-------------
ANNUAL REPORT
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1995
1995
1995
1995
1995
Smith Barney/Travelers
Series Fund Inc.
MFS Total Return Portfolio
TBC Managed Income
Portfolio
Smith Barney Money Market
Portfolio
-----------------------------------
October 31, 1995
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
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MFS Total Return, TBC Managed Income and
Smith Barney Money Market Portfolios
- ----------------------------------------
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney/Travelers
Series Fund for the period ended October 31, 1995. This report covers the MFS
Total Return, TBC Managed Income and Smith Barney Money Market Portfolios. For
your convenience, we have summarized this period's prevailing economic and
market conditions below and outlined the strategies of the Portfolios during
this time. A more detailed summary of performance and current holdings can be
found in the appropriate sections that follow in the annual report.
Portfolio Highlights
MFS Total Return Portfolio
For the fiscal year ended October 31, 1995, the MFS Total Return Portfolio
provided investors with a return of 16.12%. As a balanced fund, the MFS Total
Return Portfolio's returns were positively influenced by a strong stock market
(e.g., the S&P 500-Stock Price Index was up 26.4%) and a strong bond market
(e.g., the Lehman Brothers Government/Corporate Bond Index was up 16.2%). The
cash position of the Portfolio, which tends to help reduce volatility over the
long term, had a somewhat negative impact on the Portfolio's returns over the
past year (e.g., money-market investments had a return of approximately 5.5%).
Over the past year, the MFS Total Return Portfolio was managed conservatively.
As of this writing, stocks made up 56% of the Portfolio, bonds 33% and cash 11%.
Given the steady upward progression of the S&P 500-Stock Price Index over the
past twelve months, valuations, in our view, have not been particularly
attractive. We have concentrated our equity weighting in the energy and
financial sectors where the fundamentals appear sound and valuations are
reasonable.
On the bond side of the Portfolio, we increased our weighting throughout the
year and increased our duration as well. The current slowdown in the economy,
along with the lack of inflationary stimulus, provided an excellent backdrop for
bonds. Going forward, we believe that the Federal Reserve may cut interest rates
one more time. We also expect a stronger economy in 1996, and that may result in
a less favorable environment for bonds. If that happens, we would reduce the
Portfolio's duration. Our cash position (currently at 11%) remains on the high
side. However, because bull markets invariably correct, we believe our high cash
position is an appropriate strategy. When the stock market corrects, we plan to
be opportunistic and buy stocks at more attractive valuations.
1
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TBC Managed Income Portfolio
As many of you no doubt know, the bond market has experienced a banner year so
far in 1995, with economic growth slowing to a sustainable pace, and inflation
remaining in check. After six rate hikes in 1994, slow economic growth and
moderate inflation were the primary reasons why the Federal Reserve eased rates
for the first time in three years at the Federal Open Market Committee meeting
in July, bringing the federal funds rate to 5.75%. All of these factors have
given rise to strong overall returns for the period as measured by the Lehman
Aggregate Index, which is up 15.11% year to date. Mixed economic signals closing
out the third quarter -- including a 4.2% rate of gross domestic product (GDP)
growth -- have done little to rattle bullish sentiments. In our view, the
financial markets appear to be looking beyond the numbers. At current levels,
the yield curve suggests anticipation that a second Federal Reserve easing of
25-50 basis points may be in store, perhaps as early as December. Pending the
outcome of federal budget negotiations in Washington, D.C., we remain cautiously
optimistic about current market conditions.
The TBC Managed Income Fund ended 1994 in positive territory. This followed a
November where the bond market as a whole posted negative returns. Target
weightings were between 10% and 20% in Treasurys and 35% to 55% in corporate
bonds and mortgage-backed securities. Extremely tight corporate spreads through
the first quarter of the year prompted a defensive strategy in that sector, and
that has continued to date. Even a modest widening from current levels would
cause corporate bonds to underperform Treasurys. Although we continue to seek
value in this sector through research and fundamental analysis, our allocation
has been pared down to between 10% and 20% for the near term. Mortgage
weightings within the Portfolio currently stand at between 25% to 40% due to
attractive yields on a historical basis. The TBC Managed Income Portfolio does
not own any mortgage derivatives.
As measured by effective duration, the Portfolio's interest-rate sensitivity was
conservatively positioned short of the Lehman Aggregate Index through April
1995. As the market rallied in the first quarter, our conservative strategy
resulted in Portfolio underperformance compared to the index. In April, the
Portfolio's duration was lengthened to a benchmark neutral level. This
neutrality continued through October, when another modest lengthening was
initiated, therefore bringing the Portfolio's duration to approximately 104% of
the Lehman Aggregate. This was done in an effort to hedge against our emphasis
on the mortgage sector and the possibility of accelerating prepayments should
interest rates continue to fall.
For the year ended October 31, 1995, the TBC Managed Income Portfolio posted a
total return of 12.68% net of all fees. This represents some underperformance
relative to the Lehman Aggregate Index (15.65%) for the same time period, and
was caused in large part by the Portfolio's shorter
2
<PAGE>
duration over the first quarter of this year. Looking ahead, we will maintain
our current interest-rate sensitivity and look for research-driven value in all
sectors of the bond market. With moderate inflation and the strong possibility
of another Federal Reserve easing in the near future, we believe there may be
significant investment opportunities to be found in the credit markets into
1996.
Smith Barney Money Market Portfolio
A combination of high short-term interest rates and unattractive rates on bank
Certificates of Deposit (CDs) enabled money market funds to provide investors
with returns that were far superior to most bank products. As a result, the
money fund industry has experienced rapid asset growth of greater than 20% year
over year. We are pleased to report that the taxable money fund assets of Smith
Barney have participated in the industry's growth. Year over year, assets in the
taxable Smith Barney money market funds have risen by over 25%. As of October
31, 1995, the seven-day yield of the Smith Barney Money Market Portfolio was
5.20% (5.34% effective yield), and assets within the Portfolio grew above the
industry trend.
During the fourth quarter of 1994 (and the third year into the recovery), the
U.S. economy, as measured by gross domestic product (GDP), was still showing
signs of strength and grew at a rate of 5.1%. By January 1995, capacity
utilization, business investments and employment remained strong and inflation
levels were high enough to cause the Federal Reserve Board (the Fed) some
concern. As a result, the Fed raised the federal funds rate from 5.50% to 6.00%
in early February. This completed a series of Fed tightening moves that had
resulted in short-term interest rates rising from 3.0% to 6.0% in a 13-month
period. As early as March, automobile manufacturers began to encounter sluggish
demand and production cuts followed, adding to a meager economic growth rate of
1.3%. Expectations grew that the Fed's monetary policy would either remain
unchanged or perhaps ease slightly. On July 6, 1995, the Fed eased and lowered
the federal funds rate from 6% to 5.75%. The Fed stated that this action was
taken because "inflationary pressures have receded enough to accommodate a
modest adjustment in monetary conditions."
The Fed held firm at the August and September Federal Open Market Committee
(FOMC) meetings and did not lower short-term interest rates. In our view, the
Fed will probably leave rates unchanged at the November meeting for two main
reasons. One, third quarter GDP was reported up 4.2%, and that was much higher
than expected. Chairman Greenspan will probably want to see fourth quarter GDP
come in below 2% before any additional easing. The report also showed that
capital spending and housing as well as housing-related areas were strong, but
consumer spending remained weak. Second, the Fed does not want to consider
easing before a budget agreement in Washington, D.C., has been reached.
3
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The short-term yield curve has inverted as market participants have anticipated
further accommodations by the Fed. Overnight rates are 5.75% and six-month Euro
CDs are 5.55%. Probably the most compelling reason why the Fed may want to ease
going forward is the moderate pace of economic growth and the fact that
companies are continuing to substitute technology for labor, a trend that should
help to keep wages (and inflation) low. With the federal funds rate at 5.75% and
inflation at 2.81%, one could argue that the Fed's current policy is overly
restrictive and therefore they may decide to lower short-term rates in the
future.
We continue to have a bullish posture and we are maintaining an average life
between 45-50 days. Currently, the Smith Barney Money Market Portfolio has no
Japanese bank exposure and all of the securities in the Portfolio are rated
"A1/P1" or better.
Please note that an investment in the Smith Barney Money Market Portfolio is
neither insured nor guaranteed by the U.S. Government; nor can there be any
guarantee that the Portfolio will be able to maintain a $1.00 per share net
asset value.
We thank you for your investment in the Portfolios and your continued confidence
in our investment management approach.
Sincerely,
/S/ HEATH B. MCLENDON
Heath B. McLendon
Chairman and Chief Executive Officer
December 4, 1995
4
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Smith Barney/Travelers Series Fund Inc.
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Historical Performance -- MFS Total Return Portfolio
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Net Asset Value
----------------------
Beginning End of Income Total
Year Ended of Year Year Dividends Returns+
================================================================================
10/31/95 $ 9.98 $11.53 $0.05 16.12%
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6/16/94*-10/31/94 10.00 9.98 0.00 (0.20)++
================================================================================
Total $0.05
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Historical Performance -- TBC Managed Income Portfolio
- --------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End of Income Total
Year Ended of Year Year Dividends Returns+
================================================================================
10/31/95 $10.04 $11.16 $0.13 12.68%
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6/16/94*-10/31/94 10.00 10.04 0.00 0.40++
================================================================================
Total $0.13
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It is the Funds' policy to distribute dividends and capital gains, if any,
annually.
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Average Annual Total Return+
- --------------------------------------------------------------------------------
MFS Total TBC Managed
Return Income
Portfolio Portfolio
================================================================================
Year Ended 10/31/95 16.12% 12.68%
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6/16/94*-10/31/95 11.32 9.39
================================================================================
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Cumulative Total Return+
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MFS Total TBC Managed
Return Income
Portfolio Portfolio
================================================================================
6/16/94*-10/31/95 15.89% 13.13%
================================================================================
+ Assumes the reinvestment of all dividends and capital gain distributions
at net asset value.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
* Commencement of operations.
5
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Smith Barney/Travelers Series Fund Inc.
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Historical Performance
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Growth of $10,000 Invested in Shares of
MFS Total Return Portfolio vs. S&P 500 Index and
Lehman Brothers Government Corporate Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
MFS S&P 500 INDEX Lehman Bros. Gov't Corp. Bond Index
--- ------------- -----------------------------------
6/16/94 10000 10000 10000
7/94 9980 9943 10200
10/94 9980 10324 10075
1/95 9930 10357 10318
4/95 10614 11404 10777
7/95 11217 12538 11274
10/95 11589 13053 11704
+ Hypothetical illustration of $10,000 invested in shares of the MFS Total
Return Portfolio on June 16, 1994 (commencement of operations), assumes
reinvestment of dividends and capital gains at net asset value through
October 31, 1995. The S&P 500 is an index of widely held common stocks
listed on the New York and American Stock Exchanges and the over-the-counter
markets. Figures for the S&P 500 Index include reinvestment of dividends.
The Lehman Brothers Government Corporate Bond Index is comprised of over
5,000 issues of U.S. Government Treasury and Agency securities and Corporate
and Yankee securities. The indexes are unmanaged and are not subject to the
same management and trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
6
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Smith Barney/Travelers Series Fund Inc.
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Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
TBC Managed Income Portfolio vs.
Lehman Brothers Aggregate Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[The following table was represented by a graph in the printed material]
TBC Lehman Bros. Gov't Corp. Bond Index
--- -----------------------------------
6/16/94 10000 10000
7/94 10100 10199
10/94 10040 10052
1/95 10158 10299
4/95 10533 10757
7/95 10969 11230
10/95 11313 11626
+ Hypothetical illustration of $10,000 invested in shares of the TBC Managed
Income Portfolio on June 16, 1994 (commencement of operations), assumes
reinvestment of dividends and capital gains at net asset value through
October 31, 1995. The Lehman Brothers Aggregate Bond Index is comprised of
over 6,500 issues of U.S. Treasuries, Agencies, Corporate Bonds and
Mortgage-Backed securities. The index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
7
<PAGE>
Smith Barney/Travelers Series Fund Inc.
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Schedules of Investments October 31, 1995
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MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
COMMON STOCKS -- 51.0%
Aerospace -- 1.0%
6,800 Allied Signal Inc. $ 289,000
2,998 Textron Inc. 206,113
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495,113
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Aerospace & Defense -- 0.4%
4,000 Raytheon Co. 174,500
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Automotive -- 1.1%
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2,500 Daimler Benz AG ADR* 120,625
9,200 General Motors Corp. 402,500
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523,125
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Banking -- 6.2%
4,500 BankAmerica Corp. 258,750
5,800 Bank of Boston Corp. 258,100
7,500 Bank of New York 315,000
4,600 Federal Home Loan Mortgage Corp. 318,550
5,016 Chase Manhattan Corp. 285,912
3,800 Citicorp 246,525
5,200 Comerica Inc. 174,850
5,300 Nationsbank Corp. 348,475
13,900 National City Corp. 429,163
7,600 Northern Trust Corp. 362,900
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2,998,225
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Beverages -- 1.1%
2,000 Anheuser-Busch Cos. Inc. 132,000
7,900 Pepsico Inc. 416,725
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548,725
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Business Machines -- 0.7%
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2,700 Xerox Corp. 350,324
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Chemicals -- 1.5%
3,500 Dow Chemical Co. 240,188
4,900 E.I. du Pont De Nemours & Co. 305,637
3,500 W.R. Grace & Co. 195,125
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740,950
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Coal -- 0.6%
10,100 Eastern Enterprises 301,738
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See Notes to Financial Statements.
8
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Smith Barney/Travelers Series Fund Inc.
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Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Consumer Products -- 3.1%
2,800 Alcatel Alsthorm $ 47,250
3,000 Avon Products 213,375
4,900 Colgate Palmolive Co. 339,324
5,200 General Electric Corp. 328,900
5,600 McCormick & Co. Inc. 138,600
2,300 Minnesota Mining & Manufacturing Co. 130,813
2,700 Procter & Gamble Co. 218,700
2,900 Rubbermaid Inc. 75,763
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1,492,725
- --------------------------------------------------------------------------------
Commercial Services -- 0.1%
1,900 Browning Ferris Industries, Inc. 55,338
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Drugs -- 1.9%
4,200 American Home Products Corp. 372,225
4,200 Eli Lilly & Co. 405,825
1,600 Warner Lambert Co. 136,200
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914,250
- --------------------------------------------------------------------------------
Electrical Equipment-Utilities -- 2.9%
5,300 FPL Group Inc. 221,936
10,500 Honeywell Inc. 441,000
10,100 Loral Corp. 299,213
7,000 National Power PLC ADR 22,422
6,500 PECO Energy Co. 190,125
4,200 Stanley Works 200,550
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1,375,246
- --------------------------------------------------------------------------------
Food Processing -- 0.8%
3,800 General Mills Inc. 218,025
2,000 Kellogg Co. 144,500
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362,525
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Hospital Related -- 1.2%
9,500 Baxter International Inc. 366,938
1,800 National Health Investors Inc. 54,000
- --------------------------------------------------------------------------------
3,000 Smithkline Beecham Units 155,625
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576,563
- --------------------------------------------------------------------------------
Insurance -- 4.2%
5,500 Aetna Life & Casualty Co. 387,062
5,500 American General Corp. 180,813
4,300 Cigna Corp. 426,237
See Notes to Financial Statements.
9
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Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Insurance -- 4.2% (continued)
8,100 Equitable Cos. Inc. $ 172,125
3,700 MBIA Inc. 257,613
1,800 Prudential Reinsurance Holdings Inc. 36,675
8,100 Torchmark Corp. 336,150
4,300 UNUM Corp. 226,287
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2,022,962
- --------------------------------------------------------------------------------
Machinery-Diversified -- 0.7%
3,700 Deere & Co. 330,688
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Minerals -- 0.2%
3,043 Cyprus Amax Minerals Co. 79,498
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Natural Gas -- 1.5%
8,500 Pacific Enterprises 210,375
7,500 Sonat Inc. 215,625
1,400 Union Pacific Resources 31,850
7,100 Williams Cos. Inc. 274,237
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732,087
- --------------------------------------------------------------------------------
Natural Resources -- 0.6%
4,600 British Gas PLC ADR 174,800
8,100 YPF Sociedad Anonima ADR 138,713
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313,513
- --------------------------------------------------------------------------------
Oil Production -- 5.3%
7,800 Amoco Corp. 498,225
7,500 Coastal Corp. 242,813
7,300 Enron Corp. 250,937
5,000 Exxon Corp. 381,875
4,100 Mobile Corp. 413,075
8,800 Occidental Petroleum Corp. 189,200
5,900 Schlumberger Ltd. 367,275
14,000 USX-Marathon Group Inc. 248,500
- --------------------------------------------------------------------------------
2,591,900
- --------------------------------------------------------------------------------
Paper & Forest Products -- 1.6%
2,000 Georgia Pacific Corp. 165,000
5,800 International Paper Co. 214,600
3,400 Kimberly-Clark Corp. 246,925
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3,800 Weyerhaeuser Co. 167,675
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794,200
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See Notes to Financial Statements.
10
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Petroleum -- 2.1%
3,700 British Petroleum PLC ADR $ 326,524
3,800 Royal Dutch Petroleum Co. ADR 466,925
8,500 Ultramar PLC 207,188
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1,000,637
- --------------------------------------------------------------------------------
Photography -- 1.0%
7,600 Eastman Kodak Co. 475,950
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Real Estate Investment Trust -- 0.9%
5,000 Beacon Properties Corp. 108,750
7,900 Hospitality Properties Trust Corp. 207,375
1,700 Meditrust Corp. 57,375
1,500 Nationwide Health Properties Inc. 61,688
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435,188
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Retail -- 1.8%
2,500 Dayton-Hudson Corp. 171,875
5,100 J.C. Penney & Co. Inc. 214,837
6,800 May Department Stores Co. 266,900
7,000 Sears, Roebuck & Co. 238,000
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891,612
- --------------------------------------------------------------------------------
Telecommunications -- 4.5%
7,600 American Telephone & Telegraph Corp. 486,400
6,200 Ameritech Corp. 334,800
9,500 GTE Corp. 391,875
14,000 MCI Communications Corp. 349,125
6,900 Nynex Corp. 324,300
3,300 SBC Communications 184,387
2,500 Sprint Corp. 96,250
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2,167,137
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Tobacco -- 1.1%
6,200 Philip Morris Cos. Inc. 523,900
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Transportation -- 1.2%
5,400 Illinois Central Corp. 206,550
4,600 CSX Corp. 385,250
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591,800
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See Notes to Financial Statements.
11
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Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Utilities -- 1.3%
5,800 American Electric Power Co. $ 221,125
8,000 Frontier Corp. 216,000
5,700 Unicom Corp. 186,675
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623,800
- --------------------------------------------------------------------------------
Waste Management -- 0.4%
6,500 WMX Technologies Inc. 182,813
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TOTAL COMMON STOCKS
(Cost -- $22,854,135) 24,667,032
================================================================================
CONVERTIBLE PREFERRED STOCKS -- 1.3%
Energy -- 0.4%
3,200 Occidental Petroleum Corp. CV. $3.875 + 178,800
- --------------------------------------------------------------------------------
Financial Services -- 0.8%
5,300 Sci Finance $3.125, Class A Shares 373,650
- --------------------------------------------------------------------------------
Telephone -- 0.1%
1,000 Cointel 7.000% + 44,250
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TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost -- $594,551) 596,700
================================================================================
PREFERRED STOCKS -- 2.9%
Automotive -- 0.2%
1,500 General Motors Corp., Class E Shares 100,500
- --------------------------------------------------------------------------------
Consumer Products -- 0.8%
6,000 Allstate Corp. 261,000
2,400 Corning Delaware LP 108,000
- --------------------------------------------------------------------------------
369,000
- --------------------------------------------------------------------------------
Environmental Control -- 0.4%
5,500 Browning-Ferris Industries, Inc. 180,813
- --------------------------------------------------------------------------------
Industrial -- 0.2%
14,000 RJR Nabisco Holdings Corp. 87,500
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Oil -- 0.9%
1,824 Atlantic Richfield Co. 40,812
7,500 Unocal Corp. 393,750
- --------------------------------------------------------------------------------
434,562
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
12
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Steel -- 0.4%
4,000 AK Steel Holding Corp. $ 122,500
3,400 US Steel, Series A, 8.750% 85,000
- --------------------------------------------------------------------------------
207,500
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost -- $1,354,877) 1,379,875
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
CORPORATE BONDS -- 20.1%
Airline -- 0.7%
$ 98,769 Northwest Airlines Trust, 9.250% due 6/21/14 114,705
100,000 Qantas Airways, 7.500% due 6/30/03+ 101,375
100,000 United Airlines Inc., 10.250% due 7/15/21 118,500
- --------------------------------------------------------------------------------
334,580
- --------------------------------------------------------------------------------
Asset-Backed Security -- 0.2%
100,000 Standard Credit Card Trust, 6.066% due 5/7/00 100,250
- --------------------------------------------------------------------------------
Automotive -- 0.4%
200,000 General Motors Corp., 7.400% due 9/1/25 204,750
- --------------------------------------------------------------------------------
Banking -- 3.6%
200,000 ABN Ambro Bank Global, 7.250% due 05/31/05 208,250
300,000 Alex Brown Financial Group, 7.625% due 8/15/05 312,375
200,000 Banco Central, 8.250% due 6/15/04 214,000
100,000 Chase Manhattan Corp., 8.800% due 2/1/00 103,125
100,000 Citicorp, 8.800% due 2/1/00 109,500
100,000 Coastal Bankcorp, 10.000% due 6/30/02 100,125
100,000 Den Danske Bank, 7.250% due 6/15/05 100,875
100,000 First USA Bank, 7.650% due 8/1/03 99,500
170,000 Goldman Sachs Group L.P., 7.250% due 10/1/05+ 172,550
100,000 Riggs National Bank, 8.500% due 2/1/06 105,250
100,000 Santander Financial Issuances, 7.875% due 4/15/05 107,000
100,000 Sovereign Bancorp, 6.750% due 9/1/00 97,625
- --------------------------------------------------------------------------------
1,730,175
- --------------------------------------------------------------------------------
Beverages -- 0.4%
200,000 Anheuser-Busch Cos. Inc., 7.250% due 9/15/15 205,250
- --------------------------------------------------------------------------------
Consumer Products -- 0.2%
100,000 Black & Decker, 8.440% due 11/1/99 106,875
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Electric Utilities -- 0.2%
$ 100,000 Utilicorp United, 8.450% due 11/15/99 $ 107,250
- --------------------------------------------------------------------------------
Financial -- 1.8%
520,000 ADT Operations, zero coupon due 7/6/10 230,100
100,000 Lehman Brothers Inc., 7.125% due 7/15/02 101,500
300,000 Leucadia National, 8.250% due 6/15/05 303,000
125,000 RHG Finance Corp., 8.875% due 10/1/05 125,469
100,000 Salton Sea Funding, 7.370% due 5/30/05+ 101,125
- --------------------------------------------------------------------------------
861,194
- --------------------------------------------------------------------------------
Food -- 0.2%
100,000 Borden Inc., 7.875% due 2/15/23 98,125
- --------------------------------------------------------------------------------
Gas-Transmission -- 1.1%
100,000 AMR Pipeline Corp., 7.000% due 6/1/25 103,000
100,000 Noram Energy Corp., 7.500% due 8/1/00 101,750
100,000 Northwest Pipeline Corp., 9.000% due 8/1/22 110,750
100,000 Panhandle Eastern Corp., 8.625% due 4/15/25 111,250
100,000 Southern Union, 7.600% due 2/1/24 102,000
- --------------------------------------------------------------------------------
528,750
- --------------------------------------------------------------------------------
Industrial -- 7.5%
100,000 Asarco Inc., 8.500% due 5/1/25 110,250
75,000 Altera Corp., 5.750% due 6/15/02+ 101,625
100,000 Avenor Inc., 9.375% due 2/15/04+ 109,750
100,000 Canadian Pacific Forest,10.250% due 1/15/03 112,750
Coastal Corp.:
100,000 7.750% due 10/15/35 99,875
200,000 10.375% due 10/1/00 229,500
100,000 Dayton Hudson Co., 9.000% due 10/1/21 117,250
Georgia-Pacific Corp.:
100,000 8.625% due 4/30/25 109,000
100,000 9.875% due 11/1/21 116,500
100,000 Jet Equipment Trust, 10.690% due 5/1/15+ 106,148
100,000 Laidlaw Inc., 8.750% due 4/15/25 115,375
100,000 McDonnell Douglas Co., 9.250% due 4/1/02 113,875
News America Holdings Inc.:
100,000 7.500% due 3/1/00 103,250
150,000 7.600% due 10/11/15 150,563
See Notes to Financial Statements.
14
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Industrial -- 7.5% (continued)
Oryx Energy Co.:
$ 600,000 9.300% due 5/1/96 $ 608,250
100,000 10.000% due 4/1/01 110,625
100,000 Owens-Corning Fiber Glass Corp., 8.875% due 6/1/02 108,875
100,000 Parker & Parsley Petroleum Co., 8.250% due 8/15/07 104,000
100,000 Raytheon Co., 7.375% due 7/15/25 101,250
RJR Nabisco Inc.:
50,000 8.000% due 1/15/00 52,625
100,000 8.750% due 8/15/05 103,125
100,000 7.550% due 6/15/15 100,625
100,000 Rouse Co., 8.550% due 3/28/05 108,375
117,000 TCI Communications Inc., 8.750% due 8/1/15 125,044
83,000 Tele-Communications Inc., 9.250% due 1/15/23 89,121
100,000 Tenet Healthcare Corp., 10.125% due 3/1/05 108,250
Time Warner Inc.:
33,000 7.750% due 6/15/05 33,701
54,800 8.750% due 1/10/15 57,061
100,000 Valassis Inserts Inc., 9.375% due 3/15/99 105,874
- --------------------------------------------------------------------------------
3,612,512
- --------------------------------------------------------------------------------
Miscellaneous -- 1.2%
150,000 Brascan Ltd., 7.375% due 10/1/02 150,000
300,000 Louisiana Land and Exploration Co., 7.650% due 12/1/23 303,000
100,000 Province of Ontario, 7.000% due 8/4/05 102,875
- --------------------------------------------------------------------------------
555,875
- --------------------------------------------------------------------------------
Real Estate Investment Trust -- 0.2%
80,000 Liberty Property Trust, 8.000% due 7/1/01 82,800
- --------------------------------------------------------------------------------
Utility-Electric -- 2.4%
50,000 Cleveland Electric Illuminating Co., 9.500% due 5/15/05 51,938
300,000 Commonwealth Edison Co., 8.375% due 2/15/23 318,375
100,000 First PV Funding, 10.150% due 1/15/16 104,750
Long Island Lighting Co.:
100,000 7.625% due 4/15/98 102,250
100,000 9.625% due 7/1/24 102,000
100,000 Louisiana Power & Light Co., 10.670% due 1/2/17 107,500
100,000 Midland Funding II, 11.750% due 7/23/05 105,250
See Notes to Financial Statements.
15
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Utility-Electric -- 2.4% (continued)
Niagara Mohawk Power Corp.:
$ 100,000 9.250% due 10/1/01 $ 102,625
90,000 7.750% due 5/15/06 81,450
100,000 Ohio Edison, 7.375% due 9/15/02 102,125
- --------------------------------------------------------------------------------
1,178,263
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost -- $9,366,357) 9,706,649
================================================================================
U.S. GOVERNMENT OBLIGATIONS -- 7.1%
200,000 U.S. Treasury Note, 6.750% due 4/30/00 207,344
685,000 U.S. Treasury Note, 6.250% due 5/31/00 697,206
100,000 U.S. Treasury Note, 6.125% due 9/30/00 101,366
1,150,000 U.S. Treasury Note, 7.250% due 8/15/04 1,245,288
50,000 U.S. Treasury Note, 6.500% due 8/15/05 51,787
950,000 U.S. Treasury Bond, 7.625% due 2/15/25 1,102,960
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost -- $3,368,735) 3,405,951
================================================================================
SHORT-TERM INVESTMENTS -- 17.6%
2,800,000 Federal Home Loan Bank, 5.630% due 11/6/95 2,797,811
2,300,000 Federal Home Loan Bank, 5.650% due 11/7/95 2,297,834
3,400,000 Federal Home Loan Mortgage Corp., 5.600% due 11/2/95 3,399,471
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost -- $8,495,116) 8,495,116
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $46,033,771)++ $48,251,323
================================================================================
See Notes to Financial Statements.
16
<PAGE>
<TABLE>
<CAPTION>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
TBC MANAGED INCOME PORTFOLIO
SHARES SECURITY VALUE
===================================================================================
U.S. GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS -- 83.8%
<C> <S> <C>
$ 690,000 U. S. Treasury Bond, 7.125% due 2/15/23 $ 752,155
37,000 U. S. Treasury Note, 7.375% due 5/15/96 37,352
85,000 U. S. Treasury Note, 6.625% due 3/31/97 86,176
775,000 U. S. Treasury Note, 7.875% due 1/15/98 810,340
1,086,000 U. S. Treasury Note, 7.875% due 8/15/01 1,191,972
1,965,000 U. S. Treasury Note, 6.375% due 8/15/02 2,017,466
586,000 U. S. Treasury Note, 7.250% due 8/15/04 634,556
276,821 Federal National Mortgage Association, 7.500% due 7/1/09 282,530
74,370 Federal National Mortgage Association, 7.500% due 6/1/10 75,904
357,326 Federal National Mortgage Association, 8.000% due 9/1/10 368,268
280,655 Federal National Mortgage Association, 7.500% due 4/1/25 283,899
246,898 Federal National Mortgage Association, 7.000% due 9/1/25 245,047
304,127 Federal National Mortgage Association, 8.500% due 9/1/25 315,435
113,590 Federal National Mortgage Association, 7.500% due 10/1/25 114,903
218,117 Government National Mortgage Association, 8.500% due 12/15/24 228,133
251,329 Government National Mortgage Association, 8.000% due 1/15/25 259,968
168,300 Government National Mortgage Association, 8.500% due 4/15/25 176,030
404,172 Government National Mortgage Association, 7.500% due 9/15/25 411,621
583,730 Government National Mortgage Association, 8.000% due 9/15/25 603,794
50,000 International Bank for Reconstruction & Development,
9.875% due 10/1/97 53,687
70,000 MBNA Master Credit Card Trust, Class A, 6.450% due 2/15/08 69,615
- -----------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT & GOVERNMENT
AGENCY OBLIGATIONS (Cost -- $8,818,579) 9,018,851
===================================================================================
CORPORATE BONDS -- 16.2%
Banking -- 1.0%
109,000 Malayan Banking Berhad - NY, 7.125% due 9/15/25 110,226
- -----------------------------------------------------------------------------------
Consumer Products -- 0.4%
39,000 American Home Products, 7.700% due 2/15/00 41,096
- -----------------------------------------------------------------------------------
Financial Services -- 5.8%
111,000 Aegon NV, 8.000% due 8/15/06 121,268
75,000 Charles Schwab, 6.300% due 9/30/03 72,375
60,000 China International Trust & Investment Corp., 9.000%
due 10/15/06 67,050
60,000 Donaldson, Lufkin & Jenrette, 6.875% due 11/1/05 59,625
50,000 H.F. Ahmanson, 7.650% due 4/15/00 52,000
50,000 Household Finance Corp., 7.800% due 11/1/96 50,909
50,000 Lincoln National Corp., 7.250% due 5/15/05 51,687
150,000 Paine Webber Group, 7.310% due 8/9/00 153,375
- -----------------------------------------------------------------------------------
628,289
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
TBC MANAGED INCOME PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Healthcare -- 1.0%
$100,000 Tenet Healthcare Corp., 9.625% due 9/1/02 $ 108,000
- --------------------------------------------------------------------------------
Industrial-Non-Oil Related -- 3.0%
90,000 ADT Operations, 8.250% due 8/1/00 94,500
50,000 Carpenter Technology Corp., 7.440% due 8/16/99 51,938
95,000 Jones Intercable Inc., 9.625% due 3/15/02 100,700
50,000 Penn Traffic Co., 8.625% due 12/15/03 42,375
25,000 Valassis Inserts Inc., 9.375% due 3/15/99 26,468
- --------------------------------------------------------------------------------
315,981
- --------------------------------------------------------------------------------
Retail -- 1.3%
85,000 Federated Department Stores, 10.000% due 2/15/01 92,650
50,000 Sears, Roebuck & Co., 8.550% due 8/1/96 50,938
- --------------------------------------------------------------------------------
143,588
- --------------------------------------------------------------------------------
Telecommunications -- 1.5%
65,000 Paging Network Inc., 8.875% due 2/1/06 65,163
50,000 Rogers Cable System, 9.625% due 8/1/02 51,250
75,000 Rogers Communications Inc., 2.000% due 11/26/05 39,375
155,788
- --------------------------------------------------------------------------------
Transportation -- 0.9%
65,000 Federal Express Corp., 6.250% due 4/15/98 50,000
45,000 Mass Transit Railways, 7.250% due 10/1/05 45,675
- --------------------------------------------------------------------------------
95,675
- --------------------------------------------------------------------------------
Yankee Bonds With Coupon -- 1.3%
41,000 Carter Holt Harvey Ltd., 8.875% due 12/1/04 46,842
40,000 Cemex SA, 8.875% due 6/10/98 36,925
55,000 Domtar Inc., 11.750% due 3/15/99 60,293
- --------------------------------------------------------------------------------
144,060
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost -- $1,691,772) 1,742,703
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $10,510,351)++ $10,761,554
================================================================================
See Notes to Financial Statements.
18
<PAGE>
<TABLE>
<CAPTION>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY MONEY MARKET PORTFOLIO
ANNUALIZED
YIELD ON
FACE DATE OF
AMOUNT SECURITY PURCHASE VALUE
===================================================================================
U.S. GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS -- 0.4%
$ 150,000 Federal National Mortgage Association matures 11/13/95
(Cost-- $149,722) 5.71% $ 149,722
===================================================================================
COMMERCIAL PAPER -- 84.1%
<S> <C> <C> <C>
1,000,000 Abbey National North America Corp.
matures 1/8/96 5.71 and 5.69 989,422
800,000 AT&T Corp. mature 11/2/95 and 11/10/95 5.64 and 5.73 799,630
1,000,000 B.A.T. Capital Corp. matures 11/20/95 5.75 996,992
1,000,000 Bank of America Corp. matures 11/13/95 5.76 998,090
1,000,000 Bank of Nova Scotia matures 11/13/95 5.74 998,107
1,000,000 Banque Paribas (Cayman) matures 11/2/95 5.78 999,840
1,000,000 Bear Stearns matures 12/5/95 5.77 994,588
750,000 Cheltenham & Gloucester Building Society
matures 12/8/95 5.74 745,567
1,000,000 Ciesco L.P. matures 1/26/96 5.78 986,383
800,000 Compagnie Bancaire matures 11/27/95 5.76 796,724
500,000 Corporate Asset Funding Co. matures 1/17/96 5.78 493,915
1,000,000 Creditanstalt Bank matures 12/13/95 5.72 993,420
850,000 Credito Italiano matures 12/19/95 5.70 843,631
1,000,000 Daimler-Benz North America Corp.
matures 11/22/95 5.68 996,675
1,300,000 Dean Witter, Discover &Co.
mature 11/10/95 and 11/17/95 5.76 and 5.77 1,297,587
800,000 Delaware Funding Corp. matures 11/27/95 5.68 796,689
1,000,000 Dresdner US Finance matures 1/22/96 5.80 986,971
500,000 Eli Lilly & Co. matures 12/4/95 5.76 497,388
1,000,000 Ford Motor Credit Corp. matures 12/7/95 5.76 994,270
1,000,000 General Electric Capital Corp.
matures 2/20/96 5.77 982,548
750,000 Goldman Sachs Group, L.P.
mature 11/14/95 and 1/12/96 6.00 and 5.79 743,773
1,000,000 Halifax Building Society matures 11/29/95 5.74 995,598
850,000 Hanson Finance PLC mature 11/3/95
and 11/13/95 5.75 and 5.77 848,940
500,000 Indosuez North American Inc. matures 1/29/96 5.81 492,954
200,000 International Nederlander matures 11/21/95 5.76 199,372
1,000,000 J.C. Penney matures 11/21/95 5.77 996,817
250,000 J.P. Morgan & Co. matures 1/31/96 5.77 246,455
493,000 Kredietbank N.A. Corp. matures 1/2/96 5.84 488,118
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
<TABLE>
<CAPTION>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY MONEY MARKET PORTFOLIO
ANNUALIZED
YIELD ON
FACE DATE OF
AMOUNT SECURITY PURCHASE VALUE
===================================================================================
<S> <C> <C> <C>
$ 900,000 Merrill Lynch & Co., Inc.
mature 11/1/95 and 11/6/95 5.68% and 5.75% $ 899,604
500,000 Morgan Stanley Group, Inc. matures 12/20/95 5.73 496,175
800,000 National & Provincial Building Society
matures 3/18/96 5.75 782,796
800,000 Pepsico matures 11/3/95 5.73 799,747
1,000,000 PHH Corp. matures 11/14/95 5.77 997,931
1,000,000 Preferred Receivable Funding Corp.
matures 11/27/95 5.78 995,862
1,000,000 Province of British Columbia matures 4/3/96 5.75 976,044
1,000,000 Royal Bank of Canada matures 1/29/96 5.79 985,908
500,000 Toronto-Dominion Holdings USA matures 1/8/96 5.81 494,598
800,000 Transamerica Financial Corp. matures 12/7/95 5.76 795,424
200,000 Woolwich Building Society matures 12/14/95 5.77 198,645
- -----------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost -- $31,623,198) 31,623,198
===================================================================================
FOREIGN CERTIFICATES OF DEPOSIT -- 13.3%
1,000,000 ABN AMRO North American Finance, Inc.
matures 2/5/96 5.80 999,764
1,000,000 Bank of Montreal matures 1/12/96 5.79 1,000,012
1,000,000 National Westminster Bank matures 11/30/95 5.76 1,000,009
1,000,000 Societe Generale matures 3/6/96 5.75 1,000,000
1,000,000 Swiss Bank Corporation matures 1/5/96 5.77 1,000,009
- -----------------------------------------------------------------------------------
TOTAL FOREIGN CERTIFICATES OF DEPOSIT
(Cost -- $4,999,794) 4,999,794
===================================================================================
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY MONEY MARKET PORTFOLIO
SHARES SECURITY VALUE
================================================================================
REPURCHASE AGREEMENT -- 2.2%
$ 834,000 Citibank, 5.850% due 11/1/95; Proceeds
at maturity --$834,136;
(Fully collateralized by U.S. Treasury Notes,
8.375% due 10/31/97; Market value -- $858,600)
(Cost -- $834,000) $ 834,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $37,606,714)++ $37,606,714
================================================================================
* Non-income producing security.
+ Security is exempt from registration under Rule 144A of the Securities Act
of 1933. The securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers.
++ Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
21
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MFS Total TBC Managed SB Money
Return Income Market
Portfolio Portfolio Portfolio
================================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost -- $46,033,771,
$10,510,351 and $37,606,714, respectively) $ 48,251,323 $10,761,554 $37,606,714
Cash 901,329 350,636 510
Receivable for securities sold 379,016 -- --
Receivable for Fund shares sold 247,809 105,187 --
Dividends and interest receivable 330,457 135,111 24,514
- ------------------------------------------------------------------------------------------------
Total Assets 50,109,934 11,352,488 37,631,738
- ------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 547,656 26,708 --
Management fees payable 161,573 20,945 50,020
Dividends payable -- -- 61,504
Accrued expenses and other liabilities 37,694 25,911 33,415
- ------------------------------------------------------------------------------------------------
Total Liabilities 746,923 73,564 144,939
- ------------------------------------------------------------------------------------------------
Total Net Assets $49,363,011 $11,278,924 $37,486,799
================================================================================================
NET ASSETS:
Par value of capital shares $ 43 $ 10 $ 375
Capital paid in excess of par value 45,724,230 10,395,674 37,486,424
Undistributed net investment income 1,038,795 454,153 --
Accumulated net realized gain on
security transactions 382,391 177,884 --
Net unrealized appreciation of investments 2,217,552 251,203 --
Total Net Assets $49,363,011 $11,278,924 $37,486,799
================================================================================================
Shares Outstanding 4,280,101 1,010,854 37,486,799
- ------------------------------------------------------------------------------------------------
Net Asset Value $11.53 $11.16 $1.00
- ------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Operations October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MFS Total TBC Managed SB Money
Return Income Market
Portfolio Portfolio Portfolio
====================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 828,484 $ 520,450 $ 992,524
Dividends 429,969 -- --
- ------------------------------------------------------------------------------------
Total Investment Income 1,258,453 520,450 992,524
- ------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 187,388 47,986 100,040
Audit and legal 14,000 13,500 12,500
Registration fees 12,837 3,000 10,850
Custody 12,000 2,200 4,800
Shareholder communications 10,000 9,000 11,460
Shareholder and system servicing fees 6,009 9,209 10,898
Directors' fees 4,104 3,500 3,444
Pricing service fees 1,500 2,700 --
Other 500 3,991 4,400
- ------------------------------------------------------------------------------------
Total Expenses 248,338 95,086 158,392
Less: Management fee waiver 25,815 27,041 50,020
- ------------------------------------------------------------------------------------
Net Expenses 222,523 68,045 108,372
- ------------------------------------------------------------------------------------
Net Investment Income 1,035,930 452,405 884,152
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN
CURRENCIES (NOTE 4):
Realized Gain (Loss) From:
Security transactions
(excluding short-term securities) 394,685 177,909 --
Foreign currency transactions (338) -- --
- ------------------------------------------------------------------------------------
Net Realized Gain 394,347 177,909 --
- ------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
(Depreciation) of Investments:
Beginning of year (40,964) (59,706) --
End of year 2,217,552 251,203 --
- ------------------------------------------------------------------------------------
Increase in Net Unrealized
Appreciation 2,258,516 310,909 --
- ------------------------------------------------------------------------------------
Net Gain on Investments and
Foreign Currencies 2,652,863 488,818 --
- ------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 3,688,793 $ 941,223 $ 884,152
====================================================================================
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
MFS Total
Return Portfolio
-------------------------
1995 1994(a)
===================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,035,930 $ 61,057
Net realized gain (loss) 394,347 (12,294)
Increase (decrease) in net unrealized appreciation 2,258,516 (40,964)
- -----------------------------------------------------------------------------------
Increase in Net Assets From Operations 3,688,793 7,799
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (61,075) --
- -----------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (61,075) --
- -----------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sales of shares 37,602,066 8,597,694
Net asset value of shares issued for
reinvestment of dividends 61,075 --
Cost of shares reacquired (431,780) (101,561)
- -----------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 37,231,361 8,496,133
- -----------------------------------------------------------------------------------
Increase in Net Assets 40,859,079 8,503,932
NET ASSETS:
Beginning of year 8,503,932 --
- -----------------------------------------------------------------------------------
End of year* $49,363,011 $8,503,932
===================================================================================
* Includes undistributed net investment income of: $1,038,795 $61,057
===================================================================================
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
See Notes to Financial Statements.
24
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
TBC Managed
Income Portfolio
-------------------------
1995 1994(a)
===================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 452,405 $ 63,984
Net realized gain 177,909 2,015
Increase (decrease) in net unrealized appreciation 310,909 (59,706)
- -----------------------------------------------------------------------------------
Increase in Net Assets From Operations 941,223 6,293
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (63,967) --
Net realized gains+ (2,040) --
- -----------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (66,007) --
- -----------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sales of shares 8,018,349 4,284,950
Net asset value of shares issued for reinvestment
of dividends 66,007 --
Cost of shares reacquired (1,521,061) (450,830)
- -----------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 6,563,295 3,834,120
- -----------------------------------------------------------------------------------
Increase in Net Assets 7,438,511 3,840,413
NET ASSETS:
Beginning of year 3,840,413 --
- -----------------------------------------------------------------------------------
End of year* $11,278,924 $3,840,413
- -----------------------------------------------------------------------------------
* Includes undistributed net investment income of: $454,153 $63,984
===================================================================================
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
+ For the year ended October 31, 1995, the distribution amount represents less
than $0.01 per share.
See Notes to Financial Statements.
25
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
SB Money
Market Portfolio
-------------------------
1995 1994(a)
===================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 884,152 $ 66,922
- -----------------------------------------------------------------------------------
Increase in Net Assets From Operations 884,152 66,922
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2) (884,152) (66,922)
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sales of shares 41,451,114 10,261,033
Net asset value of shares issued for reinvestment
of dividends 829,090 54,679
Cost of shares reacquired (10,071,297) (5,037,820)
- -----------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 32,208,907 5,277,892
- -----------------------------------------------------------------------------------
Increase in Net Assets 32,208,907 5,277,892
NET ASSETS:
Beginning of year 5,277,892 --
- -----------------------------------------------------------------------------------
End of year* $37,486,799 $5,277,892
===================================================================================
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
See Notes to Financial Statements.
26
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The MFS Total Return, TBC Managed Income and Smith Barney Money Market
Portfolios ("Portfolios") are separate investment portfolios of the Smith
Barney/Travelers Series Fund Inc. ("Fund"). The Fund, a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company and consists of these
Portfolios and nine other separate investment portfolios: Alliance Growth, AIM
Capital Appreciation, American Capital Enterprise, Smith Barney Income and
Growth, Smith Barney International Equity, Smith Barney Pacific Basin, Putnam
Diversified Income, G.T. Global Strategic Income and Smith Barney High Income
Portfolios. Shares of the Fund are offered only to insurance company separate
accounts that fund certain variable annuity and variable life insurance
contracts. The financial statements and financial highlights for the other
portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolios
are: (a) securities transactions, money market transactions and government
obligations are accounted for on trade date; (b) the Portfolios use the
amortized cost method for valuing short-term investments; accordingly, the cost
of securities plus accreted discount or minus amortized premium, approximates
market value; also securities traded on national securities markets are valued
at the closing prices on such markets; securities for which no sales price was
reported and U.S. Government and Government Agency obligations are valued at the
mean between the bid and asked prices; (c) short-term investments that have a
maturity of more than 60 days, other than those held in the Smith Barney Money
Market Portfolio, are valued at prices based on market quotations for securities
of similar type, yield and maturity as applicable; (d) dividend income is
recorded on the ex-dividend date and interest income is recorded on the accrual
basis; (e) gains or losses on the sale of securities are calculated by using the
specific identification method; (f) direct expenses are charged to each
Portfolio; (g) the accounting records of the Portfolios are maintained in U.S.
dollars. All assets and liabilities denominated in foreign currencies are
translated into U.S. dollars based on the rate of exchange of such currencies
against U.S. dollars on the date of valuation. Purchases and sales of
securities, and income and expenses are translated at the rate of exchange
quoted on the respective date that such transactions are recorded. Differences
between income and expense amounts recorded and collected or paid are adjusted
when reported by the custodian bank; (h) in accordance with Statement of
Position 93-2, Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distribution by Investment
Companies, book and tax differences have been reclassified to
27
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
undistributed net investment income. As of October 31, 1995, the cumulative
effect of such differences, totaling $3,221 and $1,731 were reclassified to
undistributed net investment income for the MFS Total Return and TBC Managed
Income Portfolios from paid-in capital, respectively. Net investment income, net
realized gains, and net assets were not affected by this change; and (i) the
Portfolios intend to comply with the requirements of the Internal Revenue Code
of 1986, as amended, pertaining to regulated investment companies and to make
distributions of taxable income sufficient to relieve it from substantially all
Federal income and excise taxes.
2. DIVIDENDS
The Smith Barney Money Market Portfolio declares and records a dividend of
substantially all its net investment income on each business day. Such dividends
are paid or reinvested monthly on the payable date.
3. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATED PERSONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager of the Fund. The MFS
Total Return ("MFSTR"), TBC Managed Income ("TBCMI") and Smith Barney Money
Market ("SBMM") Portfolios pay SBMFM a management fee calculated at an annual
rate of 0.80%, 0.65%, and 0.60% of the average daily net assets of each
Portfolio, respectively. All fees are calculated daily and paid monthly. SBMFM
waived a portion of its management fees for each of the Portfolios.
SBMFM has entered into subadvisory agreements with Massachusetts Financial
Services Company ("MFS") and The Boston Company Asset Management, Inc. ("TBC").
Pursuant to each subadvisory agreement, MFS and TBC are responsible for the
day-to-day portfolio operations and investment decisions for MFSTR and TBCMI,
respectively. As a result, SBMFM will pay MFS and TBC a monthly fee calculated
at the annual rate of 0.375% and 0.30% of the average daily net assets of MFSTR
and TBCMI, respectively.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. For the year ended October 31, 1995, SBreceived brokerage
commissions of $42.
All officers and two Directors of the Fund are employees of SB.
28
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
4. INVESTMENTS
During the year ended October 31, 1995, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were:
MFS TBC
Total Managed
Return Income
================================================================================
Purchases $49,495,798 $18,741,037
- --------------------------------------------------------------------------------
Sales 19,398,832 11,919,884
================================================================================
At October 31, 1995, net unrealized appreciation of investments for Federal
income tax purposes consisted of the following:
MFS TBC
Total Managed
Return Income
================================================================================
Gross unrealized appreciation $2,638,666 $258,621
Gross unrealized depreciation (421,114) (7,418)
- --------------------------------------------------------------------------------
Net unrealized appreciation $2,217,552 $251,203
================================================================================
5. REPURCHASE AGREEMENTS
The Portfolios purchase (and its custodian takes possession of) U.S.
Government Securities from banks and securities dealers subject to agreements to
resell the securities to the sellers at a future date (generally, the next
business day) at an agreed-upon higher repurchase price. The Portfolios require
continual maintenance of the market value of the collateral in amounts at least
equal to the repurchase price.
6. CAPITAL SHARES
At October 31, 1995, the Fund had six billion shares of $0.00001 par value
capital stock authorized. Each share of a Portfolio represents an equal
proportionate interest in that Portfolio with each other share of the same
Portfolio and has an equal entitlement to any dividends and distributions made
by the Portfolio.
29
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each Portfolio were as follows:
Year Ended Period Ended
October 31, 1995 October 31, 1994(a)
================================================================================
MFS Total Return
Shares sold 3,460,809 862,510
Shares issued on reinvestment 6,277 --
Shares redeemed (39,326) (10,169)
- --------------------------------------------------------------------------------
Net Increase 3,427,760 852,341
================================================================================
TBC Managed Income
Shares sold 766,837 427,408
Shares issued on reinvestment 6,674 --
Shares redeemed (145,178) (44,887)
- --------------------------------------------------------------------------------
Net Increase 628,333 382,521
================================================================================
SB Money Market
Shares sold 41,451,114 10,261,033
Shares issued on reinvestment 829,090 54,679
Shares redeemed (10,071,297) (5,037,820)
- --------------------------------------------------------------------------------
Net Increase 32,208,907 5,277,892
================================================================================
(a) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
30
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
MFS Total Return Portfolio 1995 1994(1)
================================================================================
Net Asset Value, Beginning of Year $ 9.98 $10.00
- --------------------------------------------------------------------------------
Income (Loss) from Operations:
Net investment income(2) 0.45 0.13
Net realized and unrealized gain (loss) 1.15 (0.15)
- --------------------------------------------------------------------------------
Total Income (Loss) from Operations 1.60 (0.02)
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.05) --
- --------------------------------------------------------------------------------
Total Distributions (0.05) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $11.53 $ 9.98
- --------------------------------------------------------------------------------
Total Return 16.12% (0.20)%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $49,363 $8,504
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.95% 0.93%+
Net investment income 4.40 3.51+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 103.72% 17.67%
================================================================================
Average commissions paid on
equity security transactions(3) $0.04 --
================================================================================
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager has
reimbursed the Portfolio for $13,857 in expenses for the period ended
October 31, 1994. If such fees were not waived and expenses not reimbursed,
the per share decreases in net investment income and the ratios of expenses
to average net assets would have been as follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------------ -----------------
1995 $0.01 1.06%
1994 0.06 2.51+
(3) Due to new SEC disclosure guidelines, average commissions per share are
calculated only for the current year and not for the prior period.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
31
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
TBC Managed Income Portfolio 1995 1994(1)
================================================================================
Net Asset Value, Beginning of Year $10.04 $10.00
- --------------------------------------------------------------------------------
Income (Loss) from Operations:
Net investment income(2) 0.61 0.21
Net realized and unrealized gain (loss) 0.64 (0.17)
- --------------------------------------------------------------------------------
Total Income from Operations 1.25 0.04
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.13) --
- --------------------------------------------------------------------------------
Total Distributions (0.13) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $11.16 $10.04
- --------------------------------------------------------------------------------
Total Return 12.68% 0.40%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $11,279 $3,840
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.92% 0.87%+
Net investment income 6.13 5.67+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 169.51% 41.54%
================================================================================
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager has
reimbursed the Portfolio for $15,557 for the period ended October 31, 1994.
If such fees were not waived and expenses not reimbursed, the per share
decreases in net investment income and the ratios of expenses to average net
assets would have been as follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------------ -----------------
1995 $0.04 1.29%
1994 0.07 2.91+
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
32
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
Smith Barney Money Market Portfolio 1995 1994(1)
================================================================================
Net Asset Value, Beginning of Year $1.00 $1.00
- --------------------------------------------------------------------------------
Net investment income(2) 0.052 0.014
Dividends from net investment income (0.052) (0.014)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00
- --------------------------------------------------------------------------------
Total Return 5.35% 1.46%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $37,487 $5,278
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.65% 0.66%+
Net investment income 5.26 3.83+
================================================================================
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager has
reimbursed the Portfolio for $15,423 in expenses for the period ended
October 31, 1994. If such fees were not waived and expenses not reimbursed,
the per share decreases in net investment income and the ratios of expenses
to average net assets would have been as follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------------ -----------------
1995 $0.003 0.94%
1994 0.005 2.11+
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
33
<PAGE>
Smith Barney Travelers Series Fund, Inc.
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney/Travelers Series Fund Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the MFS Total Return, TBC Managed
Income and Smith Barney Money Market Portfolios of Smith Barney/Travelers Series
Fund Inc. as of October 31, 1995, the related statements of operations for the
year then ended, and the statements of changes in net assets and financial
highlights for the year then ended and for the period from June 16, 1994
(commencement of operations) to October 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
MFS Total Return, TBC Managed Income and Smith Barney Money Market Portfolios of
Smith Barney/Travelers Series Fund Inc. as of October 31, 1995, the results of
their operations for the year then ended, and the changes in their net assets
and financial highlights for the year then ended and for the period from June
16, 1994 to October 31, 1994, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
New York, New York
December 12, 1995
34
<PAGE>
SMITH BARNEY
Smith Barney/Travelers --------------
Series Fund Inc. A Member of Travelers Group {LOGO]
Directors
Victor K. Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
James M. Shuart
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President and Treasurer
John C. Bianchi
Vice President
James B. Conheady
Vice President
Martin Hanley
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Phyllis Zahorodny
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Annuity Administration
Travelers Annuity Investor Services
5 State House Square
1 Tower Square
Hartford, CT 06183
This report is submitted for the general information of the shareholders of
Smith Barney/Travelers Series Fund Inc. -- MFS Total Return, TBC Managed Income
and Smith Barney Money Market Portfolios. It is not authorized for distribution
to prospective investors unless accompanied or preceded by a current Prospectus
for the Portfolios, which contains information concerning the Portfolios'
investment policies and expenses as well as other pertinent information.
Smith Barney/Travelers
Series Fund Inc.
388 Greenwich Street
New York, New York 10013
IN0253 12/95
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995
1995
1995
Smith Barney/Travelers
Series Fund Inc.
Smith Barney International Equity Portfolio
Smith Barney Pacific Basin Portfolio
G.T. Global Strategic Income Portfolio
--------------------------------------------------------
October 31, 1995
[LOGO APPEARS HERE] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- --------------------------------------------------------------------------------
Smith Barney International Equity, Smith Barney Pacific
Basin and G.T. Global Strategic Income Portfolios
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with this annual report for the Smith Barney
Travelers Series Fund Inc. This report covers the Smith Barney International
Equity, Smith Barney Pacific Basin and G.T. Global Strategic Income Portfolios
for the twelve-month period ended October 31, 1995. For your convenience, we
have summarized this period's prevailing economic and market conditions below
and outlined the portfolio strategies during this time. A more detailed summary
of performance and current holdings can be found in the appropriate sections
that follow in the annual report.
Portfolio Highlights
International Equity Portfolio
The international equity markets have been roiled over the past twelve months by
economic and political uncertainties. While many countries have enjoyed a
cyclical economic recovery during 1995, the rate of growth has abated during the
year and new concerns of global economic slowdown have increased. In addition,
the Mexican peso devaluation in late 1994 and specific corporate disappointments
have led to a sharp correction in many emerging markets. Against this backdrop,
the net asset value (NAV) of the International Equity Portfolio declined 0.7%
for the twelve months ended October 31, 1995.
The International Equity Portfolio's largest allocation is Europe at 51% of
assets. Europe was a safe haven for the Portfolio during 1995, given the flight
from emerging markets after the Mexican peso devaluation. In our view, there are
many reasons to continue to commit a substantial portion of the Portfolio to
Europe. Companies are restructuring, undergoing a process of self-evaluation,
and improving their profits, which is similar to what U.S. companies have
undergone for nearly a decade. European economic growth, while slowing, should
be in the 2% to 3% range for 1996, an environment providing reasonable revenue
growth opportunities for many industries, yet capping concerns of a possible re-
acceleration of inflation. Our major holdings are concentrated in Ireland,
Sweden, the United Kingdom, Austria, the Netherlands and Italy.
We have 35% of the Portfolio invested in the Pacific Rim markets in 1995. In the
short term, these markets have been subject to concerns regarding the dynamics
of the Japanese economic recovery, perceived deterioration in macroeconomic
fundamentals, and, in some instances, rising short-term interest rates and other
government measures to subdue inflationary pressures. In our view, the potential
underlying growth rates of the Pacific Rim
1
<PAGE>
economies justify omitting a portion of the Portfolio's assets to the region.
The Pacific Rim markets are now valued at levels not seen in many years and in
our view, are attractively valued compared to many other equity markets.
A relatively modest 8% of the Portfolio is invested in the Americas, including
Canada. The Mexican crisis had a ripple effect on several Latin economies and
markets. We felt these events provided a buying opportunity in certain markets
and, as a result, increased our presence during the year in Chile (which is our
largest Latin America holding). In our opinion, confidence in policy decisions
and financial stability, as well as a resumption of institutional reform, are
critical for higher equity prices in the Latin America markets. Given the
attractive opportunities we have found in other international markets, our
commitment to Latin America is somewhat reduced from years past.
During 1995, we have established new positions in two exciting emerging markets:
South Africa and Israel. The South African economy is recovering from years of
international sanctions. We believe South African companies have an enormous
opportunity to participate in the revitalization of the economy and the
empowerment of a majority of the country's population who remain economically
disenfranchised. The Israeli market is home to many attractive technology
companies as well as other companies who will participate in the turnaround of
Israel's economy.
In closing, while we are aware of the risks inherent in investing in the
emerging markets as evidenced by the events of the last twelve months, we remain
committed to our belief the best opportunities lie in the dynamic growth stocks
of the emerging markets.
Smith Barney Pacific Basin Portfolio
During the last twelve months, several factors combined to produce a negative
effect on most Pacific region economies. For the twelve months ended October 31,
1995, the Pacific Basin Portfolio had a total return of -11.58%.
Reversing a multi-year downward trend, the U.S. dollar rose sharply against many
foreign currencies in 1995, including the yen rallying by approximately 9%-10%.
This had a dramatic affect on the Pacific region, especially in Hong Kong, where
interest rates climbed in order for their currency to maintain parity with the
U.S. dollar. In addition, the Chinese government, concerned about Taiwanese
independence, staged large naval exercises in August and September,
demonstrating its ability to launch an amphibious attack. The resulting negative
psychological effect, combined with higher interest rates, contributed to a 20%
decline in the Hong Kong stock market for the period.
Last August, Malaysian officials began making changes to their nation's monetary
policy, and that upset the Malaysian stock market. Moreover, a large number of
shareholders of one of the largest capitalized companies in Malaysia discovered
that they possessed counterfeit certificates when they tried to sell
2
<PAGE>
their shares. The government has halted trading in the company's securities
while the matter is investigated and there are fears that the problem may affect
other Malaysian companies as well. At the same time, the former president of
South Korea has been indicted and accused of accepting more than $650 million in
bribes from executives at several companies, including the Daewoo Corporation,
the largest capitalized company in the country. The scandal has adversely
affected South Korea's stock market.
Japan experienced a major shift in currency valuation during the period, with
the yen growing weaker versus the U.S. dollar by approximately 15%. The Japanese
stock market has been relatively flat, giving up any potential gains as a result
of continuing scandals in the banking industry. With one major bank reporting
losses of more than $1 billion dollars by a single rogue trader, and a series of
bad loans on the part of other financial institutions, the viability of several
Japanese banking concerns has been called into question. Although the stock
market held its own, the weaker yen has had a negative impact on the Japanese
economy.
Looking forward, we continue to have a positive viewpoint on the impressive
growth potential of Southeast Asia. We believe that the U.S. dollar will
continue to stay strong versus foreign currencies into 1996, and that should
fuel the demand for imports both in the U.S. and Europe. This in turn should
enable many Pacific Basin companies to increase their production and provide a
stimulus to the local economies. We are finally starting to see a corporate
earnings recovery in Japan with the latest reports indicating a 47% increase in
average profits over the previous year. These are the best results in over six
years and may signal the start of a long-awaited Japanese economic recovery. In
addition, there is a high probability of major tax reforms in Japan next spring
that could result in the largest corporate and individual tax cuts in Japanese
history. We are also beginning to see the effects of political reforms in the
region. Japan, Malaysia and Thailand all have upcoming elections with the
primary issues being reform and attention to fiscal stimulus. The Pacific region
as a whole is not only still growing, but is also participating in the continued
recovery of Western economies. These converging and positive factors may provide
our shareholders with strong investment returns over the long term.
G.T. Global Strategic Income Portfolio
The G.T. Global Strategic Income Portfolio invests in a universe of global debt
spanning a wide range of credit qualities. The Portfolio's investment management
team invests in the direct debt issued by U.S. and foreign governments, yet they
may also invest in agency and corporate issues. In addition, up to 50% of the
Portfolio may be invested in the debt of emerging market countries (i.e., those
countries whose sovereign credit rating is not investment grade).
3
<PAGE>
For the twelve months ended October 31, 1995, the G.T. Global Strategic Income
Portfolio posted a gain of 9.37%. In comparison, the benchmark J.P. Morgan
Global Bond Index returned 15.36% over the same time period.
In general, fiscal 1995 was characterized by consistently strong returns in core
bond markets and by ultimately positive (yet volatile) returns in the emerging
markets. In the core markets, the United States has led a global rally for most
of the year. In yield terms, U.S. bonds peaked on November 7, 1994 when the
benchmark 30-year Treasury bond touched 8.16%. However, since that time, the
trend in U.S. yields has been steadily down, and the strength and consistency of
the bond market rally has carried the global markets with it. Moreover, in the
months of January, February, and March, the U.S. dollar fell sharply versus the
German deutschmark and Japanese yen, creating currency gains for some global
investors. Although the U.S. dollar has since recovered fully against the yen,
the U.S. dollar remains close to its lowest levels against the deutschmark and
against several European currencies.
For much of fiscal 1995 and within the core side of the Portfolio, we emphasized
a strategy of overweighting European bonds over the U.S. Within the European
bloc, we overweighted "peripheral" countries such as Sweden, Spain and Italy
over Germany, France and the Netherlands. We based our strategy on the view that
the European markets, as compared to the U.S., faced a slower growth environment
(i.e., a strong prospect of falling inflation and lower interest rates) and
these expectations were not built into market prices. While generally our
economic forecasts have proven to be correct, our strategy for the Portfolio has
in fact produced mixed results. Sweden has performed very well while Spain has
performed acceptably. However, the Italian market has underperformed due to
volatility in the currency markets, and that forced the Bank of Italy to keep
interest rates artificially high for much of the year. In the core market
sleeves of the Portfolio, our currency strategy took advantage of the decline in
the U.S. dollar during the first part of the year. That strategy also received
some benefit from a relative underweighting in the yen as the U.S. dollar
recovered in mid-year.
Emerging markets have consistently made up 30% - 50% of the G.T. Global
Strategic Income Portfolio. The emerging markets experienced high volatility
early this year, but over the latter two thirds of the year, they also
contributed to the Portfolio's returns. In late December, the G.T. Global
Strategic Income Portfolio was hurt by the unexpected devaluation of the Mexican
peso. As many of you no doubt know, the devaluation of the Mexican peso not only
reduced the value of our peso-denominated securities, but it also caused a sharp
sell-off in a broad spectrum of emerging markets debt. At the same time of the
peso devaluation, we moved quickly to close out our peso exposure and to raise
cash levels in the emerging markets portion of the Portfolio. However, our cash
levels never climbed too high, and the consequences of the peso devaluation at
the beginning of the year adversely affected the Portfolio's
4
<PAGE>
value. In our view, the Mexican peso's performance explains much of the
Portfolio's underperformance versus key benchmarks during fiscal year 1995.
Our strong belief in the development potential of the emerging markets helped
position the Portfolio for recovery during the months that followed Mexico's
devaluation of the peso. The Portfolio currently maintains an allocation of 41%
in emerging market bonds (close to the maximum allowed by the prospectus). We do
not expect that proportion to change dramatically in the days ahead.
Looking forward at our core markets, we are cautiously optimistic that the
strong performance of global bonds in 1995 will carry through into 1996. Both in
the U.S. and in many countries around the world, economic growth has tapered off
steadily since 1994. Because inflation rates have generally fallen, most central
banks have room to lower interest rates. Very few of the leading indicators that
we follow indicate that these trends are about to reverse.
In retrospect, it appears that the bond market sell-off of 1994 may be a short-
term correction rather than a reversal in the long-term trend towards lower bond
yields. Although 1994 demonstrated the risks of the fixed income markets clearly
and reinforced the need to carefully manage risk within the Portfolio, our
outlook remains bright. In our view, inflation trends that have been positive
for the fixed income markets show no signs of reversing. In addition, other
trends such as greater international trade, increasing global competition and
the growth of emerging markets in Eastern Europe and Latin America are also
positive developments for the global bond markets. Of course, if monetary
policies throughout the world become too loose or if fiscal policies become too
tight, the global fixed income markets may be adversely affected. However, we
anticipate a continuation of the trend toward lower yields and higher bond
prices, and that may be a positive development for the shareholders of G.T.
Global Strategic Income Portfolio.
Thank you for your investment in the International Equity, Pacific Basin and
G.T. Global Strategic Income Portfolios. We appreciate your ongoing confidence
in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman and Chief Executive Officer
December 1, 1995
5
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance -- Smith Barney International Equity Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns+
========================================================================================
<S> <C> <C> <C> <C>
10/31/95 $10.55 $10.48 $0.00 (0.66)%
- ----------------------------------------------------------------------------------------
6/16/94*-10/31/94 10.00 10.55 0.00 5.50++
========================================================================================
Total $0.00
========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Smith Barney Pacific Basin Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns+
========================================================================================
<S> <C> <C> <C> <C>
10/31/95 $10.10 $ 8.95 $0.00 (11.58)%
- ----------------------------------------------------------------------------------------
6/16/94*-10/31/94 10.00 10.10 0.00 1.00++
========================================================================================
Total $0.00
========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- G.T. Global Strategic Income Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns+
========================================================================================
<S> <C> <C> <C> <C>
10/31/95 $ 9.95 $10.77 $0.10 9.37%
- ----------------------------------------------------------------------------------------
6/16/94*-10/31/94 10.00 9.95 0.00 (0.50)++
========================================================================================
Total $0.10
========================================================================================
</TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
6
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Average Annual Total Return+
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SB SB G.T. Global
International Pacific Strategic
Equity Basin Income
Portfolio Portfolio Portfolio
========================================================================================
<S> <C> <C> <C>
Year Ended 10/31/95 (0.66)% (11.58)% 9.37%
- ----------------------------------------------------------------------------------------
6/16/94* through 10/31/95 3.47 7.90 6.34
========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return+
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SB SB G.T. Global
International Pacific Strategic
Equity Basin Income
Portfolio Portfolio Portfolio
========================================================================================
<S> <C> <C> <C>
6/16/94* through 10/31/95 4.80% (10.70)% 8.82%
========================================================================================
</TABLE>
+ Assumes the reinvestment of all dividends and capital gains distributions.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
* Commencement of operations.
7
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
Smith Barney International Equity Portfolio vs.
MSCI EAFE-GDP Weighted Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[LINE GRAPH APPEARS HERE]
+ Hypothetical illustration of $10,000 invested in shares of the Smith Barney
International Equity Portfolio on June 16, 1994 (commencement of operations),
assuming reinvestment of dividends and capital gains, if any, at net asset
value through October 31, 1995. The Morgan Stanley Capital International EAFE-
GDP Weighted Index is a composite portfolio consisting of equity total returns
for the countries of Europe, Australia, New Zealand and countries in the Far
East, weighted based on each country's gross domestic product. The index is
unmanaged and is not subject to the same management and trading expenses of a
mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
value may be more or less than the original cost.
8
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
Smith Barney Pacific Basin Portfolio vs.
MSCI Pacific Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[LINE GRAPH APPEARS HERE]
+ Hypothetical illustration of $10,000 invested in shares of the Smith Barney
Pacific Basin Portfolio on June 16, 1994 (commencement of operations),
assuming reinvestment of dividends and capital gains, if any, at net asset
value through October 31, 1995. The Morgan Stanley Capital International
Pacific Index is comprised of a sampling of large, medium and small
capitalization companies who are listed on the various Pacific exchanges, such
as Australia, Hong Kong, Japan, Malaysia, New Zealand and the Singapore stock
exchange. The index is unmanaged and is not subject to the same management and
trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
value may be more or less than the original cost.
9
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
G.T. Global Strategic Income Portfolio vs.
J.P. Morgan Global Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[LINE GRAPH APPEARS HERE]
+ Hypothetical illustration of $10,000 invested in shares of the G.T. Global
Strategic Income Portfolio on June 16, 1994 (commencement of operations),
assuming reinvestment of dividends and capital gains, if any, at net asset
value through October 31, 1995. The J.P. Morgan Global Bond Index is a daily,
market capitalization weighted international fixed income index consisting of
13 countries. The index is unmanaged and is not subject to the same management
and trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
value may be more or less than the original cost.
10
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================================
<C> <S> <C>
STOCKS -- 100%
Argentina -- 0.6%
17,500 Quilmes Industrial S.A. $ 308,000
- ------------------------------------------------------------------------------------------------------------
Australia -- 2.1%
62,150 Burns Philip & Co. Ltd. 138,996
123,973 Coca Cola Amatil Ltd. 958,150
- ------------------------------------------------------------------------------------------------------------
1,097,146
- ------------------------------------------------------------------------------------------------------------
Austria -- 7.4%
10,000 Austria Mikro Systeme International AG 1,851,628
10,000 Baumax AG Preferred 406,652
5,000 VA Technologie AG 579,201
4,000 VAE Eisenbahn AG 357,611
3,000 Weinerberger Baustoffinds AG 602,410
- ------------------------------------------------------------------------------------------------------------
3,797,502
- ------------------------------------------------------------------------------------------------------------
Belgium -- 1.7%
7,500 Barco N.V. 845,096
- ------------------------------------------------------------------------------------------------------------
Canada -- 2.0%
15,000 Loewen Group Inc. 599,442
10,000 Loewen Group Inc. ADR 400,470
- ------------------------------------------------------------------------------------------------------------
999,912
- ------------------------------------------------------------------------------------------------------------
Chile -- 2.6%
25,000 Embotelladora Andina S.A. ADR 831,250
20,000 Madeco S.A. ADR 497,500
- ------------------------------------------------------------------------------------------------------------
1,328,750
- ------------------------------------------------------------------------------------------------------------
Denmark -- 0.2%
5,000 Scandinavian Mobility International AS 118,906
- ------------------------------------------------------------------------------------------------------------
Finland -- 1.1%
10,000 Nokia OY AB Class A Shares 572,155
- ------------------------------------------------------------------------------------------------------------
France -- 4.4%
3,348 Castorama Dubois Investment 542,616
5,000 Ecco S.A. 774,592
2,750 Sidel S.A. 954,341
- ------------------------------------------------------------------------------------------------------------
2,271,549
- ------------------------------------------------------------------------------------------------------------
Germany -- 6.9%
12,000 Fielmann AG Preferred 656,110
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================================
<C> <S> <C>
Germany -- 6.9% (continued)
600 Hornbach AG Non-Voting Preferred $ 602,855
3,000 Mannesmann AG 984,165
20,000 SGL Carbon AG 1,310,800
- ------------------------------------------------------------------------------------------------------------
3,553,930
- ------------------------------------------------------------------------------------------------------------
Hong Kong -- 3.6%
100,000 Cheung Kong Holdings Ltd. 563,905
100,000 Guoco Group Ltd. 463,023
150,000 Hutchison Whampoa Ltd. 826,457
- ------------------------------------------------------------------------------------------------------------
1,853,385
- ------------------------------------------------------------------------------------------------------------
Indonesia -- 1.0%
15,000 PT Indonesia Satellite Corp. ADR 496,875
- ------------------------------------------------------------------------------------------------------------
Ireland -- 5.3%
100,000 Bank of Ireland 664,952
100,000 CRH PLC 660,098
150,000 Independent Newspapers PLC 897,927
30,115 Irish Continental Group PLC 231,433
100,000 Jefferson Smurfit Corp. 268,569
- ------------------------------------------------------------------------------------------------------------
2,722,979
- ------------------------------------------------------------------------------------------------------------
Israel -- 2.8%
30,000 Gilast Satellite Networks Ltd. 667,500
20,000 Teva Pharmaceutical Industries Ltd. ADR 785,000
- ------------------------------------------------------------------------------------------------------------
1,452,500
- ------------------------------------------------------------------------------------------------------------
Italy -- 8.0%
50,000 Alleanza Assicurazioni di Risp 346,580
25,000 Gucci Group N.V. - NY ADR 750,000
20,000 Industrie Natuzzi S.p.A. ADR 800,000
100,000 IMA 697,550
225,000 Parmalat Finanziera S.p.A. 177,838
200,000 Telecom Italia S.p.A. 1,006,806
600,000 Telecom Italia Mobile S.p.A. 303,610
- ------------------------------------------------------------------------------------------------------------
4,082,384
- ------------------------------------------------------------------------------------------------------------
Japan -- 6.3%
9,500 Bunkyodo Co. Ltd. 214,632
40,000 Canon Inc. 684,630
10,000 Mabuchi Motor Co. Ltd. 605,409
20,000 Matsushita Electric Industrial Company Ltd. 283,632
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================================
<C> <S> <C>
Japan -- 6.3% (continued)
10,000 Mitsubishi Bank Ltd. $ 195,609
52,000 Mitsubishi Heavy Industries Ltd. 401,271
12,000 Nippon Denso Co. Ltd. 219,473
6,000 Rohm Co. 364,419
13,770 Sato Corp. 282,820
- ------------------------------------------------------------------------------------------------------------
3,251,895
- ------------------------------------------------------------------------------------------------------------
Malaysia -- 3.1%
100,000 Arab Malaysia Corp. 336,217
66,666 Leader Universal Holdings Berhad 179,576
200,000 Renong Berhad 305,151
150,000 Sungei Way Holdings Berhad 504,326
40,000 Telekom Malaysia Berhad 286,276
- ------------------------------------------------------------------------------------------------------------
1,611,546
- ------------------------------------------------------------------------------------------------------------
Mexico -- 2.1%
20,000 Fomento Economico Mexicano S.A. Femsa Series B 41,345
49,980 Gruma S.A. de C.V. B 142,730
50,000 Grupo Carso S.A. de C.V. Series A1 261,204
10,000 Grupo Industrial Bimbo S.A. de C.V. A 38,305
20,000 Kimberly Clark A NPV 260,224
50,000 Tablex S.A. de C.V. Series 2 76,331
10,000 Telefonos de Mexico ADR Series L 275,000
- ------------------------------------------------------------------------------------------------------------
1,095,139
- ------------------------------------------------------------------------------------------------------------
Netherlands -- 6.0%
15,000 Getronics N.V. 714,828
5,000 Heineken N.V. 886,020
20,000 IHC Caland N.V. 568,318
20,000 Randstad Holding N.V. 901,209
- ------------------------------------------------------------------------------------------------------------
3,070,375
- ------------------------------------------------------------------------------------------------------------
New Zealand -- 1.3%
10,000 Telecom Corp. New Zealand Ltd. ADR 663,750
- ------------------------------------------------------------------------------------------------------------
Norway -- 0.7%
20,000 Petroleum Geo Services AS 378,873
- ------------------------------------------------------------------------------------------------------------
Panama -- 0.5%
10,000 Panamerican Beverages Inc. ADR 273,750
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================================
<C> <S> <C>
Philippines -- 3.2%
1,500,000 Bankard Inc. $ 619,954
25,007 Metropolitan Bank & Trust Co. 461,490
2,000,000 SM Prime Holdings Inc. 538,255
- ------------------------------------------------------------------------------------------------------------
1,619,699
- ------------------------------------------------------------------------------------------------------------
Singapore -- 4.0%
100,000 Cerebos Pacific Ltd. 622,084
40,000 Fraser & Neave Ltd. 472,218
500,000 QAF Ltd. 604,411
100,000 Sembawang Maritime Ltd. 337,905
- ------------------------------------------------------------------------------------------------------------
2,036,618
- ------------------------------------------------------------------------------------------------------------
South Africa -- 3.8%
75,000 Barlow Ltd. 966,601
30,177 South African Breweries Ltd. ADR 984,524
- ------------------------------------------------------------------------------------------------------------
1,951,125
- ------------------------------------------------------------------------------------------------------------
Spain -- 1.0%
5,000 Acerinox S.A. ORD 525,971
- ------------------------------------------------------------------------------------------------------------
Sweden -- 6.6%
15,000 Autoliv AB Free 860,226
20,000 Getinge Industrier AB B Free 851,948
10,000 Hennes Mauritz Series B Free 653,260
33,000 Telefon AB Ericsson Series B 700,373
14,000 Volvo AB Series B Free 315,041
- ------------------------------------------------------------------------------------------------------------
3,380,848
- ------------------------------------------------------------------------------------------------------------
Switzerland -- 3.1%
2,000 Edipresse S.A. 557,853
6,000 Nestle S.A. ADR 301,500
100 Roche Holding AG Basel Genuss Schein 725,913
- ------------------------------------------------------------------------------------------------------------
1,585,266
- ------------------------------------------------------------------------------------------------------------
Taiwan -- 0.5%
20,000 Advanced Semiconductor Engineering Inc. GDR 255,000
- ------------------------------------------------------------------------------------------------------------
Thailand -- 2.5%
45,600 Finance One Public Co. Foreign 280,922
90,000 Krung Thai Bank Public Company Ltd. 355,922
50,000 United Communication Industry Public Co. Ltd. Foreign 627,981
- ------------------------------------------------------------------------------------------------------------
1,264,825
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================================
<C> <S> <C>
United Kingdom -- 5.6%
30,000 Carlton Communications PLC $ 456,331
150,000 Rentokil Group PLC 745,562
15,000 Reuters Holdings PLC ADR B 832,500
20,000 Vodafone Group PLC ADR 817,502
- ------------------------------------------------------------------------------------------------------------
2,851,895
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $48,386,812)++ $51,317,644
============================================================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY PACIFIC BASIN PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================================
<C> <S> <C>
STOCKS -- 100%
Australia -- 4.2%
20,716 Burns Philip & Co. Ltd. $ 46,330
25,639 Coca Cola Amatil Ltd. 198,156
- ------------------------------------------------------------------------------------------------------------
244,486
- ------------------------------------------------------------------------------------------------------------
Hong Kong -- 14.1%
40,000 Guoco Group Ltd. 185,209
75,000 Hong Kong & China Gas Co. 121,738
40,000 Hong Kong Electric Holdings Ltd. 136,061
40,000 Hutchison Whampoa Ltd. 220,389
41,142 New World Development Company Ltd. 160,166
68 New World Infrastructure Ltd. 107
- ------------------------------------------------------------------------------------------------------------
823,670
- ------------------------------------------------------------------------------------------------------------
Indonesia -- 2.0%
3,500 PT Indonesia Satellite Corp. ADR 115,938
- ------------------------------------------------------------------------------------------------------------
Japan -- 15.4%
12,000 Canon Inc. 205,389
20,000 Hitachi Ltd. 205,389
3,000 Ishikawajima Construction Materials Co. Ltd. 31,982
10,000 Itochu Corp. Ltd. 59,269
10,000 Kajima Corp. 92,327
4,000 Matsushita Electric Industrial Company Ltd. 56,726
3,000 Mitsubishi Bank Ltd. 58,683
9,000 Mitsubishi Heavy Industries Ltd. 69,451
2,000 Rohm Co. 121,473
- ------------------------------------------------------------------------------------------------------------
900,689
- ------------------------------------------------------------------------------------------------------------
Malaysia -- 20.7%
25,000 Arab Malaysia Corp. 84,054
40,000 Bandar Raya Developments Berhad 59,772
30,000 Gamuda Berhad 125,049
12,000 Hong Leong Credit Berhad 50,963
35,000 Leader Universal Holdings Berhad 94,278
12,000 Prime Utilities Berhad 110,893
100,000 Renong Berhad 152,576
29,000 Road Builders M Holdings Berhad 89,520
50,000 Sungei Way Holdings Berhad 168,109
50,000 Sunway Building Technology Berhad 133,700
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY PACIFIC BASIN PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
============================================================================================================
<C> <S> <C>
Malaysia -- 20.7% (continued)
20,000 Telekom Malaysia Berhad $ 143,138
- ------------------------------------------------------------------------------------------------------------
1,212,052
- ------------------------------------------------------------------------------------------------------------
New Zealand -- 2.8%
2,500 Telecom Corp New Zealand ADR 166,563
- ------------------------------------------------------------------------------------------------------------
Philippines -- 9.9%
70,000 Ayala Corp., Class B 71,319
414,000 Bankard Inc. 171,107
6,253 Metropolitan Bank & Trust Co. 115,396
1,500 Philippine Long Distance Telephone Co. ADR 84,188
500,000 SM Prime Holdings Inc. 134,564
- ------------------------------------------------------------------------------------------------------------
576,574
- ------------------------------------------------------------------------------------------------------------
Singapore -- 19.7%
25,000 Cerebos Pacific Ltd. 155,521
50,000 DBS Land Ltd. 147,745
10,000 Fraser & Neave Ltd. 118,055
20,837 Jardine Matheson Holding Registered 127,106
100,000 QAF Ltd. 120,882
40,000 Sembawang Maritime Ltd. 135,162
225,000 Steamers Maritime Holding Ltd. 167,008
35,000 Van Der Horst Ltd. 179,379
- ------------------------------------------------------------------------------------------------------------
1,150,858
- ------------------------------------------------------------------------------------------------------------
Taiwan -- 1.4%
6,600 Advanced Semiconductor Engineering Inc. GDR 84,150
- ------------------------------------------------------------------------------------------------------------
Thailand -- 9.8%
20,000 Dhana Siam Finance & Securities Public Co. Ltd.
Foreign Registered 96,184
30,000 Krung Thai Bank Public Co. 118,641
6,000 Land and House Public Company Ltd. Foreign 96,820
32,000 Quality House Public Co. Ltd. 138,633
10,000 United Communication Industry Public Co. Ltd. Foreign 125,596
- ------------------------------------------------------------------------------------------------------------
575,874
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $6,045,484)++ $5,850,854
============================================================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT(a) SECURITY VALUE
============================================================================================================
<C> <S> <C>
BONDS -- 100%
Argentina -- 5.6%
500,000 Argentina Par Series L, 5.000% due 3/31/23* $238,750
300,000 Republic of Argentina, 6.813% due 3/31/05* 177,750
- ------------------------------------------------------------------------------------------------------------
416,500
- ------------------------------------------------------------------------------------------------------------
Australia -- 3.6%
300,000 Australia Commonwealth, 12.000% due 11/15/01 265,851
- ------------------------------------------------------------------------------------------------------------
Brazil -- 7.5%
840,000 Republic of Brazil, 6.813% due 4/15/06* 557,029
- ------------------------------------------------------------------------------------------------------------
Bulgaria -- 3.4%
500,000 Republic of Bulgaria Tranche A, 6.750% due 7/28/24* 253,125
- ------------------------------------------------------------------------------------------------------------
Canada -- 1.8%
170,000 Government of Canada, 8.500% due 4/1/02 134,067
- ------------------------------------------------------------------------------------------------------------
Denmark -- 2.3%
1,000,000 Kingdom of Denmark, 7.000% due 12/15/04 173,676
- ------------------------------------------------------------------------------------------------------------
Ecuador -- 3.3%
750,000 Republic of Ecuador, 3.000% due 2/28/25* 249,375
- ------------------------------------------------------------------------------------------------------------
France -- 4.4%
1,500,000 France OAT, 8.500% due 11/25/02 331,858
- ------------------------------------------------------------------------------------------------------------
Germany -- 7.2%
740,000 Bundesrepublik, 6.750% due 7/15/04 535,282
- ------------------------------------------------------------------------------------------------------------
Italy -- 5.2%
600,000,000 BTP Italy, 12.000% due 9/1/02 386,764
- ------------------------------------------------------------------------------------------------------------
Mexico -- 4.3%
550,000 Mexican States Value Recovery Rights
Series A, Warrants, expire 6/30/03+ 0
300,000 Mexican States Series A, 6.250% due 12/31/19 176,625
250,000 Mexican States Series B, 6.250% due 12/31/19 145,703
- ------------------------------------------------------------------------------------------------------------
322,328
- ------------------------------------------------------------------------------------------------------------
Morocco -- 4.1%
500,000 Morocco Tranche A Loan, 4.500% due 7/18/99 302,190
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT(a) SECURITY VALUE
============================================================================================================
<C> <S> <C>
Nigeria -- 3.1%
500 Central Bank of Nigeria Oil Linked Warrants,
expire 11/15/20+ $ 0
500,000 Central Bank of Nigeria, 6.250% due 11/15/20* 234,375
- ------------------------------------------------------------------------------------------------------------
234,375
- ------------------------------------------------------------------------------------------------------------
New Zealand -- 1.4%
140,000 New Zealand Government, 10.000% due 3/15/02 105,130
- ------------------------------------------------------------------------------------------------------------
Philippines -- 2.5%
250,000 Central Bank of Philippines, 5.750% due 12/1/17* 183,281
- ------------------------------------------------------------------------------------------------------------
Poland -- 4.1%
400,000 Republic of Poland, 7.125% due 10/27/24* 306,252
- ------------------------------------------------------------------------------------------------------------
Russia -- 1.7%
500,000 Vneshekonombank Loan Agreement, 5.438% due 1/1/99(b)+ 123,820
- ------------------------------------------------------------------------------------------------------------
Spain -- 8.2%
56,000,000 Kingdom of Spain, 4.625% due 7/22/04 614,798
- ------------------------------------------------------------------------------------------------------------
Sweden -- 2.1%
1,300,000 Kingdom of Sweden Treasury Bond, 6.000% due 2/9/05 157,624
- ------------------------------------------------------------------------------------------------------------
United Kingdom -- 4.5%
230,000 United Kingdom Treasury Gilt, 6.750% due 11/26/04 335,247
- ------------------------------------------------------------------------------------------------------------
United States -- 15.2%
100,000 U.S. Treasury Bond, 6.250% due 8/15/23 97,797
1,000,000 U.S. Treasury Note, 6.500% due 8/15/05 1,035,730
- ------------------------------------------------------------------------------------------------------------
1,133,527
- ------------------------------------------------------------------------------------------------------------
Venezuela -- 4.5%
250,000 Republic of Venezuela Series A, 6.750%, due 3/31/20 128,906
400,000 Republic of Venezuela Series B, 6.750%, due 3/31/20 206,250
3,250 Republic of Venezuela Oil Obligation Warrants,
expire 4/15/20+ 0
- ------------------------------------------------------------------------------------------------------------
335,156
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $7,235,931)[+] $7,457,255
============================================================================================================
</TABLE>
(a) Represents local currency.
(b) Security is in default
* Represents current rate on floating rate security.
+ Non-income producing security.
[+] Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
19
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SB SB G.T. Global
International Pacific Strategic
Equity Basin Income
Portfolio Portfolio Portfolio
===================================================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at value
(Cost -- $48,386,812, $6,045,484
and $7,235,931) $51,317,644 $5,850,854 $7,457,255
Foreign currency
(Cost -- $1,599,419, $0 and $158,088) 1,598,697 -- 158,107
Cash 2,635,041 1,395,343 577,036
Receivable for Fund shares sold 228,065 23,604 27,650
Receivable for securities sold 312,392 -- --
Receivable for open forward foreign
currency contracts -- -- 14,019
Dividends and interest receivable 13,613 6,198 203,665
- ------------------------------------------------------------------------------------------------------------------
Total Assets 56,105,452 7,275,999 8,437,732
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 2,445,887 114,742 --
Management fees payable 62,770 9,920 17,199
Payable for open forward foreign
currency contracts 4,610 760 --
Accrued expenses 52,221 28,680 23,370
Other liabilities 1,512 230 219
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities 2,567,000 154,332 40,788
- ------------------------------------------------------------------------------------------------------------------
Total Net Assets $53,538,452 $7,121,667 $8,396,944
==================================================================================================================
NET ASSETS:
Par value of capital shares $ 51 $ 8 $ 8
Capital paid in excess of par value 51,875,508 7,662,726 7,865,228
Underdistributed (accumulated)
net investment income (loss) 74,756 (41,342) 325,186
Accumulated net realized loss
on investments (1,318,542) (304,995) (29,784)
Net unrealized appreciation (depreciation)
of investments and foreign currencies 2,906,679 (194,730) 236,306
- ------------------------------------------------------------------------------------------------------------------
Total Net Assets $53,538,452 $7,121,667 $8,396,944
==================================================================================================================
Shares Outstanding 5,106,565 795,521 779,973
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value $10.48 $8.95 $10.77
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SB SB G.T. Global
International Pacific Strategic
Equity Basin Income
Portfolio Portfolio Portfolio
===================================================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 497,516 $ 62,458 $ --
Interest -- -- 443,565
Less: Foreign withholding tax (52,022) (7,306) (2,627)
- ------------------------------------------------------------------------------------------------------------------
Total Investment Income 445,494 55,152 440,938
- ------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 263,820 47,987 40,549
Custody 67,500 27,840 18,867
Shareholder and system servicing fees 23,600 11,480 11,300
Audit and legal 23,000 13,500 13,300
Pricing service fees 15,000 6,500 1,500
Shareholder communications 9,000 5,200 5,200
Directors' fees 7,000 3,350 3,180
Other 18,000 3,100 3,575
- ------------------------------------------------------------------------------------------------------------------
Total Expenses 426,920 118,957 97,471
Less: Management fee waiver (Note 2) -- (21,803) (23,349)
Custody earnings credit (Note 1) (67,500) (27,840) (18,367)
- ------------------------------------------------------------------------------------------------------------------
Net Expenses 359,420 69,314 55,755
- ------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 86,074 (14,162) 385,183
- ------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES (NOTE 3):
Realized Loss From:
Security transactions
(excluding short-term securities) (1,318,542) (304,995) (145)
Foreign currency transactions (11,318) (13,226) (60,650)
- ------------------------------------------------------------------------------------------------------------------
Net Realized Loss (1,329,860) (318,221) (60,795)
- ------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized
Appreciation (Depreciation) and
Foreign Currencies:
Beginning of year 386,314 35,107 (21,991)
End of year 2,906,679 (194,730) 236,306
- ------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net
Unrealized Appreciation 2,520,365 (229,837) 258,297
- ------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) 1,190,505 (548,058) 197,502
- ------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations $ 1,276,579 $(562,220) $582,685
==================================================================================================================
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
SB International
Equity Portfolio
------------------------------
1995 1994(a)
=========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 86,074 $ (20,650)
Net realized loss (1,329,860) (2,927)
Increase in net unrealized appreciation 2,520,365 386,314
- -----------------------------------------------------------------------------------------
Increase in Net Assets
From Operations 1,276,579 362,737
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- --
Net realized gains -- --
- -----------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders -- --
- -----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 38,693,155 16,769,710
Net asset value of shares issued
for reinvestment of dividends -- --
Cost of shares reacquired (242,713) (3,321,016)
- -----------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 38,450,442 13,448,694
- -----------------------------------------------------------------------------------------
Increase in Net Assets 39,727,021 13,811,431
NET ASSETS:
Beginning of year 13,811,431 --
--------------------------------------------------------------------------------------
End of year * $53,538,452 $13,811,431
=========================================================================================
* Includes undistributed
net investment income of: $74,756 --
=========================================================================================
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
See Notes to Financial Statements.
22
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
SB Pacific
Basin Portfolio
------------------------------
1995 1994(a)
=========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment loss $ (14,162) $ (13,292)
Net realized loss (318,221) (2,568)
Increase (decrease) in net unrealized appreciation (229,837) 35,107
- -----------------------------------------------------------------------------------------
Increase (Decrease) in
Net Assets From Operations (562,220) 19,247
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- --
Net realized gains -- --
- -----------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders -- --
- -----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 4,389,864 4,959,072
Net asset value of shares issued
for reinvestment of dividends --
Cost of shares reacquired (944,296) (740,000)
- -----------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 3,445,568 $ 4,219,072
- -----------------------------------------------------------------------------------------
Increase in Net Assets 2,883,348 4,238,319
NET ASSETS:
Beginning of year 4,238,319 --
- -----------------------------------------------------------------------------------------
End of year* $ 7,121,667 $ 4,238,319
=========================================================================================
* Includes accumulated
net investment loss of: $(41,342) --
=========================================================================================
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
See Notes to Financial Statements.
23
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
G.T. Global Strategic
Income Portfolio
-----------------------------
1995 1994(a)
========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 385,183 $ 31,684
Net realized loss (60,795) (27,000)
Increase (decrease) in net unrealized appreciation 258,297 (21,991)
- ----------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations 582,685 (17,307)
- ----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (34,436) --
Net realized gains -- --
- ----------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (34,436) --
- ----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 5,781,130 3,363,893
Net asset value of shares issued
for reinvestment of dividends 31,412 --
Cost of shares reacquired (587,696) (722,737)
- ----------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 5,224,846 2,641,156
- ----------------------------------------------------------------------------------------
Increase in Net Assets 5,773,095 2,623,849
NET ASSETS:
Beginning of year 2,623,849 --
- ----------------------------------------------------------------------------------------
End of year* $8,396,944 $2,623,849
========================================================================================
* Includes undistributed
net investment income of: $325,186 $27,112
========================================================================================
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
See Notes to Financial Statements.
24
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney International Equity, Smith Barney Pacific Basin and G.T.
Global Strategic Income Portfolios ("Portfolios") are separate investment
portfolios of the Smith Barney/Travelers Series Fund Inc. ("Fund"). The Fund, a
Maryland corporation, is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company and consists
of these Portfolios and nine other separate investment portfolios: AIM Capital
Appreciation, Alliance Growth, American Capital Enterprise, Smith Barney Income
and Growth, TBC Managed Income, Putnam Diversified Income, Smith Barney High
Income, MFS Total Return and Smith Barney Money Market Portfolios. Shares of the
Fund are offered only to insurance company separate accounts which fund certain
variable annuity and variable life insurance contracts. The financial statements
and financial highlights for the other portfolios are presented in separate
annual reports.
The significant accounting policies consistently followed by the Portfolio
are: (a) security transactions are accounted for on trade date; (b) securities
traded on national securities markets are valued at the closing prices in the
primary exchange on which they are traded; securities listed or traded on
certain foreign exchanges or other markets whose operations are similar to the
U.S. over-the-counter market (including securities listed on exchanges where the
primary market is believed to be over-the-counter) and listed securities for
which no sale was reported on that date are valued at the mean between the bid
and ask prices. Securities which are listed or traded on more than one exchange
or market are valued at the quotations on the exchange or market determined to
be the primary market for such securities. Short-term securities maturing within
60 days are valued at cost plus accreted discount, or minus amortized premium,
as applicable; (c) gains or losses on the sale of securities are calculated by
using the specific identification method; (d) interest income, adjusted for
amortization of premiums and accretion of discount, is recorded on the accrual
basis; (e) dividend income is recorded on the ex-dividend date except that
certain dividends from foreign securities are recorded as soon as the Portfolio
is informed of the ex-dividend date; (f) direct expenses are charged to each
Portfolio; (g) foreign currency receivables and payables for unsettled foreign
securities transactions are translated into U.S. dollars based on the rate of
exchange of such currencies against U.S. dollars on the date of valuation.
Translation gains or losses resulting from changes in the exchange rates
25
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
and realized gains and losses on the settlement of foreign currency transactions
are reported in the statements of operations; (h) during 1994, the Portfolios
adopted Statement of Position 93-2 Determination, Disclosure, and Financial
----------------------------------------
Statement Presentation of Income, Capital Gain and Return of Capital
- -------------------------------------------------------------------
Distributions by Investment Companies. Accordingly, book and tax basis
- -------------------------------------
differences relating to shareholder distributions are reclassified to
undistributed net investment income. As of November 1, 1995, the cumulative
effect of such differences totaling $766 for the G.T. Global Strategic Income
Portfolio was reclassified to undistributed net investment income from paid-in
capital. Net investment income, net realized gains, and net assets were not
affected by this change; and (i) the Portfolios intend to comply with the
requirements of the Internal Revenue Code of 1986, as amended pertaining to
regulated investment companies and make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
The Portfolio has an arrangement with its custodian, Morgan Guaranty Trust
Company of New York, where it earns custody earnings credits on available cash
balances. These credits offset custody fees which may be charged to the
Portfolio during the current year. These credits totalled $67,500, $27,840 and
$18,367 for the Smith Barney International Equity, Smith Barney Pacific Basin
and G.T. Global Strategic Income Portfolios, respectively, for the year ended
October 31, 1995.
In addition, the Portfolios may enter into forward exchange contracts in
order to hedge against foreign currency risk. These contracts are marked to
market daily, by recognizing the difference between the contract exchange rate
and the current market rate as an unrealized gain or loss. Realized gains or
losses are recognized when contracts are settled.
2. Management Agreement and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager of the Fund. The Smith
Barney International Equity ("SBIE"), Smith Barney Pacific Basin ("SBPB") and
G.T. Global Strategic Income Portfolios ("GTGSI") pay SBMFM a management fee
calculated at the annual rate of 0.90%, 0.90% and 0.80% of the average daily net
assets of each Portfolio, respectively; the fee is calculated daily and paid
monthly. SBMFM waived $21,803 and $23,349 of the management fees for SBPB and
GTGSI, respectively, for the year ended October 31, 1995.
26
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
SBMFM has entered into a subadvisory agreement with G.T. Capital
Management, Inc. ("G.T. Capital"). Pursuant to the subadvisory agreement, G.T.
Capital is responsible for the day-to-day portfolio operations and investment
decisions for GTGSI. SBMFM will pay G.T. Capital with regard to GTGSI, a monthly
fee calculated at the annual rate of 0.375% of the average daily net assets of
GTGSI.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. For the year ended October 31, 1995, SB received brokerage
commissions of $10,296.
All officers and two Directors of the Fund are employees of SB.
3. Investments
For the year ended October 31, 1995, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term securities) were as follows:
<TABLE>
<CAPTION>
SB SB G.T. Global
International Pacific Strategic
Equity Basin Income
========================================================================================================
<S> <C> <C> <C>
Purchases $45,949,621 $3,539,434 $18,465,832
- --------------------------------------------------------------------------------------------------------
Sales 7,991,970 1,286,312 13,479,109
========================================================================================================
</TABLE>
At October 31, 1995, aggregate gross unrealized appreciation and
depreciation of investments for tax purposes were as follows:
<TABLE>
<CAPTION>
SB SB G.T. Global
International Pacific Strategic
Equity Basin Income
========================================================================================================
<S> <C> <C> <C>
Gross unrealized appreciation $ 5,470,307 $ 341,531 $304,776
Gross unrealized depreciation (2,539,475) (536,161) (83,452)
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) $ 2,930,832 $(194,630) $221,324
========================================================================================================
</TABLE>
4. Capital Loss Carryforward
At October 31, 1995, the Fund had unused captial loss carryforwards
available to offset future realized capital gains, if any, for Federal income
tax purposes of $1,318,542, $304,995 and $29,784 for SBIE, SBPB and GTGSI,
respectively. To the extent that these carryforward losses are used to offset
capital gains, it is probable that the gains so offset will not be
27
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
distributed. The amount and expiration of the carryovers amounts are indicated
below. Expiration occurs on October 31 of the year indicated.
<TABLE>
<CAPTION>
Portfolio 2002 2003
===========================================================================
<S> <C> <C>
SBIE $ -- $1,318,542
SBPB -- 304,995
GTGSI 29,639 145
===========================================================================
</TABLE>
5. Forward Foreign Currency Contracts
At October 31, 1995, the Portfolios had open forward foreign currency
contracts as described below. The Portfolios bear the market risk that arises
from changes in foreign currency exchange rates. The unrealized gain (loss) on
the contracts reflected in the accompanying financial statements are as follows:
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain (Loss)
=======================================================================================================
<S> <C> <C> <C> <C>
Smith Barney International Equity
To Sell:
Italian Lira 498,000,000 $312,392 11/1/95 $(3,651)
- -------------------------------------------------------------------------------------------------------
To Buy:
Danish Krone 589,693 108,143 11/1/95 (959)
- -------------------------------------------------------------------------------------------------------
Total Market Value and
Unrealized Loss on Forward
Foreign Currency Contracts $420,535 $(4,610)
=======================================================================================================
Smith Barney Pacific Basin
To Buy:
Malaysian Ringgit 278,871 $109,662 11/1/95 $ (760)
=======================================================================================================
G.T. Global Strategic Income
To Sell:
German Deutschemark 300,000 $213,390 11/20/95 $(1,807)
French Franc 1,000,000 204,255 11/30/95 77
Japanese Yen 13,000,000 127,886 11/14/95 13,981
Japanese Yen 32,000,000 315,441 12/18/95 1,768
- -------------------------------------------------------------------------------------------------------
Total Market Value and
Unrealized Gain on Forward
Foreign Currency Contracts $860,972 $14,019
=======================================================================================================
</TABLE>
28
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. Portfolio Concentration
The Portfolios' investments in foreign securities may involve risks not
present in domestic investments. Since securities may be denominated in a
foreign currency and may require settlement in foreign currencies and pay
interest or dividends in foreign currencies, changes in the relationship of
these foreign currencies to the U.S. dollar can significantly affect the value
of the investments and earnings of the Portfolio. Foreign investments may also
subject the Portfolios' to foreign government exchange restrictions,
expropriation, taxation or other political, social or economic developments, all
of which could affect the market and/or credit risk of the investments.
In addition to the risks described above, risks may arise from forward
foreign currency contracts with respect to the potential inability of counter
parties to meet the terms of their contracts.
7. Capital Shares
At October 31, 1995, the Fund had six billion shares of $0.00001 par value
capital stock authorized. Each share of a Portfolio represents an equal
proportionate interest in that Portfolio with each share of the same Portfolio
and has an equal entitlement to any dividends and distributions made by the
Portfolio.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
October 31, 1995 October 31, 1994(a)
========================================================================================================
<S> <C> <C>
Smith Barney International Equity
Shares sold 3,823,913 1,629,110
Shares issued on reinvestment -- --
Shares redeemed (26,232) (320,226)
- --------------------------------------------------------------------------------------------------------
Net Increase 3,797,681 1,308,884
========================================================================================================
Smith Barney Pacific Basin
Shares sold 477,242 493,056
Shares issued on reinvestment -- --
Shares redeemed (101,281) (73,496)
- --------------------------------------------------------------------------------------------------------
Net Increase 375,961 419,560
========================================================================================================
G.T. Global Strategic Income
Shares sold 573,083 336,108
Shares issued on reinvestment 3,338 --
Shares redeemed (60,141) (72,415)
- --------------------------------------------------------------------------------------------------------
Net Increase 516,280 263,693
========================================================================================================
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
29
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Smith Barney International Equity Portfolio 1995 1994/(1)/
==============================================================================================================
<S> <C> <C>
Net Asset Value, Beginning of Year $10.55 $10.00
- --------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)/(2)/ 0.03 (0.03)
Net realized and unrealized gain (loss) (0.10) 0.58
- --------------------------------------------------------------------------------------------------------------
Total Income (Loss) from Operations (0.07) 0.55
- --------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
- --------------------------------------------------------------------------------------------------------------
Total Distributions -- --
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $10.48 $10.55
- --------------------------------------------------------------------------------------------------------------
Total Return (0.66)% 5.50%++
- --------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $53,538 $13,811
- --------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(2)/ 1.44% 1.20%+
Net investment income (loss) 0.25 (0.73)+
- --------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 28.72% --
==============================================================================================================
Average commissions paid on
equity security transactions $0.01 --
==============================================================================================================
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
(2) The Manager has waived a portion of its fees for the period ended
October 31, 1994. If such fees were not waived the effect of the per share
decrease in net investment income would have been $0.03 and the ratio of
expenses to average net assets would have been 2.00%+. In addition, during
the year ended October 31, 1995, the Portfolio has earned credits from the
custodian which reduces service fees incurred. When the credits are taken
into consideration the ratio of expenses to average net assets is 1.21%;
prior year numbers have not been restated to reflect these adjustments.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
30
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding
throughout each year:
<TABLE>
<CAPTION>
Smith Barney Pacific Basin Portfolio 1995 1994/(1)/
=============================================================================================================
<S> <C> <C>
Net Asset Value, Beginning of Year $10.10 $10.00
- -------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss/(2)/ (0.04) (0.04)
Net realized and unrealized gain (loss) (1.11) 0.14
- -------------------------------------------------------------------------------------------------------------
Total Income (Loss) from Operations (1.15) 0.10
- -------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
- -------------------------------------------------------------------------------------------------------------
Total Distributions -- --
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $8.95 $10.10
- -------------------------------------------------------------------------------------------------------------
Total Return (11.58)% 1.00%++
- -------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $7,122 $4,238
- -------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(2)/ 1.83% 1.26%+
Net investment loss (0.51) (0.93)+
- -------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27.70% --
=============================================================================================================
Average commissions paid on
equity security transactions $0.01 --
=============================================================================================================
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
(2) The Manager has waived all or part of its fees for each of the periods
reported. In addition, the Manager has reimbursed the Portfolio for $9,778
in expenses for the period ended October 31, 1994. If such fees were not
waived and expenses not reimbursed, the per share increases in net
investment loss and the ratios of expenses to average net assets would have
been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Increases Without Fee Waiver
in Net Investment Loss and Reimbursement
---------------------- ------------------
<S> <C> <C>
1995 $0.03 2.23%
1994 0.06 2.82+
</TABLE>
In addition, during the year ended October 31, 1995 the Portfolio has earned
credits from the custodian which reduces service fees incurred. If the
credits are taken into consideration the ratio of expenses to average net
assets is 1.30%; prior year numbers have not been restated to reflect these
adjustments. The manager has also agreed to cap the expense ratio at 1.50%.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
31
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
G.T. Global Strategic Income Portfolio 1995 1994/(1)/
=============================================================================================================
<S> <C> <C>
Net Asset Value, Beginning of Year $ 9.95 $10.00
- -------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income/(2)/ 0.64 0.17
Net realized and unrealized loss 0.28 (0.22)
- -------------------------------------------------------------------------------------------------------------
Total Income (Loss) from Operations 0.92 (0.05)
- -------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.10) --
- -------------------------------------------------------------------------------------------------------------
Total Distributions (0.10) --
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $10.77 $ 9.95
- -------------------------------------------------------------------------------------------------------------
Total Return 9.37% (0.50)%++
- -------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $8,397 $2,624
- -------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(2)/ 1.47% 1.07%+
Net investment income 6.44 4.58+
- -------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 295.47% 56.34%
=============================================================================================================
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
(2) The Manager has waived all or part of its fees for each of the periods
reported. In addition, the Manager has reimbursed the Portfolio for $18,556
in expenses for the period ended October 31, 1994. If such fees were not
waived and expenses not reimbursed, the per share decreases in net
investment income and the ratios of expenses to average net assets would
have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waiver
in Net Investment Income and Reimbursement
------------------------ ------------------
<S> <C> <C>
1995 $0.04 1.93%
1994 0.13 4.53+
</TABLE>
In addition, during the year ended October 31, 1995 the Portfolio has earned
credits from the custodian which reduces service fees incurred. If the
credits are taken into consideration the ratio of expenses to average net
assets is 1.11%; prior year numbers have not been restated to reflect these
adjustments.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
32
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney/Travelers Series Fund Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Smith Barney International Equity, Smith
Barney Pacific Basin and G.T. Global Strategic Income Portfolios of Smith
Barney/Travelers Series Fund Inc. as of October 31, 1995, the related statements
of operations for the year then ended, and the statements of changes in net
assets and financial highlights for the year then ended and for the period from
June 16, 1994 (commencement of operations) to October 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Smith Barney International Equity, Smith Barney Pacific Basin and G.T. Global
Strategic Income Portfolios of Smith Barney/Travelers Series Fund Inc. as of
October 31, 1995, the results of their operations for the year then ended, and
the changes in their net assets and financial highlights for the year then ended
and for the period from June 16, 1994 to October 31, 1994, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
December 12, 1995
33
<PAGE>
Smith Barney/Travelers
Series Fund Inc.
DIRECTORS
Victor K. Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
James M. Shuart
OFFICERS
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President and Treasurer
John C. Bianchi
Vice President
James B. Conheady
Vice President
Martin Hanley
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Phyllis Zahorodny
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Smith Barney
------------
A Member of TravelersGroup [LOGO APPEARS HERE]
INVESTMENT MANAGER
Smith Barney Mutual Funds
Management Inc.
DISTRIBUTOR
Smith Barney Inc.
CUSTODIAN
Morgan Guaranty Trust Company
of New York
ANNUITY ADMINISTRATION
Travelers Annuity Investor Services
5 State House Square
1 Tower Square
Hartford, CT 06183
This report is submitted for the general information of the shareholders of
Smith Barney/Travelers Series Fund Inc. -- Smith Barney International Equity,
Smith Barney Pacific Basin and G.T. Global Strategic Income Portfolios. It is
not authorized for distribution to prospective investors unless accompanied or
preceded by a current Prospectus for the Portfolios, which contains information
concerning the Portfolios' investment policies and expenses as well as other
pertinent information.
SMITH BARNEY/TRAVELERS
SERIES FUND INC.
388 Greenwich Street
New York, New York 10013
IN0252 12/95
- -------------
ANNUAL REPORT
- -------------
1995
1995
1995
1995
1995
Smith Barney/Travelers
Series Fund Inc.
Smith Barney Income
and Growth Portfolio
Alliance Growth Portfolio
American Capital
Enterprise Portfolio
-----------------------------
October 31, 1995
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- --------------------------------------------------------------------------------
Smith Barney Income and Growth, Alliance Growth
and American Capital Enterprise Portfolios
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the annual report for the Smith Barney/Travelers
Series Fund for the period ended October 31, 1995. This report covers the Smith
Barney Income and Growth, Alliance Growth and American Capital Enterprise
Portfolios. Below we have provided a summary of economic and market conditions,
as well as brief investment management summaries for each of the Portfolios. A
more detailed summary of performance and current holdings can be found in the
appropriate sections that follow in the annual report.
Portfolio Highlights
Smith Barney Income and Growth Portfolio
For the twelve months ended October 31, 1995, the Smith Barney/Travelers Series
Fund -- Income and Growth Portfolio had a total return for Class A shares of
20.21%. In selecting stocks for the Portfolio, we typically choose
large-capitalization companies with above-market dividend yield and look for
companies with assets that are undervalued by the marketplace. We must see a
fundamental improvement underway, such as a new product or new management, that
is not reflected in the stock price.
In the third quarter, our concern for a slowdown in corporate earnings came to
fruition as several companies began warning investors of disappointing earnings.
The majority of these negative pre-announcements were in the technology and
capital goods sectors as the Federal Reserve's 1994 interest rate increases
began to impact cyclicals. There was a distinct leadership change during the
quarter as investors began to take money out of cyclical and technology sectors
and started adding to positions in defensive sectors, such as consumer staples
and utilities. This rotation helped performance due to our conservative
investment philosophy. Recent Portfolio activity has been geared towards
becoming more defensive. We decreased our exposure to cyclical sectors such as
raw materials and conglomerates, and increased our exposure in consumer staples,
financials and utilities. The Portfolio's top-five holdings as of October 31,
1995 were Eastman Kodak, H&R Block, Inc., GTE Corp., Chase Manhattan, and
Jostens Inc. Some of the Portfolio's additions include Allstate Corp. in the
financial sector; Tambrands Inc. in the consumer staples sector; and Pinnacle
West Capital in the utility group.
Our outlook for inflation is benign, and the overall psychology surrounding the
markets is, in our view, healthy. However, because we utilize a bottom-up
approach to investing and emphasize companies with established dividend records
as well as price appreciation potential, we believe the Portfolio's stock
selections are well positioned for future growth even if there are any
unpleasant market surprises in the near term.
1
<PAGE>
Alliance Growth Portfolio
The Alliance Growth Portfolio completed its first full fiscal year on October
31, 1995. As most of you no doubt know, it was a period of strong gains for the
stock market. The Alliance Growth Portfolio was up 26.19%, compared to 26.41%
for the S&P 500-Stock Price Index.
The fiscal year began in a climate of strong earnings growth, but the stock
market was under pressure due to the Federal Reserve Board's tightening of
monetary policy. The Fed began raising interest rates in February 1994, and did
not reverse their stance until July 1995. The stock market treaded water for
much of 1994, but began a strong, sustained advance in December which has
continued through October 1995.
In our view, the stock market advance has been fueled by declining interest
rates as well as the prospects for further declines. Economic activity has
slowed, but we believe that a recession does not seem likely. The strategy of
the Alliance Growth Portfolio has been to reduce exposure to the more cyclically
sensitive sectors of the market, and to concentrate primarily on the technology,
telecommunications and financial sectors.
As of October 31, 1995, the largest holding in the Alliance Growth Portfolio is
Cisco Systems. Cisco has become the leading provider of equipment and software
for computer inter-networking. The extraordinary growth of Internet usage has
given additional impetus to an already dynamic industry. Holdings such as 3Com,
Bay Net Inc., Cabletron and Oracle are also significant beneficiaries of
Internet's growth.
Our next largest area of concentration in the Portfolio is financial services.
The Portfolio holds a number of value-oriented investments such as ITT Corp.,
Lowe's Corp. and Union Pacific. Although we do not expect a recession next year,
earnings momentum may slow a bit. Our outlook for interest rates and inflation
is benign, but the favorable performance of the stock market due primarily to
the reversal in Fed policy may be largely behind us. In short, our market
outlook remains constructive, but gains should be much more modest than those of
the past year.
American Capital Enterprise Portfolio
The stock market as a whole benefited from continuing economic growth that
generated strong corporate profits without higher inflation. In fact, if
inflation projections are accurate and inflation remains under 3% percent in
1995, it will be the first time since the 1960s that the United States has
experienced three consecutive years of an inflation rate below 3%. During the
past year, market conditions have been ideal for stocks.
In particular, the American Capital Enterprise Portfolio benefited from its
heavy investment in technology stocks, the best-performing sector of the stock
market during the period covered by this report. We believe one of the most
2
<PAGE>
positive aspects of the performance of technology stocks is that the rally has
been driven by strong fundamentals -- and not speculation. There is tremendous
demand for technology products that will likely be with us for some time to
come. The rally in technology stocks has been fueled not only by the highly
publicized success of a product such as Microsoft's Windows 95, but the
unexpected explosive growth of the Internet, an idea that was virtually unheard
of a year ago, but is now changing the face of the telecommunications industry.
We still like technology stocks. Although the sector will continue to be
volatile, our long-term outlook remains positive. The technology sector has
produced the biggest earnings gains, demand for technology products is high and
stock prices are not high compared to the underlying value of the companies.
However, although we are extremely optimistic about the prospects for technology
stocks, the Portfolio remains diversified, which is very much in keeping with
our overall investment philosophy.
At this time, we would like to thank you for your continued participation in the
Smith Barney Income and Growth, Alliance Growth and American Capital Enterprise
Portfolios. We hope you have found this report to be useful as you evaluate your
investments.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman and Chief Executive Officer
December 4, 1995
3
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance -- Smith Barney Income and Growth Portfolio
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns+
================================================================================
10/31/95 $10.14 $12.12 $0.06 $0.00 20.21%
- --------------------------------------------------------------------------------
6/16/94*-10/31/94 10.00 10.14 0.00 0.00 1.40++
================================================================================
Total $0.06 $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Alliance Growth Portfolio
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns+
================================================================================
10/31/95 $10.65 $13.28 $0.02 $0.10 26.19%
- --------------------------------------------------------------------------------
6/16/94*-10/31/94 10.00 10.65 0.00 0.00 6.50++
================================================================================
Total $0.02 $0.10
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- American Capital Enterprise Portfolio
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns+
================================================================================
10/31/95 $10.38 $12.89 $0.02 $0.03 24.74%
- --------------------------------------------------------------------------------
6/16/94*-10/31/94 10.00 10.38 0.00 0.00 3.80++
================================================================================
Total $0.02 $0.03
================================================================================
It is the Funds' policy to distribute dividends and capital gains, if any,
annually.
4
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Average Annual Total Return+
- --------------------------------------------------------------------------------
SB American
Income and Alliance Capital
Growth Growth Enterprise
Portfolio Portfolio Portfolio
================================================================================
Year Ended 10/31/95 20.21% 26.19% 24.74%
- --------------------------------------------------------------------------------
6/16/94* through 10/31/95 15.48 23.97 20.67
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Return+
- --------------------------------------------------------------------------------
SB American
Income and Alliance Capital
Growth Growth Enterprise
Portfolio Portfolio Portfolio
================================================================================
6/16/94* through 10/31/95 21.89% 34.39% 29.48%
================================================================================
+ Assumes the reinvestment of all dividends and capital gain distributions at
net asset value.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
* Commencement of operations.
5
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
Smith Barney Income and Growth Portfolio vs. S&P 500 Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[THE FOLLOWING TABLE WAS PRESENTED AS A GRAPH IN THE PRINTED DOCUMENT]
Smith Barney
Income &
Growth S&P 500
Portfolio Index
--------- -----
6/16/94 $10000 $10000
10/94 10140 10324
4/95 10982 11404
10/95 12189 13053
+ Hypothetical illustration of $10,000 invested in shares of the Smith Barney
Income and Growth Portfolio on June 16, 1994 (commencement of operations),
assuming reinvestment of dividends and capital gains at net asset value
through October 31, 1995. The S&P 500 is an index of widely held common
stocks listed on the New York and American Stock Exchanges and the
over-the-counter markets. Figures for the S&P 500 Index include
reinvestment of dividends. The index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
6
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
Alliance Growth Portfolio vs. S&P 500 Index and Russell 1000 Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[THE FOLLOWING TABLE WAS PRESENTED AS A GRAPH IN THE PRINTED DOCUMENT]
Alliance
Growth S&P 500 RUSSELL 1000
Portfolio Index Index
--------- ----- -----
6/16/94 $10000 $10000 $10000
10/94 10650 10324 10191
4/95 11475 11404 11050
10/95 13428 13053 12612
+ Hypothetical illustration of $10,000 invested in shares of the Alliance
Growth Portfolio on June 16, 1994 (commencement of operations), assuming
reinvestment of dividends and capital gains at net asset value through
October 31, 1995. The S&P 500 is an index of widely held common stocks
listed on the New York and American Stock Exchanges and the
over-the-counter markets. Figures for the S&P 500 Index include
reinvestment of dividends. The Russell 1000 Index is comprised of 1,000 of
the largest capitalized U.S. domiciled companies whose common stock is
traded on either the New York, American or NASDAQ stock exchanges. The
indexes are unmanaged and are not subject to the same management and
trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
7
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
American Capital Enterprise Portfolio vs. S&P 500 Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[THE FOLLOWING TABLE WAS PRESENTED AS A GRAPH IN THE PRINTED DOCUMENT]
American
Capital
Enterprise S&P 500
Portfolio Index
--------- -----
6/16/94 $10000 $10000
10/94 10380 10324
4/95 11160 11404
10/95 12948 13053
+ Hypothetical illustration of $10,000 invested in shares of the American
Capital Enterprise Portfolio on June 16, 1994 (commencement of operations),
assuming reinvestment of dividends and capital gains at net asset value
through October 31, 1995. The S&P 500 is an index of widely held common
stocks listed on the New York and American Stock Exchanges and the
over-the-counter markets. Figures for the S&P 500 Index include
reinvestment of dividends. The index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
8
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INCOME AND GROWTH PORTFOLIO
SHARES SECURITY VALUE
================================================================================
COMMON STOCKS -- 88.9%
Aerospace/Defense -- 2.4%
6,000 Lockheed Martin Corp. $ 408,750
6,000 United Technologies Corp. 532,500
- --------------------------------------------------------------------------------
941,250
- --------------------------------------------------------------------------------
Auto Related -- 2.4%
8,000 Chrysler Corp. 413,000
30,000 Federal Mogul Corp. 536,250
- --------------------------------------------------------------------------------
949,250
- --------------------------------------------------------------------------------
Capital Goods -- 2.0%
5,000 Emerson Electric Co. 356,250
7,000 General Electric Co. 442,750
- --------------------------------------------------------------------------------
799,000
- --------------------------------------------------------------------------------
Conglomerates -- 3.9%
13,000 Alexander Baldwin Inc. 299,000
10,000 Tenneco Inc. 438,750
15,000 W.R. Grace & Co. 836,250
- --------------------------------------------------------------------------------
1,574,000
- --------------------------------------------------------------------------------
Consumer Cyclical -- 15.3%
15,000 B.F. Goodrich Co. 988,125
15,000 Deluxe Corp. 403,125
10,000 E.W. Scripps Co., Class A Shares 377,500
45,000 Jostens Inc. 1,018,125
2,000 McGraw Hill Cos. Inc. 163,750
30,000 New York Times Co., Class A Shares 832,500
5,000 Reader's Digest Association Inc.,
Class A Shares Non-Voting 251,250
10,000 Seagrams Co. Ltd. 360,000
20,000 Sears, Roebuck & Co. 680,000
20,000 Tambrands, Inc. 895,000
4,905 Times Mirror Co., Class A Shares 142,245
- --------------------------------------------------------------------------------
6,111,620
- --------------------------------------------------------------------------------
Consumer Staples -- 6.4%
20,000 American Brands, Inc. 857,500
8,000 American Home Products Corp. 709,000
4,000 Eli Lilly & Co. 386,500
10,000 Glaxo Holdings PLC 271,250
15,000 Interstate Bakeries Corp. 320,625
- --------------------------------------------------------------------------------
2,544,875
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
9
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INCOME AND GROWTH PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Energy -- 6.3%
15,000 Dresser Industries Inc. $ 311,250
17,000 Kerr-McGee Corp. 937,125
10,000 Mobil Oil Corp. 1,007,500
4,000 Texaco Inc. 272,500
- --------------------------------------------------------------------------------
2,528,375
- --------------------------------------------------------------------------------
Financial Services -- 17.6%
10,000 Aetna Life & Casualty Co. 703,750
25,000 Allstate Corp. 918,752
18,000 Chase Manhattan Corp. 1,026,000
20,000 Crescent Real Estate Equities Inc. 640,000
4,000 First Interstate Bancorp 516,000
25,000 H&R Block, Inc. 1,031,250
11,000 Household International Inc. 618,750
17,500 MARC Inc. 236,250
21,100 Provident Life & Accident Insurance
Co. of America, Class B Shares 564,425
15,000 St. Paul Cos., Inc. 761,250
- --------------------------------------------------------------------------------
7,016,427
- --------------------------------------------------------------------------------
Food Supermarkets -- 0.4%
5,000 Giant Foods Inc., Class A Shares 160,625
- --------------------------------------------------------------------------------
Industrial Gases -- 1.3%
10,000 Air Products & Chemicals Inc. 516,250
- --------------------------------------------------------------------------------
Leisure Products -- 1.7%
35,000 Brunswick Corp. 682,500
- --------------------------------------------------------------------------------
Medical Products & Supplies -- 2.7%
25,000 Baxter International, Inc. 965,625
2,000 Merck & Co. Inc. 115,000
- --------------------------------------------------------------------------------
1,080,625
- --------------------------------------------------------------------------------
Raw Intermediate Materials -- 5.2%
8,000 Aluminium Co. of America 408,000
7,000 Monsanto Co. 733,250
10,000 Olin Corp. 640,000
10,000 Westvaco Corp. 277,500
- --------------------------------------------------------------------------------
2,058,750
- --------------------------------------------------------------------------------
Steel & Iron -- 0.9%
10,000 Cleveland Cliffs Inc. 373,750
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
10
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY INCOME AND GROWTH PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Technology -- 4.7%
17,000 Eastman Kodak Co. $ 1,064,625
7,000 Honeywell, Inc. 294,000
4,000 Xerox Corp. 519,000
- --------------------------------------------------------------------------------
1,877,625
- --------------------------------------------------------------------------------
Telecommunications -- 2.6%
25,000 GTE Corp. 1,031,250
- --------------------------------------------------------------------------------
Transportation -- 3.0%
3,000 Norfolk Southern Corp. 231,750
15,000 Union Pacific Corp. 980,625
- --------------------------------------------------------------------------------
1,212,375
- --------------------------------------------------------------------------------
Utility -- 10.1%
20,000 Entergy Corp. 570,000
20,000 Panhandle Eastern Corp. 505,000
35,000 Pinnacle West Capital Corp. 962,500
30,000 Unicom Corp. 982,500
25,000 Unocal Corp. 656,250
8,000 U.S. West Inc. 381,000
- --------------------------------------------------------------------------------
4,057,250
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost-- $32,963,152) 35,515,797
================================================================================
PREFERRED STOCKS -- 1.9%
Insurance -- 0.8%
13,000 FHP International Corp., Convertible, Series A 308,750
- --------------------------------------------------------------------------------
Mining -- 0.5%
6,000 Freeport McMoRan, Series B 201,000
- --------------------------------------------------------------------------------
Publishing -- 0.6%
10,095 Times Mirror Co., Series B 243,542
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (Cost-- $754,833) 753,292
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
REPURCHASE AGREEMENT -- 9.2%
$3,694,000 Chemical Securities, Inc., 5.801% due 11/1/95;
Proceeds at maturity -- $3,694,594;
(Fully collateralized by U.S. Treasury Notes,
6.125% due 5/31/97; Market value -- $3,768,084)
(Cost -- $3,694,000) 3,694,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $37,411,985)++ $39,963,089
================================================================================
See Notes to Financial Statements.
11
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
ALLIANCE GROWTH PORTFOLIO
SHARES SECURITY VALUE
================================================================================
COMMON STOCKS -- 88.6%
Banks -- 0.3%
6,000 NationsBank Corp. $ 394,500
- --------------------------------------------------------------------------------
Chemicals -- 3.1%
17,900 Great Lakes Chemical Corp. 1,201,538
12,400 Monsanto Co. 1,298,900
7,100 UCAR International Inc.* 202,350
17,100 W.R. Grace & Co. 953,325
- --------------------------------------------------------------------------------
3,656,113
- --------------------------------------------------------------------------------
Computer Services -- 2.2%
36,000 DST Systems Inc.* 756,000
40,000 General Motors Corp., Class E Shares 1,885,000
- --------------------------------------------------------------------------------
2,641,000
- --------------------------------------------------------------------------------
Drugs -- 2.9%
8,000 Amgen Inc.* 384,000
21,000 Astra AB Series, Class A Shares 771,267
18,800 Merck & Co., Inc. 1,081,000
20,000 Pfizer Inc. 1,147,500
- --------------------------------------------------------------------------------
3,383,767
- --------------------------------------------------------------------------------
Electronics -- 19.7%
7,000 Applied Materials Inc.* 350,875
15,000 Bay Networks Inc.* 993,750
12,500 Cabletron Systems Inc.* 982,813
73,700 Cisco Systems Inc.* 5,711,750
17,300 Eastman Kodak Co. 1,083,412
43,300 General Instruments Corp.* 822,700
25,400 Intel Corp. 1,774,825
72,800 Motorola Inc. 4,777,500
89,400 National Semiconductor Corp.* 2,179,125
57,000 Oracle Corp.* 2,486,625
19,000 3Com Corp.* 893,000
76,000 Westinghouse Electric Corp. 1,073,500
- --------------------------------------------------------------------------------
23,129,875
- --------------------------------------------------------------------------------
Financial Services -- 4.0%
42,000 AmeriCredit Corp.* 514,500
36,000 Capital One Financial Corp. 882,000
3,000 Federal National Mortgage Association 314,625
57,600 Mercury Finance Co. 1,108,800
See Notes to Financial Statements.
12
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
ALLIANCE GROWTH PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Financial Services -- 4.0% (continued)
53,000 MS Financial Inc.* $ 596,250
80,300 Union Acceptance Corp., Class A Shares* 1,264,725
- --------------------------------------------------------------------------------
4,680,900
- --------------------------------------------------------------------------------
Food and Beverages -- 0.5%
14,000 Coca Cola Femsa SA ADR 252,000
39,000 Triarc Cos. Inc. 370,500
- --------------------------------------------------------------------------------
622,500
- --------------------------------------------------------------------------------
Holding Company-Diversified -- 4.6%
44,500 ITT Corp.* 5,451,250
- --------------------------------------------------------------------------------
Hospital Supplies & Services -- 1.7%
21,000 Abbott Laboratories Inc. 834,750
18,500 Healthsource Inc. 980,500
12,000 Quest Medical Inc.* 132,000
- --------------------------------------------------------------------------------
1,947,250
- --------------------------------------------------------------------------------
Insurance -- 3.6%
9,450 American International Group Inc. 797,344
69,000 PennCorp Financial Group Inc. 1,647,375
5,000 PMI Group Inc.* 240,000
22,900 Progressive Corp. Ohio 950,350
34,600 Twentieth Century Industries 575,225
- --------------------------------------------------------------------------------
4,210,294
- --------------------------------------------------------------------------------
Leisure & Hotels -- 1.0%
46,000 Patriot American Hospitality Inc.* 1,135,510
- --------------------------------------------------------------------------------
Mining -- 2.2%
70,483 Freeport McMoRan Inc. 2,634,302
- --------------------------------------------------------------------------------
Oil Related -- 2.5%
772,000 Gulf Canada Resources Ltd.* 2,991,500
- --------------------------------------------------------------------------------
Printing, Publishing and Broadcasting -- 5.4%
9,600 Comcast Corp., Class A Shares Special 171,600
45,500 R.R. Donnelley & Sons Co. 1,660,750
156,500 Tele-Communications Inc., Class A Shares* 2,660,500
46,125 Tele-Communications Liberty Media Group,
Class A Shares* 1,135,828
8,000 Time Warner Inc. 292,000
18,000 Turner Broadcasting Systems Inc.,
Class B Shares 465,750
- --------------------------------------------------------------------------------
6,386,428
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
ALLIANCE GROWTH PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Railroads -- 3.0%
11,000 Conrail Inc. $ 756,250
42,000 Union Pacific Corp. 2,745,750
- --------------------------------------------------------------------------------
3,502,000
- --------------------------------------------------------------------------------
Real Estate -- 7.8%
21,400 Amli Residential Properties Trust 411,950
22,000 CBL & Associates Properties Inc. 467,500
20,600 Essex Property Trust Inc. 375,950
10,000 Evans Withycombe Residential Inc. 188,750
33,000 First Industrial Realty Trust Inc. 672,375
7,000 Gables Residential Trust 150,500
21,000 Highwoods Properties Inc. 559,125
93,000 JP Realty Inc. 1,906,500
52,900 The Macerich Co. 1,064,613
20,000 Mitsubishi Estate Co. Ltd. 213,213
6,000 Regency Realty Corp. 102,000
35,000 Saul Centers Inc. 503,125
9,000 Shurgard Storage Centers Inc., Class A Shares 229,500
13,000 Spieker Properties Inc. 315,250
19,000 Storage USA Inc. 555,750
48,100 Summit Properties Inc. 889,850
20,000 Tucker Properties Corp. 185,000
16,500 Weeks Corp. 379,500
- --------------------------------------------------------------------------------
9,170,451
- --------------------------------------------------------------------------------
Retail -- 5.2%
43,000 Home Depot Inc. 1,601,750
82,300 Lowe's Cos., Inc. 2,222,100
16,000 Melville Corp. 512,000
10,500 Moovies Inc.* 171,938
19,800 Sears, Roebuck & Co. 673,200
36,000 Talbots Inc. 873,000
- --------------------------------------------------------------------------------
6,053,988
- --------------------------------------------------------------------------------
Telecommunications -- 8.3%
101,400 Airtouch Communication Inc.* 2,889,900
23,000 Cox Communications Inc., Class A Shares* 431,250
36,000 DSC Communications Corp.* 1,332,000
7,700 Mannesmann AG ADR 2,533,198
24,000 MCI Communications Corp. 598,500
30,000 Millicom International Cellular SA* 990,000
See Notes to Financial Statements.
14
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
ALLIANCE GROWTH PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Telecommunications -- 8.3% (continued)
13,800 Rogers Cantel Mobile Communications Inc.,
Class B Shares ADR $ 286,350
7,500 United States Cellular Corp.* 258,750
11,500 Vodafone Group PLC ADR 470,063
- --------------------------------------------------------------------------------
9,790,011
- --------------------------------------------------------------------------------
Tobacco -- 6.2%
18,400 Loews Corp. 2,697,900
53,600 Philip Morris Cos., Inc. 4,529,200
- --------------------------------------------------------------------------------
7,227,100
- --------------------------------------------------------------------------------
Transportation -- 1.2%
50,000 Pittston Services Group 1,375,000
- --------------------------------------------------------------------------------
Utility-Gas -- 0.2%
9,500 Renaissance Energy Ltd.* 209,247
- --------------------------------------------------------------------------------
Utility-Telephone -- 3.0%
88,800 Telephone & Data Systems Inc. 3,552,000
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost -- $96,069,718) 104,144,986
================================================================================
PREFERRED CONVERTIBLE STOCKS --- 0.2%
Drugs -- 0.2%
24,400 Gensia Parmaceuticals Inc. Exchangable $3.75+
(Cost -- $441,975) 286,700
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
CORPORATE BONDS -- 2.7%
Computers -- 1.8%
$1,300,000 3Com Corp., 10.250% due 11/1/01+ 2,068,625
- --------------------------------------------------------------------------------
Electronics -- 0.9%
775,000 Altera Corp., 5.750% due 6/15/02+ 1,050,125
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (Cost-- $2,774,046) 3,118,750
================================================================================
SHORT-TERM INVESTMENT -- 8.5%
10,000,000 Federal National Mortgage Association
Discount Note, 5.630% due 11/7/95
(Cost -- $9,990,617) 9,990,617
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $109,276,356)++ $117,541,053
================================================================================
See Notes to Financial Statements.
15
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
SHARES SECURITY VALUE
================================================================================
COMMON STOCKS -- 89.5%
Advertising -- 0.8%
4,100 Omnicom Group Inc. $ 261,888
- --------------------------------------------------------------------------------
Aerospace/Defense -- 0.5%
2,100 United Technologies Corp. 186,375
- --------------------------------------------------------------------------------
Aluminum -- 0.4%
2,700 Aluminum Co. of America 137,700
- --------------------------------------------------------------------------------
Banking-Major -- 4.2%
5,600 Bank America Corp. 322,000
8,700 Bank of Boston Corp. 387,150
2,600 Bank of New York Co. Inc. 109,200
6,200 Chemical Banking Corp. 352,625
4,100 Citicorp 265,988
- --------------------------------------------------------------------------------
1,436,963
- --------------------------------------------------------------------------------
Banking-Midsize -- 0.3%
1,400 Baybanks Inc. 113,400
- --------------------------------------------------------------------------------
Beverage-Soft Drink --1.7%
11,300 Pepsico Inc. 596,075
- --------------------------------------------------------------------------------
Broadcast Media and Cable Television -- 2.4%
2,700 American Radio Systems Corp. 60,750
1,800 Citicasters Inc., Class A Shares 55,575
7,500 Cox Communications Inc., Class A Shares 140,625
6,500 Emmis Broadcasting Corp., Class A Shares 172,250
6,600 Evergreen Media Corp., Class A Shares 179,850
4,600 Viacom Inc., Class B Shares 230,000
- --------------------------------------------------------------------------------
839,050
- --------------------------------------------------------------------------------
Chemicals -- 3.3%
3,700 Cytec Industries Inc. 202,575
2,300 Hercules Inc. 122,763
2,400 Monsanto Co. 251,400
14,000 Praxair Inc. 378,000
2,400 Sigma-Aldrich Corp. 114,000
1,400 W.R. Grace & Co. 78,050
- --------------------------------------------------------------------------------
1,146,788
- --------------------------------------------------------------------------------
Construction/Agricultural Equipment -- 0.4%
2,200 Continental Homes Holding Corp. 45,100
2,700 Varity Corp. 97,875
- --------------------------------------------------------------------------------
142,975
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Electrical Products -- 0.8%
4,300 SCI Systems Inc. $ 151,038
4,500 Vishay Intertechnology Inc. 158,625
- --------------------------------------------------------------------------------
309,663
- --------------------------------------------------------------------------------
Energy-Oil & Gas -- 3.6%
6,200 Exxon Corp. 473,525
4,900 Mobil Oil Corp. 493,675
10,800 Panhandle Eastern Corp. 272,700
- --------------------------------------------------------------------------------
1,239,900
- --------------------------------------------------------------------------------
Energy-Oilfield Services -- 0.6%
12,000 Smith International Inc. 192,000
- --------------------------------------------------------------------------------
Entertainment -- 0.7%
4,100 Walt Disney Co. 236,263
- --------------------------------------------------------------------------------
Environmental Production/Services -- 1.0%
9,000 United Waste Systems Inc. 355,500
- --------------------------------------------------------------------------------
Financial Services -- 6.0%
8,800 Federal National Mortgage Association 922,900
4,700 Franklin Resources Inc. 238,525
18,600 Green Tree Financial Corp. 495,225
8,400 Mercury Finance Co. 161,700
3,800 SunAmerica Inc. 236,550
- --------------------------------------------------------------------------------
2,054,900
- --------------------------------------------------------------------------------
Funeral Services -- 1.2%
10,100 Service Corporation International 405,263
- --------------------------------------------------------------------------------
Gaming -- 1.0%
4,900 Grand Casinos Inc. 194,775
8,700 Trump Hotels & Casino Resort Inc. 147,900
- --------------------------------------------------------------------------------
342,675
- --------------------------------------------------------------------------------
Healthcare-Biotech -- 1.1%
2,700 Amgen Inc. 129,600
4,300 Genzyme Corp. - General Division 250,475
- --------------------------------------------------------------------------------
380,075
- --------------------------------------------------------------------------------
Healthcare-Hospital/Medical Services -- 4.8%
4,600 Columbia/HCA Healthcare Corp. 225,975
9,900 Community Health Systems Inc. 314,325
4,100 Guidant Corp. 131,200
5,475 Health Management Association Inc., Class A Shares 117,713
See Notes to Financial Statements.
17
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Healthcare-Hospital/Medical Services -- 4.8% (continued)
11,600 Lincare Holdings Inc. $ 288,550
4,900 Medtronic Inc. 282,975
3,000 Nellcor Puritan Bennett Inc. 172,500
3,500 Renal Treatment Centers Inc. 126,000
- --------------------------------------------------------------------------------
1,659,238
- --------------------------------------------------------------------------------
Healthcare-Pharmaceuticals -- 5.6%
5,000 Johnson & Johnson 407,500
4,500 Merck & Co., Inc. 258,750
9,200 Schering-Plough Corp. 493,350
9,600 Smithkline Beecham PLC ADR 498,000
5,800 Watson Pharmaceuticals Inc. 259,550
- --------------------------------------------------------------------------------
1,917,150
- --------------------------------------------------------------------------------
Hotels/Motels -- 0.7%
6,100 Marriott International Inc. 224,938
- --------------------------------------------------------------------------------
Insurance -- 3.2%
2,300 Aetna Life & Casualty Co. 161,863
9,600 Allstate Corp. 352,800
5,000 Exel Limited 267,500
5,800 Penncorp Financial Group Inc. 138,475
4,300 Reliastar Financial Corp. 179,525
- --------------------------------------------------------------------------------
1,100,163
- --------------------------------------------------------------------------------
Machine-Diversified -- 0.4%
4,600 Harnischfeger Industries Inc. 144,900
- --------------------------------------------------------------------------------
Manufacturing -- 1.7%
4,900 Dover Corp. 193,550
4,000 Greenfield Industries Inc. 120,000
4,600 Illinois Tool Works Inc. 267,375
- --------------------------------------------------------------------------------
580,925
- --------------------------------------------------------------------------------
Meat/Poultry/Fish -- 1.1%
10,100 ConAgra Inc. 390,113
- --------------------------------------------------------------------------------
Packaged Food and Goods -- 1.0%
5,300 CPC International Inc. 351,788
- --------------------------------------------------------------------------------
Paper Products & Containers -- 1.8%
4,700 Bowater Inc. 207,975
5,900 James River Corp. of Virginia 189,538
4,000 Scott Paper Co. 213,000
- --------------------------------------------------------------------------------
610,513
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
18
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Retail-Department/Discount -- 1.9%
4,500 Consolidated Stores Corp. $ 104,063
8,100 Family Dollar Stores Inc. 123,525
6,400 Federated Department Stores Inc. 162,400
7,900 Sears, Roebuck & Co. 268,600
- --------------------------------------------------------------------------------
658,588
- --------------------------------------------------------------------------------
Retail-Specialty -- 2.6%
4,600 Borders Group Inc. 78,775
14,600 General Nutrition Companies Inc. 363,175
4,100 Nine West Group Inc. 182,450
11,200 Officemax Inc. 277,200
- --------------------------------------------------------------------------------
901,600
- --------------------------------------------------------------------------------
Retail-Food/Drugs -- 3.8%
10,200 Eckerd Corp. 404,175
12,800 Kroger Co. 427,200
10,500 Safeway Inc. 496,125
- --------------------------------------------------------------------------------
1,327,500
- --------------------------------------------------------------------------------
Technology-Computers & Office Equipment -- 2.1%
7,600 Compaq Computer Corp. 423,700
6,500 Dell Computer Corp. 303,063
- --------------------------------------------------------------------------------
726,763
- --------------------------------------------------------------------------------
Technology-Computer Software -- 5.3%
3,150 Cadence Design Systems Inc. 101,588
9,100 Computer Associates International, Inc. 500,500
2,200 First Data Corp. 145,475
2,700 Medic Computer Systems Inc. 143,775
5,400 Microsoft Corp. 540,000
1,900 Sybase Inc. 74,575
13,000 Symantec Corp. 316,063
- --------------------------------------------------------------------------------
1,821,976
- --------------------------------------------------------------------------------
Technology-Peripherals -- 1.8%
4,900 Adaptec Inc. 218,050
3,000 Komag Inc. 171,000
4,000 Oak Technology Inc. 219,000
- --------------------------------------------------------------------------------
608,050
- --------------------------------------------------------------------------------
Technology-Precision Instruments -- 1.0%
4,200 Applied Materials Inc. 210,525
3,700 Teradyne Inc. 123,488
- --------------------------------------------------------------------------------
334,013
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
19
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
SHARES SECURITY VALUE
================================================================================
Technology-Semiconductors -- 5.9%
2,300 Altera Corp. $ 139,150
4,100 Analog Devices Inc. 148,113
3,000 Intel Corp. 209,625
8,100 International Rectifier Inc. 365,513
3,700 Linear Technology Corp. 161,875
5,200 LSI Logic Corp. 245,050
2,400 Micron Technology, Inc. 169,500
8,800 National Semiconductors Corp. 214,500
3,700 SGS-Thomson Microelectronics NV 167,425
2,400 Texas Instruments Inc. 163,800
2,400 VLSI Technology Inc. 56,400
- --------------------------------------------------------------------------------
2,040,951
- --------------------------------------------------------------------------------
Technology-Telecommunications Equipment -- 3.2%
4,100 Bay Networks Inc. 271,625
5,300 Cisco Systems Inc. 410,750
5,700 3Com Corp. 267,900
1,600 U.S. Robotics Corp. 148,000
- --------------------------------------------------------------------------------
1,098,275
- --------------------------------------------------------------------------------
Tobacco -- 4.3%
17,400 Philip Morris Cos. Inc. 1,470,300
- --------------------------------------------------------------------------------
Transportation-Rail -- 1.4%
2,700 Conrail Inc. 185,625
7,900 Illinois Central Corp., Series A 302,175
- --------------------------------------------------------------------------------
487,800
- --------------------------------------------------------------------------------
Utilities-Cellular -- 1.1%
6,900 Cellular Communications Inc. 370,013
- --------------------------------------------------------------------------------
Utilities-Telephone -- 4.8%
2,800 American Telephone & Telegraph Corp. 179,200
4,800 Frontier Corp. 129,600
21,300 MCI Communications Corp. 531,169
9,900 Sprint Corp. 381,150
13,800 Worldcom Inc. 450,225
- --------------------------------------------------------------------------------
1,671,334
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost -- $29,534,890) 30,874,344
================================================================================
See Notes to Financial Statements.
20
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
FACE
AMOUNT SECURITY VALUE
================================================================================
SHORT-TERM INVESTMENTS -- 10.5%
$ 270,000 FNMA Discount Notes, 5.700% due 11/2/95 $ 269,957
40,000 U.S. Treasury Bill, 5.380% due 11/2/95 39,994
280,000 U.S. Treasury Bill, 5.120% due 11/24/95 279,084
70,000 U.S. Treasury Bill, 5.220% due 11/30/95 69,710
390,000 U.S. Treasury Bill, 5.250% due 12/7/95 387,960
150,000 U.S. Treasury Bill, 6.500% due 12/14/95 149,088
310,000 U.S. Treasury Bill, 5.120% due 12/28/95 307,412
140,000 U.S. Treasury Bill, 5.220% due 1/11/96 138,520
1,270,000 U.S. Treasury Bill, 5.205% due 1/18/96 1,255,306
720,000 U.S. Treasury Bill, 5.250% due 1/25/96 710,935
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost -- $3,608,597) 3,607,966
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $33,143,487)++ $34,482,310
================================================================================
* Non-income producing security.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
++ Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
21
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SB American
Income Alliance Capital
and Growth Growth Enterprise
Portfolio Portfolio Portfolio
===========================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost - $37,411,985,
$109,276,356 and $33,143,487, respectively) $39,963,089 $117,541,053 $34,482,310
Cash 899 197,773 13,299
Receivable for securities sold 738,660 388,611 1,739,011
Receivable for Fund shares sold 246,140 460,847 227,474
Dividends and interest receivable 52,013 120,134 10,539
- -------------------------------------------------------------------------------------------
Total Assets 41,000,801 118,708,418 36,472,633
- -------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 1,523,898 6,737,351 3,930,496
Management fees payable 78,886 337,425 41,601
Accrued expenses and other liabilities 34,490 60,794 53,574
- -------------------------------------------------------------------------------------------
Total Liabilities 1,637,274 7,135,570 4,025,671
- -------------------------------------------------------------------------------------------
Total Net Assets $39,363,527 $111,572,848 $32,446,962
===========================================================================================
NET ASSETS:
Par value of capital shares $ 33 $ 84 $ 25
Capital paid in excess of par value 36,115,696 99,364,295 29,772,510
Undistributed net investment income 496,837 659,256 86,951
Accumulated net realized gain on
security transactions 199,857 3,284,516 1,248,653
Net unrealized appreciation of investments 2,551,104 8,264,69 1,338,823
- -------------------------------------------------------------------------------------------
Total Net Assets $39,363,527 $111,572,848 $32,446,962
===========================================================================================
Shares Outstanding 3,247,299 8,404,307 2,516,871
- -------------------------------------------------------------------------------------------
Net Asset Value $ 12.12 $ 13.28 $ 12.89
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Operations For the Year Ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SB American
Income Alliance Capital
and Growth Growth Enterprise
Portfolio Portfolio Portfolio
===========================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 534,998 $ 905,992 $ 143,241
Interest 94,486 233,685 59,936
Less: Foreign withholding tax -- 9,946 --
- -------------------------------------------------------------------------------------------
Total Investment Income 629,484 1,129,731 203,177
- -------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 116,605 421,756 93,346
Registration fees 15,000 29,000 10,000
Audit and legal 14,000 18,000 13,000
Shareholder communications 10,000 8,000 11,000
Shareholder and system servicing fees 6,017 9,000 8,000
Custody 4,000 9,700 26,000
Directors' fees 3,663 5,350 4,000
Other 3,000 8,000 3,000
- -------------------------------------------------------------------------------------------
Total Expenses 172,285 508,806 168,346
Less: Management fee waiver 37,719 34,331 51,745
- -------------------------------------------------------------------------------------------
Net Expenses 134,566 474,475 116,601
- -------------------------------------------------------------------------------------------
Net Investment Income 494,918 655,256 86,576
- -------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND
FOREIGN CURRENCIES (NOTE3):
Realized Gain From:
Security transactions
(excluding short-term securities) 208,200 3,284,516 1,248,678
Foreign currency transactions -- 1,559 --
- -------------------------------------------------------------------------------------------
Net Realized Gain
and Foreign Currencies 208,200 3,286,075 1,248,678
- -------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
of Investments:
Beginning of year 13,317 517,420 191,825
End of year 2,551,104 8,264,697 1,338,823
- -------------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 2,537,787 7,747,277 1,146,998
- -------------------------------------------------------------------------------------------
Net Gain on Investments
and Foreign Currencies 2,745,987 11,033,352 2,395,676
- -------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 3,240,905 $ 11,688,608 $ 2,482,252
===========================================================================================
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
SB Income
and Growth Portfolio
--------------------------
1995 1994(a)
================================================================================
OPERATIONS:
Net investment income $ 494,918 $ 51,610
Net realized gain (loss) 208,200 (8,343)
Increase in net unrealized appreciation 2,537,787 13,317
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 3,240,905 56,584
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (51,640) --
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (51,640) --
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sales of shares 30,321,187 9,406,035
Net asset value of shares issued for
reinvestment of dividends 51,640 --
Cost of shares reacquired (575,314) (3,085,870)
- -------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 29,797,513 6,320,165
- -------------------------------------------------------------------------------
Increase in Net Assets 32,986,778 6,376,749
NET ASSETS:
Beginning of year 6,376,749 --
- -------------------------------------------------------------------------------
End of year* $ 39,363,527 $ 6,376,749
===============================================================================
* Includes undistributed net investment income of: $ 496,837 $ 51,610
===============================================================================
(a) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
See Notes to Financial Statements.
24
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
Alliance Growth
Portfolio
---------------------------
1995 1994(a)
================================================================================
OPERATIONS:
Net investment income $ 655,256 $ 50,869
Net realized gain 3,286,075 231,524
Increase in net unrealized appreciation 7,747,277 517,420
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 11,688,608 799,813
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (50,811) --
Net realized gains (231,524) --
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (282,335) --
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sales of shares 83,125,087 17,018,599
Net asset value of shares issued for
reinvestment of dividends 282,335 --
Cost of shares reacquired (326,769) (732,490)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 83,080,653 16,286,109
- --------------------------------------------------------------------------------
Increase in Net Assets 94,486,926 17,085,922
NET ASSETS:
Beginning of year 17,085,922 --
- --------------------------------------------------------------------------------
End of year* $ 111,572,848 $ 17,085,922
- --------------------------------------------------------------------------------
*Includes undistributed net investment income of: $ 659,256 $ 50,869
================================================================================
(a) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
See Notes to Financial Statements.
25
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
American Capital
Enterprise Portfolio
---------------------------
1995 1994(a)
================================================================================
OPERATIONS:
Net investment income $ 86,576 $ 13,182
Net realized gain 1,248,678 16,732
Increase in net unrealized appreciation 1,146,998 191,825
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 2,482,252 221,739
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (13,157) --
Net realized gains (16,757) --
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (29,914) --
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sales of shares 26,651,648 6,315,439
Net asset value of shares issued for
reinvestment of dividends 29,914 --
Cost of shares reacquired (2,420,846) (803,270)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 24,260,716 5,512,169
- --------------------------------------------------------------------------------
Increase in Net Assets 26,713,054 5,733,908
NET ASSETS:
Beginning of year 5,733,908 --
- --------------------------------------------------------------------------------
End of year* $ 32,446,962 $ 5,733,908
================================================================================
* Includes undistributed net investment income of: $ 86,951 $ 13,182
================================================================================
(a) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
See Notes to Financial Statements.
26
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Smith Barney Income and Growth, Alliance Growth and American Capital
Enterprise Portfolios ("Portfolios") are separate investment portfolios of the
Smith Barney/Travelers Series Fund Inc. ("Fund"). The Fund, a Maryland
corporation, is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company and consists of these
Portfolios and nine other separate investment portfolios: AIM Capital
Appreciation, Smith Barney International Equity, Smith Barney Pacific Basin, TBC
Managed Income, Putnam Diversified Income, G.T. Global Strategic Income, Smith
Barney High Income, MFS Total Return and Smith Barney Money Market Portfolios.
Shares of the Fund are offered only to insurance company separate accounts which
fund certain variable annuity and variable life insurance contracts. The
financial statements and financial highlights for the other portfolios are
presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolios
are: (a) securities transactions are accounted for on trade date; (b) securities
traded on national securities markets are valued at the closing prices on such
markets; securities for which no sales price was reported and U.S. Government
and Government Agency obligations are valued at the mean between bid and asked
prices; short-term investments that have a maturity of more than 60 days are
valued at prices based on market quotations for securities of similar type,
yield and maturity; short-term investments that have a maturity of 60 days or
less are valued at cost plus accreted discount, or minus amortized premium, as
applicable; (c) dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis; (d) gains or losses on the sale of
securities are calculated by using the specific identification method; (e)
direct expenses are charged to each Portfolio; (f) the accounting records of the
Portfolios are maintained in U.S. dollars. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian bank;
(g) in accordance with the Statement of Position 93-2, Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distribution by Investment Companies, book and tax differences
relating to shareholder distributions and other permanent book and tax
differences have been reclassified to undistributed net investment income. As of
October 31, 1995, the cumulative effect of such differences, totaling $1,949,
$2,383 and $350 were reclassified to undistributed net investment income for the
Smith Barney Income and Growth, Alliance Growth and American Capital Enterprise
27
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Portfolios from paid-in capital, respectively. Net investment income, net
realized gains, and net assets were not affected by this change; and (h) the
Portfolios intend to comply with the requirements of the Internal Revenue Code
of 1986, as amended, pertaining to regulated investment companies and to make
distributions of taxable income sufficient to relieve it from substantially all
Federal income and excise taxes.
2. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH
AFFILIATED PERSONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager of the Fund. The Smith
Barney Income and Growth ("SBIG"), Alliance Growth ("AGP") and American Capital
Enterprise Portfolios ("ACEP") pay SBMFM a management fee calculated at an
annual rate of 0.65%, 0.80%, and 0.70% of the average daily net assets of each
Portfolio, respectively. All fees are calculated daily and paid monthly. SBMFM
waived a portion of its management fees for each of the Portfolios for the year
ended October 31, 1995.
SBMFM has entered into sub-advisory agreements with Alliance Capital
Management L.P. ("Alliance Capital") and American Capital Asset Management, Inc.
("ACAM"). Pursuant to each sub-advisory agreement, Alliance Capital and ACAM are
responsible for the day-to-day portfolio operations and investment decisions for
AGP and ACEP, respectively. As a result, SBMFM will pay Alliance Capital and
ACAM a monthly fee calculated at the annual rate of 0.375% and 0.325% of the
average daily net assets of AGP and ACEP, respectively.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. For the year ended October 31, 1995, SB received brokerage
commissions of $271,821.
All officers and two Directors of the Fund are employees of SB.
3. INVESTMENTS
During the year ended October 31, 1995, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were:
SB American
Income and Alliance Capital
Growth Growth Enterprise
================================================================================
Purchases $34,786,269 $119,964,048 $46,626,467
- --------------------------------------------------------------------------------
Sales 6,482,473 39,546,095 23,616,569
================================================================================
28
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At October 31, 1995, net unrealized appreciation of investments for Federal
income tax purposes consisted of the following:
SB American
Income and Alliance Capital
Growth Growth Enterprise
================================================================================
Gross unrealized appreciation $3,014,354 $11,862,717 $1,786,442
Gross unrealized depreciation (463,250) (3,598,020) (447,619)
- --------------------------------------------------------------------------------
Net unrealized appreciation $2,551,104 $8,264,697 $1,338,823
================================================================================
4. REPURCHASE AGREEMENTS
The Portfolios purchase (and its custodian takes possession of) U.S.
Government Securities from banks and securities dealers subject to agreements to
resell the securities to the sellers at a future date (generally, the next
business day) at an agreed-upon higher repurchase price. The Portfolios require
continual maintenance of the market value of the collateral in amounts at least
equal to the repurchase price.
5. CAPITAL SHARES
At October 31, 1995, the Fund had six billion shares of $0.00001 par value
capital stock authorized. Each share of a Portfolio represents an equal
proportionate interest in that Portfolio with each other share of the same
Portfolio and has an equal entitlement to any dividends and distributions made
by the Portfolio.
Year Ended Period Ended
October 31, 1995 October 31, 1994(a)
================================================================================
SB Income and Growth
Shares sold 2,665,475 933,456
Shares issued on reinvestment 5,253 --
Shares redeemed (52,420) (304,465)
- --------------------------------------------------------------------------------
Net Increase 2,618,308 628,991
================================================================================
Alliance Growth
Shares sold 6,799,083 1,675,745
Shares issued on reinvestment 27,438 --
Shares redeemed (26,705) (71,254)
- --------------------------------------------------------------------------------
Net Increase 6,799,816 1,604,491
================================================================================
American Capital Enterprise
Shares sold 2,171,971 631,869
Shares issued on reinvestment 2,968 --
Shares redeemed (210,523) (79,414)
- --------------------------------------------------------------------------------
Net Increase 1,964,416 552,455
================================================================================
(a) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
29
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
SB Income and Growth Portfolio 1995 1994(1)
================================================================================
Net Asset Value, Beginning of Year $ 10.14 $ 10.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income(2) 0.28 0.11
Net realized and unrealized gain 1.76 0.03
- --------------------------------------------------------------------------------
Total Income From Operations 2.04 0.14
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.06) --
- --------------------------------------------------------------------------------
Total Distributions (0.06) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 12.12 $ 10.14
- --------------------------------------------------------------------------------
Total Return 20.21% 1.40%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $ 39,364 $ 6,377
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.73% 0.73%+
Net investment income 2.70 2.82+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 38.39% 2.17%
================================================================================
Average commissions paid on
equity security transactions(3) $ 0.07 --
================================================================================
(1) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager
has reimbursed the Portfolio for $13,120 in expenses for the period ended
October 31, 1994. If such fees were not waived and expenses not reimbursed,
the per share decreases in net investment income and the ratios of expenses
to average net assets would have been as follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------------ ------------------
1995 $0.02 0.94%
1994 0.05 2.08+
(3) Due to new SEC disclosure guidelines, average commissions per share are
calculated only for the current year and not for the prior period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
30
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
Alliance Growth Portfolio 1995 1994(1)
================================================================================
Net Asset Value, Beginning of Year $ 10.65 $ 10.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income(2) 0.14 0.06
Net realized and unrealized gain 2.61 0.59
- --------------------------------------------------------------------------------
Total Income From Operations 2.75 0.65
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.02) --
Net realized gains (0.10) --
- --------------------------------------------------------------------------------
Total Distributions (0.12) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 13.28 $ 10.65
- --------------------------------------------------------------------------------
Total Return 26.19% 6.50%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $ 111,573 $ 17,086
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.90% 0.88%+
Net investment income 1.24 1.47+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 77.66% 36.66%
================================================================================
Average commissions paid on
equity security transactions(3) $ 0.06 --
================================================================================
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager
has reimbursed the Portfolio for $3,500 in expenses for the period ended
October 31, 1994. If such fees were not waived and expenses not reimbursed,
the per share decreases in net investment income and the ratios of expenses
to average net assets would have been as follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------------ -------------------
1995 $0.01 0.97%
1994 0.03 1.76+
(3) Due to new SEC disclosure guidelines, average commissions per share are
calculated only for the current year and not for the prior period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
31
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
American Capital Enterprise Portfolio 1995 1994(1)
================================================================================
Net Asset Value, Beginning of Year $ 10.38 $ 10.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income(2) 0.03 0.03
Net realized and unrealized gain 2.53 0.35
- --------------------------------------------------------------------------------
Total Income From Operations 2.56 0.38
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.02) --
Net realized gains (0.03) --
- --------------------------------------------------------------------------------
Total Distributions (0.05) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 12.89 $ 10.38
- --------------------------------------------------------------------------------
Total Return 24.74% 3.80%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $ 32,447 $ 5,734
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.88% 0.84%+
Net investment income 0.65 0.79+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 180.26% 54.74%
================================================================================
Average commissions paid on
equity security transactions(3) $ 0.05 --
================================================================================
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager
has reimbursed the Portfolio for $19,007 in expenses for the period ended
October 31, 1994. If such fees were not waived and expenses not reimbursed,
the per share decreases in net investment income and the ratios of expenses
to average net assets would have been as follows:
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------ ---------------
1995 $0.06 1.26%
1994 0.07 2.66+
(3) Due to new SEC disclosure guidelines, average commissions per share are
calculated only for the current year and not for the prior period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
32
<PAGE>
Smith Barney Travelers Series Fund, Inc.
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney/Travelers Series Fund Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Smith Barney Income and Growth,
Alliance Growth and American Capital Enterprise Portfolios of Smith
Barney/Travelers Series Fund Inc. as of October 31, 1995, the related statements
of operations for the year then ended, and the statements of changes in net
assets and financial highlights for the year then ended and for the period from
June 16, 1994 (commencement of operations) to October 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Smith Barney Income and Growth, Alliance Growth and American Capital Enterprise
Portfolios of Smith Barney/Travelers Series Fund Inc. as of October 31, 1995,
the results of their operations for the year then ended, and the changes in
their net assets and financial highlights for the year then ended and for the
period from June 16, 1994 to October 31, 1994, in conformity with generally
accepted accounting principles.
/s/KPMG Peat Marwick LLP
New York, New York
December 12, 1995
33
<PAGE>
SMITH BARNEY
A Member of TravelersGroup [LOGO]
Smith Barney/Travelers
Series Fund Inc.
Directors
Victor K. Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
James M. Shuart
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President and Treasurer
John C. Bianchi
Vice President
James B. Conheady
Vice President
Martin Hanley
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Phyllis Zahorodny
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Annuity Administration
Travelers Annuity Investor Services
5 State House Square
1 Tower Square
Hartford, CT 06183
This report is submitted for the general information of the shareholders of
Smith Barney/Travelers Series Fund Inc. --Smith Barney Income and Growth,
Alliance Growth and American Capital Enterprise Portfolios. It is not authorized
for distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Portfolios, which contains information concerning the
Portfolios' investment policies and expenses as well as other pertinent
information.
Smith Barney/Travelers
Series Fund Inc.
388 Greenwich Street
New York, New York 10013
IN0251 12/95
<PAGE>
A N N U A L R E P O R T
1995
1995
1995
1995
1995
Smih Barney/Travelers
Series Fund Inc.
Smith Barney High Income
Portfolio
Putnam Diversified Income
Portfolio
-------------------------------
October 31, 1995
[LOGO] Smith Barney Mutual Funds
Inveting for your future.
Every Day.
<PAGE>
- --------------------------------------------------------------------------------
Smith Barney High Income and
Putnam Diversified Income Portfolios
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the annual report for the Smith Barney/Travelers
Series Fund Inc. for the period ended October 31, 1995. This report covers the
Smith Barney High Income and Putnam Diversified Income Portfolios. For your
convenience, we have summarized this period's prevailing economic and market
conditions below and outlined the portfolio strategies employed during this
time. A more detailed summary of performance and current holdings can be found
in the appropriate sections that follow in the annual report.
Portfolio Highlights
Smith Barney High Income Portfolio
The high yield market has generated strong results and has recently outperformed
the other major fixed income markets. Fixed income investors continued to become
more comfortable with the economic slowdown and its positive implications for
inflation rates. High yield total returns for the three months ended October 31,
1995 were in the range of 2.80% to 3.00% and 15.00% to 16.00% for the twelve
months ended October 31, 1995. The Salomon Brothers Broad Index was 3.46% and
15.69%. (The Salomon Brothers Broad Index is one of the most comprehensive
investment-grade bond indices.) The Smith Barney High Income Portfolio's
performance returns were competitive with the high yield market averages during
these time periods.
We continued to maintain a more conservative credit profile in the third
quarter, adding stronger B-rated and BB-rated issues. We believe the ongoing,
slower-growth economic environment will continue to present a difficult
challenge for a number of companies that are overleveraged and in relatively
weaker competitive positions within their respective industries. We have
continued to redirect our emphasis away from consumer-sensitive sectors,
including retail, textile/apparel, and automobile/trucking, towards cable TV,
wireless communications and media, given their strong growth prospects over the
next several years. As a result of this repositioning of the Portfolio as well
as continued cash subscriptions into it, our cash position has remained
temporarily higher during the past several months. Our goal is to be fully
invested by the end of the fourth quarter in anticipation of strengthening bond
market conditions in the final weeks of 1995 and early 1996.
Given our outlook for modest economic growth with contained inflation, we expect
additional declines in short-term interest rates and are looking for modest
declines in long-term interest rates, with 6.0% a reasonable target for the 30-
year Treasury bond by the end of 1995. In this slower-growth economic
environment, we will continue to carefully control overall credit risk by
emphasizing the stronger, higher-rated issues.
1
<PAGE>
Putnam Diversified Income Portfolio
Market conditions were extremely favorable for the Putnam Diversified Income
Portfolio for most of its fiscal year ended October 31, 1995. The U.S. Treasury
market experienced an extraordinary rally in 1995 and carried most of the
world's fixed income markets along with it. The 30-year Treasury bond returned
29.5% during the fiscal year, while the 10-year Treasury returned 30%. This
tremendous run in U.S. Treasury bonds occurred against a backdrop of slowing
growth and very low inflation. The Federal Reserve changed to a policy of
reducing interest rates in July and December as a result of these trends.
Corporate profits remained strong throughout this period.
Deflation and slow growth were common themes throughout the world, fueling
rallies in a number of foreign bond markets. Currencies were extremely volatile
during the time, but wound up relatively unchanged from last year.
The Putnam Diversified Income Portfolio returned 13.55% for the year ended
October 31, 1995. The Portfolio benefitted from very strong performances from
both its high-yield and U.S. government-sleeves. The Portfolio's international
sleeve lagged in the first half for the fiscal year, but performed better in the
second half as our holdings in peripheral European countries and our long
duration helped enhance returns. Our U.S. dollar hedges detracted from
performance early in the year, but helped to boost performance in the summer as
the U.S. dollar rallied sharply.
Asset allocation decisions had less of an impact on returns this year than in
some years past as all three sectors posted similar returns for the year.
However, the timing of these returns did differ, and the Portfolio was
successful in capturing the strong outperformance of the U.S. Treasury sector in
the last half of the fiscal year. In addition, the fact that the Portfolio was
underweighted in the international sector, the weakest sector during the time
period covered by this report, helped performance as well.
The Portfolio also maintained a neutral-to-overweighted exposure to the high
yield market throughout the year. The following is a summary of the Putnam
Diversified Portfolio's allocation of assets throughout the year.
<TABLE>
<CAPTION>
10/31/94 4/30/95 10/31/95
-------- ------- --------
<S> <C> <C> <C>
High Yield 40.0% 32.9% 36.1%
U.S. Government 27.3% 37.7% 35.7%
International 32.7% 29.4% 28.2%
</TABLE>
2
<PAGE>
The strategy for the Portfolio is to manage the asset allocation process in
order to capture opportunities that are taking place among the various sectors
while trying to remain well diversified. This past year, the Portfolio was
positioned for a late business cycle, slower-growth environment.
We anticipate maintaining the Portfolio's current asset allocation for the
foreseeable future (i.e., an overweighting in the high yield and U.S. government
sectors and an underweighting in the international sector). We believe our
current asset allocation decisions are appropriate given our ongoing concerns
that the U.S. dollar will remain strong. In addition, because we expect that the
economy will continue to grow moderately and the Federal Reserve will maintain a
bias toward lower interest rates, we feel comfortable maintaining an
overweighted position in the high yield sector. (As a side note, we are entering
a period of seasonal strength in the high yield market.) We also are comfortable
with the Portfolio's overweighting in the U.S. government sector because of
possible progress on the federal budget deficit and our expectations that
inflation should remain low.
As this time, we would like to thank you for your continued participation in the
Smith Barney High Income and Putnam Diversified Income Portfolios and for your
ongoing confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman and Chief Executive Officer
November 14, 1995
3
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance -- High Income Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns+
- ---------- --------- ------- --------- --------
<S> <C> <C> <C> <C>
10/31/95 $10.07 $11.26 $0.22 14.30%
6/16/94*-10/31/94 10.00 10.07 0.00 0.70++
-----
Total $0.22
=====
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Putnam Diversified Income Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns+
- ---------- --------- ------- --------- --------
<S> <C> <C> <C> <C>
10/31/95 $10.18 $11.46 $0.09 13.55%
6/16/94*-10/31/94 10.00 10.18 0.00 1.80++
-----
Total $0.09
=====
</TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
4
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Average Annual Total Return +
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Putnam
High Diversified
Income Income
Portfolio Portfolio
--------- -----------
<S> <C> <C>
Year Ended 10/31/95 14.30% 13.55%
6/16/94* through 10/31/95 10.77 11.11
Cumulative Total Return +
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return +
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Putnam
High Diversified
Income Income
Portfolio Portfolio
--------- -----------
<S> <C> <C>
6/16/94* through 10/31/95 15.10% 15.60%
</TABLE>
+ Assumes the reinvestment of all dividends and capital gains distributions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
* Commencement of operations.
5
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
Smith Barney High Income Portfolio vs. Salomon Brothers
Intermediate High Yield Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Smith Barney Salomon Brothers
High Income Intermediate
Portfolio High Yield Index
------------ ----------------
<S> <C> <C>
June 16, 1994 10,000.00 10,000.00
July 1994 10,080.00 10,024.00
October 1994 10,180.00 10,146.59
January 1995 10,248.50 10,902.38
April 1995 10,783.10 10,642.06
July 1995 11,247.10 11,279.79
October 1995 11,559.80 11,599.26
</TABLE>
+ Hypothetical illustration of $10,000 invested in shares of the Smith Barney
High Income Portfolio on June 16, 1994 (commencement of operations), assuming
reinvestment of dividends and capital gains, if any, at net asset value
through October 31, 1995. The Salomon Brothers Intermediate High Yield Index
is comprised of 434 issues, both cash-pay and deferred interest bonds with a
remaining maturity of at least seven years, but less than ten years. The bonds
are all public, non-convertible issues with at least $50 million outstanding.
The index is unmanaged and is not subject to the same management and trading
expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
value may be more or less than the original cost.
6
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Shares of the
Putnam Diversified Income Portfolio vs. Lehman Brothers
Aggregate Bond Index and the Salomon Brothers
Non-U.S. World Government Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- October 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Salomon Brothers
Non-U.S. World Lehman Brothers
Putnam Diversified Government Aggregate
Income Portfolio Bond Index Bond Index
------------------ ---------------- ---------------
<S> <C> <C> <C>
June 16, 1994 10,000.00 10,000.00 10,000.00
July 1994 10,080.00 10,121.00 10,000.00
October 1994 10,180.00 10,288.21 10,061.13
January 1995 10,248.50 10,346.69 10,099.17
April 1995 10,783.10 11,840.09 10,608.57
July 1995 11,247.10 12,418.89 11,254.96
October 1995 11,559.80 12,116.64 11,476.33
</TABLE>
+ Hypothetical illustration of $10,000 invested in shares of the Putnam
Diversified Income Portfolio on June 16, 1994, assuming reinvestment of
dividends and capital gains, if any, at net asset value (commencement of
operations) through October 31, 1995. The Lehman Brothers Aggregate Bond Index
is comprised of over 6,500 issues of U.S. Treasuries, Agencies, Corporate
Bonds and Mortgage-Backed Securities. The Salomon Brothers Non-U.S. World
Government Bond Index is comprised of fixed rate bonds with a maturity of one
year or longer, and at least $25 million outstanding. The index includes
securities from 10 countries, providing a comprehensive measure of the total
return performance of the domestic bond markets in each country included, as
well as the ten combined countries. These indexes are unmanaged and are not
subject to the same management and trading expenses of a mutual fund.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
value may be more or less than the original cost.
7
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
CORPORATE BONDS AND NOTES -- 81.9%
Aerospace/Defense -- 1.1%
$ 250,000 B Tracor Inc., Sr. Sub. Notes, 10.875% due 8/15/01 $ 260,625
- --------------------------------------------------------------------------------------------------------------------
Automobile -- 1.1%
Harvard Industries Inc., Sr. Notes:
100,000 B+ 12.000% due 7/15/04 105,250
150,000 B+ 11.125% due 8/1/05+ 152,437
- --------------------------------------------------------------------------------------------------------------------
257,687
- --------------------------------------------------------------------------------------------------------------------
Broadcasting -- 17.0%
175,000 B- Alliance Entertainment, Sr. Sub. Notes, 11.250%
due 7/15/05+ 176,531
600,000 CCC Australis Media Limited, Sr. Discount Notes, step bond
to yield 13.247% due 5/15/03 438,000
Bell Cablemedia PLC, Sr. Discounts Notes:
250,000 BB- Step bond to yield 11.950% due 7/15/04 170,625
775,000 BB- Step bond to yield 11.686% due 9/15/05+ 470,813
200,000 B Cablevision Systems Corporation, Sr. Sub. Debentures,
9.875% due 2/15/13 210,500
225,000 BB- Continental Cablevision, Inc., Sr. Sub. Notes,
11.000% due 6/1/07 251,719
Marcus Cable Co.:
250,000 B Sr. Debentures, 11.875% due 10/1/05 255,000
450,000 B+ Sr. Discount Notes, step bond to yield
11.738% due 8/1/04 312,750
425,000 B NWCG Holding Corp., Sr. Discount Notes,
zero coupon due 6/15/99 286,875
Rogers Cablesystems:
150,000 BB+ Sr. Secured Debentures, 10.125% due 9/1/12 156,000
450,000 BB- Sr. Debentures, 10.875% due 4/15/04 471,375
300,000 BB- SCI Television, Sr. Notes, 11.000% due 6/30/05 319,875
300,000 B+ Videotron Holdings PLC, Sr. Discount Notes, step bond to
yield 10.979% due 8/15/05 180,000
150,000 B- Wireless One Inc., Sr. Notes, 13.000% due 10/15/03 155,250
- --------------------------------------------------------------------------------------------------------------------
3,855,313
- --------------------------------------------------------------------------------------------------------------------
Building/Construction -- 1.7%
350,000 BB- American Standard Inc., Sr. Debentures,
11.375% due 5/15/04 388,938
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Chemicals -- 2.5%
$ 420,000 B NL Industries Inc., Sr. Secured Notes, 11.750%
due 10/15/03 $ 448,350
100,000 B+ Terra Industries, Inc., Sr. Notes, Series B, 10.500%
due 6/15/05+ 107,750
- --------------------------------------------------------------------------------------------------------------------
556,100
- --------------------------------------------------------------------------------------------------------------------
Communications -- 8.5%
200,000 CCC- Dial Call Communications, Inc., Sr. Discount Notes,
step bond to yield 12.034% due 4/15/04 107,500
350,000 B- Metrocall Inc., Sr. Sub. Notes, 10.375% due 10/1/07 360,063
300,000 CCC- Nextel Communications, Sr. Discount Notes,
step bond to yield 11.780% due 8/15/04+ 153,000
275,000 NR Pagemart Inc., Sr. Discount Notes, step bond to yield
11.643% due 11/1/03+ 198,688
250,000 B Paging Network, Sr. Sub. Notes, 10.125% due 8/1/07 266,250
800,000 BB Telewest Communications, Debentures,
step bond to yield 10.998% due 10/1/07 472,000
325,000 CCC+ USA Mobile Communications, Inc., Sr. Notes,
14.000% due 11/1/04 374,563
- --------------------------------------------------------------------------------------------------------------------
1,932,064
- --------------------------------------------------------------------------------------------------------------------
Consumer Durables -- 2.0%
400,000 B+ International Semi-Tech, Sr. Secured Notes, step bond to
yield 12.673% due 8/15/03 208,500
250,000 B Samsonite Corp., Sr. Sub. Notes, 11.125% due 7/15/05+ 241,875
- --------------------------------------------------------------------------------------------------------------------
450,375
- --------------------------------------------------------------------------------------------------------------------
Diversified and Conglomerate Manufacturing -- 1.1%
250,000 B3* Interlake Corp., Sr. Sub. Debentures, 12.125% due 3/1/02 238,125
- --------------------------------------------------------------------------------------------------------------------
Diversified and Conglomerate Services -- 1.2%
100,000 B- Russel Metals, Sr. Notes, 10.250% due 6/15/00 97,125
150,000 B SHL Systemshouse Inc., Sr. Sub. Notes, 12.250% due 9/1/01 186,375
- --------------------------------------------------------------------------------------------------------------------
283,500
- --------------------------------------------------------------------------------------------------------------------
Electric Utilities -- 1.0%
150,000 BB- California Energy Inc., Sr. Discount Notes,
step bond to yield 10.250% due 1/15/04 135,375
86,583 BB- Midland Funding Corp. I, Sr. Secured Lease Obligation
Bond, Series C 91, 10.330% due 7/23/02 90,696
- --------------------------------------------------------------------------------------------------------------------
226,071
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Electronics and Computers -- 2.5%
$ 250,000 B Bell and Howell Holdings Co., Sr. Discount Sub.
Debentures, Series B, step bond to yield 12.100%
due 3/1/05 $ 160,625
150,000 B- Dictaphone Corp., Sr. Sub. Notes, 11.750% due 8/1/05 150,562
250,000 B- Graphic Controls Corp., Sr. Sub. Notes,
12.000% due 9/15/05+ 255,000
- --------------------------------------------------------------------------------------------------------------------
566,187
- --------------------------------------------------------------------------------------------------------------------
Food -- 1.4%
300,000 B- Van De Kamp, Inc., Sr. Sub. Notes, 12.000% due 9/15/05 308,250
- --------------------------------------------------------------------------------------------------------------------
Grocery and Convenience Stores -- 4.6%
200,000 B- Farm Fresh Inc., Sr. Notes, 12.250% due 10/1/00 166,000
106,700 B- Kash-N-Karry Food Stores, Inc., Sr. Notes, 11.500% due 2/1/03 108,834
450,000 B Pathmark Stores Inc., Debentures, 12.625% due 6/15/05 474,750
300,000 B- Ralphs Grocery, Sr. Sub. Notes, 11.000% due 6/15/05 292,125
- --------------------------------------------------------------------------------------------------------------------
1,041,709
- --------------------------------------------------------------------------------------------------------------------
Healthcare -- 1.5%
150,000 B Charter Medical Corp., Sr. Sub. Notes,
11.250% due 4/15/04+ 162,375
150,000 B- Ornda Healthcorp, Sr. Sub. Notes, 12.250% due 5/15/02 166,125
- --------------------------------------------------------------------------------------------------------------------
328,500
- --------------------------------------------------------------------------------------------------------------------
Hotel, Casinos and Gaming -- 6.1%
250,000 B Aztar Corporation, Sr. Sub. Notes, 13.750% due 10/1/04 271,250
255,000 BB- Bally's Grand, 1st Mortgage Notes,
10.375% due 12/15/03 256,275
230,000 BB- Boyd Gaming Corp., Sr. Sub. Notes, Series B,
10.750% due 9/1/03 242,650
100,000 NR Mohegan Tribal Gaming, Sr. Secured Notes,
13.500% due 11/15/02+ 105,500
300,000 BB GNF Corp., 1st Mortgage Notes, 10.625% due 4/1/03 262,500
250,000 B Station Casinos Inc., Sr. Sub. Notes, 9.625% due 6/1/03 240,000
- --------------------------------------------------------------------------------------------------------------------
1,378,175
- --------------------------------------------------------------------------------------------------------------------
Insurance -- 0.5%
100,000 BB+ Life Partners Group Inc., Sr. Sub. Notes,
12.750% due 7/15/02 110,750
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Leisure -- 2.8%
$ 400,000 B Coleman Holdings Inc., Sr. Discount Notes,
zero coupon to yield 9.270% due 5/27/98 $ 319,000
300,000 NR Gillett Holdings, Inc., Sr. Sub. Notes, Series A,
12.250% due 6/30/02 316,500
- --------------------------------------------------------------------------------------------------------------------
635,500
- --------------------------------------------------------------------------------------------------------------------
Machinery -- 0.5%
100,000 B- Day International Group, Sr. Sub Notes,
11.125% due 6/1/05+ 104,500
- --------------------------------------------------------------------------------------------------------------------
Metals and Mining -- 2.1%
250,000 B Algoma Steel Inc., 1st Mortgage Notes,
12.375% due 7/15/05 225,625
200,000 B- Kaiser Aluminum, Sr. Sub. Notes, 12.750% due 2/1/03 221,000
30,000 B UCAR Global Enterprises Inc., Sr. Sub. Notes,
12.000% due 1/15/05 33,750
- --------------------------------------------------------------------------------------------------------------------
480,375
- --------------------------------------------------------------------------------------------------------------------
Oil and Natural Gas -- 3.8%
400,000 B+ Global Marine, Sr. Secured Notes, 12.750% due 12/15/99 443,000
200,000 B Santa Fe Energy Resources, Sr. Sub. Debentures,
11.000% due 5/15/04 218,500
200,000 B United Meridian Corp., Sr. Sub Notes,
10.375% due 10/15/05 204,000
- --------------------------------------------------------------------------------------------------------------------
865,500
- --------------------------------------------------------------------------------------------------------------------
Other Utilities -- 0.9%
200,000 BB- California Energy, Sr. Notes, 9.875% due 6/30/03 206,000
- --------------------------------------------------------------------------------------------------------------------
Packaging and Containers -- 2.3%
250,000 B Calmar Inc., Sr. Sub. Notes, 11.500% due 8/15/05+ 257,500
150,000 B Gaylord Container Corp., Sr. Notes, 11.500% due 5/15/01 155,250
100,000 B+ Stone Consolidated Corp., Sr. Secured Notes,
10.250% due 12/15/00 107,000
- --------------------------------------------------------------------------------------------------------------------
519,750
- --------------------------------------------------------------------------------------------------------------------
Paper and Printing -- 8.7%
250,000 BB Asia Pulp & Paper International Finance, Secured Notes,
11.750% due 10/1/05 255,625
300,000 BB- Domtar Inc., Notes, 12.000% due 4/15/01 349,500
300,000 BB Indah Kiat International Finance Co., Sr. Secured Notes,
11.375% due 6/15/99 315,000
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Paper and Printing -- 8.7% (continued)
Repap New Brunswick, Sr. Notes:
$ 100,000 BB- 9.093% due 7/15/00 $ 100,500
250,000 B+ 10.625% due 4/15/05 256,875
Riverwood International, Sr. Sub. Notes:
200,000 B 11.250% due 6/15/02 214,000
250,000 B Series II, 11.250% due 6/15/02 267,500
100,000 B+ SD Warren Corp., Series A, Sr. Sub. Notes,
12.000% due 12/15/04+ 111,250
100,000 BB Tjiwi Kimia Industries, Sr. Notes, 13.250% due 8/1/01 109,500
- --------------------------------------------------------------------------------------------------------------------
1,979,750
- --------------------------------------------------------------------------------------------------------------------
Personal Care -- 3.6%
150,000 BB- American Safety Razor Co., Series A, Sr. Notes,
9.875% due 8/1/05+ 151,875
100,000 B3* Revlon Consumer Products Corp., Sr. Sub. Notes, Series B,
10.500% due 2/15/03 103,250
750,000 B- Revlon Worldwide Corp., Sr. Secured Notes,
zero coupon to yield 13.750% due 3/15/98+ 561,563
- --------------------------------------------------------------------------------------------------------------------
816,688
- --------------------------------------------------------------------------------------------------------------------
Publishing -- 0.5%
150,000 B- Marvel Holdings Inc., Sr. Secured Notes, zero coupon to
yield 15.860% due 4/15/98+ 110,250
- --------------------------------------------------------------------------------------------------------------------
Real Estate Investment -- 1.2%
275,000 BB- Trizec Finance., Sr. Notes, 10.875% due 10/15/05 277,060
- --------------------------------------------------------------------------------------------------------------------
Tobacco -- 0.5%
100,000 B Consolidated Cigar Acquisition Corp., Sr. Sub. Notes,
10.500% due 3/1/03 102,125
- --------------------------------------------------------------------------------------------------------------------
Transportation -- 1.2%
250,000 BB- Sea Containers Limited, Sr. Sub. Debentures,
12.500% due 12/1/04 271,250
- --------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS AND NOTES
(Cost -- $18,210,382) 18,551,117
====================================================================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
SMITH BARNEY HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
PREFERRED STOCKS -- 2.4%
Health Care and Pharmaceuticals -- 0.8%
4,575 Foxmeyer Health Corp., Series A, Payment-in-kind,
Exchange $4.20 (Formerly National Intergroup) $ 169,847
- --------------------------------------------------------------------------------------------------------------------
Publishing -- 0.7%
5,500 K-III Communications Corp., Series A, Exchange $2.875 149,188
- --------------------------------------------------------------------------------------------------------------------
Metals and Mining -- 0.4%
3,942 BCP/Essex Holding, Series A, Exchange 15.000% 101,507
- --------------------------------------------------------------------------------------------------------------------
Telecommunications -- 0.5%
106 PanAmSat Corp., Series A, Exchange $31.875 115,512
- --------------------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost -- $515,827) 536,054
====================================================================================================================
MISCELLANEOUS -- 0.6%
200 Dial Call Communications, Inc. Warrants,
expire 12/15/98+ 320
2,400 Navistar International, Series G,
Convertible Preferred $6.00 127,500
- --------------------------------------------------------------------------------------------------------------------
TOTAL MISCELLANEOUS
(Cost -- $122,851) 127,820
====================================================================================================================
SUB-TOTAL INVESTMENTS
(Cost -- $18,849,060) 19,214,991
====================================================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
REPURCHASE AGREEMENT -- 15.1%
$3,411,000 Chemical Securities Inc., 5.800% due 11/1/95;
Proceeds at maturity -- $3,411,549;
(Fully collateralized by U.S. Treasury Notes,
6.125% due 5/31/97; Market value -- $3,479,409)
(Cost -- $3,411,000) 3,411,000
====================================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $22,260,060)++ $22,625,991
====================================================================================================================
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
U.S. GOVERNMENT SECTOR -- 28.7%
==========================================================================================================================
U.S. Government & Agency Obligations -- 28.7%
$ 509,275 AAA FNMA, 7.000% due 7/1/25 $ 505,456
173,785 AAA GNMA, 7.000% due 12/15/22 172,861
133,613 AAA GNMA, 7.000% due 10/15/23 132,902
55,312 AAA GNMA, 7.000% due 12/15/23 55,018
126,317 AAA GNMA, 7.000% due 12/15/23 125,645
173,298 AAA GNMA, 7.000% due 2/15/24 172,375
54,172 AAA GNMA, 7.000% due 4/15/24 53,883
68,986 AAA GNMA, 7.000% due 5/15/24 68,618
470,250 AAA GNMA, 7.000% due 11/15/24 469,512
44,329 AAA GNMA, 7.000% due 5/15/24 44,093
208,782 AAA GNMA, 7.000% due 8/15/25 207,671
101,923 AAA GNMA, 7.500% due 8/15/24 103,419
293,800 AAA GNMA, 7.500% due 10/15/24 298,113
1,078,000 AAA GNMA TBA, 6.500% due 10/15/25 1,047,008
1,500,000 AAA U.S. Treasury Bond, 6.875% due 8/15/25 1,610,880
205,000 AAA U.S. Treasury Bond, Stripped Principal Payment
only due 2/15/19 45,082
210,000 AAA U.S. Treasury Notes, Stripped Principal Payment
only due 8/15/22 37,550
490,000 AAA U.S. Treasury Notes, 5.750% due 10/31/00 488,942
1,000,000 AAA U.S. Treasury Notes, 6.125% due 9/30/00 1,013,660
1,865,000 AAA U.S. Treasury Notes, 6.500% due 5/15/05 1,930,555
500,000 AAA U.S. Treasury Notes, 6.500% due 8/15/05 517,865
25,000 AAA U.S. Treasury Notes, 8.125% due 8/15/19 30,089
390,000 AAA U.S. Treasury Notes, 10.750% due 5/15/03 502,105
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECTOR
(Cost -- $9,424,083) 9,633,302
==========================================================================================================================
HIGH YIELD SECTOR -- 32.7%
==========================================================================================================================
CORPORATE DEBENTURES -- 32.2%
Advertising-Communications -- 0.2%
50,000 B Outdoor Systems Inc., Sr. Notes, 10.750% due 8/15/03 48,375
25,000 NR Universal Outdoor Inc., Sr. Notes, 11.000% due 11/15/03 24,563
- --------------------------------------------------------------------------------------------------------------------------
72,938
- --------------------------------------------------------------------------------------------------------------------------
Automotive -- 0.4%
125,000 B3* Aftermarket Technology, Sr. Sub. Notes, 12.000% due 8/1/04 133,438
- --------------------------------------------------------------------------------------------------------------------------
Aviation Components -- 1.2%
130,000 BB- BE Aerospace, Sr. Notes, 9.750% due 3/1/03 130,813
25,000 B Fairchild Industries, Sr. Secured Notes, 12.250% due 2/1/99 26,000
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Aviation Components -- 1.2% (continued)
$ 125,000 B- K&F Industries Inc., Sr. Sub. Discount Debentures,
13.750% due 8/1/01 $ 130,156
75,000 BB Sequa Corp., Sr. Notes, 9.625% due 10/15/99 73,125
45,000 BB- UNC Inc., Sr. Notes, 9.125% due 7/15/03 40,163
- --------------------------------------------------------------------------------------------------------------------------
400,257
- --------------------------------------------------------------------------------------------------------------------------
Brewers -- 0.3%
100,000 B+ Canandaigua Wine, Sr. Sub. Notes, 8.750% due 12/15/03 99,875
- --------------------------------------------------------------------------------------------------------------------------
Broadcasting -- 1.5%
150,000 B Act III Broadcasting Inc., Sr. Sub. Notes,
9.625% due 12/15/03 152,625
125,000 B- Argyle Television, Sr. Sub. Notes, 9.750% due 11/1/05 125,625
125,000 B- Paxson Communications, Sr. Sub. Notes,
11.625% due 10/1/02 122,812
83,000 NR Petracom Holdings, zero coupon due 2/1/03 56,233
50,000 B SFX Broadcasting, Sr. Sub. Notes, 11.375% due 10/1/00 52,375
- --------------------------------------------------------------------------------------------------------------------------
509,670
- --------------------------------------------------------------------------------------------------------------------------
Building Materials -- 1.3%
150,000 BB- American Standard Inc., Sr. Sub. Debentures,
9.250% due 12/1/16 156,375
200,000 B Intercity Products Corp., Sr. Secured Notes,
9.750% due 3/1/00 158,000
25,000 BB- Schuller International Group, Sr. Notes,
10.875% due 12/15/04 27,875
35,000 B Valcor Inc., Sr. Notes, 9.625% due 11/1/03 32,112
75,000 NR Walter Industries Inc., Sr. Notes, 12.190% due 3/15/00 76,312
- --------------------------------------------------------------------------------------------------------------------------
450,674
- --------------------------------------------------------------------------------------------------------------------------
Casinos -- 1.6%
30,000 BB+ Harrahs Operating, Sr. Sub. Notes, 10.875% due 4/15/02 32,738
100,000 CCC+ Lady Luck Gaming Financial Corp., Guaranteed
1st Mortgage Note, 10.500% due 3/1/01 77,250
25,000 NR Louisiana Casino Cruises, 1st Mortgage,
11.500% due 12/1/98 24,031
100,000 BB- MGM Grand Hotel Financial Corp., 12.000% due 5/1/02 110,250
75,000 B- Mohegan Tribal Gaming, Sr. Secured Notes,
13.500% due 11/15/02 79,125
50,000 BB Players International Inc., Sr. Notes, 10.875% due 4/15/05 47,875
75,000 B- PRT Funding Corp., Sr. Notes, 11.625% due 4/15/04 61,594
10,000 B Stratosphere Corp., Guaranteed 1st Mortgage Note,
14.250% due 05/15/02 10,600
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Casinos -- 1.6% (continued)
$ 25,000 B- Trump Hotel Casino Resorts Funding, Sr. Secured Notes,
15.500% due 6/15/05 $ 24,750
75,000 B+ Trump Plaza Funding Inc., Guaranteed Mortgage Note,
10.875% due 6/15/01 70,688
- --------------------------------------------------------------------------------------------------------------------------
538,901
- --------------------------------------------------------------------------------------------------------------------------
Chemicals -- 1.1%
125,000 BB- Acetex Corp., Sr. Notes, 9.750% due 10/1/03 128,750
150,000 BB- Huntsman Corp., 1st Mortgage, 10.625% due 4/15/01 163,500
5,000 B- Kaiser Aluminum Chemical Corp., Sr. Sub. Notes,
12.750% due 2/1/03 5,525
50,000 BB- OSI Specialties Inc., Sr. Sub. Notes, 9.250% due 10/1/03 55,250
25,000 BB- Sifto Canada Inc., Guaranteed Secured Note,
8.500% due 7/15/00 23,563
- --------------------------------------------------------------------------------------------------------------------------
376,588
- --------------------------------------------------------------------------------------------------------------------------
Computer Software Services -- 0.7%
175,000 B Computer Vision Corp., Sr. Notes, 10.875% due 8/15/97 183,094
50,000 BB- Unisys Corp., Credit Sensitive Note,
13.500% due 7/1/97 51,000
- --------------------------------------------------------------------------------------------------------------------------
234,094
- --------------------------------------------------------------------------------------------------------------------------
Conglomerates -- 0.3%
25,000 BB+ ADT Group Limited, 9.250% due 8/1/03 26,625
75,000 NR MacAndrews and Forbes Holdings Inc., Sub. Debentures,
13.000% due 3/1/99 77,906
- --------------------------------------------------------------------------------------------------------------------------
104,531
- --------------------------------------------------------------------------------------------------------------------------
Consumer Products -- 0.1%
35,000 B Playtex Family Products Corp., Sr. Sub. Notes,
9.000% due 12/15/03 31,500
25,000 B+ International Semi-Tech., Sr. Secured Discount Notes,
11.500% due 8/15/03 13,031
- --------------------------------------------------------------------------------------------------------------------------
44,531
- --------------------------------------------------------------------------------------------------------------------------
Entertainment -- 1.2%
30,000 BB- AMC Entertainment Inc., Sr. Notes, 11.875%
due 8/1/00 32,850
Chelsea Piers Funding Corp.:
50,000 NR 1st Mortgage Discount Notes, 12.500% due 6/15/04 46,813
5,000 NR 1st Mortgage Discount Notes, Class B, 11.000%
due 6/15/09+ 4,718
30,000 BB- Cinemark USA Inc., Sr. Notes, 12.000% due 6/1/02 32,588
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Entertainment -- 1.2% (continued)
$ 30,000 B- General Media, Sr. Notes, 10.625% due 12/31/00+ $ 25,350
100,000 B+ Premier Parks, Sr. Notes, 12.000% due 8/15/03 103,250
Time Warner Inc., Notes:
7,000 BBB- 7.975% due 8/15/04 7,236
15,000 BBB- 8.110% due 8/15/06 15,694
15,000 BBB- 8.180% due 8/15/07 15,806
125,000 BB- Viacom Inc., Sub. Debentures Exchangeable,
8.000% due 7/7/06 124,062
- --------------------------------------------------------------------------------------------------------------------------
408,367
- --------------------------------------------------------------------------------------------------------------------------
Financial Services -- 2.6%
50,000 BB Aim Management Group, Sr. Notes, 9.000% due 11/15/03 50,688
75,000 BB+ Centerbank, Sub. Notes, 8.375% due 10/1/02 76,500
125,000 B Chevy Chase Savings Bank, Sub. Notes, 9.250%
due 12/1/05 127,031
Comdata Network Inc., Guaranteed:
165,000 B+ Sr. Notes, 12.500% due 12/15/99 185,006
15,000 B- Sr. Sub. Debentures, 13.250% due 12/15/02 17,494
135,000 BB- Keystone Group Inc., Sr. Notes, 9.750% due 9/1/03 134,494
100,000 NR PSF Finance LP, Sr. Secured Notes, 12.250% due 6/15/04+ 104,000
150,000 BB Terra Nova Holdings, Sr. Guaranteed Notes,
10.750% due 7/1/05 153,375
25,000 BB- U.S. Banknote Corp., 10.375% due 6/1/02 18,500
- --------------------------------------------------------------------------------------------------------------------------
867,088
- --------------------------------------------------------------------------------------------------------------------------
Food Wholesalers -- 0.3%
25,000 B+ Chiquita Brands Int'l. Inc., Sr. Notes, 9.125% due 3/1/04 25,125
75,000 B Fresh Delmonte Produce, Sr. Notes, 10.000% due 5/1/03 63,844
- --------------------------------------------------------------------------------------------------------------------------
88,969
- --------------------------------------------------------------------------------------------------------------------------
Gas/Oil Exploration -- 1.4%
Arkla Inc., Debentures:
50,000 BB+ 8.000% due 1/15/97 50,000
50,000 BB+ 8.900% due 12/15/06 55,312
50,000 NR Chesapeake Energy Corp., Guaranteed Sr. Exchangeable,
12.000% due 3/1/01 49,750
50,000 B+ Gulf Canada Resources Ltd., Sr. Sub. Notes,
9.625% due 7/1/05 51,250
75,000 BB Maxus Energy, Medium Term Notes, 10.200% due 5/10/96 75,094
25,000 BBB Transcontinental Gas Pipeline, Debentures, 9.125% due 2/1/17 26,281
50,000 BB- Trans Texas Gas, Sr. Notes, 11.500% due 6/15/02 52,500
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Gas/Oil Exploration -- 1.4% (continued)
$ 100,000 B+ Triton Energy, Sr. Sub. Discount Notes, step bond to
yield 9.750% due 12/15/00 $ 94,000
- --------------------------------------------------------------------------------------------------------------------------
454,187
- --------------------------------------------------------------------------------------------------------------------------
Healthcare Services -- 2.1%
30,000 B+ American Medical International Inc., Sr. Sub. Notes,
13.500% due 8/15/01 33,375
65,000 BBB+ Columbia/HCA Healthcare, Medium Term Notes,
7.580% due 9/15/25 66,950
50,000 B Community Health Systems Inc., Sr. Sub. Debentures,
10.250% due 11/30/03 53,562
50,000 B Genesis Health Ventures Inc., Sr. Sub. Notes,
9.750% due 6/15/05 52,250
100,000 B Paracelsus Healthcare Corp., Sr. Sub. Notes,
9.875% due 10/15/03 100,375
Tenet Healthcare Corp., Sr. Notes:
50,000 B+ 9.625% due 9/1/02 54,000
100,000 B+ 10.125% due 3/1/05 108,250
153,000 B- Total Renal Care Inc., Sr. Sub. Discount,
step bond to yield 12.000% due 8/15/04 146,766
85,000 NR Universal Health Service Inc., Sr. Notes, 8.750% due 5/15/05 83,938
- --------------------------------------------------------------------------------------------------------------------------
699,466
- --------------------------------------------------------------------------------------------------------------------------
Hotels -- 1.3%
100,000 B Continental Home Holdings, Sr. Notes, 12.000% due 8/1/99 106,000
85,000 BB- HMH Properties Inc., Sr. Notes, 9.500% due 5/15/05 85,850
15,000 BB- John Q. Hammons Hotels LP, 8.875% due 2/15/04 14,625
50,000 BB- La Quinta Motor Inns Inc., Sr. Sub. Notes, 9.250%
due 5/15/03 53,000
25,000 B- Presley Companies Delaware, Sr. Notes, 12.500% due 7/1/01 21,375
75,000 B- Red Roofs Inns Inc., Sr. Notes, 9.625% due 12/15/03 72,750
100,000 BB- Scotsman Group, Sr. Notes, 9.500% due 12/15/00 98,125
- --------------------------------------------------------------------------------------------------------------------------
451,725
- --------------------------------------------------------------------------------------------------------------------------
Household Furnishings -- 0.2%
53,070 NR Simmons Mattress, 8.000% due 1/17/03 53,070
- --------------------------------------------------------------------------------------------------------------------------
Insurance -- 0.6%
50,000 B- American Annuity Group Inc., Sr. Sub. Notes,
11.125% due 2/1/03 52,625
Reliance Group Holdings Inc., Sr. Sub. Debentures:
100,000 BB+ 9.000% due 11/15/00 102,000
35,000 BB- 9.750% due 11/15/03 35,788
- --------------------------------------------------------------------------------------------------------------------------
190,413
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Machinery -- 0.2%
$ 75,000 B Terex Corp. Unit, Sr. Secured Notes, 13.750% due 5/15/02+ $ 63,562
- --------------------------------------------------------------------------------------------------------------------------
Manufacturing-Communications -- 0.1%
30,000 BB+ Amphenol Corp., Sr. Sub. Notes, 12.750% due 12/15/02 33,787
- --------------------------------------------------------------------------------------------------------------------------
Media-Cable -- 3.0%
Adelphia Communications Corp., Sr. Notes:
25,000 B 12.500% due 5/15/02 24,750
70,926 B Series B, 9.500% due 2/15/04 60,110
40,000 BB- Century Communications Corp., Sr. Notes,
9.500% due 3/1/05 40,600
100,000 CCC Australis Media, Sr. Sub. Discount Notes, step bond to
yield 14.000% due 5/15/03 70,000
CF Cable Television Inc., Sr. Notes:
50,000 BBB- 9.125% due 7/15/07 51,000
35,000 BB+ 11.625% due 2/15/05 38,063
Cablevision Systems Corp., Sr. Sub. Debentures:
25,000 B 9.875% due 2/15/13 26,312
100,000 B 9.875% due 4/1/23 104,750
55,651 NR Falcon Holdings Group Inc., Sr. Sub. Notes, Series B,
11.000% due 9/15/03 52,590
25,000 B Heartland Wireless Communication Unit,
13.000% due 4/15/03 27,625
100,000 BB Jones Intercable Inc., Sr. Sub. Notes, 9.625% due 3/15/02 106,000
100,000 B Marcus Cable Operating Co., Sr. Discount Notes,
13.500% due 8/1/04 69,500
50,000 BB+ Summit Communication Group, Sr. Sub. Debentures,
10.500% due 4/15/05 53,250
50,000 BBB- Telecommunications Inc., Debentures, 9.250% due 1/15/23 53,687
170,000 BB Telewest Communications, Debentures, step bond to
yield 11.000% due 10/1/07 100,300
50,000 B+ Videotron Holdings PLC, Sr. Discount Notes, step bond to
yield 11.125% due 7/1/04 33,500
100,000 B- Wireless One Inc., Sr. Discount Notes, 13.000% due 10/15/03 103,500
- --------------------------------------------------------------------------------------------------------------------------
1,015,537
- --------------------------------------------------------------------------------------------------------------------------
Medical Supplies -- 0.4%
75,000 B- Graphic Controls, Sr. Sub. Notes, 12.000% due 9/15/05 76,500
50,000 BB+ McGaw Inc., Sr. Notes, 10.375% due 4/1/99 51,812
- --------------------------------------------------------------------------------------------------------------------------
128,312
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Miscellaneous -- 0.8%
$ 50,000 B+ Blue Bird Body Co., Sr. Sub. Notes, 11.750% due 4/15/02 $ 51,625
100,000 NR Herff Jones Inc., Sr. Sub. Notes, 11.000% due 8/15/05+ 105,250
25,000 A+ Quebec Province, Debentures, 7.125% due 2/9/24 24,000
35,000 BB- Reeves Industries, Sr. Notes, 11.000% due 7/15/02 36,444
50,000 B- Solon Automated Services, Sr. Sub. Debentures,
13.750% due 10/15/02 49,875
- --------------------------------------------------------------------------------------------------------------------------
267,194
- --------------------------------------------------------------------------------------------------------------------------
Paper Packaging/Products -- 1.9%
100,000 BB APP International Finance Co., Guaranteed Secured Notes,
11.750% due 10/1/05 102,250
125,000 BB- Domtar, Inc., Sr. Notes, 12.000% due 4/15/01 145,625
75,000 B Gaylord Container Corp., Sr. Sub. Discount Debentures,
11.500% due 5/15/01 77,625
25,000 B- Ivex Packaging, Sr. Sub. Notes, 12.500% due 12/15/02 26,906
50,000 B+ Repap New Brunswick, Sr. Secured Notes,
10.625% due 4/15/05 51,375
Riverwood International Corp., Sr. Notes:
50,000 B+ 10.750% due 6/15/00 52,625
75,000 NR 6.750% due 9/15/03 87,563
50,000 B 10.375% due 6/30/04 53,750
Stone Container Corp., Sr. Sub. Notes:
25,000 B- 11.500% due 9/1/99 25,656
25,000 B 11.500% due 10/1/04 26,125
- --------------------------------------------------------------------------------------------------------------------------
649,500
- --------------------------------------------------------------------------------------------------------------------------
Plastics -- 0.5%
50,000 BB- Carlisle Plastic Inc., Sr. Extendible Reset Notes,
10.250% due 6/15/97 50,563
25,000 B+ Key Plastics, Sr. Notes, 14.000% due 11/15/99 28,312
75,000 B+ Owens Illinois Inc., Sr. Sub. Notes, 9.750% due 8/15/04 77,813
- --------------------------------------------------------------------------------------------------------------------------
156,688
- --------------------------------------------------------------------------------------------------------------------------
Publishing -- 0.1%
25,000 BB- World Color Press Inc., Sr. Sub. Notes, 9.125% due 3/15/03 24,781
- --------------------------------------------------------------------------------------------------------------------------
Railroad Equipment -- 0.2%
75,000 B+ Westinghouse Air Brake, Sr. Notes, 9.375% due 6/15/05 78,937
- --------------------------------------------------------------------------------------------------------------------------
Retail Department Stores -- 1.7%
50,000 B+ Brylane LP/Brylane Capital Corp., Sr. Sub. Notes A,
10.000% due 9/1/03 46,312
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Retail Department Stores -- 1.7% (continued)
$ 100,000 B Corporate Express, Sr. Sub. Notes, 9.125% due 3/15/04 $ 100,000
50,000 B- County Seat Stores, Sr. Sub. Notes, 12.000% due 10/1/02 50,062
130,000 CCC+ Loehmann's Holdings, Sr. Sub. Notes, 13.750%
due 2/15/99 131,462
25,000 BBB- Revco DS Inc., New Sr. Notes, 9.125% due 1/15/00 26,094
150,000 BB+ Southland Corp., First Priority, Sr. Sub. Debentures,
5.000% due 12/15/03 124,500
50,000 B- United Stationers, Sr. Sub. Notes, 12.750% due 5/1/05 53,500
50,000 BB- Waban Inc., Sr. Sub. Notes, 11.000% due 5/15/04 51,500
- --------------------------------------------------------------------------------------------------------------------------
583,430
- --------------------------------------------------------------------------------------------------------------------------
Supermarkets -- 0.2%
30,000 B+ Starters Brothers Inc., Sr. Notes, 11.000% due 3/1/01 30,000
25,000 BB+ Stop & Shop Cos. Inc., New Sr. Sub. Notes,
9.750% due 2/1/02 27,125
- --------------------------------------------------------------------------------------------------------------------------
57,125
- --------------------------------------------------------------------------------------------------------------------------
Telecommunications -- 3.0%
100,000 CCC+ A+ Communications, Inc., Sr. Sub. Notes,
11.875% due 11/1/05 100,250
55,000 B+ Callnet Enterprises Inc., Sr. Discount Notes,
step bond to yield 13.250% due 12/1/04 38,912
3,000 NR Celcaribe SA Unit, Sr. Secured Notes,
step bond to yield 13.500% due 3/15/04+ 26,850
100,000 CCC Cellular Inc., Sr. Sub. Notes, step bond to yield
11.750% due 9/1/03 75,500
15,000 CCC- Cencall Communications Corp., Sr. Discount Notes,
step bond to yield 10.125% due 1/15/04 7,725
75,000 CCC+ Horizon Cellular Telephone/LP Horizon Financial Corp., Sr.
Sub. Notes, step bond to yield 11.375% due 10/1/00 62,250
140,000 B+ Intelcom Group Inc., Sr. Discount Notes, step bond to
yield 13.500% due 9/15/05+ 79,800
50,000 B MFS Communications Inc., Sr. Discount Notes,
step bond to yield 9.700% due 1/15/04 38,750
100,000 B- Metrocall Inc., Sr. Sub. Notes, 10.375% due 10/1/07 102,875
125,000 BB- Mobile Telecommunications Tech. Corp., Sr. Notes,
13.500% due 12/15/02 141,250
100,000 CCC- Nextel Communications Inc., Sr. Discount Notes,
step bond to yield 9.750% due 8/15/04 51,000
100,000 B Paging Network, Sr. Sub. Notes, 10.125% due 8/1/07 106,500
50,000 B- PanAmSat LP/PanAmSat Capital Corp., Sr. Sub. Notes,
step bond to yield 11.375% due 8/1/03 40,125
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Telecommunications -- 3.0% (continued)
$ 75,000 CCC+ Pricecellular Wireless Corp., Sr. Sub. Discount
Exchange Notes, zero coupon due 11/15/01 $ 62,719
76,000 NR Pricellular Wire, Convertible Debentures,
10.750% due 8/15/04 45,980
25,000 BB- Rogers Communications Inc., Sr. Debentures,
10.875% due 4/15/04 26,188
- --------------------------------------------------------------------------------------------------------------------------
1,006,674
- --------------------------------------------------------------------------------------------------------------------------
Utility-Electric -- 1.7%
50,000 BB Cleveland Electric Illuminating Co., 1st Mortgage,
9.000% due 7/1/23 47,250
50,000 B First PV Funding Corp., Lease Obligation Bond
Series 86B, 10.150% due 7/1/23 52,375
35,000 BB+ Long Island Lighting Co., Debentures, 9.000% due 11/1/22 36,619
42,617 BB- Midland Funding Corp. I, Sr. Secured Lease Obligation Bond,
Series C 91,10.330% due 7/23/02 44,641
Midland Funding Corp. II, Sub. Secured Lease
Obligation Bond:
75,000 B- Series A, 11.750% due 7/23/05 78,937
75,000 B- Series B, 13.250% due 7/23/06 81,750
105,000 Ba2* Public Service of New Hampshire, Contingent Note,
15.230% due 7/1/00 126,263
100,000 B Texas New Mexico Power, Secured Debentures,
12.500% due 1/15/99 110,000
- --------------------------------------------------------------------------------------------------------------------------
577,835
- --------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE DEBENTURES
(Cost -- $10,573,929) 10,822,144
==========================================================================================================================
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS -- 0.5%
250 Cablevision System Corp., Series G, Preferred Stock 25,813
10 General Media Inc. Warrants, expire 12/31/00 50
1,325 Grand Union Co., Common Stock 14,244
1,250 Granite Broadcasting, Preferred Stock 64,375
75 Louisiana Casino Cruises Warrants, expire 12/1/98 1
201 Petracomm Holdings Warrants, expire 8/1/05+ 1,432
221 President Riverboat Casinos Inc. Warrants, expire 9/30/99 884
825 SD Warren Convertible Preferred Stock 14.000% 22,687
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
MISCELLANEOUS -- 0.5% (continued)
85 SD Warren Unit Warrants, expire 12/15/06+ $ 23,800
- --------------------------------------------------------------------------------------------------------------------------
Total Miscellaneous (Cost -- $179,686) 153,286
==========================================================================================================================
TOTAL HIGH YIELD SECTOR
(Cost -- $10,753,615) 10,975,430
==========================================================================================================================
FACE
AMOUNT(a) RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SECTOR -- 25.9%
==========================================================================================================================
FOREIGN GOVERNMENT AGENCIES & OBLIGATIONS -- 25.8%
Argentina -- 1.0%
Republic of Argentina:
50,000 BB- 10.950% due 11/1/99 50,000
510,000 BB- 6.875% due 3/31/23 288,788
- --------------------------------------------------------------------------------------------------------------------------
338,788
- --------------------------------------------------------------------------------------------------------------------------
Australia -- 0.4%
175,000 AAA Australian Government, 8.750% due 1/15/01 135,221
- --------------------------------------------------------------------------------------------------------------------------
Brazil -- 1.2%
50,000 NR Banco Nacional De Comercio Exterior SNC,
7.250% due 2/2/04 36,000
25,000 NR Republic of Brazil Sinking Fund, variable rate
6.813% due 4/15/06 16,625
403,750 NR Republic of Brazil, variable rate 6.875% due 1/1/01 354,291
- --------------------------------------------------------------------------------------------------------------------------
406,916
- --------------------------------------------------------------------------------------------------------------------------
Canada -- 3.3%
Canadian Government:
195,000 Aa1* 6.500% due 6/1/04 135,558
580,000 NR 9.000% due 12/1/04 472,279
620,000 Aaa* 8.750% due 12/1/05 500,209
- --------------------------------------------------------------------------------------------------------------------------
1,108,046
- --------------------------------------------------------------------------------------------------------------------------
Denmark -- 0.9%
1,560,000 NR Danish Government, 9.000% due 11/15/00 309,174
- --------------------------------------------------------------------------------------------------------------------------
France -- 4.3%
French Government:
2,450,000 NR 7.000% due 11/12/99 510,390
2,130,000 NR 7.750% due 4/12/00 456,003
2,160,000 Aaa* 8.500% due 11/25/02 477,876
- --------------------------------------------------------------------------------------------------------------------------
1,444,269
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Germany -- 4.1%
Deutscheland Republic:
350,000 Aaa* 8.250% due 9/20/01 $ 276,933
480,000 NR 7.375% due 1/3/05 360,707
335,000 NR 6.875% due 5/12/05 244,251
780,000 Aaa* 6.250% due 1/4/24 488,504
- --------------------------------------------------------------------------------------------------------------------------
1,370,395
- --------------------------------------------------------------------------------------------------------------------------
Great Britain -- 3.2%
United Kingdom Treasury:
560,000 NR 7.000% due 11/6/01 857,948
150,000 NR 7.750% due 9/8/06 236,704
- --------------------------------------------------------------------------------------------------------------------------
1,094,652
- --------------------------------------------------------------------------------------------------------------------------
Italy -- 2.9%
Italian Government:
790,000,000 NR 8.500% due 4/1/99 461,170
325,000,000 NR 12.000% due 1/1/03 209,885
535,000,000 NR 10.500% due 4/1/05 315,667
- --------------------------------------------------------------------------------------------------------------------------
986,722
- --------------------------------------------------------------------------------------------------------------------------
Mexico -- 0.8%
400,000 BB Mexico Discount, Brady Floater Bond,
6.969% due 12/31/19 268,748
- --------------------------------------------------------------------------------------------------------------------------
Netherlands -- 1.6%
730,000 NR Netherlands Government, 9.000% due 5/15/00 525,752
- --------------------------------------------------------------------------------------------------------------------------
Poland -- 0.6%
250,000 NA Poland Registered Discount, Brady Floater Bond,
6.875% due 10/27/24 191,562
- --------------------------------------------------------------------------------------------------------------------------
Spain -- 1.5%
57,700,000 NR Spanish Government, 12.250% due 3/25/00 498,792
TOTAL FOREIGN GOVERNMENT
AGENCIES & OBLIGATIONS
(Cost -- $8,438,507) 8,679,037
==========================================================================================================================
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
OPTIONS -- 0.1%
940,000,000 BTPS Call 94.25 1/24/96 $ 8,920
690,000 USD Call/DEM Put 1.49 12/11/95 1,932
800,000 USD Call/JPY Put 102.50 12/22/95 11,920
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS
(Cost -- $31,546) 22,772
==========================================================================================================================
TOTAL INTERNATIONAL SECTOR
(Cost -- $8,470,053) 8,701,809
==========================================================================================================================
SUBTOTAL INVESTMENTS
(Cost -- $28,647,751) 29,310,541
==========================================================================================================================
FACE
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 12.7%
$ 4,281,000 Lehman Brothers, 5.860% due 11/1/95; Proceeds at
maturity -- $4,281,697; (Fully collateralized by
U.S. Treasury Notes, 7.625% due 2/15/07; Market value --
$4,288,096) (Cost -- $4,281,000) 4,281,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $32,928,751)++ $33,591,541
==========================================================================================================================
</TABLE>
(a) Represents local currency.
+ Security exempt from registration under Rule 144A of Securities Act of 1933.
These securities may be resold in transactions exempt from registration,
generally to qualified institutional buyers.
++ Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
25
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Schedules of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except those identified by an
asterisk (*) are rated by Moody's Investors Services. The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's--Ratings from "AA" to "CCC" may be modified by the addition of
a plus (+) or a minus (-) sign to show relative standings within the major
rating categories
AAA - Bonds rated "AAA" have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA - Bonds rated "AA" have a very strong capacity to pay interest
and repay principal and differs from the highest rated issue
only in a small degree.
A - Bonds rated "A" have a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB - Bonds rated "BBB" are regarded as having an adequate capacity
to pay interest and repay principal. Whereas they normally
exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB - Bonds rated "BB" have less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments.
B - Bonds rated "B" have a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal.
CCC - Bonds rated "CCC" are regarded, on balance, as predominately
speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation.
D - Bonds rated "D" are in default, and payment of interest and/or
repayment of principal is in arrears.
Moody's - Numerical modifiers 1, 2, and 3 may be applied to each generic
rating from "Aa" to "Caa", where 1 is the highest and 3 the
lowest rating within its generic category.
Aaa - Bonds that are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds that are rated "Aa" are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A - Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade which
suggest a susceptibility to impairment some time in the future.
Baa - Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear for
the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Ba - Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated "B" generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
NR - Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investor's Services.
26
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Putnam
Smith Barney Diversified
High Income Income
Portfolio Portfolio
------------ -----------
<S> <C> <C>
ASSETS:
Investments, at value (Cost -- $18,849,060 $ 19,214,991 $ 29,310,541
and $28,647,751, respectively)
Repurchase agreements (Cost -- $3,411,000
and $4,281,000, respectively) 3,411,000 4,281,000
Cash 139 984
Receivable for securities sold -- 55,199
Receivable for Fund shares sold 119,515 100,177
Dividends and interest receivable 366,919 672,430
Other receivables -- 926
------------ ------------
Total Assets 23,112,564 34,421,257
------------ ------------
LIABILITIES:
Payable for securities purchased 2,619,790 2,604,152
Management fees payable 20,429 67,573
Payable for open forward foreign currency
contracts -- 177,658
Options written -- 311
Accrued expenses and other liabilities 22,532 57,834
------------ ------------
Total Liabilities 2,662,751 2,907,528
------------ ------------
Total Net Assets $ 20,449,813 $ 31,513,729
============ ============
NET ASSETS:
Par value of capital shares $ 18 $ 28
Capital paid in excess of par value 19,265,663 29,320,479
Undistributed net investment income 838,320 1,271,270
Accumulated net realized gain (loss)
on security transactions (20,119) 449,691
Net unrealized appreciation of investments,
options and foreign currencies 365,931 472,261
------------ ------------
Total Net Assets $ 20,449,813 $ 31,513,729
============ ============
Shares Outstanding 1,815,579 2,749,284
------------ ------------
Net Asset Value $11.26 $11.46
------------ ------------
</TABLE>
See Notes to Financial Statements
27
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
<TABLE>
<CAPTION>
Putnam
Smith Barney Diversified
High Income Income
Portfolio Portfolio
------------ -----------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 871,816 $ 1,395,929
Dividends 25,002 805
Less: Foreign withholding tax -- (10,528)
---------- -----------
Total Investment Income 896,818 1,386,206
---------- -----------
EXPENSES:
Management fees (Note 2) 53,173 122,559
Audit and legal 13,000 15,500
Shareholder and system servicing fees 7,000 6,009
Shareholder communications 6,000 10,000
Registration fees 5,650 7,802
Custody 2,400 37,000
Directors' fees 2,000 3,818
Pricing service fees 2,000 10,000
Other 2,500 500
---------- -----------
Total Expenses 93,723 213,188
Less: Management fee waiver (32,744) (54,986)
---------- -----------
Net Expenses 60,979 158,202
---------- -----------
Net Investment Income 835,839 1,228,004
---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, OPTIONS AND FOREIGN
CURRENCIES (NOTES 3 and 5):
Realized Gain (Loss) From:
Security transactions
(excluding short-term securities) (13,404) 452,216
Options written -- 201
Options purchased -- 55,764
Foreign currency transactions -- (34,540)
---------- -----------
Net Realized Gain (Loss) (13,404) 473,641
---------- -----------
Change in Net Unrealized Appreciation (Depreciation)
of Investments, Options Written and Foreign Currencies:
Beginning of year (68,023) (25,806)
End of year 365,931 472,261
---------- -----------
Increase in Net Unrealized Appreciation 433,954 498,067
---------- -----------
Net Gain on Investments, Options and
Foreign Currencies 420,550 971,708
---------- -----------
Increase in Net Assets From Operations $1,256,389 $ 2,199,712
========== ===========
</TABLE>
See Notes to Financial Statements
28
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1995
and the Period Ended October 31, 1994
<TABLE>
<CAPTION>
Putnam
Smith Barney Diversified
High Income Portfolio Income Portfolio
--------------------------- -----------------------------
1995 1994(a) 1995 1994(a)
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 835,839 $ 101,338 $ 1,228,004 $ 96,849
Net realized gain (loss) (13,404) (6,715) 473,641 (3,294)
Increase (decrease) in net
unrealized appreciation 433,954 (68,023) 498,067 (25,806)
----------- ---------- ----------- ----------
Increase in Net Assets
From Operations 1,256,389 26,600 2,199,712 67,749
----------- ---------- ----------- ----------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (101,352) -- (78,180) --
----------- ---------- ----------- ----------
Decrease in Net Assets From
Distributions to Shareholders (101,352) -- (78,180) --
----------- ---------- ----------- ----------
FUND SHARE TRANSACTIONS
(NOTE 8):
Net proceeds from
sales of shares 17,271,651 5,570,590 22,758,517 7,745,319
Net asset value of shares issued
for reinvestment of dividends 85,584 -- 78,180 --
Cost of shares reacquired (1,457,780) (2,201,869) (207,951) (1,049,617)
----------- ---------- ----------- ----------
Increase in Net Assets From
Fund Share Transactions 15,899,455 3,368,721 22,628,746 6,695,702
----------- ---------- ----------- ----------
Increase in Net Assets 17,054,492 3,395,321 24,750,278 6,763,451
NET ASSETS:
Beginning of year 3,395,321 -- 6,763,451 --
----------- ---------- ----------- ----------
End of year* $20,449,813 $3,395,321 $31,513,729 $6,763,451
=========== ========== =========== ==========
* Includes undistributed
net investment income of: $ 838,320 $ 101,338 $ 1,271,270 $ 78,157
=========== ========== =========== ==========
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
See Notes to Financial Statements
29
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney High Income and Putnam Diversified Income Portfolios
("Portfolios") are separate investment portfolios of the Smith Barney/Travelers
Series Fund Inc. ("Fund"). The Fund, a Maryland corporation, is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company and consists of these Portfolios and ten other
separate investment portfolios: AIM Capital Appreciation, Alliance Growth,
American Capital Enterprise, Smith Barney Income and Growth, Smith Barney
International Equity, Smith Barney Pacific Basin, TBC Managed Income, G.T.
Global Strategic Income, MFS Total Return and Smith Barney Money Market
Portfolios. Shares of the Fund are offered only to insurance company separate
accounts which fund certain variable annuity and variable life insurance
contracts. The financial statements and financial highlights for the other
portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolios
are: (a) securities transactions are accounted for on trade date; (b) securities
traded on national securities markets are valued at the closing prices on such
markets; securities for which no sales price was reported and U.S. Government
and Government Agency obligations are valued at the mean between the bid and
asked prices; short-term investments that have a maturity of more than 60 days
are valued at prices based on market quotations for securities of similar type,
yield and maturity; short-term investments that have a maturity of 60 days or
less are valued at cost plus accreted discount, or minus amortized premium, as
applicable; (c) dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis; (d) interest income, adjusted for
accretion of original issue discount, is recorded on the accrual basis; (e)
gains or losses on the sale of securities are calculated by using the specific
identification method; (f) direct expenses are charged to each Portfolio; (g)
the accounting records of the Portfolios are maintained in U.S. dollars. All
assets and liabilities denominated in foreign currencies are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, and income
and expenses are translated at the rate of exchange quoted on the respective
date that such transactions are recorded. Differences between income and expense
amounts recorded and collected or paid are adjusted when reported by the
custodian bank; (h) in accordance with Statement of Position 93-2 Determination,
--------------
Disclosure, and Financial Statement Presentation of
- ---------------------------------------------------
30
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Income, Capital Gain, and Return of Capital Distributions by Investment
- -----------------------------------------------------------------------
Companies, book and tax basis differences relating to shareholder distributions
- ---------
and other permanent book and tax differences are reclassified to undistributed
net investment income. As of October 31, 1995, the cumulative effect of such
differences, totaling $2,495 and $3,941, were reclassified to undistributed net
investment income from paid-in capital for the Smith Barney High Income and
Putnam Diversified Income Portfolios, respectively. Net investment income, net
realized gains, and net assets were not affected by this change; and (i) the
Portfolios intend to comply with the requirements of the Internal Revenue Code
of 1986, as amended, pertaining to regulated investment companies and to make
distributions of taxable income sufficient to relieve it from substantially all
Federal income and excise taxes.
2. Management Agreement and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager of the Fund. The Smith
Barney High Income ("SBHI") and Putnam Diversified Income Portfolios ("PDIP")
pay SBMFM a management fee calculated at an annual rate of 0.60% and 0.75% of
the average daily net assets, of each Portfolio, respectively. All fees are
calculated daily and paid monthly. SBHI is managed by the Greenwich Street
Advisors Division of SBMFM. SBMFM waived a portion of its management fees for
SBHI and PDIP for the year ended October 31, 1995.
SBMFM has entered into a sub-advisory agreement with Putnam Investment
Management, Inc. ("PIM"). Pursuant to the sub-advisory agreement, PIM is
responsible for the day-to-day portfolio operations and investment decisions for
PDIP. SBMFM will pay PIM a monthly fee calculated at the annual rate of 0.35% of
the average daily net assets of PDIP.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares.
All officers and two Directors of the Fund are employees of SB.
31
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. Investments
During the year ended October 31, 1995, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term securities) were:
<TABLE>
<CAPTION>
Putnam
SB High Diversified
Income Income
----------- -----------
<S> <C> <C>
Purchases $19,777,281 $63,346,087
Sales 4,272,095 40,570,265
</TABLE>
At October 31, 1995, the aggregate gross unrealized appreciation and
depreciation of investments for tax purposes were as follows:
<TABLE>
<CAPTION>
Putnam
SB High Diversified
Income Income
--------- -----------
<S> <C> <C>
Gross unrealized appreciation $ 575,089 $ 763,177
Gross unrealized depreciation (209,158) (100,387)
--------- ---------
Net unrealized appreciation $ 365,931 $ 662,790
========= =========
</TABLE>
4. Capital Loss Carryforwards
At October 31, 1995, SBHI had for Federal income tax purposes approximately
$20,119 of unused loss carryforwards available to offset future capital gains.
To the extent that these carryforward losses are used to offset capital gains,
it is possible that the gains so offset will not be distributed. The amount and
expiration of the carryover amounts are indicated below. Expiration occurs on
October 31 of the year indicated:
<TABLE>
2002 2003
------ -------
<S> <C> <C>
SBHI $6,715 $13,404
</TABLE>
5. Option Contracts
Premiums paid when put or call options are purchased by the Portfolios,
represent investments, which are marked-to-market daily. When a purchased option
expires, the Portfolios will realize a loss in the amount of the premium paid.
When the Portfolios enter into closing sales transaction, the Portfolios will
realize a gain or loss depending on whether the proceeds from the closing sales
transaction are greater or lesser than
32
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
the premium paid for the option. When the Portfolios exercise a put option, they
will realize a gain or loss from the sale of the underlying security and the
proceeds from such sale will be decreased by the premium originally paid. When
the Portfolios exercise a call option, the cost of the security which the
Portfolios purchase upon exercise will be increased by the premium originally
paid.
When the Portfolios write a call or put option, an amount equal to the
premium received by the Portfolios is recorded as a liability, the value of
which is marked-to-market daily. When a written option expires, the Portfolios
realize a gain equal to the amount of the premium received. When the Portfolios
enter into a closing purchase transaction, the Portfolios realize a gain (or
loss if the cost of the closing purchase transaction exceeds the premium
received when the option was sold) without regard to any unrealized gain or loss
on the underlying security, and the liability related to such option is
eliminated. When a call option is exercised the cost of the security sold will
be increased by the premium originally received. When a put option is exercised,
the amount of the premium originally received will reduce the cost of the
security which the Portfolios purchased upon exercise.
Putnam Diversified Income Portfolio
<TABLE>
<CAPTION>
Number of
Premiums Contracts
-------- ---------
<S> <C> <C>
Options written, outstanding at October 31, 1994 $ 0 0
Options written during the fiscal year 20,894 12,771
Options cancelled in closing purchase transactions (17,927) (12,770)
-------- -------
Options written, outstanding at October 31, 1995 $ 2,967 1
======== =======
</TABLE>
The following table represents the open options contracts as of October 31,
1995 for PDIP:
<TABLE>
<CAPTION>
Number of Strike
Contracts Expiration Price Value
- --------- ---------- ------ -----
<S> <C> <C> <C>
Call Options Written
1 Call/DEM Put
(Premiums received -- $2,967) 12/11/95 $1.565 $(311)
</TABLE>
6. Forward Foreign Currency Contracts
At October 31, 1995, the PDIP had open forward foreign currency contracts
as described below. The Portfolio bears the market risk that
33
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
arises from changes in foreign currency exchange rates. The unrealized gain
(loss) on the contracts reflected in the accompanying financial statements are
as follows:
<TABLE>
<CAPTION>
Unrealized
Local Market Settlement Gain
Foreign Currency Currency Value Date (Loss)
- ---------------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
To Buy:
Australian Dollar 840,000 $ 638,987 12/13/95 $ 5,267
Canadian Dollar 187,707 139,559 11/03/95 0
Canadian Dollar 1,685,400 1,253,086 12/13/95 5,720
German Deutschemark 5,801,000 4,119,151 12/13/95 88,548
Danish Krone 2,372,000 434,080 12/13/95 14,547
Spanish Peseta 46,000,000 376,278 12/13/95 11,379
French Francs 940,000 192,115 12/13/95 2,903
British Pound 240,000 378,698 12/13/95 11,065
Italian Lira 590,000,000 370,103 12/13/95 4,398
Japanese Yen 550,160,000 5,380,801 12/13/95 (258,841)
Dutch Guilder 347,700 220,049 12/13/95 (6)
New Zealand Dollar 280,000 184,828 12/13/95 699
Swedish Krona 2,950,000 444,036 12/13/95 34,675
----------- ---------
14,131,771 (79,646)
----------- ---------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Cross Forwards:**
Buy German Deutschemark vs French Franc 298,232 11/14/95 12,045
Buy German Deutschemark vs Italian Lira 177,519 11/29/95 7,088
Buy German Deutschemark vs Italian Lira 426,046 01/26/95 (4,364)
Buy Danish Krone vs German Deutschemark 284,229 12/13/95 1,217
Buy French Franc vs German Deutschemark 300,775 11/14/95 4,927
Buy French Franc vs German Deutschemark 497,107 12/13/95 0
Buy British Pound vs German Deutschemark 426,035 12/01/95 (596)
Buy British Pound vs German Deutschemark 331,361 12/13/95 1,298
Buy Italian Lira vs German Deutschemark 173,701 11/29/95 2,349
Buy Italian Lira vs German Deutschemark 431,929 01/26/95 9,785
Buy Swedish Krona vs German Deutschemark 215,911 12/13/95 (1,902)
----------- ---------
3,562,845 31,847
----------- ---------
Market Value and Unrealized Loss
on Forward Foreign Currency Contracts $17,694,617 $ (47,799)
=========== ==========
</TABLE>
34
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
**Local Currency on Cross Forwards Buy Sell
- ---------------------------------- ----------- -----------
<S> <C> <C>
Buy German Deutschemark vs French Franc 420,000 1,455,975
Buy German Deutschemark vs Italian Lira 250,000 277,111,750
Buy German Deutschemark vs Italian Lira 600,000 695,112,000
Buy Danish Krone vs German Deutschemark 1,553,736 400,000
Buy French Franc vs German Deutschemark 1,471 661 420,000
Buy French Franc vs German Deutschemark 2,432,297 700,000
Buy British Pound vs German Deutschemark 270,000 612,217
Buy British Pound vs German Deutschemark 210,000 463,838
Buy Italian Lira vs German Deutschemark 276,905,000 250,000
Buy Italian Lira vs German Deutschemark 688,560,000 600,000
Buy Swedish Krona vs German Deutschemark 1,434,423 300,000
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Local Market Settlement Gain
Foreign Currency Currency Value Date (Loss)
- ---------------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
To Sell:
Australian Dollar 350,000 $ 266,245 12/13/95 $ (5,610)
Canadian Dollar 1,572,700 1,169,294 12/13/95 (15,239)
Swiss Franc 500,000 439,947 12/13/95 (3,718)
German Deutschemark 5,528,000 3,925,299 12/13/95 (110,371)
Danish Krone 3,161,000 578,249 12/13/95 (10,522)
Spanish Peseta 72,000,000 588,957 12/13/95 (16,608)
French Franc 3,991,000 815,672 12/13/95 (25,031)
British Pound 541,000 853,649 12/13/95 (6,112)
Italian Lira 1,311,770,000 822,865 12/13/95 (20,496)
Japanese Yen 488,540,000 4,778,131 12/13/95 175,188
Dutch Guilder 1,260,000 797,418 12/13/95 (34,941)
New Zealand Dollar 65,700 43,369 12/13/95 (394)
Swedish Krona 1,600,000 240,833 12/13/95 (19,581)
----------- ----------
$15,319,928 $ (93,435)
----------- ----------
</TABLE>
35
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized
Market Settlement Gain
Foreign Currency Value Date (Loss)
- ---------------- --------- ---------- -----------
<S> <C> <C> <C>
Cross Forwards:**
Sell German Deutschemark vs Danish Krone 284,030 12/13/95 $ (1,018)
Sell German Deutschemark vs French Franc 298,232 11/14/95 (2,384)
Sell German Deutschemark vs French Franc 497,053 12/13/95 54
Sell German Deutschemark vs British Pound 434,721 12/1/95 (8,089)
Sell German Deutschemark vs British Pound 329,360 12/13/95 703
Sell German Deutschemark vs Italian Lira 177,519 11/29/95 (6,167)
Sell German Deutschemark vs Italian Lira 426,046 01/26/95 (3,901)
Sell German Deutschemark vs Swedish Krone 213,023 12/13/95 4,789
Sell French Franc vs German Deutschemark 297,569 11/14/95 (11,382)
Sell Italian Lira vs German Deutschemark 173,830 11/29/95 (3,400)
Sell Italian Lira vs German Deutschemark 436,039 01/26/95 (5,629)
----------- ---------
3,567,422 (36,424)
----------- ---------
Market Value and Unrealized Loss
on Forward Foreign Currency Contracts $18,887,350 $(129,859)
=========== =========
Total Market Value and Unrealized Loss
on Forward Foreign Currency Contracts $36,581,967 $(177,658)
=========== =========
</TABLE>
<TABLE>
<CAPTION>
**Local Currency on Cross Forwards Buy Sell
- ---------------------------------- ----------- -----------
<S> <C> <C>
Sell German Deutschemark vs Danish Krone 1,553,736 400,000
Sell German Deutschemark vs French Franc 1,471,661 420,000
Sell German Deutschemark vs French Franc 2,432,297 700,000
Sell German Deutschemark vs British Pound 270,000 612,217
Sell German Deutschemark vs British Pound 210,000 463,838
Sell German Deutschemark vs Italian Lira 276,905,000 250,000
Sell German Deutschemark vs Italian Lira 688,560,000 600,000
Sell German Deutschemark vs Swedish Krone 1,434,423 300,000
Sell French Franc vs German Deuschemark 420,000 1,455,975
Sell Italian Lira vs German Deuschemark 250,000 277,111,750
Sell Italian Lira vs German Deuschemark 600,000 695,112,000
</TABLE>
7. Repurchase Agreements
The Portfolios purchase (and their custodian takes possession of) U.S.
Government Securities from banks and securities dealers subject to agreements to
resell the securities to the sellers at a future date (generally, the next
business day) at an agreed-upon higher repurchase price. The Portfolios require
continual maintenance of the market value of the collateral in amounts at least
equal to the repurchase price.
36
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
8. Capital Shares
At October 31, 1995, the Fund had six billion shares of $0.00001 par
value capital stock authorized. Each share of a Portfolio represents an equal
proportionate interest in that Portfolio with each share of the same
Portfolio and has an equal entitlement to any dividends and distributions
made by the Portfolio.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
October 31, 1995 October 31, 1994/(a)/
---------------- ---------------------
<S> <C> <C>
Smith Barney High Income
Shares sold 1,615,645 554,899
Shares issued on reinvestment 8,805 --
Shares redeemed (146,026) (217,744)
--------- --------
Net Increase 1,478,424 337,155
========= ========
Putnam Diversified Income
Shares sold 2,096,498 768,005
Shares issued on reinvestment 7,771 --
Shares redeemed (19,661) (103,329)
--------- --------
Net Increase 2,084,608 664,676
========= ========
</TABLE>
(a) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
37
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
<TABLE>
Smith Barney High Income Portfolio 1995 1994/(1)/
- ---------------------------------- ------- ---------
<S> <C> <C>
Net Asset Value, Beginning of Year $ 10.07 $10.00
------- ------
Income From Operations:
Net investment income(2) 0.93 0.29
Net realized and unrealized gain (loss) 0.48 (0.22)
------- ------
Total Income from Operations 1.41 0.07
------- ------
Less Distributions From:
Net investment income (0.22) --
------- ------
Total Distributions (0.22) --
------- ------
Net Asset Value, End of Year $ 11.26 $10.07
------- ------
Total Return 14.30% 0.70%++
------- ------
Net Assets, End of Year (000s) $20,450 $3,395
------- ------
Ratios to Average Net Assets:
Expenses(2) 0.70% 0.69%+
Net investment income 9.54 7.55+
------- ------
Portfolio Turnover Rate 56.94% 14.74%
======= ======
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager has
reimbursed the Portfolio for $13,857 in expenses for the period ended
October 31, 1994. If such fees were not waived and expenses not reimbursed,
the per share decreases in net investment income and the ratios of expenses
to average net assets would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------------ -------------------
<S> <C> <C>
1995 $0.04 1.07%
1994 0.07 2.60+
</TABLE>
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
38
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Putnam Diversified Income Portfolio 1995 1994/(1)/
- ----------------------------------- ------- ---------
<S> <C> <C>
Net Asset Value, Beginning of Year $ 10.18 $10.00
------- ------
Income From Operations:
Net investment income(2) 0.79 0.23
Net realized and unrealized gain (loss) 0.58 (0.05)
------- ------
Total Income from Operations 1.37 0.18
------- ------
Less Distributions From:
Net investment income (0.09) --
------- ------
Total Distributions (0.09) --
------- ------
Net Asset Value, End of Year $ 11.46 $10.18
------- ------
Total Return 13.55% 1.80%++
------- ------
Net Assets, End of Year (000s) $31,514 $6,763
------- ------
Ratios to Average Net Assets:
Expenses(2) 0.97% 0.98%+
Net investment income 7.53 6.14+
------- ------
Portfolio Turnover Rate 275.71% 20.02%
======= ======
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to
October 31, 1994.
(2) The Manager has waived all or part of its fees for the year ended October
31, 1995 and the period ended October 31, 1994. In addition, the Manager has
reimbursed the Portfolio for $19,028 in expenses for the period ended
October 31, 1994. If such fees were not waived and expenses not reimbursed,
the per share decreases in net investment income and the ratios of expenses
to average net assets would have been as follows:
<TABLE>
Expense Ratios
Per Share Decreases Without Fee Waivers
in Net Investment Income and Reimbursement
------------------------ -------------------
<S> <C> <C>
1995 $0.04 1.31%
1994 0.07 2.92+
</TABLE>
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
39
<PAGE>
Smith Barney/Travelers Series Fund Inc.
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney/Travelers Series Fund Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Smith Barney High Income and Putnam
Diversified Income Portfolios of Smith Barney/Travelers Series Fund Inc. as of
October 31, 1995, the related statement of operations for the year then ended,
and the statements of changes in net assets and financial highlights for the
year then ended and for the period from June 16, 1994 (commencement of
operations) to October 31, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Smith Barney High Income and Putnam Diversified Income Portfolios of Smith
Barney/Travelers Series Fund Inc. as of October 31, 1995, the results of their
operations for the year then ended, and the changes in their net assets and
financial highlights for the year then ended and for the period from June 16,
1994 to October 31, 1994, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
New York, New York
December 12, 1995
40
<PAGE>
Smith Barney/Travelers
Series Fund Inc.
Directors
Victor K. Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
James M. Shuart
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President and Treasurer
John C. Bianchi
Vice President
James B. Conheady
Vice President
Martin Hanley
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Phyllis Zahorodny
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
SmithBarney
-----------
A Member of TravelersGroup [LOGO]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Annuity Administration
Travelers Annuity Investor Services
5 State House Square
1 Tower Square
Hartford, CT 06193
This report is submitted for the general
information of the shareholders of Smith
Barney/Travelers Series Fund Inc.--
Smith Barney High Income and Putnam
Diversified Income Portfolio. It is not
authorized for distribution to prospective
investors unless accompanied or preceded
by a current Prospectus for the
Portfolios, which contain information
concerning the Portfolios' investment
policies and expenses as well as other
pertinent information.
Smith Barney/Travelers
Series Fund Inc.
388 Greenwich Street
New York, New York 10013
IN0254 12/95
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995
1995
1995
Smith Barney/Travelers
Series Fund Inc.
AIM Capital
Appreciation Portfolio
--------------------------------------------------------
October 31, 1995
[LOGO APPEARS HERE] Smith Barney Mutual Funds
Investing for your future.
Everyday
<PAGE>
- --------------------------------------------------------------------------------
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with this annual report for the Smith
Barney/Travelers Series Fund, Inc. -- AIM Capital Appreciation Portfolio for the
period ended October 31, 1995. For your convenience, we have briefly summarized
this period's prevailing economic and market conditions below and outlined the
portfolio strategies during this time. A more detailed summary of performance
and current holdings can be found in the appropriate sections that follow in the
annual report.
Portfolio Highlights
As of October 11, 1995, AIM Capital Management, Inc. (AIM) began to manage the
day-to-day operations of AIM Capital Appreciation Portfolio as the Sub-advisor.
During this short time period, the Portfolio's investment management team began
structuring a portfolio that seeks capital appreciation by investing primarily
in the common stocks of medium-sized and smaller-sized companies. As of October
31, 1995, the AIM Capital Appreciation Portfolio had 70 holdings.
The foundation of AIM's equity investment strategy is to focus on stock
selection based on earnings momentum. In our view, earnings drive stock prices
and the stock of a growing company tends to appreciate. AIM believes that
identifying and capturing such "earnings-acceleration" stocks in a portfolio is
crucial to achieving investment growth. This strategy also helps identify those
stocks with slowing earnings growth that may no longer meet a fund's investment
criteria.
However, earnings are not AIM's sole criteria in selecting stocks. We analyze a
host of other factors such as a particular company's revenues, the quality of
its management and new product lines. Yet earnings remain AIM's single most
important consideration in selecting stocks and determining whether a particular
stock ultimately qualifies for an AIM equity portfolio.
Market Outlook
As of this report, the stock market's performance, as measured by the Dow Jones
Industrial Average, has surpassed the 5100 level. Yet many market analysts
maintain that this aging bull market may have plenty of momentum left. (The Dow
Jones Industrial Average has gone a record 61 months without experiencing a 10%
correction.) For example, a recent issue of Barron's reported that many analysts
project that the Dow Jones Industrial Average
1
<PAGE>
may move well past 5500 during the coming year. Of course, a significant number
of market analysts hold a different view and believe that a stock market
correction is due.
Rather than make a specific projection about future stock market performance, we
at AIM remain committed to our disciplined investment strategy that helps us
determine, on a company-by-company basis, which stocks to buy and sell. Our
disciplined approach eliminates guesswork about market timing. We believe our
commitment to this time-tested strategy should provide our shareholders with the
best value over the long term. (Of course, no guarantees can be made that our
disciplined investment strategy will work in the future.)
Thank you for your investment in the AIM Capital Appreciation Portfolio and your
ongoing confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman and Chief Executive Officer
December 8, 1995
2
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
=========================================================================================
<C> <S> <C>
COMMON STOCKS -- 85.8%
Banks-Commercial -- 1.4%
3,100 MBNA Corp. $ 114,313
- -----------------------------------------------------------------------------------------
Beverages-Alcoholic -- 0.9%
1,500 Canadaigua Wine Co.* 72,000
- -----------------------------------------------------------------------------------------
Commercial Services -- 3.1%
1,700 Loewen Group Inc. 68,080
2,400 Medaphis Corp.* 76,200
2,800 Service Corp. 112,350
- -----------------------------------------------------------------------------------------
256,630
- -----------------------------------------------------------------------------------------
Communications-Equipment & Software -- 1.1%
1,000 U.S. Robotics* 92,500
- -----------------------------------------------------------------------------------------
Computers -- 11.9%
2,100 Bay Networks Inc.* 139,125
1,100 Cabletron Systems Inc.* 86,488
1,600 Ceridan Corp.* 69,600
2,200 Compaq Computer Corp.* 122,650
4,200 Dell Computer Corp.* 195,825
1,200 HBO & Co. 84,900
1,600 Sun Microsystems Inc.* 124,800
3,300 3Com Corp.* 155,100
- -----------------------------------------------------------------------------------------
978,488
- -----------------------------------------------------------------------------------------
Computer Software -- 12.4%
2,200 BMC Software Inc.* 78,375
1,000 Broderbund Software Inc.* 69,375
2,250 Cadence Design System* 72,562
2,500 Cisco Systems Inc.* 193,750
3,100 Computer Associates International Inc. 170,500
2,500 Informix Corp.* 72,812
3,300 Oracle Crop.* 143,963
1,600 Parametric Technology* 107,000
2,900 Synopsys Inc.* 108,750
- -----------------------------------------------------------------------------------------
1,017,087
- -----------------------------------------------------------------------------------------
Consumer Services -- 0.9%
2,700 Manpower Inc. 73,237
- -----------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
=========================================================================================
<C> <S> <C>
Electrical Equipment -- 1.1%
2,100 Linear Technology Corp. $ 91,875
- -----------------------------------------------------------------------------------------
Electronics -- 7.2%
2,500 Altera Corp.* 151,250
5,100 Integrated Device Technologies Corp.* 96,900
2,100 Solectron Corp.* 84,525
4,500 Teradyne Inc.* 150,188
1,600 Texas Instruments Inc. 109,200
- -----------------------------------------------------------------------------------------
592,063
- -----------------------------------------------------------------------------------------
Electronics-Semiconductors and Components -- 12.3%
1,600 Adaptec Inc.* 71,200
2,300 Alliance Semiconductor Corp.* 70,725
2,700 Analog Devices Inc.* 97,537
4,500 Atmel Corp.* 140,625
2,100 Cypress Semiconductor Corp.* 74,025
3,700 LSI Logic Corp.* 174,362
2,400 Micron Technology Inc. 169,500
3,100 VLSI Technology Inc.* 72,850
3,100 Xilinx Inc.* 142,600
- -----------------------------------------------------------------------------------------
1,013,424
- -----------------------------------------------------------------------------------------
Entertainment -- 0.8%
2,000 Mirage Resorts Inc.* 65,500
- -----------------------------------------------------------------------------------------
Financial Services -- 2.5%
1,300 First U.S.A. Inc. 59,800
2,600 Green Tree Financial Corp. 69,225
4,100 Mercury Finance Co. 78,925
- -----------------------------------------------------------------------------------------
207,950
- -----------------------------------------------------------------------------------------
Hotels/Motels -- 0.9%
1,200 HFS Inc.* 73,500
- -----------------------------------------------------------------------------------------
Machine-Diversified -- 4.4%
3,700 Applied Materials Inc.* 185,462
1,700 Lam Research Corp.* 103,488
1,100 Novellus Systems Inc.* 75,762
- -----------------------------------------------------------------------------------------
364,712
- -----------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
=========================================================================================
<C> <S> <C>
Medical Products & Supplies -- 1.9%
1,900 Boston Scientific Corp.* $ 80,038
1,800 Sybron International Corp.* 76,500
- -----------------------------------------------------------------------------------------
156,538
- -----------------------------------------------------------------------------------------
Medical Services -- 12.3%
3,600 Apria Healthcare Group Inc.* 77,850
2,300 Columbia/HCA Heathcare Corp. 112,988
1,900 Community Health Systems* 60,325
3,100 Health Care & Retirement Corp.* 91,062
3,600 Health Management Association* 77,400
1,200 Healthcare Compare Corp.* 44,400
1,500 Healthsource Inc.* 79,500
5,100 Healthsouth Corp.* 133,237
2,700 Lincare Holdings Inc.* 67,162
2,600 Manor Care Inc. 85,150
1,200 Oxford Health Plans Inc.* 93,900
2,800 Vencor Inc.* 77,700
- -----------------------------------------------------------------------------------------
1,000,674
- -----------------------------------------------------------------------------------------
Office Equipment -- 0.9%
2,200 Danka Business Systems Corp. 73,700
- -----------------------------------------------------------------------------------------
Pharmaceuticals -- 1.3%
2,100 Cardinal Health Inc. 107,888
- -----------------------------------------------------------------------------------------
Retail-Department Stores -- 0.9%
2,900 Dollar General Corp. 71,050
- -----------------------------------------------------------------------------------------
Retail-Food Chains -- 1.8%
2,100 Kroger Co.* 70,088
1,600 Safeway Inc.* 75,600
- -----------------------------------------------------------------------------------------
145,688
- -----------------------------------------------------------------------------------------
Retail-Special Line -- 4.4%
2,800 General Nutrition Co.* 69,650
1,700 Micro Warehouse Inc.* 75,650
3,800 Staples Inc.* 101,175
2,600 Viking Office Products Inc.* 115,700
- -----------------------------------------------------------------------------------------
362,175
- -----------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
=========================================================================================
<C> <S> <C>
Telecommunications -- 1.4%
5,300 Ericsson LM Telephone Sponsored ADR $ 113,205
- -----------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost -- $7,054,634) 7,044,197
=========================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
=========================================================================================
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 14.2%
$1,165,000 Federal Home Loan Mortgage Corporation
Discount Notes, 5.850% due 11/1/95
(Cost -- $1,164,811) 1,164,811
=========================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $8,219,445)+ $8,209,008
=========================================================================================
</TABLE>
* Non-income producing security.
+ Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
6
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost--$8,219,445) $8,209,008
Cash 7,443
Receivable for Fund shares sold 429,589
Receivable from investment manager 13,456
Dividend receivable 69
- -------------------------------------------------------------------------------
Total Assets 8,659,565
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 560,235
Accrued expenses and other liabilities 16,623
- -------------------------------------------------------------------------------
Total Liabilities 576,858
- -------------------------------------------------------------------------------
Total Net Assets $8,082,707
===============================================================================
NET ASSETS:
Par value of capital shares $ 8
Capital paid in excess of par value 8,087,523
Undistributed net investment income 13,217
Accumulated net realized loss on security transactions (7,604)
Net unrealized depreciation of investments (10,437)
- -------------------------------------------------------------------------------
Total Net Assets $8,082,707
===============================================================================
Shares Outstanding 808,169
- -------------------------------------------------------------------------------
Net Asset Value $10.00
- -------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
For the Period Ended October 31, 1995(a)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 16,392
Dividends 69
- -------------------------------------------------------------------------------
Total Investment Income 16,461
- -------------------------------------------------------------------------------
EXPENSES:
Audit and legal 11,000
Management fees (Note 2) 2,595
Shareholder communications 2,000
Registration fees 3,000
Shareholder and system servicing fees 500
Custody 200
- -------------------------------------------------------------------------------
Total Expenses 19,295
Less: Expense reimbursement and management fee waiver 16,051
- -------------------------------------------------------------------------------
Net Expenses 3,244
- -------------------------------------------------------------------------------
Net Investment Income 13,217
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 3):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 381,984
Cost of securities sold 389,588
- -------------------------------------------------------------------------------
Net Realized Loss (7,604)
- -------------------------------------------------------------------------------
Change in Net Unrealized Depreciation of Investments:
Beginning of period --
End of period (10,437)
- -------------------------------------------------------------------------------
Increase in Net Unrealized Depreciation (10,437)
- -------------------------------------------------------------------------------
Net Loss on Investments (18,041)
- -------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (4,824)
===============================================================================
</TABLE>
(a) For the period from October 10, 1995 (commencement of operations) to
October 31, 1995.
See Notes to Financial Statements.
8
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Period Ended October 31, 1995(a)
<TABLE>
<S> <C>
OPERATIONS:
Net investment income $ 13,217
Net realized loss (7,604)
Increase in net unrealized depreciation (10,437)
- -------------------------------------------------------------------------------
Decrease in Net Assets From Operations (4,824)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders --
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sales 10,257,531
Net asset value of shares issued for
reinvestment of dividends --
Cost of shares reacquired (2,170,000)
- -------------------------------------------------------------------------------
Increase in Net Assets From Fund
Share Transactions 8,087,531
- -------------------------------------------------------------------------------
Increase in Net Assets 8,082,707
NET ASSETS:
Beginning of period --
- -------------------------------------------------------------------------------
End of period* $ 8,082,707
===============================================================================
* Includes undistributed net investment income of: $13,217
===============================================================================
</TABLE>
(a) For the period from October 10, 1995 (commencement of operations) to
October 31, 1995.
See Notes to Financial Statements.
9
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The AIM Capital Appreciation Portfolio ("Portfolio") is a separate
investment portfolio of the Smith Barney/Travelers Series Fund Inc. ("Fund").
The Fund, a Maryland corporation, is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment company
and consists of this portfolio and eleven other separate investment portfolios:
Smith Barney Income and Growth, Alliance Growth, American Capital Enterprise,
Smith Barney International Equity, Smith Barney Pacific Basin, TBC Managed
Income, Putnam Diversified Income, G.T. Global Strategic Income, Smith Barney
High Income, MFS Total Return and Smith Barney Money Market Portfolios. Shares
of the Fund are offered only to insurance company separate accounts that fund
certain variable annuity and variable life insurance contracts. The financial
statements and financial highlights for the other portfolios are presented in
separate annual reports.
The significant accounting policies followed by the Fund are: (a)
securities transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on such markets;
securities for which no sales price was reported and U.S. Government and
Government Agency obligations are valued at the mean between the bid and the
asked prices; (c) short-term investments that have a maturity of 60 days or more
are valued at prices based on market quotations for securities of similar type,
yield and maturity; (d) short-term investments that have a maturity of 60 days
or less are valued at cost plus accreted discount, or minus amortized premium,
as applicable; (e) dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis; (f) gains or losses on the
sale of securities are calculated by using the specific identification method;
(g) direct expenses are charged to the Portfolio; (h) the accounting records of
the Portfolios are maintained in U.S. dollars. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian; and
(i) the Portfolio intends to comply with
10
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
the applicable provisions of the Internal Revenue Code of 1986, as amended,
pertaining to regulated investment companies and to make distributions of
taxable income sufficient to relieve it from substantially all Federal income
and excise taxes.
2. Management Agreement and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager of the Fund. The
Portfolio pays SBMFM a management fee calculated at an annual rate of 0.80% on
the average daily net assets. This fee is calculated daily and paid monthly.
SBMFM waived all of its management fees and reimbursed expenses of $13,456 for
the period ended October 31, 1995.
SBMFM has entered into a subadvisory agreement with AIM Capital Management
Inc. ("AIM"). Pursuant to the subadvisory agreement AIM is responsible for the
day-to-day portfolio operations and investment decisions. As a result, SBMFM
will pay AIM a monthly fee calculated at the annual rate of 0.375% of the
average daily net assets of the Portfolio.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares and primary broker for its portfolio agency transactions.
All officers and two Directors of the Fund are employees of SB.
3. Investments
During the period ended October 31, 1995, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term investments) was $7,443,890 and $381,984 respectively.
11
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At October 31, 1995, the net unrealized depreciation of investments for
Federal income tax purposes consisted of the following:
<TABLE>
<S> <C>
================================================================================
Gross unrealized appreciation $ 115,552
Gross unrealized depreciation (125,989)
- --------------------------------------------------------------------------------
Net unrealized depreciation $ (10,437)
================================================================================
</TABLE>
4. Capital Loss Carryforward
At October 31, 1995, the Fund had for Federal tax purposes approximately
$331 of unused capital loss carryforwards, expiring October 31, 2003 available
to offset future realized capital gains, if any. To the extent that these
carryforward losses are used to offset capital gains, it is possible that the
gains so offset will not be distributed.
5. Repurchase Agreements
The Fund purchases (and its custodian takes possession of) U.S. Government
Securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day) at
an agreed upon higher repurchase price. The Fund requires continual maintenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
6. Capital Shares
At October 31, 1995, the Fund had six billion shares of $0.00001 par value
capital stock authorized. Each share represents an equal proportionate interest
and has an equal entitlement to any dividends and distributions made by the
Portfolio.
Transactions in shares of the Portfolio were as follows:
<TABLE>
<CAPTION>
Period Ended
October 31, 1995
================================================================================
<S> <C>
Shares sold 1,026,832
Shares issued on reinvestment --
Shares redeemed (218,663)
- --------------------------------------------------------------------------------
Net Increase 808,169
================================================================================
</TABLE>
12
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout the period:
<TABLE>
<CAPTION>
1995(1)
================================================================================
<S> <C>
Net Asset Value, Beginning of Period $10.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income (2) 0.02
Net realized and unrealized loss (0.02)
- --------------------------------------------------------------------------------
Total Income From Operations --
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income --
- --------------------------------------------------------------------------------
Total Distributions --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.00
- --------------------------------------------------------------------------------
Total Return 0.00%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $8,083
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2) 1.00%+
Net investment income 4.07+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 5.91%
================================================================================
Average commissions paid on
equity security transactions $ 0.06
================================================================================
</TABLE>
(1) For the period from October 10, 1995 (commencement of operations) to
October 31, 1995.
(2) The manager has waived all of its fees and reimbursed the Portfolio for
$13,456 in expenses for the period ended October 31, 1995. If such fees were
not waived and expenses not reimbursed, the per share decrease in net
investment income and ratio of expenses to average net asset would have been
$0.03 and 5.95%+, respectively.
+ Annualized.
13
<PAGE>
Smith Barney/Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney/Travelers Series Fund Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the AIM Capital Appreciation Portfolio
of Smith Barney/Travelers Series Fund Inc. as of October 31, 1995, the related
statements of operations, changes in net assets and financial highlights for the
period from October 10, 1995 (commencement of operations) to October 31, 1995.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
AIM Capital Appreciation Portfolio of Smith Barney/Travelers Series Fund Inc.
as of October 31, 1995, and the results of its operations, changes in its net
assets and financial highlights for the period from October 10, 1995 to
October 31, 1995, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
December 12, 1995
14
<PAGE>
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<PAGE>
[This page intentionally left blank]
<PAGE>
Smith Barney/Travelers
Series Fund Inc.
Directors
Victor K. Atkins
Robert A. Belfer
Jessica M. Bibliowicz
Alger B. Chapman
Robert A. Frankel
Rainer Greeven
Susan M. Heilbron
Heath B. McLendon, Chairman
James M. Shuart
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President and Treasurer
John C. Bianchi
Vice President
James B. Conheady
Vice President
Martin Hanley
Vice President
Jeffrey J. Russell
Vice President
Bruce D. Sargent
Vice President
Phyllis Zahorodny
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Smith Barney
------------
[TRAVELERS GROUP LOGO APPEARS HERE]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Annuity Administration
Travelers Annuity Investor Services
5 State House Square
1 Tower Square
Hartford, CT 06183
This report is submitted for the general information of the shareholders of
Smith Barney/Travelers Series Fund Inc.-- AIM Capital Appreciation Portfolio. It
is not authorized for distribution to prospective investors unless accompanied
or preceded by a current Prospectus for the Portfolio, which contains
information concerning the Portfolio's investment policies and expenses as well
as other pertinent information.
Smith Barney/Travelers
Series Fund Inc.
388 Greenwich Street
New York, New York 10013
IN0794 12/95
