<PAGE>
Travelers Series Fund Inc.
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Prospectus
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February 28, 1999
Fixed Income Fund
----------------------------
MFS Total Return Portfolio
Shares of the fund are offered only to insurance company Separate Accounts
which fund certain variable annuity and variable life insurance contracts. This
prospectus should be read together with the prospectus for those contracts.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
Contents
Travelers Series Fund Inc. consists of 13 separate investment funds, each with
its own investment objective and policies. This Prospectus relates only to one
fund--the MFS Total Return Portfolio.
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<TABLE>
<CAPTION>
Fund Goals and Strategies Page
------------------------------------------
<S> <C>
MFS Total Return Portfolio 2
More on the Fund's Investments 4
Management 8
Share Transactions 10
Share Price 10
Dividends, Distributions and Taxes 11
Financial Highlights 12
</TABLE>
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You should know:
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
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Fund Goals and Strategies
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MFS Total Return Portfolio
Investment goals
Primary: Above average income (compared to a portfolio invested entirely in
equity securities) consistent with the prudent employment of capital.
Secondary: Growth of capital and income.
Key investments
The fund invests in a broad range of equity and fixed income securities of both
U.S. and foreign issuers.
The fund's equity securities include common and preferred stock; bonds,
warrants or rights convertible into stock and depositary receipts for those
securities.
The fund's fixed income securities include corporate debt obligations of any
maturity, Brady bonds, U.S. Government securities, mortgage-backed securities,
zero-coupon bonds, deferred interest bonds and payment in kind bonds.
Credit quality: The fund's assets may consist of both investment grade and
lower quality securities. The fund may invest up to 20% of the fund's assets in
nonconvertible fixed income securities rated below investment grade or unrated
securities of equivalent quality.
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Selection process
Under normal market conditions and depending on the
subadviser's view of economic and money market conditions,
fiscal and monetary policy and security values, the fund's
assets will be allocated among fixed income and equity
investments within the following ranges:
. between 40% . at least 25%
and 75% in in non-
equity convertible
securities fixed income
securities
Equity investments
The subadviser uses a "bottom up" investment approach in
selecting securities based on its fundamental analysis of an
individual security's value. In selecting individual equity
securities for investment, the subadviser seeks companies:
. that are undervalued in the market relative to their long
term potential because the market has overlooked them or
because they are temporarily out of favor in the market due
to market declines, poor economic conditions or adverse
regulatory or other changes
. that generally have low price to book, price to sales
and/or price to earnings ratios
. with relatively large market capitalizations (i.e., market
capitalizations of $5 billion or more).
The subadviser also invests in convertible securities that
generally provide a fixed income stream and an opportunity to
participate in an increase in the market price of the
underlying common stock.
Fixed income investments
The subadviser periodically assesses the three month outlook
for inflation rate changes, economic growth and other fiscal
measures and their effect on U.S. Treasury interest rates.
Using that assessment, the subadviser determines a probable
difference between total Returns on U.S. Treasury securities
and on other types of fixed income securities and selects
those securities the subadviser believes will deliver
favorable returns.
2 Travelers Series Fund
<PAGE>
While investing in a mix of equity and debt securities can bring added
benefits, it may also involve additional risks. Investors could lose money in
the fund or the fund's performance could fall below other possible investments
if any of the following occurs:
. The subadviser's allocation of investments between equity and fixed income
securities could cause the fund to miss attractive investment opportunities
by underweighting markets that generate significant returns or cause the fund
to incur losses by overweighting markets that experience significant
declines.
. The subadviser's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
. Equity investments lose their value due to a decline in the U.S. stock
market.
. Value or large capitalization stocks are temporarily out of favor.
. An adverse event, such as negative press reports about a company in the
fund's portfolio, depresses the value of the company's stock.
. Fixed income investments lose their value due to an increase in interest
rates.
. The issuer of a debt security in the fund defaults on its obligation to pay
principal or interest, has its credit rating downgraded by a rating
organization or is perceived by the market to be less creditworthy.
. Mortgage and asset backed securities are subject to the same default risks of
other fixed income securities, but it may be more difficult to enforce rights
against the assets underlying these securities in case of default.
. As a result of declining interest rates, the issuer of a security exercises
its right to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call risk.
. As a result of rising interest rates, the issuer of a security exercises its
right to pay principal later than scheduled, which will lock in a below-
market interest rate and reduce the value of the security. This is known as
extension risk.
. Securities with longer maturities are more sensitive to interest rate changes
and may be more volatile.
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
Many foreign countries in which the fund invests have less liquid and more
volatile markets than in the U.S. In some of the foreign countries in which the
fund invests, there is also less information available about foreign issuers
and markets because of less rigorous accounting and regulatory standards than
in the U.S. Currency fluctuations could erase investment gains or add to
investment losses. The risk of investing in foreign securities is greater in
the case of less developed countries.
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Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks, and the Lehman
Brothers Government/Corporate Bond Index ("Lehman Brothers Index"), a broad-
based unmanaged index of bonds issued by the U.S. government and its agencies
as well as certain corporate issuers. Past performance does not necessarily
indicate how the fund will perform in the future. Performance figures do not
reflect expenses incurred from investing through a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account
prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
% Total Return
1995 25.70%
1996 14.51%
1997 21.18%
1998 11.67%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Principal risks of investing in the fund
Quarterly returns:
Highest: 9.87% in 2nd quarter 1997
Lowest: (4.06)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
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One Since
year inception
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Fund 11.67 15.26
S&P 500 Index 28.60 28.03*
Lehman Brothers Index 9.47 9.22*
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* Index comparisons begin on June 30, 1994
Travelers Series Fund
3
<PAGE>
More on the Fund's Investments
Additional investments and investment techniques
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The fund de- MFS Total Return Portfolio
scribes its The fund may invest without limit in ADRs and up to 20% of
investment ob- its total assets in foreign securities.
jective and
its principal
investment
strategies and
risks under
"Fund Goals
and Strate-
gies."
This section
provides addi-
tional infor-
mation about
the fund's in-
vestments and
certain port-
folio manage-
ment tech-
niques the
fund may use.
More informa-
tion about the
fund's invest-
ments and
portfolio man-
agement tech-
niques, some
of which en-
tail risks, is
included in
the statement
of additional
information
(SAI).
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Equity Subject to its particular investment policies, the fund may
investments invest in all types of equity securities. Equity securities
include exchange-traded and over-the-counter (OTC) common and
preferred stocks, warrants, rights, investment grade convert-
ible securities, receipts and shares, trust certificates,
limited partnership interests, shares of other investment
companies, real estate investment trusts and equity partici-
pations.
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Fixed income Subject to its particular investment policies, the fund may
investments invest in fixed income securities. Fixed income investments
include bonds, notes (including structured notes), mortgage-
related securities, asset-backed securities, convertible se-
curities, Eurodollar and Yankee dollar instruments, preferred
stocks and money market instruments. Fixed income securities
may be issued by U.S. and foreign corporations or entities;
U.S. and foreign banks; the U.S. government, its agencies,
authorities, instrumentalities or sponsored enterprises;
state and municipal governments; supranational organizations;
and foreign governments and their political subdivisions.
Fixed income securities may have all types of interest rate
payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and
auction rate features.
The fund may invest in mortgage-backed and asset-backed secu-
rities. Mortgage-related securities may be issued by private
companies or by agencies of the U.S. government and represent
direct or indirect participations in, or are collateralized
by and payable from, mortgage loans secured by real property.
Asset-backed securities represent participations in, or are
secured by and payable from, assets such as installment sales
or loan contracts, leases, credit card receivables and other
categories of receivables.
4 Travelers Series Fund
<PAGE>
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Fixed income
investments Credit quality
(Cont'd.) If a security receives different ratings, the fund will treat
the securities as being rated in the highest rating category.
The fund may choose not to sell securities that are
downgraded after their purchase below the fund's minimum
acceptable credit rating. The fund's credit standards also
apply to counterparties to OTC derivatives contracts.
Investment grade securities
Securities are investment grade if:
. They are rated, respectively, in one of the top four long-
term rating categories of a nationally recognized
statistical rating organization.
. They have received a comparable short-term or other rating.
. They are unrated securities that the manager believes are
of comparable quality to investment grade securities.
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High yield, lower quality securities
The fund may invest in fixed income securities that are high
yield, lower quality securities rated by a rating organiza-
tion below its top four long term rating categories or
unrated securities determined by the manager or subadviser to
be of equivalent quality. The issuers of lower quality bonds
may be highly leveraged and have difficulty servicing their
debt, especially during prolonged economic recessions or pe-
riods of rising interest rates. The prices of lower quality
securities are volatile and may go down due to market percep-
tions of deteriorating issuer credit-worthiness or economic
conditions. Lower quality securities may become illiquid and
hard to value in down markets.
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Foreign and The fund may invest in foreign securities.
emerging
market
investments Investments in securities of foreign entities and securities
quoted or denominated in foreign currencies involve special
risks. These include possible political and economic insta-
bility and the possible imposition of exchange controls or
other restrictions on investments. If the fund invests in se-
curities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency rates relative to
the U.S. dollar will affect the U.S. dollar value of the
fund's assets.
Emerging market investments offer the potential of signifi-
cant gains but also involve greater risks than investing in
more developed countries. Political or economic instability,
lack of market liquidity and government actions such as cur-
rency controls or seizure of private business or property may
be more likely in emerging markets.
Travelers Series Fund 5
<PAGE>
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Foreign and
emerging market
investments Sovereign government and supranational debt
(Cond't.)
This fund may invest in all types of fixed income securities
of governmental issuers in all countries, including emerging
markets. These sovereign debt securities may include:
. Fixed income securities issued or guaranteed by
governments, governmental agencies or instrumentalities and
political subdivisions located in emerging market
countries.
. Participations in loans between emerging market governments
and financial institutions.
. Fixed income securities issued by government owned,
controlled or sponsored entities located in emerging market
countries.
. Interests in entities organized and operated for the
purpose of restructuring the investment characteristics of
instruments issued by any of the above issuers.
. Brady Bonds.
. Fixed income securities issued by corporate issuers, banks
and finance companies located in emerging market countries.
. Fixed income securities issued by supranational entities
such as the World Bank or the European Economic Community
(A supranational entity is a bank, commission or company
established or financially supported by the national
governments of one or more countries to promote
reconstruction or development.)
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Derivatives The fund may, but need not, use derivative contracts, such as
and hedging futures and options on securities, securities indices or cur-
techniques rencies; options on these futures; forward currency con-
tracts; and interest rate or currency swaps for any of the
following purposes:
. To hedge against the economic impact of adverse changes in
the market value of its securities, due to changes in stock
market prices, currency exchange rates or interest rates
. As a substitute for buying or selling securities
. To enhance the fund's return
A derivative contract will obligate or entitle the fund to
deliver or receive an asset or cash payment that is based on
the change in value of one or more securities, currencies or
indices. Even a small investment in derivative contracts can
have a big impact on a fund's stock market, currency and in-
terest rate exposure. Therefore, using derivatives can dis-
proportionately increase losses and reduce opportunities for
gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money
on derivatives if changes in their value do not correspond
accurately to changes in the value of the fund's holdings.
The other parties to certain derivative contracts present the
same types of credit risk as issuers of fixed income securi-
ties. Derivatives can also make a fund less liquid and harder
to value, especially in declining markets.
6 Travelers Series Fund
<PAGE>
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Securities The fund may engage in securities lending to increase its net
lending investment income. The fund will only lend securities if the
loans are callable by the fund at any time and the loans are
continuously secured by cash or liquid securities equal to no
less than the market value, determined daily, of the securi-
ties loaned. The risks in lending securities consist of pos-
sible delay in receiving additional collateral, delay in re-
covery of securities when the loan is called or possible loss
of collateral should the borrower fail financially.
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Defensive The fund may depart from its principal investment strategies
investing in response to adverse market, economic or political condi-
tions by taking temporary defensive positions in all types of
money market and short-term debt securities. If the fund
takes a temporary defensive position, it may be unable to
achieve its investment goal.
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Portfolio The fund may engage in active and frequent trading to achieve
turnover its principal investment strategies. Frequent trading also
increases transaction costs, which could detract from the
fund's performance.
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Travelers Series Fund 7
<PAGE>
Management
The manager
Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation, which is an indirect wholly owned subsidiary of Citigroup.
Citigroup businesses produce a broad range of financial services -- asset
management, banking and consumer finance, credit and charge cards, insurance,
investments, investment banking and trading - and use diverse channels to make
them available to consumer and corporate customers around the world. TIA is
located at 388 Greenwich Street, New York, New York 10013. TIA acts as
investment manager to investment companies having aggregate assets of
approximately $2.3 billion. TIA has engaged a subadviser to select investments
for the fund for which TIA serves as manager.
TIA manages the investment operations of the fund covered in this Prospectus
and receives for these services from the fund the fee indicated:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Actual management fee
paid for the fiscal year Contractual management
ended October 31, 1998 fee paid
(as a percentage (as a percentage
of the fund's of the fund's
Fund average daily net assets) average daily net assets)
-----------------------------------------------------------------------
<S> <C> <C>
MFS Total Return
Portfolio 0.80% 0.80%
----------------------------------------------------------------------
</TABLE>
The Subadviser and Portfolio Managers
The fund's investments are selected by a subadviser which is supervised by TIA.
The table below sets forth the name and business experience of the fund's
portfolio managers, who are employed by the subadviser.
<TABLE>
<CAPTION>
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Fund Portfolio Manager and Subadviser Business Experience
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<S> <C> <C>
MFS Total Return David M. Calabro (since inception) Senior Vice President, MFS.
Portfolio Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116
Geoffrey L. Kurinsky (since inception) Senior Vice President, MFS.
MFS
Constantinos Mokas (since 1998) Vice President, MFS.
MFS
Lisa B. Nurme (since inception) Senior Vice President, MFS.
MFS
Maura A. Shaughnessy (since inception) Senior Vice President, MFS.
MFS
- ---------------------------------------------------------------------------------------
</TABLE>
Travelers Series Fund 8
<PAGE>
Year 2000 Issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. Individual companies and governmental issuers that
securities held by a fund may also be adversely affected by the cost of
addressing their Year 2000 systems problems, which could be substantial. The
managers are addressing the Year 2000 issue for their systems. The funds have
been informed by their other service providers that they are taking similar
measures. Although the funds do not expect the Year 2000 issue to adversely
affect them, the funds cannot guarantee that their efforts or the efforts of
their service providers to correct the problem will be successful.
Additional information about the subadviser
Massachusetts Financial Services Company. MFS and its predecessor organizations
have a history of money management dating from 1924. The MFS organization
manages approximately $100 billion on behalf of 4 million investor accounts.
Travelers Series Fund 9
<PAGE>
Share Transactions
Availability of the fund
Shares of the fund are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through
their separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations.
The company currently does not foresee any disadvantages to investors arising
from the fact that each fund may offer its shares to different insurance
company separate accounts that serve as the investment medium for their
variable annuity and variable life products. Nevertheless, the Board of
Directors intends to monitor events to identify any material irreconcilable
conflicts which may arise, and to determine what action, if any, should be
taken in response to these conflicts. If a conflict were to occur, one or more
insurance companies' separate accounts might be required to withdraw their
investments in one or more funds and shares of another fund may be substituted.
In addition, the sale of shares may be suspended or terminated if required by
law or regulatory authority or is in the best interests of the funds'
shareholders.
Redemption of shares
The redemption price of the shares of the fund will be the net asset value next
determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted
to a separate account on or before the third day following receipt of the
request in good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
Share Price
The fund's net asset value is the value of its assets minus its liabilities.
The fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, the fund accelerates the calculation of its net asset value to the
actual closing time.
The fund generally values its fund securities based on market prices or
quotations. To the extent the fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices are
not readily available, or when the manager believes that they are unreliable or
that the value of a security has been materially affected by events occurring
after a foreign exchange closes, the funds may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund that uses market quotations to
price the same securities.
International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.
10 Travelers Series Fund
<PAGE>
Dividends, Distributions and Taxes
The fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
Separate Accounts and to holders of the Contracts.
The fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment.
An alternative diversification test may be satisfied under certain
circumstances. If a fund should fail to comply with these regulations or fails
to qualify for the special tax treatment afforded regulated investment
companies under the Code, Contracts invested in that fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
Travelers Series Fund 11
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of the fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
LLP, independent accountants, whose report, along with each fund's financial
statements, are included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total returns
represent the rate that a shareholder would have earned (or lost) on a share of
a fund assuming reinvestment of all dividends and distributions.
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
--------------------------------------------------
MFS Total Return
--------------------------------------------------
1998 1997 1996 1995 1994(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 15.31 $ 13.13 $ 11.53 $ 9.98 $10.00
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income (2) 0.32 0.38 0.33 0.45 0.13
Net realized and unrealized
gain (loss) 1.36 2.27 1.62 1.15 (0.15)
- --------------------------------------------------------------------------------
Total income (loss) from
operations 1.68 2.65 1.95 1.60 (0.02)
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.28) (0.29) (0.27) (0.05) --
Net realized gains (0.48) (0.18) (0.08) -- --
- --------------------------------------------------------------------------------
Total distributions (0.76) (0.47) (0.35) (0.05) --
- --------------------------------------------------------------------------------
Net asset value, end of year $16.23 $ 15.31 $ 13.13 $ 11.53 $ 9.98
- --------------------------------------------------------------------------------
Total return 10.94% 20.64% 17.16% 16.12% (0.20)%(3)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $462,274 $263,585 $134,529 $49,363 $8,504
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 0.84% 0.86% 0.91% 0.95% 0.93%(4)
Net investment income 3.32 3.54 3.82 4.40 3.51(4)
- --------------------------------------------------------------------------------
Portfolio turnover rate 118% 99% 139% 104% 18%
- --------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
Per Share Decreases in Net Investment Income $0.01 $0.06
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.06% 2.51%(4)
------------------------------------------------------------------------------
(3) Not annualized.
(4) Annualized.
12 Travelers Series Fund
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
The fund sends one report to a household if more than one account has the same
address. Contact an appropriate representative of a participating life
insurance company or your Salomon Smith Barney Financial Consultant if you do
not want this policy to apply to you.
Statement of additional information. The statement of additional (SAI)
information provides more detailed information about the fund. It is
incorporated by reference into this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-842-8573
or writing to Travelers Series Fund, 388 Greenwich Street, MF2, New York, NY
10013.
You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You may obtain copies of these
materials upon payment of a duplicating fee, by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-60019. You can get the same
reports and information free from the Commission's Internet web site at
http://www.sec.gov
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.
MFS Total Return Portfolio
(Investment Company Act file no. 811-08372)
L-21239 2/99
<PAGE>
Travelers Series Fund Inc.
- ------------------
Prospectus
- ------------------
February 28, 1999
Equity Fund Fixed Income Fund
--------------------------- ----------------------------
Alliance Growth Portfolio MFS Total Return Portfolio
Shares of each fund are offered only to insurance company Separate Accounts
which fund certain variable annuity and variable life insurance contracts. This
prospectus should be read together with the prospectus for those contracts.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
Contents
Travelers Series Fund Inc. consists of 13 separate investment funds, each with
its own investment objective and policies. This Prospectus relates to two of
those funds. Each fund offers different levels of potential return and involves
different levels of risk.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Goals and Strategies Page
------------------------------------------
<S> <C>
Alliance Growth Portfolio 2
MFS Total Return Portfolio 4
More on the Funds' Investments 6
Management 9
Share Transactions 11
Share Price 11
Dividends, Distributions and Taxes 12
Financial Highlights 13
</TABLE>
- --------------------------------------------------------------------------------
You should know:
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
- ------------------------------------
Fund Goals and Strategies
- ------------------------------------
Alliance Growth Portfolio
Investment goal
Long-term growth of capital.
Key investments
The fund invests primarily in equity securities of U.S. companies. Equity
securities include exchange traded and over-the-counter common stocks and
preferred stock, debt securities convertible into equity securities, and
warrants and rights relating to equity securities.
The fund may also invest in fixed income securities for capital appreciation,
including lower quality fixed income securities.
- --------------------------------------------------------------------------------
Selection process
The subadviser emphasizes individual security selection while
spreading investments among many industries and sectors. The
subadviser identifies individual companies that it believes
offer exceptionally high prospects for growth and uses
qualitative analysis to control risk. The subadviser also
over- and underweights particular industry sectors depending
on the subadviser's outlook for each sector.
In selecting individual companies and sectors for investment
the subadviser looks for the following:
. Favorable earnings outlook
. Above average growth rates at reasonable market valuations
. Experienced and effective management
. High relative return on invested capital
. Strong financial condition
. Effective research, product development and marketing
2 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in growth securities can bring added benefits, it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
. Stock markets decline.
. Growth stocks are temporarily out of favor.
. An adverse event, such as negative press reports about a company in the fund,
depresses the value of the company's stock.
. The subadviser's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Russell 1000 Index, a broad-based unmanaged index of smaller capitalization
stocks. Past performance does not necessarily indicate how the fund will
perform in the future. Performance figures do not reflect expenses incurred
from investing through a Separate Account. These expenses will reduce
performance. Please refer to the Separate Account prospectus for more
information on expenses.
[BAR CHART APPEARS HERE]
% Total Return
1995 34.87%
1996 24.41%
1997 29.02%
1998 29.05%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 31.22% in 4th quarter 1998
Lowest: (17.35)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 29.05 27.58
Russell 1000 Index 27.02 27.47*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 3
<PAGE>
- ---------------------------------
Fund Goals and Strategies
- ---------------------------------
MFS Total Return Portfolio
Investment goals
Primary: Above average income (compared to a portfolio invested entirely in
equity securities) consistent with the prudent employment of capital.
Secondary: Growth of capital and income.
Key investments
The fund invests in a broad range of equity and fixed income securities of both
U.S. and foreign issuers.
The fund's equity securities include common and preferred stock; bonds,
warrants or rights convertible into stock and depositary receipts for those
securities.
The fund's fixed income securities include corporate debt obligations of any
maturity, Brady bonds, U.S. Government securities, mortgage-backed securities,
zero-coupon bonds, deferred interest bonds and payment in kind bonds.
Credit quality: The fund's assets may consist of both investment grade and
lower quality securities. The fund may invest up to 20% of the fund's assets in
nonconvertible fixed income securities rated below investment grade or unrated
securities of equivalent quality.
- --------------------------------------------------------------------------------
Selection process
Under normal market conditions and depending on the
subadviser's view of economic and money market conditions,
fiscal and monetary policy and security values, the fund's
assets will be allocated among fixed income and equity
investments within the following ranges:
. between 40% . at least 25%
and 75% in in non-
equity convertible
securities fixed income
securities
Equity investments
The subadviser uses a "bottom up" investment approach in
selecting securities based on its fundamental analysis of an
individual security's value. In selecting individual equity
securities for investment, the subadviser seeks companies:
. that are undervalued in the market relative to their long
term potential because the market has overlooked them or
because they are temporarily out of favor in the market due
to market declines, poor economic conditions or adverse
regulatory or other changes
. that generally have low price to book, price to sales
and/or price to earnings ratios
. with relatively large market capitalizations (i.e., market
capitalizations of $5 billion or more).
The subadviser also invests in convertible securities that
generally provide a fixed income stream and an opportunity to
participate in an increase in the market price of the
underlying common stock.
Fixed income investments
The subadviser periodically assesses the three month outlook
for inflation rate changes, economic growth and other fiscal
measures and their effect on U.S. Treasury interest rates.
Using that assessment, the subadviser determines a probable
difference between total Returns on U.S. Treasury securities
and on other types of fixed income securities and selects
those securities the subadviser believes will deliver
favorable returns.
4 Travelers Series Fund
<PAGE>
While investing in a mix of equity and debt securities can bring added
benefits, it may also involve additional risks. Investors could lose money in
the fund or the fund's performance could fall below other possible investments
if any of the following occurs:
. The subadviser's allocation of investments between equity and fixed income
securities could cause the fund to miss attractive investment opportunities
by underweighting markets that generate significant returns or cause the fund
to incur losses by overweighting markets that experience significant
declines.
. The subadviser's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
. Equity investments lose their value due to a decline in the U.S. stock
market.
. Value or large capitalization stocks are temporarily out of favor.
. An adverse event, such as negative press reports about a company in the
fund's portfolio, depresses the value of the company's stock.
. Fixed income investments lose their value due to an increase in interest
rates.
. The issuer of a debt security in the fund defaults on its obligation to pay
principal or interest, has its credit rating downgraded by a rating
organization or is perceived by the market to be less creditworthy.
. Mortgage and asset backed securities are subject to the same default risks of
other fixed income securities, but it may be more difficult to enforce rights
against the assets underlying these securities in case of default.
. As a result of declining interest rates, the issuer of a security exercises
its right to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call risk.
. As a result of rising interest rates, the issuer of a security exercises its
right to pay principal later than scheduled, which will lock in a below-
market interest rate and reduce the value of the security. This is known as
extension risk.
. Securities with longer maturities are more sensitive to interest rate changes
and may be more volatile.
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
Many foreign countries in which the fund invests have less liquid and more
volatile markets than in the U.S. In some of the foreign countries in which the
fund invests, there is also less information available about foreign issuers
and markets because of less rigorous accounting and regulatory standards than
in the U.S. Currency fluctuations could erase investment gains or add to
investment losses. The risk of investing in foreign securities is greater in
the case of less developed countries.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks, and the Lehman
Brothers Government/Corporate Bond Index ("Lehman Brothers Index"), a broad-
based unmanaged index of bonds issued by the U.S. government and its agencies
as well as certain corporate issuers. Past performance does not necessarily
indicate how the fund will perform in the future. Performance figures do not
reflect expenses incurred from investing through a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account
prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
1995 25.70%
1996 14.51%
1997 21.18%
1998 11.67%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Principal risks of investing in the fund
Quarterly returns:
Highest: 9.87% in 2nd quarter 1997
Lowest: (4.06)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 11.67 15.26
S&P 500 Index 28.60 28.03*
Lehman Brothers Index 9.47 9.22*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 5
<PAGE>
More on the Funds' Investments
Additional investments and investment techniques
- --------------------------------------------------------------------------------
Each fund de- Alliance Growth Portfolio
scribes its Although the fund invests primarily in U.S. equity securi-
investment ob- ties, it may also invest up to 25% of its assets in high
jective and yield securities with no minimum credit quality restriction,
its principal and may also invest up to 15% in foreign securities.
investment
strategies and
risks under
"Fund Goals
and Strate-
gies."
This section MFS Total Return Portfolio
provides addi- The fund may invest without limit in ADRs and up to 20% of
tional infor- its total assets in foreign securities.
mation about
the funds' in-
vestments and
certain port-
folio manage-
ment tech-
niques the
funds may use.
More informa-
tion about the
funds' invest-
ments and
portfolio man-
agement tech-
niques, some
of which en-
tail risks, is
included in
the statement
of additional
information
(SAI).
- --------------------------------------------------------------------------------
Equity Subject to its particular investment policies, each of the
investments funds may invest in all types of equity securities. Equity
securities include exchange-traded and over-the-counter (OTC)
common and preferred stocks, warrants, rights, investment
grade convertible securities, receipts and shares, trust cer-
tificates, limited partnership interests, shares of other in-
vestment companies, real estate investment trusts and equity
participations.
- --------------------------------------------------------------------------------
Fixed income Subject to its particular investment policies, each fund may
investments invest in fixed income securities. Fixed income investments
include bonds, notes (including structured notes), mortgage-
MFT Total related securities, asset-backed securities, convertible se-
Return curities, Eurodollar and Yankee dollar instruments, preferred
Portfolio and, stocks and money market instruments. Fixed income securities
to a limited may be issued by U.S. and foreign corporations or entities;
extent, U.S. and foreign banks; the U.S. government, its agencies,
Alliance authorities, instrumentalities or sponsored enterprises;
Growth state and municipal governments; supranational organizations;
Portfolio and foreign governments and their political subdivisions.
Fixed income securities may have all types of interest rate
payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and
auction rate features.
MFS Total The fund may invest in mortgage-backed and asset-backed secu-
Return rities. Mortgage-related securities may be issued by private
Portfolio only companies or by agencies of the U.S. government and represent
direct or indirect participations in, or are collateralized
by and payable from, mortgage loans secured by real property.
Asset-backed securities represent participations in, or are
secured by and payable from, assets such as installment sales
or loan contracts, leases, credit card receivables and other
categories of receivables.
6 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Fixed income Credit quality
investments
(cont'd.) If a security receives different ratings, a fund will treat
the securities as being rated in the highest rating category.
A fund may choose not to sell securities that are downgraded
after their purchase below the fund's minimum acceptable
credit rating. Each fund's credit standards also apply to
counterparties to OTC derivatives contracts.
Investment grade securities
Securities are investment grade if:
. They are rated, respectively, in one of the top four long-
term rating categories of a nationally recognized
statistical rating organization.
. They have received a comparable short-term or other rating.
. They are unrated securities that the manager believes are
of comparable quality to investment grade securities.
- --------------------------------------------------------------------------------
High yield, lower quality securities
Alliance Each of the funds may invest in fixed income securities that
Growth Portfo- are high yield, lower quality securities rated by a rating
lio may invest organization below its top four long term rating categories
in these secu- or unrated securities determined by the manager or subadviser
rities primar- to be of equivalent quality. The issuers of lower quality
ily for their bonds may be highly leveraged and have difficulty servicing
capital growth their debt, especially during prolonged economic recessions
potential or periods of rising interest rates. The prices of lower
quality securities are volatile and may go down due to market
perceptions of deteriorating issuer credit-worthiness or eco-
nomic conditions. Lower quality securities may become illiq-
uid and hard to value in down markets.
- --------------------------------------------------------------------------------
Foreign and Each fund may invest in foreign securities.
emerging
market Investments in securities of foreign entities and securities
investments quoted or denominated in foreign currencies involve special
risks. These include possible political and economic insta-
bility and the possible imposition of exchange controls or
other restrictions on investments. If a fund invests in secu-
rities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency rates relative to
the U.S. dollar will affect the U.S. dollar value of the
fund's assets.
MFS Total Emerging market investments offer the potential of signifi-
Return cant gains but also involve greater risks than investing in
Portfolio only more developed countries. Political or economic instability,
lack of market liquidity and government actions such as cur-
rency controls or seizure of private business or property may
be more likely in emerging markets.
Sovereign government and supranational debt
MFS Total This fund may invest in all types of fixed income securities
Return of governmental issuers in all countries, including emerging
Portfolio only markets. These sovereign debt securities may include:
. Fixed income securities issued or guaranteed by
governments, governmental agencies or instrumentalities and
political subdivisions located in emerging market
countries.
. Participations in loans between emerging market governments
and financial institutions.
Travelers Series Fund 7
<PAGE>
- --------------------------------------------------------------------------------
Foreign and . Fixed income securities issued by government owned,
emerging controlled or sponsored entities located in emerging market
market countries.
investments . Interests in entities organized and operated for the
(cont'd.) purpose of restructuring the investment characteristics of
instruments issued by any of the above issuers.
. Brady Bonds.
. Fixed income securities issued by corporate issuers, banks
and finance companies located in emerging market countries.
. Fixed income securities issued by supranational entities
such as the World Bank or the European Economic Community
(A supranational entity is a bank, commission or company
established or financially supported by the national
governments of one or more countries to promote
reconstruction or development.)
- --------------------------------------------------------------------------------
Derivatives Each fund may, but need not, use derivative contracts, such
and hedging as futures and options on securities, securities indices or
techniques currencies; options on these futures; forward currency con-
tracts; and interest rate or currency swaps for any of the
following purposes:
. To hedge against the economic impact of adverse changes in
the market value of its securities, due to changes in stock
market prices, currency exchange rates or interest rates
. As a substitute for buying or selling securities
. To enhance the fund's return
A derivative contract will obligate or entitle a fund to de-
liver or receive an asset or cash payment that is based on
the change in value of one or more securities, currencies or
indices. Even a small investment in derivative contracts can
have a big impact on a fund's stock market, currency and in-
terest rate exposure. Therefore, using derivatives can dis-
proportionately increase losses and reduce opportunities for
gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money
on derivatives if changes in their value do not correspond
accurately to changes in the value of the fund's holdings.
The other parties to certain derivative contracts present the
same types of credit risk as issuers of fixed income securi-
ties. Derivatives can also make a fund less liquid and harder
to value, especially in declining markets.
- --------------------------------------------------------------------------------
Securities Each fund may engage in securities lending to increase its
lending net investment income. Each fund will only lend securities if
the loans are callable by the fund at any time and the loans
are continuously secured by cash or liquid securities equal
to no less than the market value, determined daily, of the
securities loaned. The risks in lending securities consist of
possible delay in receiving additional collateral, delay in
recovery of securities when the loan is called or possible
loss of collateral should the borrower fail financially.
- --------------------------------------------------------------------------------
Defensive Each fund may depart from its principal investment strategies
investing in response to adverse market, economic or political condi-
tions by taking temporary defensive positions in all types of
money market and short-term debt securities. If a fund takes
a temporary defensive position, it may be unable to achieve
its investment goal.
- --------------------------------------------------------------------------------
Portfolio Each fund may engage in active and frequent trading to
turnover achieve its principal investment strategies. Frequent trading
also increases transaction costs, which could detract from a
fund's performance.
- --------------------------------------------------------------------------------
8 Travelers Series Fund
<PAGE>
Management
The manager
Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation, which is an indirect wholly owned subsidiary of Citigroup.
Citigroup businesses produce a broad range of financial services -- asset
management, banking and consumer finance, credit and charge cards, insurance,
investments, investment banking and trading - and use diverse channels to make
them available to consumer and corporate customers around the world. TIA is
located at 388 Greenwich Street, New York, New York 10013. TIA acts as
investment manager to investment companies having aggregate assets of
approximately $2.3 billion. TIA has engaged subadvisers to select investments
for funds for which TIA serves as manager.
TIA manages the investment operations of the funds covered in this Prospectus
(TIA funds) and receives for these services from each fund the fee indicated:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Actual management fee
paid for the fiscal year Contractual management
ended October 31, 1998 fee paid
(as a percentage (as a percentage
of the fund's of the fund's
Fund average daily net assets) average daily net assets)
-----------------------------------------------------------------------
<S> <C> <C>
Alliance Growth
Portfolio 0.80% 0.80%
MFS Total Return
Portfolio 0.80% 0.80%
-----------------------------------------------------------------------
</TABLE>
The Subadvisers and Portfolio Managers
Each of the TIA funds' investments are selected by a subadviser which is
supervised by TIA. The table below sets forth the name and business experience
of each fund's portfolio manager(s), who are employed by the subadviser.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Fund Portfolio Manager and Subadviser Business Experience
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Growth Tyler Smith (since inception) Senior Vice President, Alliance
Portfolio Alliance Capital Management L.P. Capital.
1345 Avenue of the Americas
New York, New York 10105
- -------------------------------------------------------------------------------------------
MFS Total Return David M. Calabro (since inception) Senior Vice President, MFS.
Portfolio Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116
Geoffrey L. Kurinsky (since inception) Senior Vice President, MFS.
MFS
Constantinos Mokas (since 1998) Vice President, MFS.
MFS
Lisa B. Nurme (since inception) Senior Vice President, MFS.
MFS
Maura A. Shaughnessy (since inception) Senior Vice President, MFS.
MFS
- --------------------------------------------------------------------------------
</TABLE>
Travelers Series Fund 9
<PAGE>
Year 2000 Issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. Individual companies and governmental issuers that
securities held by a fund may also be adversely affected by the cost of
addressing their Year 2000 systems problems, which could be substantial. The
managers are addressing the Year 2000 issue for their systems. The funds have
been informed by their other service providers that they are taking similar
measures. Although the funds do not expect the Year 2000 issue to adversely
affect them, the funds cannot guarantee that their efforts or the efforts of
their service providers to correct the problem will be successful.
Additional information about the subadvisers
Alliance Capital Management. Alliance is a global investment adviser providing
diversified services to institutions and individuals through a broad line of
investments including approximately 249 fund portfolios. Alliance manages over
$286 billion in assets.
Massachusetts Financial Services Company. MFS and its predecessor organizations
have a history of money management dating from 1924. The MFS organization
manages approximately $100 billion on behalf of 4 million investor accounts.
10 Travelers Series Fund
<PAGE>
Share Transactions
Availability of the funds
Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through
their separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations.
The company currently does not foresee any disadvantages to investors arising
from the fact that each fund may offer its shares to different insurance
company separate accounts that serve as the investment medium for their
variable annuity and variable life products. Nevertheless, the Board of
Directors intends to monitor events to identify any material irreconcilable
conflicts which may arise, and to determine what action, if any, should be
taken in response to these conflicts. If a conflict were to occur, one or more
insurance companies' separate accounts might be required to withdraw their
investments in one or more funds and shares of another fund may be substituted.
In addition, the sale of shares may be suspended or terminated if required by
law or regulatory authority or is in the best interests of the funds'
shareholders.
Redemption of shares
The redemption price of the shares of each fund will be the net asset value
next determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted
to a separate account on or before the third day following receipt of the
request in good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
Share Price
Each fund's net asset value is the value of its assets minus its liabilities.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, each fund accelerates the calculation of its net asset value to the
actual closing time.
Each fund generally values its fund securities based on market prices or
quotations. To the extent a fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices are
not readily available, or when the manager believes that they are unreliable or
that the value of a security has been materially affected by events occurring
after a foreign exchange closes, the funds may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund that uses market quotations to
price the same securities.
International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.
Travelers Series Fund 11
<PAGE>
Dividends, Distributions and Taxes
Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
Separate Accounts and to holders of the Contracts.
Each fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment.
An alternative diversification test may be satisfied under certain
circumstances. If a fund should fail to comply with these regulations or fails
to qualify for the special tax treatment afforded regulated investment
companies under the Code, Contracts invested in that fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
12 Travelers Series Fund
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
LLP, independent accountants, whose report, along with each fund's financial
statements, are included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total returns
represent the rate that a shareholder would have earned (or lost) on a share of
a fund assuming reinvestment of all dividends and distributions.
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
---------------------------------------------------
Alliance Growth
---------------------------------------------------
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 20.82 $ 16.30 $ 13.28 $ 10.65 $ 10.00
- -------------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.11 0.05 0.04 0.14 0.06
Net realized and
unrealized gain 2.69 5.11 3.39 2.61 0.59
- -------------------------------------------------------------------------------
Total income from
operations 2.80 5.16 3.43 2.75 0.65
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.04) (0.02) (0.09) (0.02) --
Net realized gains (1.44) (0.62) (0.32) (0.10) --
- -------------------------------------------------------------------------------
Total distributions (1.48) (0.64) (0.41) (0.12) --
- -------------------------------------------------------------------------------
Net asset value, end of
year $ 22.14 $ 20.82 $ 16.30 $ 13.28 $ 10.65
- -------------------------------------------------------------------------------
Total return 12.92% 32.59% 26.55% 26.18% 6.50%(3)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $774,942 $544,526 $294,596 $111,573 $17,086
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.82% 0.82% 0.87% 0.90% 0.88%(4)
Net investment income 0.59 0.32 0.39 1.24 1.47(4)
- -------------------------------------------------------------------------------
Portfolio turnover rate 40% 66% 88% 78% 37%
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
Per Share Decreases in Net Investment Income $0.01 $0.03
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 0.97% 1.76%(4)
------------------------------------------------------------------------------
(3) Not Annualized.
(4) Annualized.
Travelers Series Fund 13
13
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
--------------------------------------------------
MFS Total Return
--------------------------------------------------
1998 1997 1996 1995 1994(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 15.31 $ 13.13 $ 11.53 $ 9.98 $10.00
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income (2) 0.32 0.38 0.33 0.45 0.13
Net realized and unrealized
gain (loss) 1.36 2.27 1.62 1.15 (0.15)
- --------------------------------------------------------------------------------
Total income (loss) from
operations 1.68 2.65 1.95 1.60 (0.02)
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.28) (0.29) (0.27) (0.05) --
Net realized gains (0.48) (0.18) (0.08) -- --
- --------------------------------------------------------------------------------
Total distributions (0.76) (0.47) (0.35) (0.05) --
- --------------------------------------------------------------------------------
Net asset value, end of year $16.23 $ 15.31 $ 13.13 $ 11.53 $ 9.98
- --------------------------------------------------------------------------------
Total return 10.94% 20.64% 17.16% 16.12% (0.20)%(3)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $462,274 $263,585 $134,529 $49,363 $8,504
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 0.84% 0.86% 0.91% 0.95% 0.93%(4)
Net investment income 3.32 3.54 3.82 4.40 3.51(4)
- --------------------------------------------------------------------------------
Portfolio turnover rate 118% 99% 139% 104% 18%
- --------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
Per Share Decreases in Net Investment Income $0.01 $0.06
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.06% 2.51%(4)
------------------------------------------------------------------------------
(3) Not annualized.
(4) Annualized.
14 Travelers Series Fund
14
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
The fund sends one report to a household if more than one account has the same
address. Contact an appropriate representative of a participating life
insurance company or your Salomon Smith Barney Financial Consultant if you do
not want this policy to apply to you.
Statement of additional information. The statement of additional (SAI)
information provides more detailed information about the fund. It is
incorporated by reference into this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-842-8573
or writing to Travelers Series Fund, 388 Greenwich Street, MF2, New York, NY
10013.
You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You may obtain copies of these
materials upon payment of a duplicating fee, by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-60019. You can get the same
reports and information free from the Commission's Internet web site at
http://www.sec.gov
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.
Alliance Growth Portfolio
MFS Total Return Portfolio
(Investment Company Act file no. 811-08372)
L-21314 2/99
<PAGE>
Travelers Series Fund Inc.
- ------------------
Prospectus
- ------------------
February 28, 1999
Equity Fund Fixed Income Fund
--------------------------- ----------------------------
Alliance Growth Portfolio Putnam Diversified Income Portfolio
MFS Total Return Portfolio
Shares of each fund are offered only to insurance company Separate Accounts
which fund certain variable annuity and variable life insurance contracts. This
prospectus should be read together with the prospectus for those contracts.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
Contents
Travelers Series Fund Inc. consists of 13 separate investment funds, each with
its own investment objective and policies. This Prospectus relates to three of
those funds. Each fund offers different levels of potential return and involves
different levels of risk.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Goals and Strategies Page
-------------------------------------------
<S> <C>
Alliance Growth Portfolio 2
MFS Total Return Portfolio 4
Putnam Diversified Income Portfolio 6
More on the Funds' Investments 8
Management 12
Share Transactions 14
Share Price 14
Dividends, Distributions and Taxes 15
Financial Highlights 16
</TABLE>
- --------------------------------------------------------------------------------
You should know:
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
- --------------------------------------------------------------------------------
Fund Goals and Strategies
- --------------------------------------------------------------------------------
Alliance Growth Portfolio
Investment goal
Long-term growth of capital.
Key investments
The fund invests primarily in equity securities of U.S. companies. Equity
securities include exchange traded and over-the-counter common stocks and
preferred stock, debt securities convertible into equity securities, and
warrants and rights relating to equity securities.
The fund may also invest in fixed income securities for capital appreciation,
including lower quality fixed income securities.
- --------------------------------------------------------------------------------
Selection process
The subadviser emphasizes individual security selection while
spreading investments among many industries and sectors. The
subadviser identifies individual companies that it believes
offer exceptionally high prospects for growth and uses
qualitative analysis to control risk. The subadviser also
over- and underweights particular industry sectors depending
on the subadviser's outlook for each sector.
In selecting individual companies and sectors for investment
the subadviser looks for the following:
. Favorable earnings outlook
. Above average growth rates at reasonable market valuations
. Experienced and effective management
. High relative return on invested capital
. Strong financial condition
. Effective research, product development and marketing
2 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in growth securities can bring added benefits, it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
. Stock markets decline.
. Growth stocks are temporarily out of favor.
. An adverse event, such as negative press reports about a company in the fund,
depresses the value of the company's stock.
. The subadviser's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the Russell 1000 Index, a broad-based unmanaged index of smaller capitalization
stocks. Past performance does not necessarily indicate how the fund will
perform in the future. Performance figures do not reflect expenses incurred
from investing through a Separate Account. These expenses will reduce
performance. Please refer to the Separate Account prospectus for more
information on expenses.
[BAR CHART APPEARS HERE]
1995 34.87%
1996 24.41%
1997 29.02%
1998 29.05%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 31.22% in 4th quarter 1998
Lowest: (17.35)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 29.05 27.58
Russell 1000 Index 27.02 27.47*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 3
<PAGE>
- -------------------------------------------------
Fund Goals and Strategies
- -------------------------------------------------
MFS Total Return Portfolio
Investment goals
Primary: Above average income (compared to a portfolio invested entirely in
equity securities) consistent with the prudent employment of capital.
Secondary: Growth of capital and income.
Key investments
The fund invests in a broad range of equity and fixed income securities of both
U.S. and foreign issuers.
The fund's equity securities include common and preferred stock; bonds,
warrants or rights convertible into stock and depositary receipts for those
securities.
The fund's fixed income securities include corporate debt obligations of any
maturity, Brady bonds, U.S. Government securities, mortgage-backed securities,
zero-coupon bonds, deferred interest bonds and payment in kind bonds.
Credit quality: The fund's assets may consist of both investment grade and
lower quality securities. The fund may invest up to 20% of the fund's assets in
nonconvertible fixed income securities rated below investment grade or unrated
securities of equivalent quality.
- --------------------------------------------------------------------------------
Selection process
Under normal market conditions and depending on the
subadviser's view of economic and money market conditions,
fiscal and monetary policy and security values, the fund's
assets will be allocated among fixed income and equity
investments within the following ranges:
. between 40% . at least 25%
and 75% in in non-
equity convertible
securities fixed income
securities
Equity investments
The subadviser uses a "bottom up" investment approach in
selecting securities based on its fundamental analysis of an
individual security's value. In selecting individual equity
securities for investment, the subadviser seeks companies:
. that are undervalued in the market relative to their long
term potential because the market has overlooked them or
because they are temporarily out of favor in the market due
to market declines, poor economic conditions or adverse
regulatory or other changes
. that generally have low price to book, price to sales
and/or price to earnings ratios
. with relatively large market capitalizations (i.e., market
capitalizations of $5 billion or more).
The subadviser also invests in convertible securities that
generally provide a fixed income stream and an opportunity to
participate in an increase in the market price of the
underlying common stock.
Fixed income investments
The subadviser periodically assesses the three month outlook
for inflation rate changes, economic growth and other fiscal
measures and their effect on U.S. Treasury interest rates.
Using that assessment, the subadviser determines a probable
difference between total Returns on U.S. Treasury securities
and on other types of fixed income securities and selects
those securities the subadviser believes will deliver
favorable returns.
4 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in a mix of equity and debt securities can bring added
benefits, it may also involve additional risks. Investors could lose money in
the fund or the fund's performance could fall below other possible investments
if any of the following occurs:
. The subadviser's allocation of investments between equity and fixed income
securities could cause the fund to miss attractive investment opportunities
by underweighting markets that generate significant returns or cause the fund
to incur losses by overweighting markets that experience significant
declines.
. The subadviser's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
. Equity investments lose their value due to a decline in the U.S. stock
market.
. Value or large capitalization stocks are temporarily out of favor.
. An adverse event, such as negative press reports about a company in the
fund's portfolio, depresses the value of the company's stock.
. Fixed income investments lose their value due to an increase in interest
rates.
. The issuer of a debt security in the fund defaults on its obligation to pay
principal or interest, has its credit rating downgraded by a rating
organization or is perceived by the market to be less creditworthy.
. Mortgage and asset backed securities are subject to the same default risks of
other fixed income securities, but it may be more difficult to enforce rights
against the assets underlying these securities in case of default.
. As a result of declining interest rates, the issuer of a security exercises
its right to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call risk.
. As a result of rising interest rates, the issuer of a security exercises its
right to pay principal later than scheduled, which will lock in a below-
market interest rate and reduce the value of the security. This is known as
extension risk.
. Securities with longer maturities are more sensitive to interest rate changes
and may be more volatile.
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
Many foreign countries in which the fund invests have less liquid and more
volatile markets than in the U.S. In some of the foreign countries in which the
fund invests, there is also less information available about foreign issuers
and markets because of less rigorous accounting and regulatory standards than
in the U.S. Currency fluctuations could erase investment gains or add to
investment losses. The risk of investing in foreign securities is greater in
the case of less developed countries.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks, and the Lehman
Brothers Government/Corporate Bond Index ("Lehman Brothers Index"), a broad-
based unmanaged index of bonds issued by the U.S. government and its agencies
as well as certain corporate issuers. Past performance does not necessarily
indicate how the fund will perform in the future. Performance figures do not
reflect expenses incurred from investing through a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account
prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
1995 25.70%
1996 14.51%
1997 21.18%
1998 11.67%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 9.87% in 2nd quarter 1997
Lowest: (4.06)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 11.67 15.26
S&P 500 Index 28.60 28.03*
Lehman Brothers Index 9.47 9.22*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 5
<PAGE>
- --------------------------------------
Fund Goals and Strategies
- --------------------------------------
Putnam Diversified Income Portfolio
Investment goal
High current income consistent with preservation of capital.
Key investments
The fund invests primarily in debt securities of U.S. and foreign governments
and corporations.
Credit Quality: The fund may invest in securities with a wide range of credit
qualities depending on the particular sector of the fixed income securities
market in which the manager invests.
Duration: The Fund's duration will generally vary from 3 to 7 years depending
on market conditions and the subadviser's outlook for interest rates.
Individual securities may be of any duration.
- --------------------------------------------------------------------------------
Selection process
The subadviser combines "top down" and "bottom up" investment
styles, with an emphasis on active sector strategies. The
subadviser believes that actively allocating the fund's
investments among sectors of the fixed income securities
markets, as opposed to investing in any one sector, will
better enable the fund to control risk while pursuing its
objective of high current income.
The subadviser allocates its investment among the following
three sectors of the fixed income securities market:
. A U.S. Government Sector, consisting primarily of
securities of the U.S. government, its agencies and
instrumentalities and related options, futures and
repurchase agreements. The subadviser allocates at least
20% of the fund to the U.S. Government Sector;
. A High Yield Sector, consisting primarily of high yielding,
lower-rated, high risk U.S. and foreign corporate fixed-
income securities commonly called "junk bonds"; and
. An International Sector, consisting primarily of
obligations of foreign governments, their agencies and
instrumentalities, supranational entities, and foreign
corporations, including issuers in emerging markets, and
related options and futures.
The subadviser over- and underweights investments in each
sector depending on the subadviser's views on economic,
interest rate and political trends. The subadviser utilizes
proprietary techniques to organize and rank opportunities
presented by the various sectors.
In making sector allocations, the subadviser evaluates:
. Capital flows . Default trends
. Political . Interest rate forecasts
trends
Specialists managing each sector then select individual
securities within each sector that represent risk/return
opportunities believed optimal. In selecting securities for
investment, the subadviser looks for favorable yield,
maturity, issue classification and quality characteristics.
6 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in fixed income securities can bring added benefits, it may
also involve additional risks. Investors could lose money in the fund or the
fund's performance could fall below other possible investments if any of the
following occurs:
. Fixed income securities lose their value due to an increase in market
interest rates in one or more regions, a decline in an issuer's credit rating
or financial condition or a default by an issuer.
. As a result of declining interest rates, the issuer of a security exercises
its right to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call or prepayment
risk.
. As a result of rising interest rates, the issuer of a security exercises its
right to pay principal later than scheduled, which will lock in a below-
market interest rate and reduce the value of the security. This is known as
extension risk.
. An unhedged currency in which a security is priced declines in value relative
to the U.S. dollar
. The subadviser's judgment about the attractiveness, relative yield, value or
potential appreciation of a particular security, or the stability of a
particular government proves to be incorrect.
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the returns of
the Lehman Brothers Aggregate Bond Index and the Salomon Brothers Non-U.S.
World Government Bond Index, both of which are broad-based unmanaged indices.
(The Lehman index consists of a variety of domestically issued bonds. The
Salomon index consists of foreign government bonds.) Past performance does not
necessarily indicate how the fund will perform in the future. Performance
figures do not reflect expenses incurred from investing through a Separate
Account. Please refer to the Separate Account prospectus for more information
on expenses.
[BAR CHART APPEARS HERE]
1995 17.49%
1996 8.14%
1997 7.69%
1998 0.67%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 4.97% in 1st quarter 1995
Lowest: (3.34)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 0.67 7.65
Lehman Brothers Index 8.69 9.07*
Salomon Brothers Index 17.79 8.34*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 7
<PAGE>
More on the Funds' Investments
Additional investments and investment techniques
- --------------------------------------------------------------------------------
Each fund de- Alliance Growth Portfolio
scribes its Although the fund invests primarily in U.S. equity securi-
investment ob- ties, it may also invest up to 25% of its assets in high
jective and yield securities with no minimum credit quality restriction,
its principal and may also invest up to 15% in foreign securities.
investment
strategies and
risks under
"Fund Goals
and Strate-
gies."
This section MFS Total Return Portfolio
provides addi- The fund may invest without limit in ADRs and up to 20% of
tional infor- its total assets in foreign securities.
mation about
the funds' in-
vestments and
certain port-
folio manage-
ment tech-
niques the
funds may use.
More informa-
tion about the
funds' invest-
ments and
portfolio man-
agement tech-
niques, some
of which en-
tail risks, is
included in
the statement
of additional
information
(SAI).
- --------------------------------------------------------------------------------
Equity Subject to its particular investment policies, each of these
investments funds may invest in all types of equity securities. Equity
Alliance securities include exchange-traded and over-the-counter (OTC)
Growth and MFS common and preferred stocks, warrants, rights, investment
Total Return grade convertible securities, receipts and shares, trust cer-
Portfolios tificates, limited partnership interests, shares of other in-
vestment companies, real estate investment trusts and equity
participations.
- --------------------------------------------------------------------------------
Fixed income Subject to its particular investment policies, each fund may
investments invest in fixed income securities. Fixed income investments
include bonds, notes (including structured notes), mortgage-
Both fixed in- related securities, asset-backed securities, convertible se-
come funds curities, Eurodollar and Yankee dollar instruments, preferred
and, to a lim- stocks and money market instruments. Fixed income securities
ited extent, may be issued by U.S. and foreign corporations or entities;
the Alliance U.S. and foreign banks; the U.S. government, its agencies,
Growth Portfo- authorities, instrumentalities or sponsored enterprises;
lio state and municipal governments; supranational organizations;
and foreign governments and their political subdivisions.
Fixed income securities may have all types of interest rate
payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and
auction rate features.
MFS Total Each of these funds may invest in mortgage-backed and asset-
Return and backed securities. Mortgage-related securities may be issued
Putnam by private companies or by agencies of the U.S. government
Diversified and represent direct or indirect participations in, or are
Income collateralized by and payable from, mortgage loans secured by
Portfolios real property. Asset-backed securities represent participa-
tions in, or are secured by and payable from, assets such as
installment sales or loan contracts, leases, credit card re-
ceivables and other categories of receivables.
8 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Fixed income Credit quality
investments
(cont'd.) If a security receives different ratings, a fund will treat
the securities as being rated in the highest rating category.
A fund may choose not to sell securities that are downgraded
after their purchase below the fund's minimum acceptable
credit rating. Each fund's credit standards also apply to
counterparties to OTC derivatives contracts.
Investment grade securities
Securities are investment grade if:
. They are rated, respectively, in one of the top four long-
term rating categories of a nationally recognized
statistical rating organization.
. They have received a comparable short-term or other rating.
. They are unrated securities that the manager believes are
of comparable quality to investment grade securities.
- --------------------------------------------------------------------------------
High yield, lower quality securities
All funds Each of the funds may invest in fixed income securities that
are high yield, lower quality securities rated by a rating
Alliance organization below its top four long term rating categories
Growth Portfo- or unrated securities determined by the manager or subadviser
lio may invest to be of equivalent quality. The issuers of lower quality
in these secu- bonds may be highly leveraged and have difficulty servicing
rities primar- their debt, especially during prolonged economic recessions
ily for their or periods of rising interest rates. The prices of lower
capital growth quality securities are volatile and may go down due to market
potential perceptions of deteriorating issuer credit-worthiness or eco-
nomic conditions. Lower quality securities may become illiq-
uid and hard to value in down markets.
- --------------------------------------------------------------------------------
Foreign and Each fund may invest in foreign securities.
emerging
market
investments
Investments in securities of foreign entities and securities
quoted or denominated in foreign currencies involve special
risks. These include possible political and economic insta-
bility and the possible imposition of exchange controls or
other restrictions on investments. If a fund invests in secu-
rities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency rates relative to
the U.S. dollar will affect the U.S. dollar value of the
fund's assets.
MFS Total Emerging market investments offer the potential of signifi-
Return and cant gains but also involve greater risks than investing in
Putnam more developed countries. Political or economic instability,
Diversified lack of market liquidity and government actions such as cur-
Income rency controls or seizure of private business or property may
Portfolios be more likely in emerging markets.
only
- --------------------------------------------------------------------------------
Sovereign government and supranational debt
MFS Total These funds may invest in all types of fixed income securi-
Return and ties of governmental issuers in all countries, including
Putnam emerging markets. These sovereign debt securities may in-
Diversified clude:
Income
Portfolios . Fixed income securities issued or guaranteed by
only governments, governmental agencies or instrumentalities and
political subdivisions located in emerging market
countries.
- --------------------------------------------------------------------------------
Travelers Series Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Foreign and . Participations in loans between emerging market governments
emerging and financial institutions.
market . Fixed income securities issued by government owned,
investments controlled or sponsored entities located in emerging market
(cont'd.) countries.
. Interests in entities organized and operated for the
purpose of restructuring the investment characteristics of
instruments issued by any of the above issuers.
. Brady Bonds.
. Fixed income securities issued by corporate issuers, banks
and finance companies located in emerging market countries.
. Fixed income securities issued by supranational entities
such as the World Bank or the European Economic Community
(A supranational entity is a bank, commission or company
established or financially supported by the national
governments of one or more countries to promote
reconstruction or development.)
- --------------------------------------------------------------------------------
Derivatives Each fund may, but need not, use derivative contracts, such
and hedging as futures and options on securities, securities indices or
techniques currencies; options on these futures; forward currency con-
tracts; and interest rate or currency swaps for any of the
following purposes:
. To hedge against the economic impact of adverse changes in
the market value of its securities, due to changes in stock
market prices, currency exchange rates or interest rates
. As a substitute for buying or selling securities
. To enhance the fund's return
A derivative contract will obligate or entitle a fund to de-
liver or receive an asset or cash payment that is based on
the change in value of one or more securities, currencies or
indices. Even a small investment in derivative contracts can
have a big impact on a fund's stock market, currency and in-
terest rate exposure. Therefore, using derivatives can dis-
proportionately increase losses and reduce opportunities for
gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money
on derivatives if changes in their value do not correspond
accurately to changes in the value of the fund's holdings.
The other parties to certain derivative contracts present the
same types of credit risk as issuers of fixed income securi-
ties. Derivatives can also make a fund less liquid and harder
to value, especially in declining markets.
- --------------------------------------------------------------------------------
Securities Each fund may engage in securities lending to increase its
lending net investment income. Each fund will only lend securities if
the loans are callable by the fund at any time and the loans
are continuously secured by cash or liquid securities equal
to no less than the market value, determined daily, of the
securities loaned. The risks in lending securities consist of
possible delay in receiving additional collateral, delay in
recovery of securities when the loan is called or possible
loss of collateral should the borrower fail financially.
10 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Defensive Each fund may depart from its principal investment strategies
investing in response to adverse market, economic or political condi-
tions by taking temporary defensive positions in all types of
money market and short-term debt securities. If a fund takes
a temporary defensive position, it may be unable to achieve
its investment goal.
- --------------------------------------------------------------------------------
Portfolio Each fund may engage in active and frequent trading to
turnover achieve its principal investment strategies. Frequent trading
also increases transaction costs, which could detract from a
fund's performance.
- --------------------------------------------------------------------------------
Travelers Series Fund 11
<PAGE>
Management
The manager
Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation, which is an indirect wholly owned subsidiary of Citigroup.
Citigroup businesses produce a broad range of financial services -- asset
management, banking and consumer finance, credit and charge cards, insurance,
investments, investment banking and trading - and use diverse channels to make
them available to consumer and corporate customers around the world. TIA is
located at 388 Greenwich Street, New York, New York 10013. TIA acts as
investment manager to investment companies having aggregate assets of
approximately $2.3 billion. TIA has engaged subadvisers to select investments
for funds for which TIA serves as manager.
TIA manages the investment operations of the funds covered in this Prospectus
(TIA funds) and receives for these services from each fund the fee indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Actual management fee
paid for the fiscal year Contractual management
ended October 31, 1998 fee paid
(as a percentage (as a percentage
of the fund's of the fund's
Fund average daily net assets) average daily net assets)
- --------------------------------------------------------------------------
<S> <C> <C>
Alliance Growth
Portfolio 0.80% 0.80%
MFS Total Return
Portfolio 0.80% 0.80%
Putnam Diversified
Income Portfolio 0.75% 0.75%
- --------------------------------------------------------------------------
</TABLE>
12 Travelers Series Fund
<PAGE>
The Subadvisers and Portfolio Managers
Each of the TIA funds' investments are selected by a subadviser which is
supervised by TIA. The table below sets forth the name and business experience
of each fund's portfolio manager(s), who are employed by the subadviser.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Fund Portfolio Manager and Subadviser Business Experience
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Growth Tyler Smith (since inception) Senior Vice President, Alliance
Portfolio Alliance Capital Management L.P. Capital.
1345 Avenue of the Americas
New York, New York 10105
- ---------------------------------------------------------------------------------------------
MFS Total Return David M. Calabro (since inception) Senior Vice President, MFS.
Portfolio Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116
Geoffrey L. Kurinsky (since inception) Senior Vice President, MFS.
MFS
Constantinos Mokas (since 1998) Vice President, MFS.
MFS
Lisa B. Nurme (since inception) Senior Vice President, MFS.
MFS
Maura A. Shaughnessy (since inception) Senior Vice President, MFS.
MFS
- ---------------------------------------------------------------------------------------------
Putnam Diversified Jennifer Evans Leichter (since 1998) Managing Director and Chief
Income Portfolio Putnam Investment Management, Inc. Investment Officer, Corporate
One Post Office Square Credit Group, Putnam Management.
Boston, MA 02109
- ---------------------------------------------------------------------------------------------
</TABLE>
Year 2000 Issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. Individual companies and governmental issuers that
securities held by a fund may also be adversely affected by the cost of
addressing their Year 2000 systems problems, which could be substantial. The
managers are addressing the Year 2000 issue for their systems. The funds have
been informed by their other service providers that they are taking similar
measures. Although the funds do not expect the Year 2000 issue to adversely
affect them, the funds cannot guarantee that their efforts or the efforts of
their service providers to correct the problem will be successful.
Additional information about the subadvisers
Alliance Capital Management. Alliance is a global investment adviser providing
diversified services to institutions and individuals through a broad line of
investments including approximately 249 fund portfolios. Alliance manages over
$286 billion in assets.
Massachusetts Financial Services Company. MFS and its predecessor organizations
have a history of money management dating from 1924. The MFS organization
manages approximately $100 billion on behalf of 4 million investor accounts.
Putnam Investment Management, Inc. Putnam has managed mutual funds since 1937.
Putnam and its affiliates manage approximately $290 billion in assets.
Travelers Series Fund 13
<PAGE>
Share Transactions
Availability of the funds
Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through
their separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations.
The company currently does not foresee any disadvantages to investors arising
from the fact that each fund may offer its shares to different insurance
company separate accounts that serve as the investment medium for their
variable annuity and variable life products. Nevertheless, the Board of
Directors intends to monitor events to identify any material irreconcilable
conflicts which may arise, and to determine what action, if any, should be
taken in response to these conflicts. If a conflict were to occur, one or more
insurance companies' separate accounts might be required to withdraw their
investments in one or more funds and shares of another fund may be substituted.
In addition, the sale of shares may be suspended or terminated if required by
law or regulatory authority or is in the best interests of the funds'
shareholders.
Redemption of shares
The redemption price of the shares of each fund will be the net asset value
next determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted
to a separate account on or before the third day following receipt of the
request in good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
Share Price
Each fund's net asset value is the value of its assets minus its liabilities.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, each fund accelerates the calculation of its net asset value to the
actual closing time.
Each fund generally values its fund securities based on market prices or
quotations. To the extent a fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices are
not readily available, or when the manager believes that they are unreliable or
that the value of a security has been materially affected by events occurring
after a foreign exchange closes, the funds may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund that uses market quotations to
price the same securities.
International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.
14 Travelers Series Fund
<PAGE>
Dividends, Distributions and Taxes
Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
Separate Accounts and to holders of the Contracts.
Each fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment.
An alternative diversification test may be satisfied under certain
circumstances. If a fund should fail to comply with these regulations or fails
to qualify for the special tax treatment afforded regulated investment
companies under the Code, Contracts invested in that fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
Travelers Series Fund 15
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
LLP, independent accountants, whose report, along with each fund's financial
statements, are included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total returns
represent the rate that a shareholder would have earned (or lost) on a share of
a fund assuming reinvestment of all dividends and distributions.
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
---------------------------------------------------
Alliance Growth
---------------------------------------------------
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 20.82 $ 16.30 $ 13.28 $ 10.65 $ 10.00
- -------------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.11 0.05 0.04 0.14 0.06
Net realized and
unrealized gain 2.69 5.11 3.39 2.61 0.59
- -------------------------------------------------------------------------------
Total income from
operations 2.80 5.16 3.43 2.75 0.65
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.04) (0.02) (0.09) (0.02) --
Net realized gains (1.44) (0.62) (0.32) (0.10) --
- -------------------------------------------------------------------------------
Total distributions (1.48) (0.64) (0.41) (0.12) --
- -------------------------------------------------------------------------------
Net asset value, end of
year $ 22.14 $ 20.82 $ 16.30 $ 13.28 $ 10.65
- -------------------------------------------------------------------------------
Total return 12.92% 32.59% 26.55% 26.18% 6.50%(3)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $774,942 $544,526 $294,596 $111,573 $17,086
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 0.82% 0.82% 0.87% 0.90% 0.88%(4)
Net investment income 0.59 0.32 0.39 1.24 1.47(4)
- -------------------------------------------------------------------------------
Portfolio turnover rate 40% 66% 88% 78% 37%
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Per Share Decreases in Net Investment Income $0.01 $0.03
- -------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 0.97% 1.76%(4)
- -------------------------------------------------------------------------------
</TABLE>
(3) Not Annualized.
(4) Annualized.
16 Travelers Series Fund
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
--------------------------------------------------
MFS Total Return
--------------------------------------------------
1998 1997 1996 1995 1994(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 15.31 $ 13.13 $ 11.53 $ 9.98 $10.00
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income (2) 0.32 0.38 0.33 0.45 0.13
Net realized and unrealized
gain (loss) 1.36 2.27 1.62 1.15 (0.15)
- --------------------------------------------------------------------------------
Total income (loss) from
operations 1.68 2.65 1.95 1.60 (0.02)
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.28) (0.29) (0.27) (0.05) --
Net realized gains (0.48) (0.18) (0.08) -- --
- --------------------------------------------------------------------------------
Total distributions (0.76) (0.47) (0.35) (0.05) --
- --------------------------------------------------------------------------------
Net asset value, end of year $16.23 $ 15.31 $ 13.13 $ 11.53 $ 9.98
- --------------------------------------------------------------------------------
Total return 10.94% 20.64% 17.16% 16.12% (0.20)%(3)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $462,274 $263,585 $134,529 $49,363 $8,504
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 0.84% 0.86% 0.91% 0.95% 0.93%(4)
Net investment income 3.32 3.54 3.82 4.40 3.51(4)
- --------------------------------------------------------------------------------
Portfolio turnover rate 118% 99% 139% 104% 18%
- --------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Per Share Decreases in Net Investment Income $0.01 $0.06
- --------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.06% 2.51%(4)
- --------------------------------------------------------------------------------
</TABLE>
(3) Not annualized.
(4) Annualized.
Travelers Series Fund 17
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
-------------------------------------------------
Putnam Diversified Income
-------------------------------------------------
1998 1997 1996(1) 1995 1994(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $12.31 $ 11.99 $ 11.46 $ 10.18 $10.00
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income (3) 0.57 0.67 0.78 0.79 0.23
Net realized and unrealized
gain (loss) (0.62) 0.30 0.27 0.58 (0.05)
- --------------------------------------------------------------------------------
Total income (loss) from
operations (0.05) 0.97 1.05 1.37 0.18
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.42) (0.56) (0.39) (0.09) --
Net realized gains (0.14) (0.09) (0.13) -- --
- --------------------------------------------------------------------------------
Total distributions (0.56) (0.65) (0.52) (0.09) --
- --------------------------------------------------------------------------------
Net asset value, end of year $11.70 $ 12.31 $ 11.99 $ 11.46 $10.18
- --------------------------------------------------------------------------------
Total return (0.65)% 8.44% 9.43% 13.55% 1.80%(4)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $156,895 $121,601 $81,076 $31,514 $6,763
- --------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (3) 0.87% 0.88% 0.96% 0.97% 0.98%(5)
Net investment income 7.48 6.99 7.57 7.53 6.14(5)
- --------------------------------------------------------------------------------
Portfolio turnover rate 191% 253% 2.55% 276% 20%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts calculated using the monthly average shares method.
(2) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(3) The manager 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
reimbursed the fund 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 of the fund would have been as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Per Share Decreases in Net Investment Income $0.04 $0.07
- --------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.31% 2.92%(5)
- --------------------------------------------------------------------------------
</TABLE>
(4) Not annualized.
(5) Annualized.
18 Travelers Series Fund
<PAGE>
This page intentionally left blank
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
The fund sends one report to a household if more than one account has the same
address. Contact an appropriate representative of a participating life
insurance company or your Salomon Smith Barney Financial Consultant if you do
not want this policy to apply to you.
Statement of additional information. The statement of additional (SAI)
information provides more detailed information about the fund. It is
incorporated by reference into this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-842-8573
or writing to Travelers Series Fund, 388 Greenwich Street, MF2, New York, NY
10013.
You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You may obtain copies of these
materials upon payment of a duplicating fee, by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-60019. You can get the same
reports and information free from the Commission's Internet web site at
http://www.sec.gov
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.
Alliance Growth Portfolio
MFS Total Return Portfolio
Putnam Diversified Income Portfolio
(Investment Company Act file no. 811-08372)
L-21096 2/99
<PAGE>
Travelers Series Fund Inc.
- ------------------
Prospectus
- ------------------
February 28, 1999
Equity Funds Fixed Income Fund
--------------------------- ----------------------------
Smith Barney International Smith Barney Money Market
Equity Portfolio Portfolio
Smith Barney Large Cap
Value Portfolio
Shares of each fund are offered only to insurance company Separate Accounts
which fund certain variable annuity and variable life insurance contracts. This
prospectus should be read together with the prospectus for those contracts.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
- -----------------------------------------------------------
Contents
- -----------------------------------------------------------
Travelers Series Fund Inc. consists of 13 separate investment funds, each with
its own investment objective and policies. This Prospectus relates to three of
those funds. Each fund offers different levels of potential return and involves
different levels of risk.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Goals and Strategies Page
---------------------------------------------------
<S> <C>
Smith Barney International Equity Portfolio 2
Smith Barney Large Cap Value Portfolio 4
Smith Barney Money Market Portfolio 6
More on the Funds' Investments 8
Management 12
Share Transactions 14
Share Price 14
Dividends, Distributions and Taxes 15
Financial Highlights 16
</TABLE>
- --------------------------------------------------------------------------------
You should know:
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
- -----------------------------------------------------------
Fund Goals and Strategies
- -----------------------------------------------------------
Smith Barney International Equity Portfolio
Investment goal
Total return on its assets from growth of capital and income.
Key investments
The fund invests primarily in equity securities of foreign companies. Equity
securities include exchange traded and over-the-counter common stocks and
preferred shares, debt securities convertible into equity securities, and
warrants and rights.
- --------------------------------------------------------------------------------
Selection process
The manager emphasizes individual security selection while
diversifying the fund's investments across regions and
countries which can help to reduce risk. While the manager
selects investments primarily for their capital appreciation
potential, some investments have an income component as well.
Companies in which the fund invests may have large, mid or
small size market capitalizations and may operate in any
market sector. Market conditions around the world change
constantly as does the location of potential investment
opportunities. Depending on the manager's assessment of
overseas potential for long-term growth, the fund's emphasis
among foreign markets and types of issuers may vary.
In selecting individual companies for investment, the manager
looks for:
. Above average earnings growth
. High relative return on invested capital
. Experienced and effective management
. Competitive advantages
. Strong financial condition
. The range of individual investment opportunities
By spreading the fund's investments across many international
markets, the manager seeks to reduce volatility compared to
an investment in a single region. Unlike global mutual funds
which may allocate a substantial portion of assets to the
U.S. markets, the fund invests substantially all of its
assets in countries outside of the U.S.
In allocating assets among countries and regions, the
economic and political factors that the manager evaluates
include:
. Low or decelerating inflation which creates a favorable
environment for securities markets
. Stable government with policies that encourage economic
growth, equity investment and development of securities
markets
. Currency stability
2 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in foreign securities can bring added benefits, it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
. Foreign stock prices decline
. Adverse governmental action or political, economic or market instability
occurs in a foreign country
. The currency in which a security is priced declines in value relative to the
U.S. dollar
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some foreign countries,
there is also less information available about foreign issuers and markets
because of less rigorous accounting and regulatory standards than in the U.S.
Currency fluctuations could erase investment gains or add to investment losses.
The risk of investing in foreign securities is greater in the case of emerging
markets.
In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency began on January 1, 1999. There are significant political and economic
risks associated with EMU, which may increase the volatility of European
markets and present valuation problems for the fund.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the MSCI EAFE-GDP Weighted Index ("MSCI Index"), a broad-based unmanaged index
of foreign stocks. Past performance does not necessarily indicate how the fund
will perform in the future. Performance figures do not reflect expenses
incurred from investing through a Separate Account. These expenses will reduce
performance. Please refer to the Separate Account prospectus for more
information on expenses.
[BAR CHART APPEARS HERE]
% Total Return
1995 11.26%
1996 17.72%
1997 2.71%
1998 6.51%
Calendar years ended December 31
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest:14.02% in 4th quarter 1998
Lowest:(19.72)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
<TABLE>
<CAPTION>
One Since
year inception
- -----------------------------------------
<S> <C> <C>
Fund 6.51 7.29
MSCI Index 27.12 11.37*
- -----------------------------------------
</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund 3
<PAGE>
- -----------------------------------------------------------
Fund Goals and Strategies
- -----------------------------------------------------------
Smith Barney Large Cap Value Portfolio
Investment goal
Current income and long-term growth of income and capital.
Key investments
The fund invests primarily in common stocks of U.S. companies having market
capitalizations of at least $5 billion at the time of investment.
- --------------------------------------------------------------------------------
Selection process
The manager employs a two-step selection process. First, the
manager uses proprietary models and fundamental research to
try to find stocks that are underpriced in the market
relative to their fundamental value. The manager looks for
the following:
. Low market valuations measured by the manager's valuation
models
. Above average dividend yields and established dividend
records
. High return on invested capital and strong cash flow
. Liquidity
Next, the manager looks for a positive catalyst in the
company's near term outlook which the manager believes would
accelerate earnings.
These catalysts include positive changes in earnings
prospects because of:
. New management
. Effective research, product development and marketing
. A business strategy not yet recognized by the marketplace
. Regulatory changes favoring the company
4 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in large capitalization value securities can bring added
benefits, it may also involve additional risks. Investors could lose money on
their investment in the fund, or the fund may not perform as well as other
investments, if any of the following occurs:
. The U.S. stock market goes down.
. Value stocks or larger capitalization stocks are temporarily out of favor.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect.
. An adverse event, such as negative press reports about a company in the fund,
depresses the value of the company's stock.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks. Past
performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. These expenses will reduce performance. Please
refer to the Separate Account prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
% Total Return
1995 30.08%
1996 19.79%
1997 26.63%
1998 9.82%
Calendar years ended December 31
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest:13.92% in 4th quarter 1998
Lowest:(12.87)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
<TABLE>
<CAPTION>
One Since
year inception
- -----------------------------------------
<S> <C> <C>
Fund 9.82 18.84
S&P 500 Index 28.60 28.03*
- -----------------------------------------
</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund 5
<PAGE>
-----------------------------------------
Fund Goals and Strategies
-----------------------------------------
Smith Barney Money Market Portfolio
Investment goal
Maximize current income consistent with preservation of capital. The fund seeks
to maintain a stable $1 share price.
Key investments
The fund invests exclusively in high quality U.S. dollar denominated short term
debt securities. These include commercial paper, corporate and municipal
obligations, obligations of U.S. and foreign banks, securities of the U.S.
Government, its agencies or instrumentalities and related repurchase
agreements.
Credit Quality: The fund invests exclusively in se-curities rated by a
nationally recognized rating organization in the two highest short term rating
categories, or if unrated, of equivalent quality.
Effective Maturity: The fund invests exclusively in securities having remaining
effective maturities of 397 days or less, and maintains a dollar-weighted
portfolio maturity of 90 days or less.
- --------------------------------------------------------------------------------
Selection process
In selecting investments for the fund, the manager looks for:
. The best relative values based on an analysis of interest
rate sensitivity, yield and price.
. Issuers offering minimal credit risk.
. Maturities consistent with the manager's outlook for
interest rates.
6 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
Although the fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund, or the fund could
underperform other short term debt instruments or money market funds if any of
the following occurs:
. Interest rates rise sharply.
. An issuer of the fund's securities defaults, or has its credit rating
downgraded.
. Sectors or issuers the fund has emphasized fail to perform as expected.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
The value of the fund's foreign securities may go down because of unfavorable
government actions, political instability or the more limited availability of
accurate information about foreign issuers.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the 90-day U.S. Treasury bill. Past performance does not necessarily indicate
how the fund will perform in the future. Performance figures do not reflect
expenses incurred from investing through a Separate Account. These expenses
will reduce performance. Please refer to the Separate Account prospectus for
more information on expenses.
[BAR GRAPH APPEARS HERE]
1995 5.43%
1996 4.94%
1997 5.09%
1998 5.04%
Calendar years ended December 31
The bar chart shows the performance of the Fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest:1.37% in 2nd quarter 1995
Lowest:1.15% in 4th quarter 1994
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
<TABLE>
<CAPTION>
One Since
year inception
- -----------------------------------------
<S> <C> <C>
Fund 5.04 5.02
Treasury bill 5.06 5.28*
- -----------------------------------------
</TABLE>
* Index comparison begins on June 30, 1994.
The fund's 7-day yield as of December 31, 1998 was 4.63%. Call toll free 1-877-
795-2703 for the fund's current 7-day yield.
Travelers Series Fund 7
<PAGE>
More on the Funds' Investments
Additional investments and investment techniques
- --------------------------------------------------------------------------------
Each fund describes its investment objective and its principal investment
strategies and risks under "Fund Goals and Strategies."
This section provides additional information about the funds' investments and
certain portfolio management techniques the funds may use. More information
about the funds' investments and portfolio management techniques, some of which
entail risks, is included in the statement of additional information (SAI).
Smith Barney International Equity Portfolio The fund may invest up to 20% of its
assets in debt securities of any credit quality or maturity of foreign corporate
and governmental issuers, as well as U.S. government securities and money market
obligations of U.S. and foreign corporate issuers.
- --------------------------------------------------------------------------------
8 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Equity Subject to its particular investment policies, each of these
investments funds may invest in all types of equity securities. Equity
securities include exchange-traded and over-the-counter (OTC)
Each equity common and preferred stocks, warrants, rights, investment
fund grade convertible securities, receipts and shares, trust
certificates, limited partnership interests, shares of other
investment companies, real estate investment trusts and equity
participations.
- --------------------------------------------------------------------------------
Fixed income Subject to its particular investment policies, each fund may
investments invest in fixed income securities. Fixed income investments
include bonds, notes (including structured notes), mortgage-
The fixed in- related securities, asset-backed securities, convertible
come fund and, securities, Eurodollar and Yankee dollar instruments, preferred
to a limited stocks and money market instruments. Fixed income securities
extent, each may be issued by U.S. and foreign corporations or entities;
equity fund U.S. and foreign banks; the U.S. government, its agencies,
authorities, instrumentalities or sponsored enterprises;
state and municipal governments; supranational organizations;
and foreign governments and their political subdivisions.
Fixed income securities may have all types of interest rate
payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and
auction rate features.
- --------------------------------------------------------------------------------
Credit quality
If a security receives different ratings, a fund will treat
the securities as being rated in the highest rating category.
A fund may choose not to sell securities that are downgraded
after their purchase below the fund's minimum acceptable
credit rating. Each fund's credit standards also apply to
counterparties to OTC derivatives contracts.
Investment grade securities
Securities are investment grade if:
. They are rated, respectively, in one of the top four long-
term rating categories of a nationally recognized
statistical rating organization.
. They have received a comparable short-term or other rating.
. They are unrated securities that the manager believes are
of comparable quality to investment grade securities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Travelers Series Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Foreign and Each fund may invest in foreign securities, although the
emerging foreign investments of Smith Barney Money Market Portfolio are
market limited to U.S. dollar denominated investments issued by
investments foreign branches of U.S. banks and by U.S. and foreign branches
of foreign banks.
Investments in securities of foreign entities and securities
quoted or denominated in foreign currencies involve special
risks. These include possible political and economic
instability and the possible imposition of exchange controls or
other restrictions on investments. If a fund invests in
securities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency rates relative to
the U.S. dollar will affect the U.S. dollar value of the
fund's assets.
Smith Barney Emerging market investments offer the potential of significant
International gains but also involve greater risks than investing in more
Equity developed countries. Political or economic instability, lack
Portfolio only of market liquidity and government actions such as currency
controls or seizure of private business or property may be
more likely in emerging markets.
- --------------------------------------------------------------------------------
Derivatives Each fund may, but need not, use derivative contracts, such
and hedging as futures and options on securities, securities indices or
techniques currencies; options on these futures; forward currency
contracts; and interest rate or currency swaps for any of the
All funds following purposes:
except Smith
Barney Money . To hedge against the economic impact of adverse changes in
Market Portfolio the market value of its securities, due to changes in stock
market prices, currency exchange rates or interest rates
. As a substitute for buying or selling securities
. To enhance the fund's return
A derivative contract will obligate or entitle a fund to
deliver or receive an asset or cash payment that is based on
the change in value of one or more securities, currencies or
indices. Even a small investment in derivative contracts can
have a big impact on a fund's stock market, currency and
interest rate exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for
gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money
on derivatives if changes in their value do not correspond
accurately to changes in the value of the fund's holdings.
The other parties to certain derivative contracts present the
same types of credit risk as issuers of fixed income
securities. Derivatives can also make a fund less liquid and
harder to value, especially in declining markets.
- --------------------------------------------------------------------------------
Securities Each fund may engage in securities lending to increase its
lending net investment income. Each fund will only lend securities if
the loans are callable by the fund at any time and the loans
are continuously secured by cash or liquid securities equal
to no less than the market value, determined daily, of the
securities loaned. The risks in lending securities consist of
possible delay in receiving additional collateral, delay in
recovery of securities when the loan is called or possible
loss of collateral should the borrower fail financially.
- --------------------------------------------------------------------------------
10 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Defensive Each fund may depart from its principal investment strategies
investing in response to adverse market, economic or political condi-
tions by taking temporary defensive positions in all types of
money market and short-term debt securities. If a fund takes
a temporary defensive position, it may be unable to achieve
its investment goal.
- --------------------------------------------------------------------------------
Portfolio Each fund may engage in active and frequent trading to
turnover achieve its principal investment strategies. Frequent trading
also increases transaction costs, which could detract from a
fund's performance.
- --------------------------------------------------------------------------------
Travelers Series Fund 11
<PAGE>
Management
The manager
SSBC Fund Management Inc. (SSBC) is each fund's manager.
SSBC is a wholly owned subsidiary of Citigroup. Citigroup businesses produce a
broad range of financial services -- asset management, banking and consumer
finance, credit and charge cards, insurance, investments, investment banking and
trading -- and use diverse channels to make them available to consumer and
corporate customers around the world. SSBC is located at 388 Greenwich Street,
New York, New York 10013. SSBC acts as investment manager to investment
companies having aggregate assets of approximately $115 billion.
SSBC manages the investment operations of the funds covered in this Prospectus
(Smith Barney funds) and receives from each fund for these services the fee
indicated:
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Actual management fee
paid for the fiscal year Contractual
ended October 31, 1998 management fee paid
(as a percentage (as a percentage
of the fund's of the fund's
Fund average daily net assets) average daily net assets)
----------------------------------------------------------------------------
<S> <C> <C>
Smith Barney
International Equity
Portfolio 0.90% 0.90%
Smith Barney Large Cap
Value Portfolio 0.65% 0.65%
Smith Barney Money
Market Portfolio 0.50% 0.50%*
----------------------------------------------------------------------------
</TABLE>
* Prior to March 11, 1998, the annual management fee paid to SSBC was 0.60%
of the average daily net assets of the fund.
12 Travelers Series Fund
<PAGE>
Portfolio Managers
The table below sets forth the name and business experience of each fund's
portfolio manager(s).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Fund Portfolio Manager and Subadviser Business Experience
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney James Conheady (since inception) Investment Officer, SSBC; Vice
International Equity SSBC President, Travelers Series Fund;
Portfolio 388 Greenwich Street Managing Director, Salomon Smith
New York, New York 10013 Barney.
Jeffrey Russell (since inception) Investment Officer, SSBC; Vice
SSBC President, Travelers Series Fund;
Managing Director, Salomon Smith
Barney.
- --------------------------------------------------------------------------------------------------
Smith Barney Large Cap Ellen Cardozo Sonsino (since 1998) Investment Officer, SSBC;
Value Portfolio SSBC Managing Director and Senior
388 Greenwich Street, Equity Portfolio Manager, Salomon
New York, New York 10013 Smith Barney.
- --------------------------------------------------------------------------------------------------
Smith Barney Money Martin Hanley (since inception) Investment Officer, SSBC; Vice
Market Portfolio SSBC President, Salomon Smith Barney.
388 Greenwich Street
New York, New York 10013
- --------------------------------------------------------------------------------------------------
</TABLE>
Year 2000 Issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. Individual companies and governmental issuers that
securities held by a fund may also be adversely affected by the cost of
addressing their Year 2000 systems problems, which could be substantial. The
managers are addressing the Year 2000 issue for their systems. The funds have
been informed by their other service providers that they are taking similar
measures. Although the funds do not expect the Year 2000 issue to adversely
affect them, the funds cannot guarantee that their efforts or the efforts of
their service providers to correct the problem will be successful.
Travelers Series Fund 13
<PAGE>
Share Transactions
Availability of the funds
Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through
their separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations.
The company currently does not foresee any disadvantages to investors arising
from the fact that each fund may offer its shares to different insurance
company separate accounts that serve as the investment medium for their
variable annuity and variable life products. Nevertheless, the Board of
Directors intends to monitor events to identify any material irreconcilable
conflicts which may arise, and to determine what action, if any, should be
taken in response to these conflicts. If a conflict were to occur, one or more
insurance companies' separate accounts might be required to withdraw their
investments in one or more funds and shares of another fund may be substituted.
In addition, the sale of shares may be suspended or terminated if required by
law or regulatory authority or is in the best interests of the funds'
shareholders.
Redemption of shares
The redemption price of the shares of each fund will be the net asset value
next determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted
to a separate account on or before the third day following receipt of the
request in good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
Share Price
Each fund's net asset value is the value of its assets minus its liabilities.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, each fund accelerates the calculation of its net asset value to the
actual closing time.
Each fund generally values its fund securities based on market prices or
quotations. To the extent a fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices are
not readily available, or when the manager believes that they are unreliable or
that the value of a security has been materially affected by events occurring
after a foreign exchange closes, the funds may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund that uses market quotations to
price the same securities.
International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.
Unless there are extraordinary or unusual circumstances, Smith Barney Money
Market Portfolio uses the amortized cost method of valuing its money market
securities. Under the amortized cost method, assets are valued by constantly
amortizing over the remaining life of an instrument the difference between the
principal amount due at maturity and the cost of the instrument to the fund.
14 Travelers Series Fund
<PAGE>
Dividends, Distributions and Taxes
Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
Separate Accounts and to holders of the Contracts.
Each fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment.
An alternative diversification test may be satisfied under certain
circumstances. If a fund should fail to comply with these regulations or fails
to qualify for the special tax treatment afforded regulated investment
companies under the Code, Contracts invested in that fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
Travelers Series Fund 15
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
LLP, independent accountants, whose report, along with each fund's financial
statements, are included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total returns
represent the rate that a shareholder would have earned (or lost) on a share of
a fund assuming reinvestment of all dividends and distributions.
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
-----------------------------------------------------
Smith Barney International Equity
-----------------------------------------------------
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 13.23 $ 12.18 $ 10.48 $ 10.55 $ 10.00
- -------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income
(loss)(2) 0.05 0.01 0.02 0.03(3) (0.03)
Net realized and
unrealized gain (loss) (0.68) 1.05 1.69 (0.10) 0.58
- -------------------------------------------------------------------------------
Total income (loss) from
operations (0.63) 1.06 1.71 (0.07) 0.55
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (0.01) (0.01) -- --
- -------------------------------------------------------------------------------
Total distributions -- (0.01) (0.01) -- --
- -------------------------------------------------------------------------------
Net asset value, end of
year $ 12.60 $ 13.23 $ 12.18 $ 10.48 $ 10.55
- -------------------------------------------------------------------------------
Total return (4.76)% 8.73% 16.36% (0.66)% 5.50%(4)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $224,207 $219,037 $143,323 $53,538 $13,811
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 1.00% 1.01% 1.10% 1.44% 1.20%(5)
Net investment income
(loss) 0.37 0.09 0.23 0.25 (0.73)(5)
- -------------------------------------------------------------------------------
Portfolio turnover rate 34% 38% 41% 29% --
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager waived part of its fees for the period ended October 31, 1994
for the fund. If such fees were not waived the effect of the per share
increase in net investment loss for the fund would have been $0.03 and the
ratio of expenses to average net assets would have been 2.00%(5).
In addition, during the years ended October 31, 1995 and 1996, the fund
earned credits from the custodian, which reduces service fees incurred. If
the credits are taken into consideration the expense ratios for these
periods were 1.21% and 1.05%, respectively. Figures before October 31, 1995
have not been restated to reflect these adjustments.
(3) Includes realized gains and losses from foreign currency transactions.
(4) Not annualized.
(5) Annualized.
16 Travelers Series Fund
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
-----------------------------------------------------
Smith Barney Large Cap Value
-----------------------------------------------------
1998(1) 1997 1996 1995 1994(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 17.90 $ 14.84 $ 12.12 $ 10.14 $10.00
- --------------------------------------------------------------------------------
Income from operations:
Net investment income (3) 0.31 0.25 0.32 0.28 0.11
Net realized and unrealized
gain 1.47 3.16 2.62 1.76 0.03
- --------------------------------------------------------------------------------
Total income from operations 1.78 3.41 2.94 2.04 0.14
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.21) (0.18) (0.17) (0.06) --
Net realized gains (0.53) (0.17) (0.05) -- --
- --------------------------------------------------------------------------------
Total distributions (0.74) (0.35) (0.22) (0.06) --
- --------------------------------------------------------------------------------
Net asset value, end of year $ 18.94 $ 17.90 $ 14.84 $ 12.12 $10.14
- --------------------------------------------------------------------------------
Total return 9.65% 23.38% 24.55% 20.21% 1.40%(4)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $423,570 $287,333 $138,712 $39,364 $6,377
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (3) 0.68% 0.69% 0.73% 0.73% 0.73%(5)
Net investment income 1.59 2.01 2.35 2.70 2.82 (5)
- --------------------------------------------------------------------------------
Portfolio turnover rate 36% 46% 32% 38% 2%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(3) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
<TABLE>
<CAPTION>
-----------------------------------------
1995 1994
-----------------------------------------
<S> <C> <C>
Per Share Decreases in
Net Investment Income $0.02 $0.05
-----------------------------------------
Expense Ratios Without
Fee Waivers and
Reimbursement 0.94% 2.08%(5)
-----------------------------------------
</TABLE>
(4) Not annualized.
(5) Annualized.
Travelers Series Fund 17
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
-------------------------------------------------
Smith Barney Money Market
-------------------------------------------------
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.050 0.049 0.049 0.052 0.014
- -------------------------------------------------------------------------------
Total income from operations 0.050 0.049 0.049 0.052 0.014
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.050) (0.049) (0.049) (0.052) (0.014)
- -------------------------------------------------------------------------------
Total distributions (0.050) (0.049) (0.049) (0.052) (0.014)
- -------------------------------------------------------------------------------
Net asset value, end of year $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Total return 5.11% 5.05% 5.05% 5.35% 1.46%(3)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $164,677 $111,168 $99,150 $37,487 $5,278
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.64% 0.65% 0.65% 0.65% 0.66%(4)
Net investment income 4.99 4.94 4.86 5.26 3.83(4)
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager waived all or part of its fees with respect to the fund for the
years ended October 31, 1997, 1996 and 1995 and the period ended October
31, 1994. In addition, the manager reimbursed the fund 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 expense to average net assets of the
fund would have been as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
1997 1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Decreases in Net Investment
Income $0.000(5) $0.001 $0.003 $0.005
-----------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and
Reimbursement 0.67% 0.74% 0.94% 2.11%(4)
-----------------------------------------------------------------------------
</TABLE>
(3) Not annualized.
(4) Annualized.
(5) Amount represents less than $0.001.
18 Travelers Series Fund
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
The fund sends one report to a household if more than one account has the same
address. Contact an appropriate representative of a participating life
insurance company or your Salomon Smith Barney Financial Consultant if you do
not want this policy to apply to you.
Statement of additional information. The statement of additional (SAI)
information provides more detailed information about the fund. It is
incorporated by reference into this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-842-8573
or writing to Travelers Series Fund, 388 Greenwich Street, MF2, New York, NY
10013.
You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You may obtain copies of these
materials upon payment of a duplicating fee, by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-60019. You can get the same
reports and information free from the Commission's Internet web site at
http://www.sec.gov
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
Smith Barney Money Market Portfolio
(Investment Company Act file no. 811-08372)
2/99
<PAGE>
Travelers Series Fund Inc.
- ------------------
Prospectus
- ------------------
February 28, 1999
Equity Funds Fixed Income Fund
--------------------------- ----------------------------
Smith Barney International Smith Barney High Income
Equity Portfolio Portfolio
Smith Barney Large Cap Smith Barney Money Market
Value Portfolio Portfolio
Shares of each fund are offered only to insurance company Separate Accounts
which fund certain variable annuity and variable life insurance contracts. This
prospectus should be read together with the prospectus for those contracts.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
Contents
Travelers Series Fund Inc. consists of 13 separate investment funds, each with
its own investment objective and policies. This Prospectus relates to four of
those funds. Each fund offers different levels of potential return and involves
different levels of risk.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Goals and Strategies Page
---------------------------------------------------
<S> <C>
Smith Barney International Equity Portfolio 2
Smith Barney Large Cap Value Portfolio 4
Smith Barney High Income Portfolio 6
Smith Barney Money Market Portfolio 8
More on the Funds' Investments 10
Management 13
Share Transactions 15
Share Price 15
Dividends, Distributions and Taxes 16
Financial Highlights 17
</TABLE>
- --------------------------------------------------------------------------------
You should know:
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
- --------------------------------
Fund Goals and Strategies
- --------------------------------
Smith Barney International Equity Portfolio
Investment goal
Total return on its assets from growth of capital and income.
Key investments
The fund invests primarily in equity securities of foreign companies. Equity
securities include exchange traded and over-the-counter common stocks and
preferred shares, debt securities convertible into equity securities, and
warrants and rights.
- --------------------------------------------------------------------------------
Selection process
The manager emphasizes individual security selection while
diversifying the fund's investments across regions and
countries which can help to reduce risk. While the manager
selects investments primarily for their capital appreciation
potential, some investments have an income component as well.
Companies in which the fund invests may have large, mid or
small size market capitalizations and may operate in any
market sector. Market conditions around the world change
constantly as does the location of potential investment
opportunities. Depending on the manager's assessment of
overseas potential for long-term growth, the fund's emphasis
among foreign markets and types of issuers may vary.
In selecting individual companies for investment, the manager
looks for:
. Above average earnings growth
. High relative return on invested capital
. Experienced and effective management
. Competitive advantages
. Strong financial condition
. The range of individual investment opportunities
By spreading the fund's investments across many international
markets, the manager seeks to reduce volatility compared to
an investment in a single region. Unlike global mutual funds
which may allocate a substantial portion of assets to the
U.S. markets, the fund invests substantially all of its
assets in countries outside of the U.S.
In allocating assets among countries and regions, the
economic and political factors that the manager evaluates
include:
. Low or decelerating inflation which creates a favorable
environment for securities markets
. Stable government with policies that encourage economic
growth, equity investment and development of securities
markets
. Currency stability
2 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in foreign securities can bring added benefits, it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
. Foreign stock prices decline
. Adverse governmental action or political, economic or market instability
occurs in a foreign country
. The currency in which a security is priced declines in value relative to the
U.S. dollar
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some foreign countries,
there is also less information available about foreign issuers and markets
because of less rigorous accounting and regulatory standards than in the U.S.
Currency fluctuations could erase investment gains or add to investment losses.
The risk of investing in foreign securities is greater in the case of emerging
markets.
In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency began on January 1, 1999. There are significant political and economic
risks associated with EMU, which may increase the volatility of European
markets and present valuation problems for the fund.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the MSCI EAFE-GDP Weighted Index ("MSCI Index"), a broad-based unmanaged index
of foreign stocks. Past performance does not necessarily indicate how the fund
will perform in the future. Performance figures do not reflect expenses
incurred from investing through a Separate Account. These expenses will reduce
performance. Please refer to the Separate Account prospectus for more
information on expenses.
[BAR GRAPH APPEARS HERE]
% Total Return
1995 11.26%
1996 17.72%
1997 2.71%
1998 6.51%
Calendar years ended December 31
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 14.02% in 4th quarter 1998
Lowest: (19.72)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 6.51 7.29
MSCI Index 27.12 11.37*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 3
<PAGE>
- --------------------------------------
Fund Goals and Strategies
- --------------------------------------
Smith Barney Large Cap Value Portfolio
Investment goal
Current income and long-term growth of income and capital.
Key investments
The fund invests primarily in common stocks of U.S. companies having market
capitalizations of at least $5 billion at the time of investment.
- --------------------------------------------------------------------------------
Selection process
The manager employs a two-step selection process. First, the
manager uses proprietary models and fundamental research to
try to find stocks that are underpriced in the market
relative to their fundamental value. The manager looks for
the following:
. Low market valuations measured by the manager's valuation
models
. Above average dividend yields and established dividend
records
. High return on invested capital and strong cash flow
. Liquidity
Next, the manager looks for a positive catalyst in the
company's near term outlook which the manager believes would
accelerate earnings.
These catalysts include positive changes in earnings
prospects because of:
. New management
. Effective research, product development and marketing
. A business strategy not yet recognized by the marketplace
. Regulatory changes favoring the company
4 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in large capitalization value securities can bring added
benefits, it may also involve additional risks. Investors could lose money on
their investment in the fund, or the fund may not perform as well as other
investments, if any of the following occurs:
. The U.S. stock market goes down.
. Value stocks or larger capitalization stocks are temporarily out of favor.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect.
. An adverse event, such as negative press reports about a company in the fund,
depresses the value of the company's stock.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks. Past
performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. These expenses will reduce performance. Please
refer to the Separate Account prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
% Total Return
1995 30.08%
1996 19.79%
1997 26.63%
1998 9.82%
Calendar years ended December 31
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 13.92% in 4th quarter 1998
Lowest: (12.87)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 9.82 18.84
S&P 500 Index 28.60 28.03*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 5
<PAGE>
- ------------------------------------
Fund Goals and Strategies
- ------------------------------------
Smith Barney High Income Portfolio
Investment goal
Primary: High current income Secondary: Capital appreciation
Key investments
The fund invests primarily in high yielding, corporate debt obligations and
preferred stock of U.S. and foreign issuers, but may also invest in foreign
issuers.
Credit Quality: The fund invests primarily in below investment grade
securities, but may not invest more than 10% in securities rated lower than B
or unrated securities of comparable quality. Below investment grade securities
are commonly known as "junk bonds."
Maturity: Although the fund may invest in securities of any maturity, under
current market conditions, the fund intends to have an average remaining
maturity of between five and ten years.
- --------------------------------------------------------------------------------
Selection process
In selecting securities, the manager considers and compares
the relative yields of various types of obligations. The
manager seeks to maximize current income by generally
purchasing securities of lower credit quality, but offering
higher current yield. In selecting securities for the fund,
the manager employs a forward looking strategy seeking to
identify companies that exhibit favorable earnings prospects
or demonstrate a potential for higher ratings over time.
The manager looks for:
. "Fallen angels" or companies that are repositioning in the
marketplace which the manager believes are temporarily
undervalued, and
. Younger companies with smaller capitalizations that have
exhibited improving financial strength or improving credit
ratings over time
The manager selects individual debt securities by comparing
yield, maturity, issue classification and quality
characteristics. Investments in these companies may increase
the fund's potential for capital appreciation and reduce the
fund's credit risk exposure.
The manager also employs an active sell strategy to dispose
of securities that no longer meet the manager's investment
criteria to harvest gains for reinvestment in new securities
exhibiting characteristics as described above.
6 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in high yield securities can bring added benefits, it may also
involve additional risks. Investors could lose money in the fund or the fund's
performance could fall below other possible investments if any of the following
occurs:
. The issuer of a debt security in the fund defaults on its obligation to pay
principal or interest, has its credit rating downgraded by a rating
organization or is perceived by the market to be less creditworthy.
. Interest rates go up, causing the prices of debt securities in the fund to
fall.
. As a result of declining interest rates, the issuer of a security exercises
its right to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call or prepayment
risk.
. As a result of rising interest rates, the issuer of a security exercises its
right to pay principal later than scheduled, which will lock in a below-
market interest rate and reduce the value of the security. This is known as
extension risk.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the returns of
the Salomon Brothers Intermediate High Yield Index ("Salomon Index") and the
Bear Stearns High Yield Index ("Bear Stearns Index"), both of which are broad-
based indices of high yield corporate bonds. Past performance does not
necessarily indicate how the fund will perform in the future. Performance
figures do not reflect expenses incurred from investing through a Separate
Account. These expenses will reduce performance. Please refer to the Separate
Account prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
% Total Return
1995 19.18%
1996 13.13%
1997 13.85%
1998 0.44%
Calendar years ended December 31
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 5.35% in 2nd quarter 1997
Lowest: (5.79)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 0.44 9.86
Salomon Index 3.60 10.74*
Bear Stearns Index 2.08 10.85*
- -----------------------------------------
*Index comparisons begin on June 30, 1994
Travelers Series Fund 7
<PAGE>
- -----------------------------------
Fund Goals and Strategies
- -----------------------------------
Smith Barney Money Market Portfolio
Investment goal
Maximize current income consistent with preservation of capital. The fund seeks
to maintain a stable $1 share price.
Key investments
The fund invests exclusively in high quality U.S. dollar denominated short term
debt securities. These include commercial paper, corporate and municipal
obligations, obligations of U.S. and foreign banks, securities of the U.S.
Government, its agencies or instrumentalities and related repurchase
agreements.
Credit Quality: The fund invests exclusively in securities rated by a
nationally recognized rating organization in the two highest short term rating
categories, or if unrated, of equivalent quality.
Effective Maturity: The fund invests exclusively in securities having remaining
effective maturities of 397 days or less, and maintains a dollar-weighted
portfolio maturity of 90 days or less.
- --------------------------------------------------------------------------------
Selection process
In selecting investments for the fund, the manager looks for:
. The best relative values based on an analysis of interest
rate sensitivity, yield and price.
. Issuers offering minimal credit risk.
. Maturities consistent with the manager's outlook for
interest rates.
8 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
Although the fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund, or the fund could
underperform other short term debt instruments or money market funds if any of
the following occurs:
. Interest rates rise sharply.
. An issuer of the fund's securities defaults, or has its credit rating
downgraded.
. Sectors or issuers the fund has emphasized fail to perform as expected.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
The value of the fund's foreign securities may go down because of unfavorable
government actions, political instability or the more limited availability of
accurate information about foreign issuers.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the 90-day U.S. Treasury bill. Past performance does not necessarily indicate
how the fund will perform in the future. Performance figures do not reflect
expenses incurred from investing through a Separate Account. These expenses
will reduce performance. Please refer to the Separate Account prospectus for
more information on expenses.
[BAR CHART APPEAR HERE]
% Total Return
1995 5.43%
1996 4.94%
1997 5.09%
1998 5.04%
Calendar years ended December 31
The bar chart shows the performance of the Fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 1.37% in 2nd quarter 1995
Lowest: 1.15% in 4th quarter 1994
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 5.04 5.02
Treasury bill 5.06 5.28*
- -----------------------------------------
* Index comparison begins on June 30, 1994.
The fund's 7-day yield as of December 31, 1998 was 4.63%. Call toll free 1-877-
795-2703 for the fund's current 7-day yield.
Travelers Series Fund 9
<PAGE>
More on the Funds' Investments
Additional investments and investment techniques
- --------------------------------------------------------------------------------
Each fund de- Smith Barney International Equity Portfolio
scribes its The fund may invest up to 20% of its assets in debt securi-
investment ob- ties of any credit quality or maturity of foreign corporate
jective and and governmental issuers, as well as U.S. government securi-
its principal ties and money market obligations of U.S. and foreign corpo-
investment rate issuers.
strategies and
risks under Smith Barney High Income Portfolio
"Fund Goals Although the fund invests primarily in high yield securities,
and Strate- the fund may also invest up to 35% of its assets in common
gies." stock and common stock equivalents, including convertible se-
curities, options, warrants and rights. The fund may invest
This section up to 20% of its assets in foreign currency denominated secu-
provides addi- rities and without limit in U.S. dollar denominated securi-
tional infor- ties of foreign issuers.
mation about
the funds' in-
vestments and
certain port-
folio manage-
ment tech-
niques the
funds may use.
More informa-
tion about the
funds' invest-
ments and
portfolio man-
agement tech-
niques, some
of which en-
tail risks, is
included in
the statement
of additional
information
(SAI).
- --------------------------------------------------------------------------------
Equity Subject to its particular investment policies, each of these
investments funds may invest in all types of equity securities. Equity
securities include exchange-traded and over-the-counter (OTC)
Each equity common and preferred stocks, warrants, rights, investment
fund and Smith grade convertible securities, receipts and shares, trust cer-
Barney High tificates, limited partnership interests, shares of other in-
Income Portfo- vestment companies, real estate investment trusts and equity
lio participations.
- --------------------------------------------------------------------------------
Fixed income Subject to its particular investment policies, each fund may
investments invest in fixed income securities. Fixed income investments
Each fixed in- include bonds, notes (including structured notes), mortgage-
come fund and, related securities, asset-backed securities, convertible se-
to a limited curities, Eurodollar and Yankee dollar instruments, preferred
extent, each stocks and money market instruments. Fixed income securities
equity fund may be issued by U.S. and foreign corporations or entities;
U.S. and foreign banks; the U.S. government, its agencies,
authorities, instrumentalities or sponsored enterprises;
state and municipal governments; supranational organizations;
and foreign governments and their political subdivisions.
Fixed income securities may have all types of interest rate
payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and
auction rate features.
Smith Barney Each of these funds may invest in mortgage-backed and asset-
High Income backed securities. Mortgage-related securities may be issued
Portfolio only by private companies or by agencies of the U.S. government
and represent direct or indirect participations in, or are
collateralized by and payable from, mortgage loans secured by
real property. Asset-backed securities represent participa-
tions in, or are secured by and payable from, assets such as
installment sales or loan contracts, leases, credit card re-
ceivables and other categories of receivables.
- --------------------------------------------------------------------------------
10 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Fixed income Credit quality
investments
(cont'd.) If a security receives different ratings, a fund will treat
the securities as being rated in the highest rating category.
A fund may choose not to sell securities that are downgraded
after their purchase below the fund's minimum acceptable
credit rating. Each fund's credit standards also apply to
counterparties to OTC derivatives contracts.
Investment grade securities
Securities are investment grade if:
. They are rated, respectively, in one of the top four long-
term rating categories of a nationally recognized
statistical rating organization.
. They have received a comparable short-term or other rating.
. They are unrated securities that the manager believes are
of comparable quality to investment grade securities.
- --------------------------------------------------------------------------------
High yield, lower quality securities
Smith Barney The fund may invest in fixed income securities that are high
High yield, lower quality securities rated by a rating organiza-
Income tion below its top four long term rating categories or
Portfolio only unrated securities determined by the manager or subadviser to
be of equivalent quality. The issuers of lower quality bonds
may be highly leveraged and have difficulty servicing their
debt, especially during prolonged economic recessions or pe-
riods of rising interest rates. The prices of lower quality
securities are volatile and may go down due to market percep-
tions of deteriorating issuer credit-worthiness or economic
conditions. Lower quality securities may become illiquid and
hard to value in down markets.
- --------------------------------------------------------------------------------
Foreign and Each fund may invest in foreign securities, although the for-
emerging eign investments of Smith Barney Money Market Portfolio are
market limited to U.S. dollar denominated investments issued by for-
investments eign branches of U.S. banks and by U.S. and foreign branches
of foreign banks.
Investments in securities of foreign entities and securities
quoted or denominated in foreign currencies involve special
risks. These include possible political and economic insta-
bility and the possible imposition of exchange controls or
other restrictions on investments. If a fund invests in secu-
rities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency rates relative to
the U.S. dollar will affect the U.S. dollar value of the
fund's assets.
Smith Barney Emerging market investments offer the potential of signifi-
International cant gains but also involve greater risks than investing in
Equity more developed countries. Political or economic instability,
Portfolio only lack of market liquidity and government actions such as cur-
rency controls or seizure of private business or property may
be more likely in emerging markets.
Travelers Series Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Derivatives Each fund may, but need not, use derivative contracts, such
and hedging as futures and options on securities, securities indices or
techniques currencies; options on these futures; forward currency con-
tracts; and interest rate or currency swaps for any of the
All funds ex- following purposes:
cept Smith
Barney Money . To hedge against the economic impact of adverse changes in
Market Portfo- the market value of its securities, due to changes in stock
lio market prices, currency exchange rates or interest rates
. As a substitute for buying or selling securities
. To enhance the fund's return
A derivative contract will obligate or entitle a fund to de-
liver or receive an asset or cash payment that is based on
the change in value of one or more securities, currencies or
indices. Even a small investment in derivative contracts can
have a big impact on a fund's stock market, currency and in-
terest rate exposure. Therefore, using derivatives can dis-
proportionately increase losses and reduce opportunities for
gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money
on derivatives if changes in their value do not correspond
accurately to changes in the value of the fund's holdings.
The other parties to certain derivative contracts present the
same types of credit risk as issuers of fixed income securi-
ties. Derivatives can also make a fund less liquid and harder
to value, especially in declining markets.
- --------------------------------------------------------------------------------
Securities Each fund may engage in securities lending to increase its
lending net investment income. Each fund will only lend securities if
the loans are callable by the fund at any time and the loans
are continuously secured by cash or liquid securities equal
to no less than the market value, determined daily, of the
securities loaned. The risks in lending securities consist of
possible delay in receiving additional collateral, delay in
recovery of securities when the loan is called or possible
loss of collateral should the borrower fail financially.
- --------------------------------------------------------------------------------
Defensive Each fund may depart from its principal investment strategies
investing in response to adverse market, economic or political condi-
tions by taking temporary defensive positions in all types of
money market and short-term debt securities. If a fund takes
a temporary defensive position, it may be unable to achieve
its investment goal.
- --------------------------------------------------------------------------------
Portfolio Each fund may engage in active and frequent trading to
turnover achieve its principal investment strategies. Frequent trading
also increases transaction costs, which could detract from a
fund's performance.
12 Travelers Series Fund
<PAGE>
Management
The manager
SSBC Fund Management Inc. (SSBC) is each fund's manager.
SSBC is a wholly owned subsidiary of Citigroup. Citigroup businesses produce a
broad range of financial services -- asset management, banking and consumer
finance, credit and charge cards, insurance, investments, investment banking
and trading -- and use diverse channels to make them available to consumer and
corporate customers around the world. SSBC is located at 388 Greenwich Street,
New York, New York 10013. SSBC acts as investment manager to investment
companies having aggregate assets of approximately $115 billion.
SSBC manages the investment operations of the funds covered in this Prospectus
(Smith Barney funds) and receives from each fund for these services the fee
indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
paid for the fiscal year Contractual
ended October 31, 1998 management fee paid
(as a percentage (as a percentage
of the fund's of the fund's
Fund average daily net assets) average daily net assets)
------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney
International Equity
Portfolio 0.90% 0.90%
Smith Barney Large Cap
Value Portfolio 0.65% 0.65%
Smith Barney High Income
Portfolio 0.60% 0.60%
Smith Barney Money
Market Portfolio 0.50% 0.50%*
------------------------------------------------------------------------------
</TABLE>
* Prior to March 11, 1998, the annual management fee paid to SSBC was 0.60%
of the average daily net assets of the fund.
Travelers Series Fund 13
<PAGE>
Portfolio Managers
The table below sets forth the name and business experience of each fund's
portfolio manager(s).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Fund Portfolio Manager and Subadviser Business Experience
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney James Conheady (since inception) Investment Officer, SSBC; Vice
International Equity SSBC President, Travelers Series Fund;
Portfolio 388 Greenwich Street Managing Director, Salomon Smith
New York, New York 10013 Barney.
Jeffrey Russell (since inception) Investment Officer, SSBC; Vice
SSBC President, Travelers Series Fund;
Managing Director, Salomon Smith
Barney.
- ----------------------------------------------------------------------------------------------------
Smith Barney Large Cap Ellen Cardozo Sonsino (since 1998) Investment Officer, SSBC;
Value Portfolio SSBC Managing Director and Senior
388 Greenwich Street, Equity Portfolio Manager, Salomon
New York, New York 10013 Smith Barney.
- ----------------------------------------------------------------------------------------------------
Smith Barney High Income John C. Bianchi (since inception) Investment Officer, SSBC;
Portfolio MMC Managing Director, Salomon Smith
388 Greenwich Street, Barney.
New York, New York 10013
- ----------------------------------------------------------------------------------------------------
Smith Barney Money Martin Hanley (since inception) Investment Officer, SSBC; Vice
Market Portfolio SSBC President, Salomon Smith Barney.
388 Greenwich Street
New York, New York 10013
- ----------------------------------------------------------------------------------------------------
</TABLE>
Year 2000 Issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. Individual companies and governmental issuers that
securities held by a fund may also be adversely affected by the cost of
addressing their Year 2000 systems problems, which could be substantial. The
managers are addressing the Year 2000 issue for their systems. The funds have
been informed by their other service providers that they are taking similar
measures. Although the funds do not expect the Year 2000 issue to adversely
affect them, the funds cannot guarantee that their efforts or the efforts of
their service providers to correct the problem will be successful.
14 Travelers Series Fund
<PAGE>
Share Transactions
Availability of the funds
Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through
their separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations.
The company currently does not foresee any disadvantages to investors arising
from the fact that each fund may offer its shares to different insurance
company separate accounts that serve as the investment medium for their
variable annuity and variable life products. Nevertheless, the Board of
Directors intends to monitor events to identify any material irreconcilable
conflicts which may arise, and to determine what action, if any, should be
taken in response to these conflicts. If a conflict were to occur, one or more
insurance companies' separate accounts might be required to withdraw their
investments in one or more funds and shares of another fund may be substituted.
In addition, the sale of shares may be suspended or terminated if required by
law or regulatory authority or is in the best interests of the funds'
shareholders.
Redemption of shares
The redemption price of the shares of each fund will be the net asset value
next determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted
to a separate account on or before the third day following receipt of the
request in good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
Share Price
Each fund's net asset value is the value of its assets minus its liabilities.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, each fund accelerates the calculation of its net asset value to the
actual closing time.
Each fund generally values its fund securities based on market prices or
quotations. To the extent a fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices are
not readily available, or when the manager believes that they are unreliable or
that the value of a security has been materially affected by events occurring
after a foreign exchange closes, the funds may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund that uses market quotations to
price the same securities.
International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.
Unless there are extraordinary or unusual circumstances, Smith Barney Money
Market Portfolio uses the amortized cost method of valuing its money market
securities. Under the amortized cost method, assets are valued by constantly
amortizing over the remaining life of an instrument the difference between the
principal amount due at maturity and the cost of the instrument to the fund.
Travelers Series Fund 15
<PAGE>
Dividends, Distributions and Taxes
Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
Separate Accounts and to holders of the Contracts.
Each fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment.
An alternative diversification test may be satisfied under certain
circumstances. If a fund should fail to comply with these regulations or fails
to qualify for the special tax treatment afforded regulated investment
companies under the Code, Contracts invested in that fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
16 Travelers Series Fund
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
LLP, independent accountants, whose report, along with each fund's financial
statements, are included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total returns
represent the rate that a shareholder would have earned (or lost) on a share of
a fund assuming reinvestment of all dividends and distributions.
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
-----------------------------------------------------
Smith Barney International Equity
-----------------------------------------------------
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 13.23 $ 12.18 $ 10.48 $ 10.55 $ 10.00
- -------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income
(loss)(2) 0.05 0.01 0.02 0.03(3) (0.03)
Net realized and
unrealized gain (loss) (0.68) 1.05 1.69 (0.10) 0.58
- -------------------------------------------------------------------------------
Total income (loss) from
operations (0.63) 1.06 1.71 (0.07) 0.55
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (0.01) (0.01) -- --
- -------------------------------------------------------------------------------
Total distributions -- (0.01) (0.01) -- --
- -------------------------------------------------------------------------------
Net asset value, end of
year $ 12.60 $ 13.23 $ 12.18 $ 10.48 $ 10.55
- -------------------------------------------------------------------------------
Total return (4.76)% 8.73% 16.36% (0.66)% 5.50%(4)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $224,207 $219,037 $143,323 $53,538 $13,811
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 1.00% 1.01% 1.10% 1.44% 1.20%(5)
Net investment income
(loss) 0.37 0.09 0.23 0.25 (0.73)(5)
- -------------------------------------------------------------------------------
Portfolio turnover rate 34% 38% 41% 29% --
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager waived part of its fees for the period ended October 31, 1994
for the fund. If such fees were not waived the effect of the per share
increase in net investment loss for the fund would have been $0.03 and the
ratio of expenses to average net assets would have been 2.00%(5).
In addition, during the years ended October 31, 1995 and 1996, the fund
earned credits from the custodian, which reduces service fees incurred. If
the credits are taken into consideration the expense ratios for these
periods were 1.21% and 1.05%, respectively. Figures before October 31, 1995
have not been restated to reflect these adjustments.
(3) Includes realized gains and losses from foreign currency transactions.
(4) Not annualized.
(5) Annualized.
Travelers Series Fund 17
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
--------------------------------------------------
Smith Barney Large Cap Value
--------------------------------------------------
1998(1) 1997 1996 1995 1994(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 17.90 $ 14.84 $ 12.12 $ 10.14 $10.00
- --------------------------------------------------------------------------------
Income from operations:
Net investment income (3) 0.31 0.25 0.32 0.28 0.11
Net realized and unrealized
gain 1.47 3.16 2.62 1.76 0.03
- --------------------------------------------------------------------------------
Total income from operations 1.78 3.41 2.94 2.04 0.14
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.21) (0.18) (0.17) (0.06) --
Net realized gains (0.53) (0.17) (0.05) -- --
- --------------------------------------------------------------------------------
Total distributions (0.74) (0.35) (0.22) (0.06) --
- --------------------------------------------------------------------------------
Net asset value, end of year $ 18.94 $ 17.90 $ 14.84 $ 12.12 $10.14
- --------------------------------------------------------------------------------
Total return 9.65% 23.38% 24.55% 20.21% 1.40%(4)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $423,570 $287,333 $138,712 $39,364 $6,377
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (3) 0.68% 0.69% 0.73% 0.73% 0.73%(5)
Net investment income 1.59 2.01 2.35 2.70 2.82 (5)
- --------------------------------------------------------------------------------
Portfolio turnover rate 36% 46% 32% 38% 2%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(3) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
Per Share Decreases in Net Investment Income $0.02 $0.05
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 0.94% 2.08%(5)
------------------------------------------------------------------------------
(4) Not annualized.
(5) Annualized.
18 Travelers Series Fund
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
-------------------------------------------------
Smith Barney High Income
-------------------------------------------------
1998(1) 1997 1996 1995 1994(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $13.25 $ 12.09 $ 11.26 $ 10.07 $10.00
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income (3) 1.21 0.88 1.14 0.93 0.29
Net realized and unrealized
gain (loss) (1.58) 1.00 0.19 0.48 (0.22)
- --------------------------------------------------------------------------------
Total income (loss) from
operations (0.37) 1.88 1.33 1.41 0.07
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.74) (0.66) (0.50) (0.22) --
Net realized gains (0.17) (0.06) -- -- --
- --------------------------------------------------------------------------------
Total distributions (0.91) (0.72) (0.50) (0.22) --
- --------------------------------------------------------------------------------
Net asset value, end of year $11.97 $ 13.25 $ 12.09 $ 11.26 $10.07
- --------------------------------------------------------------------------------
Total return (3.38)% 16.24% 12.17% 14.30% 0.70%(4)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $160,259 $123,726 $65,955 $20,450 $3,395
- --------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (3) 0.67% 0.70% 0.84% 0.70% 0.69%(5)
Net investment income 9.12 9.36 9.79 9.54 7.55(5)
- --------------------------------------------------------------------------------
Portfolio turnover rate 82% 89% 104% 57% 15%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(3) The manager 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
reimbursed the fund for $17,664 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 for the fund would have been as follows:
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
Per Share Decreases in Net Investment Income $0.04 $0.07
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.07% 2.60%(5)
------------------------------------------------------------------------------
(4) Not annualized.
(5) Annualized.
Travelers Series Fund 19
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
------------------------------------------------
Smith Barney Money Market
------------------------------------------------
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.050 0.049 0.049 0.052 0.014
- -------------------------------------------------------------------------------
Total income from operations 0.050 0.049 0.049 0.052 0.014
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.050) (0.049) (0.049) (0.052) (0.014)
- -------------------------------------------------------------------------------
Total distributions (0.050) (0.049) (0.049) (0.052) (0.014)
- -------------------------------------------------------------------------------
Net asset value, end of year $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Total return 5.11% 5.05% 5.05% 5.35% 1.46%(3)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $164,677 $111,168 $99,150 $37,487 $5,278
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.64% 0.65% 0.65% 0.65% 0.66%(4)
Net investment income 4.99 4.94 4.86 5.26 3.83(4)
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager waived all or part of its fees with respect to the fund for the
years ended October 31, 1997, 1996 and 1995 and the period ended October
31, 1994. In addition, the manager reimbursed the fund 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 expense to average net assets of the
fund would have been as follows:
-----------------------------------------------------------------------------
1997 1996 1995 1994
-----------------------------------------------------------------------------
Per Share Decreases in Net Investment
Income $0.000(5) $0.001 $0.003 $0.005
-----------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and
Reimbursement 0.67% 0.74% 0.94% 2.11%(4)
-----------------------------------------------------------------------------
(3) Not annualized.
(4) Annualized.
(5) Amount represents less than $0.001.
20 Travelers Series Fund
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
The fund sends one report to a household if more than one account has the same
address. Contact an appropriate representative of a participating life
insurance company or your Salomon Smith Barney Financial Consultant if you do
not want this policy to apply to you.
Statement of additional information. The statement of additional (SAI)
information provides more detailed information about the fund. It is
incorporated by reference into this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-842-8573
or writing to Travelers Series Fund, 388 Greenwich Street, MF2, New York, NY
10013.
You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You may obtain copies of these
materials upon payment of a duplicating fee, by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-60019. You can get the same
reports and information free from the Commission's Internet web site at
http://www.sec.gov
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
Smith Barney High Income Portfolio
Smith Barney Money Market Portfolio
(Investment Company Act file no. 811-08372)
2/99
Travelers Series Fund Inc.
- ------------------
Prospectus
- ------------------
February 28, 1999
Equity Fund Fixed Income Fund
--------------------------- ----------------------------
Smith Barney International MFS Total Return Portfolio
Equity Portfolio
Smith Barney Large Cap Smith Barney High Income
Value Portfolio Portfolio
Smith Barney Money Market
Portfolio
Shares of each fund are offered only to insurance company Separate Accounts
which fund certain variable annuity and variable life insurance contracts. This
prospectus should be read together with the prospectus for those contracts.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
Contents
Travelers Series Fund Inc. consists of 13 separate investment funds, each with
its own investment objective and policies. This Prospectus relates to five of
those funds. Each fund offers different levels of potential return and involves
different levels of risk.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Goals and Strategies Page
---------------------------------------------------
<S> <C>
Smith Barney International Equity Portfolio 2
Smith Barney Large Cap Value Portfolio 4
MFS Total Return Portfolio 6
Smith Barney High Income Portfolio 8
Smith Barney Money Market Portfolio 10
More on the Funds' Investments 12
Management 16
Share Transactions 18
Share Price 19
Dividends, Distributions and Taxes 19
Financial Highlights 20
</TABLE>
- --------------------------------------------------------------------------------
You should know:
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
Fund Goals and Strategies
Smith Barney International Equity Portfolio
Investment goal
Total return on its assets from growth of capital and income.
Key investments
The fund invests primarily in equity securities of foreign companies. Equity
securities include exchange traded and over-the-counter common stocks and
preferred shares, debt securities convertible into equity securities, and
warrants and rights.
- --------------------------------------------------------------------------------
Selection process
The manager emphasizes individual security selection while
diversifying the fund's investments across regions and
countries which can help to reduce risk. While the manager
selects investments primarily for their capital appreciation
potential, some investments have an income component as well.
Companies in which the fund invests may have large, mid or
small size market capitalizations and may operate in any
market sector. Market conditions around the world change
constantly as does the location of potential investment
opportunities. Depending on the manager's assessment of
overseas potential for long-term growth, the fund's emphasis
among foreign markets and types of issuers may vary.
In selecting individual companies for investment, the manager
looks for:
. Above average earnings growth
. High relative return on invested capital
. Experienced and effective management
. Competitive advantages
. Strong financial condition
. The range of individual investment opportunities
By spreading the fund's investments across many international
markets, the manager seeks to reduce volatility compared to
an investment in a single region. Unlike global mutual funds
which may allocate a substantial portion of assets to the
U.S. markets, the fund invests substantially all of its
assets in countries outside of the U.S.
In allocating assets among countries and regions, the
economic and political factors that the manager evaluates
include:
. Low or decelerating inflation which creates a favorable
environment for securities markets
. Stable government with policies that encourage economic
growth, equity investment and development of securities
markets
. Currency stability
2 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in foreign securities can bring added benefits, it may also
involve additional risks. Investors could lose money on their investment in the
fund, or the fund may not perform as well as other investments, if any of the
following occurs:
. Foreign stock prices decline
. Adverse governmental action or political, economic or market instability
occurs in a foreign country
. The currency in which a security is priced declines in value relative to the
U.S. dollar
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some foreign countries,
there is also less information available about foreign issuers and markets
because of less rigorous accounting and regulatory standards than in the U.S.
Currency fluctuations could erase investment gains or add to investment losses.
The risk of investing in foreign securities is greater in the case of emerging
markets.
In Europe, Economic and Monetary Union (EMU) and the introduction of a single
currency began on January 1, 1999. There are significant political and economic
risks associated with EMU, which may increase the volatility of European
markets and present valuation problems for the fund.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the MSCI EAFE-GDP Weighted Index ("MSCI Index"), a broad-based unmanaged index
of foreign stocks. Past performance does not necessarily indicate how the fund
will perform in the future. Performance figures do not reflect expenses
incurred from investing through a Separate Account. These expenses will reduce
performance. Please refer to the Separate Account prospectus for more
information on expenses.
[BAR CHART APPEARS HERE]
1995 11.26%
1996 17.72%
1997 2.71%
1998 6.51%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest:14.02% in 4th quarter 1998
Lowest:(19.72)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 6.51 7.29
MSCI Index 27.12 11.37*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 3
<PAGE>
Fund Goals and Strategies
Smith Barney Large Cap Value Portfolio
Investment goal
Current income and long-term growth of income and capital.
Key investments
The fund invests primarily in common stocks of U.S. companies having market
capitalizations of at least $5 billion at the time of investment.
- --------------------------------------------------------------------------------
Selection process
The manager employs a two-step selection process. First, the
manager uses proprietary models and fundamental research to
try to find stocks that are underpriced in the market
relative to their fundamental value. The manager looks for
the following:
. Low market valuations measured by the manager's valuation
models
. Above average dividend yields and established dividend
records
. High return on invested capital and strong cash flow
. Liquidity
Next, the manager looks for a positive catalyst in the
company's near term outlook which the manager believes would
accelerate earnings.
These catalysts include positive changes in earnings
prospects because of:
. New management
. Effective research, product development and marketing
. A business strategy not yet recognized by the marketplace
. Regulatory changes favoring the company
4 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in large capitalization value securities can bring added
benefits, it may also involve additional risks. Investors could lose money on
their investment in the fund, or the fund may not perform as well as other
investments, if any of the following occurs:
. The U.S. stock market goes down.
. Value stocks or larger capitalization stocks are temporarily out of favor.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular stock proves to be incorrect.
. An adverse event, such as negative press reports about a company in the fund,
depresses the value of the company's stock.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks. Past
performance does not necessarily indicate how the fund will perform in the
future. Performance figures do not reflect expenses incurred from investing
through a Separate Account. These expenses will reduce performance. Please
refer to the Separate Account prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
1995 30.08%
1996 19.79%
1997 26.63%
1998 9.82%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest:13.92% in 4th quarter 1998
Lowest:(12.87)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 9.82 18.84
S&P 500 Index 28.60 28.03*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 5
<PAGE>
Fund Goals and Strategies
MFS Total Return Portfolio
Investment goals
Primary: Above average income (compared to a
portfolio invested entirely in equity securities)
consistent with the prudent employment of capital.
Secondary: Growth of capital and income.
Key investments
The fund invests in a broad range of equity and
fixed income securities of both U.S. and foreign
issuers.
The fund's equity securities include common and
preferred stock; bonds, warrants or rights
convertible into stock and depositary receipts for
those securities.
The fund's fixed income securities include
corporate debt obligations of any maturity, Brady
bonds, U.S. Government securities, mortgage-backed
securities, zero-coupon bonds, deferred interest
bonds and payment in kind bonds.
Credit quality: The fund's assets may consist of
both investment grade and lower quality securities.
The fund may invest up to 20% of the fund's assets
in nonconvertible fixed income securities rated
below investment grade or unrated securities of
equivalent quality.
- --------------------------------------------------------------------------------
Selection process
Under normal market conditions and depending on the
subadviser's view of economic and money market conditions,
fiscal and monetary policy and security values, the fund's
assets will be allocated among fixed income and equity
investments within the following ranges:
. between 40% . at least 25%
and 75% in in non-
equity convertible
securities fixed income
securities
Equity investments
The subadviser uses a "bottom up" investment approach in
selecting securities based on its fundamental analysis of an
individual security's value. In selecting individual equity
securities for investment, the subadviser seeks companies:
. that are undervalued in the market relative to their long
term potential because the market has overlooked them or
because they are temporarily out of favor in the market due
to market declines, poor economic conditions or adverse
regulatory or other changes
. that generally have low price to book, price to sales
and/or price to earnings ratios
. with relatively large market capitalizations (i.e., market
capitalizations of $5 billion or more).
The subadviser also invests in convertible securities that
generally provide a fixed income stream and an opportunity to
participate in an increase in the market price of the
underlying common stock.
Fixed income investments
The subadviser periodically assesses the three month outlook
for inflation rate changes, economic growth and other fiscal
measures and their effect on U.S. Treasury interest rates.
Using that assessment, the subadviser determines a probable
difference between total Returns on U.S. Treasury securities
and on other types of fixed income securities and selects
those securities the subadviser believes will deliver
favorable returns.
6 Travelers Series Fund
<PAGE>
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Principal risks of investing in the fund
While investing in a mix of equity and debt securities can bring added
benefits, it may also involve additional risks. Investors could lose money in
the fund or the fund's performance could fall below other possible investments
if any of the following occurs:
. The subadviser's allocation of investments between equity and fixed income
securities could cause the fund to miss attractive investment opportunities
by underweighting markets that generate significant returns or cause the fund
to incur losses by overweighting markets that experience significant
declines.
. The subadviser's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
. Equity investments lose their value due to a decline in the U.S. stock
market.
. Value or large capitalization stocks are temporarily out of favor.
. An adverse event, such as negative press reports about a company in the
fund's portfolio, depresses the value of the company's stock.
. Fixed income investments lose their value due to an increase in interest
rates.
. The issuer of a debt security in the fund defaults on its obligation to pay
principal or interest, has its credit rating downgraded by a rating
organization or is perceived by the market to be less creditworthy.
. Mortgage and asset backed securities are subject to the same default risks of
other fixed income securities, but it may be more difficult to enforce rights
against the assets underlying these securities in case of default.
. As a result of declining interest rates, the issuer of a security exercises
its right to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call risk.
. As a result of rising interest rates, the issuer of a security exercises its
right to pay principal later than scheduled, which will lock in a below-
market interest rate and reduce the value of the security. This is known as
extension risk.
. Securities with longer maturities are more sensitive to interest rate changes
and may be more volatile.
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
Many foreign countries in which the fund invests have less liquid and more
volatile markets than in the U.S. In some of the foreign countries in which the
fund invests, there is also less information available about foreign issuers
and markets because of less rigorous accounting and regulatory standards than
in the U.S. Currency fluctuations could erase investment gains or add to
investment losses. The risk of investing in foreign securities is greater in
the case of less developed countries.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks, and the Lehman
Brothers Government/Corporate Bond Index ("Lehman Brothers Index"), a broad-
based unmanaged index of bonds issued by the U.S. government and its agencies
as well as certain corporate issuers. Past performance does not necessarily
indicate how the fund will perform in the future. Performance figures do not
reflect expenses incurred from investing through a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account
prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
1995 25.70%
1996 14.51%
1997 21.18%
1998 11.67%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 9.87% in 2nd quarter 1997
Lowest:(4.06)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 11.67 15.26
S&P 500 Index 28.60 28.03*
Lehman Brothers Index 9.47 9.22*
- -----------------------------------------
* Index comparisons begin on June 30, 1994
Travelers Series Fund 7
<PAGE>
Fund Goals and Strategies
Smith Barney High Income Portfolio
Investment goal
Primary: High current income Secondary: Capital appreciation
Key investments
The fund invests primarily in high yielding,
corporate debt obligations and preferred stock of
U.S. and foreign issuers, but may also invest in
foreign issuers.
Credit Quality: The fund invests primarily in below
investment grade securities, but may not invest
more than 10% in securities rated lower than B or
unrated securities of comparable quality. Below in-
vestment grade securities are commonly known as
"junk bonds."
Maturity: Although the fund may invest in securi-
ties of any maturity, under current market condi-
tions, the fund intends to have an average remain-
ing maturity of between five and ten years.
- --------------------------------------------------------------------------------
Selection process
In selecting securities, the manager considers and compares
the relative yields of various types of obligations. The
manager seeks to maximize current income by generally
purchasing securities of lower credit quality, but offering
higher current yield. In selecting securities for the fund,
the manager employs a forward looking strategy seeking to
identify companies that exhibit favorable earnings prospects
or demonstrate a potential for higher ratings over time.
The manager looks for:
. "Fallen angels" or companies that are repositioning in the
marketplace which the manager believes are temporarily
undervalued, and
. Younger companies with smaller capitalizations that have
exhibited improving financial strength or improving credit
ratings over time
The manager selects individual debt securities by comparing
yield, maturity, issue classification and quality
characteristics. Investments in these companies may increase
the fund's potential for capital appreciation and reduce the
fund's credit risk exposure.
The manager also employs an active sell strategy to dispose
of securities that no longer meet the manager's investment
criteria to harvest gains for reinvestment in new securities
exhibiting characteristics as described above.
8 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
While investing in high yield securities can bring added benefits, it may also
involve additional risks. Investors could lose money in the fund or the fund's
performance could fall below other possible investments if any of the following
occurs:
. The issuer of a debt security in the fund defaults on its obligation to pay
principal or interest, has its credit rating downgraded by a rating
organization or is perceived by the market to be less creditworthy.
. Interest rates go up, causing the prices of debt securities in the fund to
fall.
. As a result of declining interest rates, the issuer of a security exercises
its right to prepay principal earlier than scheduled, forcing the fund to
reinvest in lower yielding securities. This is known as call or prepayment
risk.
. As a result of rising interest rates, the issuer of a security exercises its
right to pay principal later than scheduled, which will lock in a below-
market interest rate and reduce the value of the security. This is known as
extension risk.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
The fund may invest in lower quality securities that are speculative and have
only an adequate capacity to pay principal and interest. These securities have
a higher risk of default, tend to be less liquid, and may be more difficult to
value. Changes in economic conditions or other circumstances are more likely to
lead issuers of these securities to have a weakened capacity to make principal
and interest payments.
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S. In some of the foreign
countries in which the fund invests, there is also less information available
about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase
investment gains or add to investment losses. The risk of investing in foreign
securities is greater in the case of less developed countries.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the returns of
the Salomon Brothers Intermediate High Yield Index ("Salomon Index") and the
Bear Stearns High Yield Index ("Bear Stearns Index"), both of which are broad-
based indices of high yield corporate bonds. Past performance does not
necessarily indicate how the fund will perform in the future. Performance
figures do not reflect expenses incurred from investing through a Separate
Account. These expenses will reduce performance. Please refer to the Separate
Account prospectus for more information on expenses.
[BAR CHART APPEARS HERE]
1995 19.18%
1996 13.13%
1997 13.85%
1998 0.44%
Calendar years ended December 31.
The bar chart shows the performance of the fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest:5.35% in 2nd quarter 1997
Lowest:(5.79)% in 3rd quarter 1998
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 0.44 9.86
Salomon Index 3.60 10.74*
Bear Stearns Index 2.08 10.85*
- -----------------------------------------
*Index comparisons begin on June 30, 1994
Travelers Series Fund 9
<PAGE>
Fund Goals and Strategies
Smith Barney Money Market Portfolio
Investment goal
Maximize current income consistent with
preservation of capital. The fund seeks to maintain
a stable $1 share price.
Key investments
The fund invests exclusively in high quality U.S.
dollar denominated short term debt securities.
These include commercial paper, corporate and
municipal obligations, obligations of U.S. and
foreign banks, securities of the U.S. Government,
its agencies or instrumentalities and related
repurchase agreements.
Credit Quality: The fund invests exclusively in se-
curities rated by a nationally recognized rating
organization in the two highest short term rating
categories, or if unrated, of equivalent quality.
Effective Maturity: The fund invests exclusively in
securities having remaining effective maturities of
397 days or less, and maintains a dollar-weighted
portfolio maturity of 90 days or less.
- --------------------------------------------------------------------------------
Selection process
In selecting investments for the fund, the manager looks for:
. The best relative values based on an analysis of interest
rate sensitivity, yield and price.
. Issuers offering minimal credit risk.
. Maturities consistent with the manager's outlook for
interest rates.
10 Travelers Series Fund
<PAGE>
Principal risks of investing in the fund
Although the fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund, or the fund could
underperform other short term debt instruments or money market funds if any of
the following occurs:
. Interest rates rise sharply.
. An issuer of the fund's securities defaults, or has its credit rating
downgraded.
. Sectors or issuers the fund has emphasized fail to perform as expected.
. The manager's judgment about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect.
The value of the fund's foreign securities may go down because of unfavorable
government actions, political instability or the more limited availability of
accurate information about foreign issuers.
- --------------------------------------------------------------------------------
Fund performance
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. The table shows how the fund's
average annual returns for different calendar periods compare to the return of
the 90-day U.S. Treasury bill. Past performance does not necessarily indicate
how the fund will perform in the future. Performance figures do not reflect
expenses incurred from investing through a Separate Account. These expenses
will reduce performance. Please refer to the Separate Account prospectus for
more information on expenses.
[BAR CHART APPEARS HERE]
1995 5.43%
1996 4.94%
1997 5.09%
1998 5.04%
Calendar years ended December 31.
The bar chart shows the performance of the Fund's shares for each of the full
calendar years since its inception on June 16, 1994.
Quarterly returns:
Highest: 1.37% in 2nd quarter 1995
Lowest: 1.15% in 4th quarter 1994
Average Annual Total Returns
(for the periods ended December 31, 1998)
- -----------------------------------------
One Since
year inception
- -----------------------------------------
Fund 5.04 5.02
Treasury bill 5.06 5.28*
- -----------------------------------------
* Index comparison begins on June 30, 1994.
The fund's 7-day yield as of December 31, 1998 was 4.63%. Call toll free 1-877-
795-2703 for the fund's current 7-day yield.
Travelers Series Fund 11
<PAGE>
More on the Funds' Investments
Additional investments and investment techniques
- --------------------------------------------------------------------------------
Each fund de- Smith Barney International Equity Portfolio
scribes its The fund may invest up to 20% of its assets in debt securi-
investment ob- ties of any credit quality or maturity of foreign corporate
jective and and governmental issuers, as well as U.S. government securi-
its principal ties and money market obligations of U.S. and foreign corpo-
investment rate issuers.
strategies and
risks under MFS Total Return Portfolio
"Fund Goals The fund may invest without limit in ADRs and up to 20% of
and Strate- its total assets in foreign securities.
gies."
Smith Barney High Income Portfolio
This section Although the fund invests primarily in high yield securities,
provides addi- the fund may also invest up to 35% of its assets in common
tional infor- stock and common stock equivalents, including convertible se-
mation about curities, options, warrants and rights. The fund may invest
the funds' in- up to 20% of its assets in foreign currency denominated secu-
vestments and rities and without limit in U.S. dollar denominated securi-
certain port- ties of foreign issuers.
folio manage-
ment tech-
niques the
funds may use.
More informa-
tion about the
funds' invest-
ments and
portfolio man-
agement tech-
niques, some
of which en-
tail risks, is
included in
the statement
of additional
information
(SAI).
- --------------------------------------------------------------------------------
12 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Equity Subject to its particular investment policies, each of these
investments funds may invest in all types of equity securities. Equity
Each equity securities include exchange-traded and over-the-counter (OTC)
fund, MFS To- common and preferred stocks, warrants, rights, investment
tal Return grade convertible securities, receipts and shares, trust cer-
Portfolio and tificates, limited partnership interests, shares of other in-
Smith Barney vestment companies, real estate investment trusts and equity
High Income participations.
Portfolio
- --------------------------------------------------------------------------------
Fixed income Subject to its particular investment policies, each fund may
investments invest in fixed income securities. Fixed income investments
Each fixed in- include bonds, notes (including structured notes), mortgage-
come fund and, related securities, asset-backed securities, convertible se-
to a limited curities, Eurodollar and Yankee dollar instruments, preferred
extent, each stocks and money market instruments. Fixed income securities
equity fund may be issued by U.S. and foreign corporations or entities;
U.S. and foreign banks; the U.S. government, its agencies,
authorities, instrumentalities or sponsored enterprises;
state and municipal governments; supranational organizations;
and foreign governments and their political subdivisions.
Fixed income securities may have all types of interest rate
payment and reset terms, including fixed rate, adjustable
rate, zero coupon, contingent, deferred, payment in kind and
auction rate features.
MFS Total Each of these funds may invest in mortgage-backed and asset-
Return and backed securities. Mortgage-related securities may be issued
Smith Barney by private companies or by agencies of the U.S. government
High Income and represent direct or indirect participations in, or are
Portfolios collateralized by and payable from, mortgage loans secured by
real property. Asset-backed securities represent participa-
tions in, or are secured by and payable from, assets such as
installment sales or loan contracts, leases, credit card re-
ceivables and other categories of receivables.
- --------------------------------------------------------------------------------
Credit quality
If a security receives different ratings, a fund will treat
the securities as being rated in the highest rating category.
A fund may choose not to sell securities that are downgraded
after their purchase below the fund's minimum acceptable
credit rating. Each fund's credit standards also apply to
counterparties to OTC derivatives contracts.
Investment grade securities
Securities are investment grade if:
. They are rated, respectively, in one of the top four long-
term rating categories of a nationally recognized
statistical rating organization.
. They have received a comparable short-term or other rating.
. They are unrated securities that the manager believes are
of comparable quality to investment grade securities.
Travelers Series Fund 13
<PAGE>
- --------------------------------------------------------------------------------
High yield, lower quality securities
Fixed income Each of these funds may invest in fixed income securities
investments that are high yield, lower quality securities rated by a rat-
(cont'd) ing organization below its top four long term rating catego-
MFS Total ries or unrated securities determined by the manager or
Return and subadviser to be of equivalent quality. The issuers of lower
Smith Barney quality bonds may be highly leveraged and have difficulty
High Income servicing their debt, especially during prolonged economic
Portfolios recessions or periods of rising interest rates. The prices of
only lower quality securities are volatile and may go down due to
market perceptions of deteriorating issuer credit-worthiness
or economic conditions. Lower quality securities may become
illiquid and hard to value in down markets.
- --------------------------------------------------------------------------------
Foreign and Each fund may invest in foreign securities, although the for-
emerging eign investments of Smith Barney Money Market Portfolio are
market limited to U.S. dollar denominated investments issued by for-
investments eign branches of U.S. banks and by U.S. and foreign branches
of foreign banks.
Investments in securities of foreign entities and securities
quoted or denominated in foreign currencies involve special
risks. These include possible political and economic insta-
bility and the possible imposition of exchange controls or
other restrictions on investments. If a fund invests in secu-
rities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency rates relative to
the U.S. dollar will affect the U.S. dollar value of the
fund's assets.
Smith Barney Emerging market investments offer the potential of signifi-
International cant gains but also involve greater risks than investing in
Equity and MFS more developed countries. Political or economic instability,
Total Return lack of market liquidity and government actions such as cur-
Portfolios rency controls or seizure of private business or property may
only be more likely in emerging markets.
Sovereign government and supranational debt
MFS Total These funds may invest in all types of fixed income securi-
Return ties of governmental issuers in all countries, including
Portfolio only emerging markets. These sovereign debt securities may in-
clude:
. Fixed income securities issued or guaranteed by
governments, governmental agencies or instrumentalities and
political subdivisions located in emerging market
countries.
. Participations in loans between emerging market governments
and financial institutions.
. Fixed income securities issued by government owned,
controlled or sponsored entities located in emerging market
countries.
. Interests in entities organized and operated for the
purpose of restructuring the investment characteristics of
instruments issued by any of the above issuers.
. Brady Bonds.
. Fixed income securities issued by corporate issuers, banks
and finance companies located in emerging market countries.
14 Travelers Series Fund
<PAGE>
- --------------------------------------------------------------------------------
Foreign and . Fixed income securities issued by supranational entities
emerging such as the World Bank or the European Economic Community
market (A supranational entity is a bank, commission or company
investments established or financially supported by the national
(cont'd) governments of one or more countries to promote
reconstruction or development.)
- --------------------------------------------------------------------------------
Derivatives Each fund may, but need not, use derivative contracts, such
and hedging as futures and options on securities, securities indices or
techniques currencies; options on these futures; forward currency con-
tracts; and interest rate or currency swaps for any of the
All funds ex- following purposes:
cept Smith
Barney Money . To hedge against the economic impact of adverse changes in
Market Portfo- the market value of its securities, due to changes in stock
lio market prices, currency exchange rates or interest rates
. As a substitute for buying or selling securities
. To enhance the fund's return
A derivative contract will obligate or entitle a fund to de-
liver or receive an asset or cash payment that is based on
the change in value of one or more securities, currencies or
indices. Even a small investment in derivative contracts can
have a big impact on a fund's stock market, currency and in-
terest rate exposure. Therefore, using derivatives can dis-
proportionately increase losses and reduce opportunities for
gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money
on derivatives if changes in their value do not correspond
accurately to changes in the value of the fund's holdings.
The other parties to certain derivative contracts present the
same types of credit risk as issuers of fixed income securi-
ties. Derivatives can also make a fund less liquid and harder
to value, especially in declining markets.
- --------------------------------------------------------------------------------
Securities Each fund may engage in securities lending to increase its
lending net investment income. Each fund will only lend securities if
the loans are callable by the fund at any time and the loans
are continuously secured by cash or liquid securities equal
to no less than the market value, determined daily, of the
securities loaned. The risks in lending securities consist of
possible delay in receiving additional collateral, delay in
recovery of securities when the loan is called or possible
loss of collateral should the borrower fail financially.
- --------------------------------------------------------------------------------
Defensive Each fund may depart from its principal investment strategies
investing in response to adverse market, economic or political condi-
tions by taking temporary defensive positions in all types of
money market and short-term debt securities. If a fund takes
a temporary defensive position, it may be unable to achieve
its investment goal.
- --------------------------------------------------------------------------------
Portfolio Each fund may engage in active and frequent trading to
turnover achieve its principal investment strategies. Frequent trading
also increases transaction costs, which could detract from a
fund's performance.
Travelers Series Fund 15
<PAGE>
Management
The managers
SSBC Fund Management Inc. (SSBC) or Travelers Investment Adviser Inc. (TIA) is
each fund's manager. SSBC selects investments for the funds for which they serve
as managers. TIA has engaged a subadviser to select investments for the fund
for which TIA serves as manager.
SSBC Fund Management Inc.
SSBC is a wholly owned subsidiary of Citigroup. Citigroup businesses produce a
broad range of financial services -- asset management, banking and consumer
finance, credit and charge cards, insurance, investments, investment banking and
trading -- and use diverse channels to make them available to consumer and
corporate customers around the world. SSBC is located at 388 Greenwich Street,
New York, New York 10013. SSBC acts as investment manager to investment
companies having aggregate assets of approximately $115 billion.
SSBC manages the investment operations of the following funds (Smith Barney
funds) and receives from each fund for these services the fee indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Actual management fee
paid for the fiscal year Contractual
ended October 31, 1998 management fee paid
(as a percentage (as a percentage
of the fund's of the fund's
Fund average daily net assets) average daily net assets)
- --------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney
International Equity
Portfolio 0.90% 0.90%
Smith Barney Large Cap
Value Portfolio 0.65% 0.65%
Smith Barney High Income
Portfolio 0.60% 0.60%
Smith Barney Money
Market Portfolio 0.50% 0.50%*
- --------------------------------------------------------------------------------
</TABLE>
* Prior to March 11, 1998, the annual management fee paid to SSBC was 0.60% of
the average daily net assets of the fund.
Travelers Investment Adviser Inc.
Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation, which is an indirect wholly owned subsidiary of Citigroup.
TIA is located at 388 Greenwich Street, New York, New York 10013. TIA, an
affiliate of SSBC, acts as investment manager to investment companies having
aggregate assets of approximately $2.3 billion.
TIA manages the investment operations of the following fund (TIA fund) and
receives for these services from each fund the fee indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Actual management fee
paid for the fiscal year Contractual management
ended October 31, 1998 fee paid
(as a percentage (as a percentage
of the fund's of the fund's
Fund average daily net assets) average daily net assets)
- --------------------------------------------------------------------------------
<S> <C> <C>
MFS Total Return
Portfolio 0.80% 0.80%
- --------------------------------------------------------------------------------
</TABLE>
16 Travelers Series Fund
<PAGE>
The Subadviser and Portfolio Managers
The Smith Barney funds are managed solely by SSBC. The TIA fund's investments
are selected by a subadviser which is supervised by TIA. The table below sets
forth the name and business experience of each fund's portfolio manager(s),
including where applicable, the portfolio managers employed by the subadviser.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Fund Portfolio Manager and Subadviser Business Experience
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney James Conheady (since inception) Investment Officer, SSBC; Vice
International Equity SSBC President, Travelers Series Fund;
Portfolio 388 Greenwich Street Managing Director, Salomon Smith
New York, New York 10013 Barney.
Jeffrey Russell (since inception) Investment Officer, SSBC; Vice
SSBC President, Travelers Series Fund;
Managing Director, Salomon Smith
Barney.
- -----------------------------------------------------------------------------------------------------
Smith Barney Large Cap Ellen Cardozo Sonsino (since 1998) Investment Officer, SSBC;
Value Portfolio SSBC Managing Director and Senior
388 Greenwich Street, Equity Portfolio Manager, Salomon
New York, New York 10013 Smith Barney.
- -----------------------------------------------------------------------------------------------------
MFS Total Return David M. Calabro (since inception) Senior Vice President, MFS.
Portfolio Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116
Geoffrey L. Kurinsky (since inception) Senior Vice President, MFS.
MFS
Constantinos Mokas (since 1998) Vice President, MFS.
MFS
Lisa B. Nurme (since inception) Senior Vice President, MFS.
MFS
Maura A. Shaughnessy (since inception) Senior Vice President, MFS.
MFS
- -----------------------------------------------------------------------------------------------------
Smith Barney High Income John C. Bianchi (since inception) Investment Officer, SSBC;
Portfolio MMC Managing Director, Salomon Smith
388 Greenwich Street Barney.
New York, New York 10013
- -----------------------------------------------------------------------------------------------------
Smith Barney Money Martin Hanley (since inception) Investment Officer, SSBC; Vice
Market Portfolio SSBC President, Salomon Smith Barney.
388 Greenwich Street
New York, New York 10013
- -----------------------------------------------------------------------------------------------------
</TABLE>
Travelers Series Fund 17
<PAGE>
Year 2000 Issue. Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the funds. Individual companies and governmental issuers that
securities held by a fund may also be adversely affected by the cost of
addressing their Year 2000 systems problems, which could be substantial. The
managers are addressing the Year 2000 issue for their systems. The funds have
been informed by their other service providers that they are taking similar
measures. Although the funds do not expect the Year 2000 issue to adversely
affect them, the funds cannot guarantee that their efforts or the efforts of
their service providers to correct the problem will be successful.
Additional information about the subadviser
Massachusetts Financial Services Company. MFS and its predecessor organizations
have a history of money management dating from 1924. The MFS organization
manages approximately $100 billion on behalf of 4 million investor accounts.
Share Transactions
Availability of the funds
Shares of the funds are available only through the purchase of variable annuity
or variable life insurance contracts issued by insurance companies through
their separate accounts. The variable insurance products may or may not make
investments in all the funds described in this prospectus.
The interests of different variable insurance products investing in a fund
could conflict due to differences of tax treatment and other considerations.
The company currently does not foresee any disadvantages to investors arising
from the fact that each fund may offer its shares to different insurance
company separate accounts that serve as the investment medium for their
variable annuity and variable life products. Nevertheless, the Board of
Directors intends to monitor events to identify any material irreconcilable
conflicts which may arise, and to determine what action, if any, should be
taken in response to these conflicts. If a conflict were to occur, one or more
insurance companies' separate accounts might be required to withdraw their
investments in one or more funds and shares of another fund may be substituted.
In addition, the sale of shares may be suspended or terminated if required by
law or regulatory authority or is in the best interests of the funds'
shareholders.
Redemption of shares
The redemption price of the shares of each fund will be the net asset value
next determined after receipt by the fund of a redemption order from a separate
account, which may be more or less than the price paid for the shares. The fund
will ordinarily make payment within one business day after receipt of a
redemption request in good order, though redemption proceeds must be remitted
to a separate account on or before the third day following receipt of the
request in good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
18 Travelers Series Fund
<PAGE>
Share Price
Each fund's net asset value is the value of its assets minus its liabilities.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. This calculation is done when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, each fund accelerates the calculation of its net asset value to the
actual closing time.
Each fund generally values its fund securities based on market prices or
quotations. To the extent a fund holds securities denominated in a foreign
currency the fund's currency conversions are done when the London stock
exchange closes, which is 12 noon Eastern time. When reliable market prices are
not readily available, or when the manager believes that they are unreliable or
that the value of a security has been materially affected by events occurring
after a foreign exchange closes, the funds may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund that uses market quotations to
price the same securities.
International markets may be open on days when U.S. markets are closed, and the
value of foreign securities owned by the fund could change on days when fund
shares may not be purchased or redeemed.
Unless there are extraordinary or unusual circumstances, Smith Barney Money
Market Portfolio uses the amortized cost method of valuing its money market
securities. Under the amortized cost method, assets are valued by constantly
amortizing over the remaining life of an instrument the difference between the
principal amount due at maturity and the cost of the instrument to the fund.
Dividends, Distributions and Taxes
Each fund intends to qualify and be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, a
fund will not be subject to federal income tax on its net investment income and
net capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional shares of
the fund at net asset value and are includable in gross income of the separate
accounts holding such shares. See the accompanying contract prospectus for
information regarding the federal income tax treatment of distributions to the
Separate Accounts and to holders of the Contracts.
Each fund is also subject to asset diversification regulations promulgated by
the U.S. Treasury Department under the Code. The regulations generally provide
that, as of the end of each calendar quarter or within 30 days thereafter, no
more than 55% of the total assets of each fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments, and no more than 90% by any four investments. For this
purpose all securities of the same issuer are considered a single investment.
An alternative diversification test may be satisfied under certain
circumstances. If a fund should fail to comply with these regulations or fails
to qualify for the special tax treatment afforded regulated investment
companies under the Code, Contracts invested in that fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
Travelers Series Fund 19
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each fund for the past five years (or since inception if less
than five years). The information in the following tables was audited by KPMG
LLP, independent accountants, whose report, along with each fund's financial
statements, are included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total returns
represent the rate that a shareholder would have earned (or lost) on a share of
a fund assuming reinvestment of all dividends and distributions.
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney International Equity
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 13.23 $ 12.18 $ 10.48 $ 10.55 $ 10.00
- -------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income
(loss)(2) 0.05 0.01 0.02 0.03(3) (0.03)
Net realized and
unrealized gain (loss) (0.68) 1.05 1.69 (0.10) 0.58
- -------------------------------------------------------------------------------
Total income (loss) from
operations (0.63) 1.06 1.71 (0.07) 0.55
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (0.01) (0.01) -- --
- -------------------------------------------------------------------------------
Total distributions -- (0.01) (0.01) -- --
- -------------------------------------------------------------------------------
Net asset value, end of
year $ 12.60 $ 13.23 $ 12.18 $ 10.48 $ 10.55
- -------------------------------------------------------------------------------
Total return (4.76)% 8.73% 16.36% (0.66)% 5.50%(4)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $224,207 $219,037 $143,323 $53,538 $13,811
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 1.00% 1.01% 1.10% 1.44% 1.20%(5)
Net investment income
(loss) 0.37 0.09 0.23 0.25 (0.73)(5)
- -------------------------------------------------------------------------------
Portfolio turnover rate 34% 38% 41% 29% --
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager waived part of its fees for the period ended October 31, 1994
for the fund. If such fees were not waived the effect of the per share
increase in net investment loss for the fund would have been $0.03 and the
ratio of expenses to average net assets would have been 2.00%(5).
In addition, during the years ended October 31, 1995 and 1996, the fund
earned credits from the custodian, which reduces service fees incurred. If
the credits are taken into consideration the expense ratios for these
periods were 1.21% and 1.05%, respectively. Figures before October 31, 1995
have not been restated to reflect these adjustments.
(3) Includes realized gains and losses from foreign currency transactions.
(4) Not annualized.
(5) Annualized.
20 Travelers Series Fund
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney Large Cap Value
1998(1) 1997 1996 1995 1994(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 17.90 $ 14.84 $ 12.12 $ 10.14 $10.00
- --------------------------------------------------------------------------------
Income from operations:
Net investment income (3) 0.31 0.25 0.32 0.28 0.11
Net realized and unrealized
gain 1.47 3.16 2.62 1.76 0.03
- --------------------------------------------------------------------------------
Total income from operations 1.78 3.41 2.94 2.04 0.14
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.21) (0.18) (0.17) (0.06) --
Net realized gains (0.53) (0.17) (0.05) -- --
- --------------------------------------------------------------------------------
Total distributions (0.74) (0.35) (0.22) (0.06) --
- --------------------------------------------------------------------------------
Net asset value, end of year $ 18.94 $ 17.90 $ 14.84 $ 12.12 $10.14
- --------------------------------------------------------------------------------
Total return 9.65% 23.38% 24.55% 20.21% 1.40%(4)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $423,570 $287,333 $138,712 $39,364 $6,377
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (3) 0.68% 0.69% 0.73% 0.73% 0.73%(5)
Net investment income 1.59 2.01 2.35 2.70 2.82 (5)
- --------------------------------------------------------------------------------
Portfolio turnover rate 36% 46% 32% 38% 2%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(3) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Per Share Decreases in Net Investment Income $0.02 $0.05
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and
Reimbursement 0.94% 2.08%(5)
------------------------------------------------------------------------------
</TABLE>
(4) Not annualized.
(5) Annualized.
Travelers Series Fund 21
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
MFS Total Return
1998 1997 1996 1995 1994(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $ 15.31 $ 13.13 $ 11.53 $ 9.98 $10.00
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income (2) 0.32 0.38 0.33 0.45 0.13
Net realized and unrealized
gain (loss) 1.36 2.27 1.62 1.15 (0.15)
- --------------------------------------------------------------------------------
Total income (loss) from
operations 1.68 2.65 1.95 1.60 (0.02)
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.28) (0.29) (0.27) (0.05) --
Net realized gains (0.48) (0.18) (0.08) -- --
- --------------------------------------------------------------------------------
Total distributions (0.76) (0.47) (0.35) (0.05) --
- --------------------------------------------------------------------------------
Net asset value, end of year $16.23 $ 15.31 $ 13.13 $ 11.53 $ 9.98
- --------------------------------------------------------------------------------
Total return 10.94% 20.64% 17.16% 16.12% (0.20)%(3)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $462,274 $263,585 $134,529 $49,363 $8,504
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 0.84% 0.86% 0.91% 0.95% 0.93%(4)
Net investment income 3.32 3.54 3.82 4.40 3.51(4)
- --------------------------------------------------------------------------------
Portfolio turnover rate 118% 99% 139% 104% 18%
- --------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager 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
reimbursed the fund 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 for the fund would have been as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Per Share Decreases in Net Investment Income $0.01 $0.06
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.06% 2.51%(4)
------------------------------------------------------------------------------
</TABLE>
(3) Not annualized.
(4) Annualized.
22 Travelers Series Fund
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney High Income
1998(1) 1997 1996 1995 1994(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 13.25 $ 12.09 $ 11.26 $ 10.07 $10.00
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income (3) 1.21 0.88 1.14 0.93 0.29
Net realized and unrealized
gain (loss) (1.58) 1.00 0.19 0.48 (0.22)
- --------------------------------------------------------------------------------
Total income (loss) from
operations (0.37) 1.88 1.33 1.41 0.07
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.74) (0.66) (0.50) (0.22) --
Net realized gains (0.17) (0.06) -- -- --
- --------------------------------------------------------------------------------
Total distributions (0.91) (0.72) (0.50) (0.22) --
- --------------------------------------------------------------------------------
Net asset value, end of year $ 11.97 $ 13.25 $ 12.09 $ 11.26 $10.07
- --------------------------------------------------------------------------------
Total return (3.38)% 16.24% 12.17% 14.30% 0.70%(4)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $160,259 $123,726 $65,955 $20,450 $3,395
- --------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (3) 0.67% 0.70% 0.84% 0.70% 0.69%(5)
Net investment income 9.12 9.36 9.79 9.54 7.55(5)
- --------------------------------------------------------------------------------
Portfolio turnover rate 82% 89% 104% 57% 15%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(3) The manager 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
reimbursed the fund for $17,664 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 for the fund would have been as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Per Share Decreases in Net Investment Income $0.04 $0.07
------------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.07% 2.60%(5)
------------------------------------------------------------------------------
</TABLE>
(4) Not annualized.
(5) Annualized.
Travelers Series Fund 23
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney Money Market
1998 1997 1996 1995 1994(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.050 0.049 0.049 0.052 0.014
- -------------------------------------------------------------------------------
Total income from operations 0.050 0.049 0.049 0.052 0.014
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.050) (0.049) (0.049) (0.052) (0.014)
- -------------------------------------------------------------------------------
Total distributions (0.050) (0.049) (0.049) (0.052) (0.014)
- -------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Total return 5.11% 5.05% 5.05% 5.35% 1.46%(3)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $164,677 $111,168 $99,150 $37,487 $5,278
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.64% 0.65% 0.65% 0.65% 0.66%(4)
Net investment income 4.99 4.94 4.86 5.26 3.83(4)
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from June 16, 1994 (commencement of operations) to October
31, 1994.
(2) The manager waived all or part of its fees with respect to the fund for the
years ended October 31, 1997, 1996 and 1995 and the period ended October
31, 1994. In addition, the manager reimbursed the fund 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 expense to average net assets of the
fund would have been as follows:
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Decreases in Net Investment
Income $0.000(5) $0.001 $0.003 $0.005
-----------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and
Reimbursement 0.67% 0.74% 0.94% 2.11%(4)
-----------------------------------------------------------------------------
</TABLE>
(3) Not annualized.
(4) Annualized.
(5) Amount represents less than $0.001.
24 Travelers Series Fund
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
The fund sends one report to a household if more than one account has the same
address. Contact an appropriate representative of a participating life
insurance company or your Salomon Smith Barney Financial Consultant if you do
not want this policy to apply to you.
Statement of additional information. The statement of additional (SAI)
information provides more detailed information about the fund. It is
incorporated by reference into this prospectus.
You can make inquiries about the funds or obtain shareholder reports or the
statement of additional information (without charge) by calling 1-800-842-8573
or writing to Travelers Series Fund, 388 Greenwich Street, MF2, New York, NY
10013.
You can also review the fund's shareholder reports, prospectus and statement of
additional information at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-800-SEC-0330. You may obtain copies of these
materials upon payment of a duplicating fee, by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-60019. You can get the same
reports and information free from the Commission's Internet web site at
http://www.sec.gov
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. The fund is not offering to sell its
shares to any person to whom the fund may not lawfully sell its shares.
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
MFS Total Return Portfolio
Smith Barney High Income Portfolio
Smith Barney Money Market Portfolio
(Investment Company Act file no. 811-08372)
2/99
