<PAGE>
Travelers Series Fund Inc.
Prospectus
February 28, 2000
[GRAPHIC]
Equity Fund
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Smith Barney Aggressive Growth 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 15 separate investment funds, each with
its own investment objective and policies. This Prospectus relates to one of
those funds. Each fund offers different levels of potential return and involves
different levels of risk.
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<TABLE>
<S> <C>
Investments, Risk and Performance Page
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Smith Barney Aggressive Growth Portfolio................................... 2
More on the Fund's Investments and Related Risks........................... 4
Management................................................................. 6
Share Transactions......................................................... 7
Share Price................................................................ 7
Dividends, Distributions and Taxes......................................... 8
</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.
1
<PAGE>
Investments, Risks and Performance
Smith Barney Aggressive Growth Portfolio
Investment objective
Long-term capital appreciation.
Principal investment strategies
Key investments The fund invests primarily in common stocks of companies the
manager believes are experiencing, or will experience, growth in earnings that
exceeds the average rate of earnings growth of the companies comprising the
S&P 500 Index. The fund may invest in the securities of large, well-known
companies that offer prospects of long-term earnings growth. However, because
higher earnings growth rates are often achieved by small to medium-sized
companies, a significant portion of the fund's assets are invested in the
securities of such companies.
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Selection process
The manager emphasizes individual security selection while
diversifying the fund's investments across industries,
which may help to reduce risk. The manager focuses
primarily, but not exclusively, on emerging growth
companies that have passed their "start-up" phase and show
positive earnings and the prospect of achieving significant
profit gains in the two to three years after the fund
acquires their stocks.
When evaluating an individual stock, the manager considers
whether the company may benefit from:
. New technologies, products or services
. New cost reduction measures
. Changes in management, or
. Favorable changes in government regulations
Travelers Series Fund
2
<PAGE>
Principal risks of investing in the fund
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 prices decline generally
. Small or medium capitalization companies fall out of favor with investors
. The manager's judgment about the attractiveness, growth prospects or
potential appreciation of a particular stock proves to be incorrect
. A particular product or service developed by a company in which the fund
invests is unsuccessful, the company does not meet earnings expectations or
other events depress the value of the company's stock
. Adverse governmental action or political, economic or market instability
occurs in a foreign country
Compared to large capitalization companies, the securities of small and medium
capitalization companies are more likely to:
. Have more volatile share prices
. Have more limited product lines
. Have fewer capital resources
. Have more limited management depth
. Experience sharper swings in market prices
. Be harder to sell at times and prices the manager believes appropriate
. Offer greater potential for gains and losses
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Fund performance
Because this fund commenced operations on November 1, 1999, the fund does not
yet have a sufficient operating history to generate the performance information
which other Smith Barney funds show in bar and table form in this location of
the prospectus.
Travelers Series Fund
3
<PAGE>
More on the Fund's Investments and Related Risks
Additional investments and investment techniques
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The section entitled "Investments, Risks and Performance" describes the fund's
investment objectives and its principal investment strategies and risks. This
section provides some additional information about the fund's investments and
certain investment management techniques the fund may use. More information
about the fund's investments and portfolio management techniques, some of which
entail risk, is included in the Statement of Additional Information (SAI). To
find out how to obtain an SAI, please turn to the back cover of this
prospectus.
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Equity
investments Subject to its particular investment policies, the fund 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 convert-
ible securities, depositary receipts and shares, trust cer-
tificates, limited partnership interests, shares of other in-
vestment companies, real estate investment trusts and equity
participations.
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Fixed income
investments
The fund may invest in fixed income securities to a limited
extent. Fixed income investments include bonds, notes (in-
cluding structured notes), mortgage-related securities, as-
set-backed securities, convertible securities, 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, instrumental-
ities or sponsored enterprises; state and municipal govern-
ments; 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.
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Credit quality
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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Travelers Series Fund
4
<PAGE>
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Foreign The fund may invest in foreign securities.
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.
Economic and Monetary Union (EMU) and the introduction of a
single European currency (the Euro), which began on January
1, 1999, may increase uncertainties relating to investment in
European markets. Among other things, EMU entails sharing a
single currency and official interest rate and adhering to
limits on government borrowing by participating countries.
EMU is driven by the expectation of economic benefits, howev-
er, there are significant risks associated with EMU. Monetary
and economic union on this scale has not been attempted be-
fore, and there is uncertainty whether participating coun-
tries will remain committed to EMU in the face of changing
economic conditions.
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Securities
lending The fund may engage in securities lending to increase its net
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
investing
The fund may depart from its principal investment strategies
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
turnover The fund may engage in active and frequent trading to achieve
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
5
<PAGE>
Management
The manager
SSB Citi Fund Management LLC
SSB Citi Fund Management LLC (SSB Citi) is the fund's manager and selects
investments for the fund. SSB Citi is a wholly owned subsidiary of Citigroup,
Inc. 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. SSB Citi
is located at 388 Greenwich Street, New York, New York 10013. SSB Citi acts as
investment manager to investment companies having aggregate assets of
approximately $127 billion as of January 31, 2000.
SSB Citi manages the investment operations of the fund and receives from the
fund for these services the fee indicated:
<TABLE>
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<CAPTION>
Actual management fee
paid for the fiscal year Contractual
ended October 31, 1999 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)
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<S> <C> <C>
Smith Barney Aggressive
Growth Portfolio N/A* 0.80%
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</TABLE>
* The Smith Barney Aggressive Growth Portfolio
commenced operations on November 1, 1999,
therefore no management fees were paid during
the fiscal year ended October 31, 1999.
The Portfolio Manager
The fund is managed solely by SSB Citi. The table below sets forth the name and
business experience of the fund's portfolio manager.
<TABLE>
<CAPTION>
Fund Portfolio Manager Business Experience
<S> <C> <C>
Smith Barney Richard Freeman (since inception) Investment Officer, SSB Citi;
Aggressive Growth SSB Citi Managing Director of Salomon
Portfolio 7 World Trade Center Smith Barney.
New York, New York 10048
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</TABLE>
Distributor. The fund has entered into an agreement with CFBDS, Inc. to
distribute its shares.
Year 2000 Issue. As the year 2000 began, there were few problems caused by the
inability of certain computer systems to tell the difference between the year
2000 and the year 1900 (commonly known as the "Year 2000" issue). It is still
possible that some computer systems could malfunction in the future because of
the Year 2000 issue or as a result of actions taken to address the Year 2000
issue. Fund management does not anticipate that its services or those of the
fund's other service providers will be adversely affected, but fund management
will continue to monitor the situation. If malfunctions related to the Year
2000 issue do arise, the fund and its investments could be negatively affected.
Travelers Series Fund
6
<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 the fund described in this prospectus.
The interests of different variable insurance products investing in the 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 the 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
the fund 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 fund's 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 or
quotations 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 fund 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
7
<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, the
fund must meet certain income and diversification tests and distribution
requirements. As a regulated investment company meeting these requirements, the
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 the 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 the 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 the fund would not be treated
as annuity, endowment or life insurance contracts under the Code.
Travelers Series Fund
8
<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 fund 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.
Information about the fund (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at 1-202-942-
8090. Reports and other information about the fund are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained for a duplicating fee by electronic request at
the following E-mail address: [email protected], or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102.
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 Aggressive Growth Portfolio
(Investment Company Act file no. 811-08372)
4/00
<PAGE>
Travelers Series Fund Inc.
Prospectus
February 28, 2000
[GRAPHIC]
Equity Funds
------------
Alliance Growth Portfolio
Van Kampen Enterprise Portfolio
Fixed Income Funds
------------------
MFS Total Return Portfolio
Putnam Diversified Income 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 15 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.
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<TABLE>
<S> <C>
Investments, Risk and Performance Page
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Alliance Growth Portfolio.................................................. 2
Van Kampen Enterprise Portfolio............................................ 4
MFS Total Return Portfolio................................................. 6
Putnam Diversified Income Portfolio........................................ 8
More on the Funds' Investments and Related Risks........................... 10
Management................................................................. 14
Share Transactions......................................................... 16
Share Price................................................................ 16
Dividends, Distributions and Taxes......................................... 17
Financial Highlights....................................................... 18
</TABLE>
- --------------------------------------------------------------------------------
You should know:
An investment in a fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government agency.
1
<PAGE>
Investments, Risks and Performance
Alliance Growth Portfolio
Investment objective
Long-term growth of capital.
Principal investment strategies
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.
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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
Travelers Series Fund
2
<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.
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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 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.
Risk return bar chart
% Total Return
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
34.87% 29.41% 29.02% 29.05% 32.25%
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
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
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<TABLE>
<CAPTION>
One Five Since
year years inception
- -------------------------------------------
<S> <C> <C> <C>
Fund 32.25% 30.90% 28.41%
Russell 1000 Index 20.91% 28.04% 26.25%
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</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund
3
<PAGE>
Investments, Risks and Performance
Van Kampen Enterprise Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
Key investments The fund invests primarily in common
stocks of U.S. growth companies.
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Selection process
The subadviser emphasizes individual security selection
while diversifying the fund's investments across
industries, which can help reduce risk. The subadviser
seeks promising growth opportunities by investing primarily
in large and mid-capitalization companies. The subadviser
emphasizes growth companies but may also invest in
companies in cyclical industries during periods when their
securities appear attractive to the subadviser for capital
appreciation.
The subadviser frequently meets with company managements to
help assess individual companies for potential investment.
The subadviser looks for companies with an attractive
current valuation and a combination of positive future
fundamentals, such as one or more of the following:
. Accelerating earnings growth
. Consistent earnings growth
. Better than expected earnings, often related to new
products, processes or services or cost reductions
. Positive changes in a company or its industry or
regulatory environment
The subadviser also employs an active sell discipline and
will generally sell stock if it determines:
. The company's future fundamentals have deteriorated
. The company's stock has reached full or excessive
valuation levels
Travelers Series Fund
4
<PAGE>
Principal risks of investing in the fund
While investing in securities of large and medium capitalization companies can
bring added benefits, it may also involve 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 declines.
. Large and medium capitalization stocks or growth 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 or industry.
. The subadviser's judgment about the attractiveness, value or potential
appreciation of a particular stock or industry proves to be incorrect.
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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 returns of
the S&P 500 Index, a broad-based unmanaged index of U.S. stocks, and the Lipper
Growth Funds Index ("Lipper Index"), which shows average returns for funds
having an investment objective similar to that of the fund's. 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.
Risk return bar chart
% Total Return
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
32.55% 23.04% 28.59% 25.12% 25.93%
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:25.03% in 4th quarter 1998
Lowest:(14.75)% in 3rd quarter 1998
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
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<TABLE>
<CAPTION>
One Five Since
year years inception
- --------------------------------------
<S> <C> <C> <C>
Fund 25.93% 27.00% 24.29%
S&P 500 Index 21.03% 28.54% 26.73%
Lipper Index 27.96% 26.27% 24.45%
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</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund
5
<PAGE>
Investments, Risks and Performance
MFS Total Return Portfolio
Investment objectives
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.
Principal investment strategies
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% in
and 75% in non-convertible
equity fixed income
securities securities
Equity investments
The subadviser uses a "bottom up" investment approach in
selecting securities based on its fundamental analysis
(such as an analysis of earnings, cash flows, competitive
position and management's abilities) 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.
Travelers Series Fund
6
<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.
Impact of high portfolio turnover The fund may engage in active and frequent
trading to achieve its principal investment strategies. This may lead to the
realization and distribution to shareholders of higher capital gains, which
would increase their tax liability. Frequent trading also increases transaction
costs, which could detract from the fund's performance.
- --------------------------------------------------------------------------------
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
Risk return bar chart
% Total Return
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
25.70% 14.51% 21.18% 11.67% 2.63%
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.
Account. These expenses will reduce performance. Please refer to the Separate
Account prospectus for more information on expenses.
Quarterly returns:
Highest: 9.87% in 2nd quarter 1997
Lowest:(4.47)% in 3rd quarter 1999
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
<TABLE>
- -----------------------------------------------
<CAPTION>
One Five Since
year years inception
- -----------------------------------------------
<S> <C> <C> <C>
Fund 2.63% 14.86% 12.87%
S&P 500 Index 21.03% 28.54% 26.73%*
Lehman Brothers Index (2.15)% 7.61% 7.06%*
- -----------------------------------------------
</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund
7
<PAGE>
Investments, Risks and Performance
Putnam Diversified Income Portfolio
Investment objective
High current income consistent with preservation of capital.
Principal investment strategies
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 particu-
lar 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 se-
curities 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 trends . Interest rate forecasts
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.
Travelers Series Fund
8
<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 ("Lehman Brothers Index") and the
Salomon Smith Barney Non-U.S. World Government Bond Index ("Salomon 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. These expenses will
reduce performance. Please refer to the Separate Account prospectus for more
information on expenses.
Risk return bar chart
% Total Return
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
17.49% 8.14% 7.69% 0.67% 1.11%
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
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
One Five Since
year years inception
- -----------------------------------------------
<S> <C> <C> <C>
Fund 1.11% 6.85% 6.44%
Lehman Brothers Index (0.82)% 7.73% 7.20%
Salomon
Index (5.07)% 5.90% 5.77%
- -----------------------------------------------
</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund
9
<PAGE>
More on the Funds' Investments and Related Risks
Additional investments and investment techniques
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The section Alliance Growth Portfolio
entitled "In- Although the fund invests primarily in U.S. equity securi-
vestments, ties, it may also invest up to 25% of its assets in high
Risks and Per- yield securities with no minimum credit quality restriction,
formance" de- and may also invest up to 15% in foreign securities.
scribes the
funds' invest- MFS Total Return Portfolio
ment objec- The fund may invest without limit in ADRs and up to 20% of
tives and its total assets in foreign securities.
their princi-
pal investment
strategies and
risks. This
section pro-
vides some ad-
ditional in-
formation
about the
funds' invest-
ments and cer-
tain invest-
ment 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 risk, is
included in
the Statement
of Additional
Information
(SAI). To find
out how to ob-
tain an SAI,
please turn to
the back cover
of this pro-
spectus.
- --------------------------------------------------------------------------------
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)
Both equity common and preferred stocks, warrants, rights, investment
funds and MFS grade convertible securities, depositary receipts and shares,
Total Return trust certificates, limited partnership interests, shares of
Portfolio 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-
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;
both equity U.S. and foreign banks; the U.S. government, its agencies,
funds 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 Both 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-
only 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.
- --------------------------------------------------------------------------------
Travelers Series Fund
10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
High yield, lower quality securities
Each of these funds may invest in fixed income securities
Alliance that are high yield, lower quality securities rated by a rat-
Growth, MFS ing organization below its top four long term rating catego-
Total ries or unrated securities determined by the manager or
subadviser to be of equivalent quality. The issuers of lower
Return and quality bonds may be highly leveraged and have difficulty
Putnam servicing their debt, especially during prolonged economic
Diversified recessions 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
Income or economic conditions. Lower quality securities may become
Portfolios illiquid and hard to value in down markets.
only
Alliance
Growth Portfo-
lio may invest
in these secu-
rities primar-
ily for their
capital growth
potential
- --------------------------------------------------------------------------------
Foreign and
emerging Each fund may invest in foreign securities.
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.
Emerging market investments offer the potential of signifi-
MFS Total cant gains but also involve greater risks than investing in
Return and more developed countries. Political or economic instability,
Putnam lack of market liquidity and government actions such as cur-
Diversified rency controls or seizure of private business or property may
Income be more likely in emerging markets.
Portfolios
only
Economic and Monetary Union (EMU) and the introduction of a
single European currency (the Euro), which began on January
1, 1999, may increase uncertainties relating to investment in
European markets. Among other things, EMU entails sharing a
single currency and official interest rate and adhering to
limits on government borrowing by participating countries.
EMU is driven by the expectation of economic benefits, howev-
er, there are significant risks associated with EMU. Monetary
and economic union on this scale has not been attempted be-
fore, and there is uncertainty whether participating coun-
tries will remain committed to EMU in the face of changing
economic conditions.
- --------------------------------------------------------------------------------
Travelers Series Fund
11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sovereign government and supranational debt
These funds may invest in all types of fixed income securi-
ties of governmental issuers in all countries, including
MFS Total emerging markets. These sovereign debt securities may in-
Return and clude:
Putnam
Diversified . Fixed income securities issued or guaranteed by
Income governments, governmental agencies or instrumentalities and
Portfolios political subdivisions located in emerging market
only 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.)
- --------------------------------------------------------------------------------
Derivatives
and hedging Each fund may, but need not, use derivative contracts, such
techniques as futures and options on securities, securities indices or
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, because of 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.
- --------------------------------------------------------------------------------
Travelers Series Fund
12
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Securities Each fund, except Van Kampen Enterprise Portfolio, may engage
lending in securities lending to increase its 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 se-
cured 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 re-
ceiving additional collateral, delay in recovery of securi-
ties 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
turnover Each fund may engage in active and frequent trading to
achieve its principal investment strategies. Frequent trading
also increases transaction costs, which could detract from a
fund's performance.
- --------------------------------------------------------------------------------
Travelers Series Fund
13
<PAGE>
Management
The manager
Travelers Investment Adviser Inc.
Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation (Plaza), which is an indirect wholly owned subsidiary of
Citigroup Inc. 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 $3.3 billion as of January 31, 2000. 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, 1999 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%
Van Kampen Enterprise
Portfolio 0.70% 0.70%
MFS Total Return
Portfolio 0.80% 0.80%
Putnam Diversified
Income Portfolio 0.75% 0.75%
---------------------------------------------------------------------------
</TABLE>
Travelers Series Fund
14
<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
- -------------------------------------------------------------------------------------------------
Van Kampen Enterprise Jeff New (since July 1994) Senior Vice President, Van Kampen
Portfolio Van Kampen Asset Management Inc. Asset Management; Senior Vice
One Parkview Plaza President, Van Kampen Investment
Oakbrook Terrace, IL 60181 Advisory, Inc.
- -------------------------------------------------------------------------------------------------
MFS Total Return David M. Calabro (since inception) Senior Vice President, MFS.
Portfolio Manager of investment team
Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116
- -------------------------------------------------------------------------------------------------
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>
Distributor. The funds have entered into an agreement with CFBDS, Inc. to
distribute the funds' shares.
Year 2000 Issue. As the year 2000 began, there were few problems caused by the
inability of certain computer systems to tell the difference between the year
2000 and the year 1900 (commonly known as the "Year 2000" issue). It is still
possible that some computer systems could malfunction in the future because of
the Year 2000 issue or as a result of actions taken to address the Year 2000
issue. Fund management does not anticipate that its services or those of the
funds' other service providers will be adversely affected, but fund management
will continue to monitor the situation. If malfunctions related to the Year
2000 issue do arise, the funds and their investments could be negatively
affected.
Additional information about the subadvisers
Alliance Capital Management. Alliance manages over $368 billion in assets as
of December 31, 1999. The 52 U.S. registered investment companies comprising
more than 118 separate investment portfolios managed by Alliance Capital
currently have more than 4.5 million shareholders.
Van Kampen Asset Management Inc. Van Kampen is a diversified asset management
company. Van Kampen and its affiliates manage more than $90 billion in assets
as of December 31, 1999.
Massachusetts Financial Services Company. MFS and its predecessor organizations
have a history of money management dating from 1924. The MFS organization
manages approximately $136.7 billion on behalf of 4.2 million investor accounts
as of December 31, 1999.
Putnam Investment Management, Inc. Putnam has managed mutual funds since 1937.
Putnam and its affiliates manage approximately $390 billion in assets as of
December 31, 1999.
Travelers Series Fund
15
<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 or
quotations 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
16
<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
17
<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, is 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
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $22.14 $20.82 $16.30 $13.28 $10.65
- ---------------------------------------------------------------------------
Income from operations:
Net investment income (1) 0.02 0.11 0.05 0.04 0.14
Net realized and unrealized gain 7.79 2.69 5.11 3.39 2.61
- ---------------------------------------------------------------------------
Total income from operations 7.81 2.80 5.16 3.43 2.75
- ---------------------------------------------------------------------------
Less distributions from:
Net investment income (0.15) (0.04) (0.02) (0.09) (0.02)
Net realized gains (1.45) (1.44) (0.62) (0.32) (0.10)
- ---------------------------------------------------------------------------
Total distributions (1.60) (1.48) (0.64) (0.41) (0.12)
- ---------------------------------------------------------------------------
Net asset value, end of year $28.35 $22.14 $20.82 $16.30 $13.28
- ---------------------------------------------------------------------------
Total return 35.51% 12.92% 32.59% 26.55% 26.18%
- ---------------------------------------------------------------------------
Net assets, end of year (millions) $1,166 $775 $545 $295 $112
- ---------------------------------------------------------------------------
Ratios to average net assets:
Expenses (1) 0.82% 0.82% 0.82% 0.87% 0.90%
Net investment income 0.14 0.59 0.32 0.39 1.24
- ---------------------------------------------------------------------------
Portfolio turnover rate 54% 40% 66% 88% 78%
- ---------------------------------------------------------------------------
</TABLE>
(1) The manager waived all or part of its fees for the year ended October 31,
1995. 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
-------------------------------------------------------------
<S> <C>
Per Share Decreases in Net Investment Income $0.01
-------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 0.97%
-------------------------------------------------------------
</TABLE>
Travelers Series Fund
18
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Van Kampen Enterprise
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $20.56 $19.89 $15.37 $12.89 $10.38
- --------------------------------------------------------------------------------
Income from operations:
Net investment income (1) 0.00(2) 0.06 0.06 0.05 0.03
Net realized and unrealized
gain 5.42 1.83 4.51 2.87 2.53
- --------------------------------------------------------------------------------
Total income from operations 5.42 1.89 4.57 2.92 2.56
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.07) (0.05) (0.05) (0.04) (0.02)
Net realized gains (0.39) (1.17) -- (0.40) (0.03)
- --------------------------------------------------------------------------------
Total distributions (0.46) (1.22) (0.05) (0.44) (0.05)
- --------------------------------------------------------------------------------
Net asset value, end of year $25.52 $20.56 $19.89 $15.37 $12.89
- --------------------------------------------------------------------------------
Total return 26.48% 8.97% 29.81% 23.35% 24.74%
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $313,410 $249,051 $196,583 $103,691 $32,447
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (1) 0.73% 0.73% 0.74% 0.83% 0.88%
Net investment income 0.01 0.35 0.41 0.53 0.65
- --------------------------------------------------------------------------------
Portfolio turnover rate 120% 68% 75% 112% 180%
- --------------------------------------------------------------------------------
</TABLE>
(1) The manager waived all or part of its fees for the year ended October 31,
1995. 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
-------------------------------------------------------------
<S> <C>
Per Share Decreases in Net Investment Income $0.06
-------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.26%
-------------------------------------------------------------
</TABLE>
(2) Amount represents less than $0.01 per share
Travelers Series Fund
19
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
MFS Total Return
1999(1) 1998 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $16.23 $15.31 $13.13 $11.53 $9.98
- -------------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.52 0.32 0.38 0.33 0.45
Net realized and unrealized
gain 0.72 1.36 2.27 1.62 1.15
- -------------------------------------------------------------------------------
Total income from operations 1.24 1.68 2.65 1.95 1.60
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.37) (0.28) (0.29) (0.27) (0.05)
Net realized gains (0.88) (0.48) (0.18) (0.08) --
- -------------------------------------------------------------------------------
Total distributions (1.25) (0.76) (0.47) (0.35) (0.05)
- -------------------------------------------------------------------------------
Net asset value, end of year $16.22 $16.23 $15.31 $13.13 $11.53
- -------------------------------------------------------------------------------
Total return 7.62% 10.94% 20.64% 17.16% 16.12%
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $621,828 $462,274 $263,585 $134,529 $49,363
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.84% 0.84% 0.86% 0.91% 0.95%
Net investment income 3.11 3.32 3.54 3.82 4.40
- -------------------------------------------------------------------------------
Portfolio turnover rate 97% 118% 99% 139% 104%
- -------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) The manager waived all or part of its fees for the year ended October 31,
1995. 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
-------------------------------------------------------------
<S> <C>
Per Share Decreases in Net Investment Income $0.01
-------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.06%
-------------------------------------------------------------
</TABLE>
Travelers Series Fund
20
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Putnam Diversified Income
1999 1998 1997 1996(1) 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.70 $12.31 $11.99 $11.46 $10.18
- ------------------------------------------------------------------------------
Income (loss) from operations:
Net investment income (2) 0.91 0.57 0.67 0.78 0.79
Net realized and unrealized gain
(loss) (0.70) (0.62) 0.30 0.27 0.58
- ------------------------------------------------------------------------------
Total income (loss) from operations 0.21 (0.05) 0.97 1.05 1.37
- ------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.67) (0.42) (0.56) (0.39) (0.09)
Net realized gains -- (0.14) (0.09) (0.13) --
- ------------------------------------------------------------------------------
Total distributions (0.67) (0.56) (0.65) (0.52) (0.09)
- ------------------------------------------------------------------------------
Net asset value, end of year $11.24 $11.70 $12.31 $11.99 $11.46
- ------------------------------------------------------------------------------
Total return 1.80% (0.65)% 8.44% 9.43% 13.55%
- ------------------------------------------------------------------------------
Net assets, end of year (millions) $156 $157 $122 $81 $32
- ------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.83% 0.87% 0.88% 0.96% 0.97%
Net investment income 7.85 7.48 6.99 7.57 7.53
- ------------------------------------------------------------------------------
Portfolio turnover rate 118% 191% 253% 2.55% 276%
- ------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts calculated using the monthly average shares method.
(2) The manager waived all or part of its fees for the year ended October 31,
1995. 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
-------------------------------------------------------------
<S> <C>
Per Share Decreases in Net Investment Income $0.04
-------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.31%
-------------------------------------------------------------
</TABLE>
Travelers Series Fund
21
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the funds' investments. These reports discuss the
market conditions and investment strategies that affected the funds'
performance.
The funds send 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 funds. 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.
Information about the funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at 1-202-942-
8090. Reports and other information about the funds are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained for a duplicating fee by electronic request at
the following E-mail address: [email protected], or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102.
If someone makes a statement about the funds that is not in this prospectus,
you should not rely upon that information. The funds are not offering to sell
their shares to any person to whom the funds may not lawfully sell their
shares.
Alliance Growth Portfolio
Van Kampen Enterprise Portfolio
MFS Total Return Portfolio
Putnam Diversified Income Portfolio
(Investment Company Act file no. 811-08372)
L21239 4/00
<PAGE>
Travelers Series Fund Inc.
Prospectus
February 28, 2000
[GRAPHIC]
Equity Funds
- ------------
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
Smith Barney Aggressive Growth Portfolio
Fixed Income Funds
- ------------------
MFS Total Return Portfolio
Smith Barney High Income 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 15 separate investment funds, each with
its own investment objective and policies. This Prospectus relates to six of
those funds. Each fund offers different levels of potential return and involves
different levels of risk.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investments, Risk and Performance Page
- --------------------------------------------------------------------------------
Smith Barney International Equity Portfolio................................ 2
Smith Barney Large Cap Value Portfolio..................................... 4
Smith Barney Aggressive Growth Portfolio................................... 6
MFS Total Return Portfolio................................................. 8
Smith Barney High Income Portfolio......................................... 10
Smith Barney Money Market Portfolio........................................ 12
More on the Funds' Investments and Related Risks........................... 14
Management................................................................. 18
Share Transactions......................................................... 21
Share Price................................................................ 21
Dividends, Distributions and Taxes......................................... 22
Financial Highlights....................................................... 23
</TABLE>
- --------------------------------------------------------------------------------
You should know:
An investment in a fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government agency.
1
<PAGE>
Investments, Risks and Performance
Smith Barney International Equity Portfolio
Investment objective
Total return on its assets from growth of capital and income.
Principal investment strategies
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
Travelers Series Fund
2
<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.
Risk return bar chart
% Total Return
[BAR CHART]
11.26% 17.72% 2.71% 6.51% 67.73%
------ ------ ----- ----- ------
1995 1996 1997 1998 1999
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:47.43% in 4th quarter 1999
Lowest:(19.72)% in 3rd quarter 1998
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
One Five Since
year years inception
- -----------------------------------
<S> <C> <C> <C>
Fund 67.73% 19.17% 16.29%
MSCI Index 31.00% 16.00% 14.36%
- -----------------------------------
</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund
3
<PAGE>
Investments, Risks and Performance
Smith Barney Large Cap Value Portfolio
Investment objective
Current income and long-term growth of income and capital.
Principal investment strategies
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 will
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
Travelers Series Fund
4
<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.
Risk return bar chart
% Total Return
[BAR CHART]
33.08% 19.79% 26.63% 9.82% 0.06%
------ ------ ------ ----- -----
1995 1996 1997 1998 1999
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
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
One Five Since
year years inception
- --------------------------------------
<S> <C> <C> <C>
Fund 0.06% 17.27% 15.21%
S&P 500 Index 21.03% 28.54% 26.73%
- --------------------------------------
</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund
5
<PAGE>
Investments, Risks and Performance
Smith Barney Aggressive Growth Portfolio
Investment objective
Long-term capital appreciation.
Principal investment strategies
Key investments The fund invests primarily in common stocks of companies the
manager believes are experiencing, or will experience, growth in earnings that
exceeds the average rate of earnings growth of the companies comprising the
S&P 500 Index. The fund may invest in the securities of large, well-known
companies that offer prospects of long-term earnings growth. However, because
higher earnings growth rates are often achieved by small to medium-sized
companies, a significant portion of the fund's assets are invested in the
securities of such companies.
- --------------------------------------------------------------------------------
Selection process
The manager emphasizes individual security selection while
diversifying the fund's investments across industries,
which may help to reduce risk. The manager focuses
primarily, but not exclusively, on emerging growth
companies that have passed their "start-up" phase and show
positive earnings and the prospect of achieving significant
profit gains in the two to three years after the fund
acquires their stocks.
When evaluating an individual stock, the manager considers
whether the company may benefit from:
. New technologies, products or services
. New cost reduction measures
. Changes in management, or
. Favorable changes in government regulations
Travelers Series Fund
6
<PAGE>
Principal risks of investing in the fund
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 prices decline generally
. Small or medium capitalization companies fall out of favor with investors
. The manager's judgment about the attractiveness, growth prospects or
potential appreciation of a particular stock proves to be incorrect
. A particular product or service developed by a company in which the fund
invests is unsuccessful, the company does not meet earnings expectations or
other events depress the value of the company's stock
. Adverse governmental action or political, economic or market instability
occurs in a foreign country
Compared to large capitalization companies, the securities of small and medium
capitalization companies are more likely to:
. Have more volatile share prices
. Have more limited product lines
. Have fewer capital resources
. Have more limited management depth
. Experience sharper swings in market prices
. Be harder to sell at times and prices the manager believes appropriate
. Offer greater potential for gains and losses
- --------------------------------------------------------------------------------
Fund performance
Because this fund commenced operations on November 1, 1999, the fund does not
yet have a sufficient operating history to generate the performance information
which other Smith Barney funds show in bar and table form in this location of
the prospectus.
Travelers Series Fund
7
<PAGE>
Investments, Risks and Performance
MFS Total Return Portfolio
Investment objectives
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.
Principal investment strategies
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% in
and 75% in non-convertible
equity fixed income
securities securities
Equity investments
The subadviser uses a "bottom up" investment approach in
selecting securities based on its fundamental analysis
(such as an analysis of earnings, cash flows, competitive
position and management's abilities) 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.
Travelers Series Fund
8
<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.
Impact of high portfolio turnover The fund may engage in active and frequent
trading to achieve its principal investment strategies. This may lead to the
realization and distribution to shareholders of higher capital gains, which
would increase their tax liability. Frequent trading also increases transaction
costs, which could detract from the fund's performance.
- --------------------------------------------------------------------------------
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
Risk return bar chart
% Total Return
[BAR CHART]
25.70% 14.51% 21.18% 11.67% 2.63%
------ ------ ------ ------ -----
1995 1996 1997 1998 1999
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.
Account. These expenses will reduce performance. Please refer to the Separate
Account prospectus for more information on expenses.
Quarterly returns:
Highest: 9.87% in 2nd quarter 1997
Lowest:(4.47)% in 3rd quarter 1999
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
<TABLE>
- -----------------------------------------------
<CAPTION>
One Five Since
year years inception
- -----------------------------------------------
<S> <C> <C> <C>
Fund 2.63% 14.86% 12.87%
S&P 500 Index 21.03% 28.54% 26.73%*
Lehman Brothers Index (2.15)% 7.61% 7.06%*
- -----------------------------------------------
</TABLE>
* Index comparisons begin on June 30, 1994
Travelers Series Fund
9
<PAGE>
Investments, Risks and Performance
Smith Barney High Income Portfolio
Investment objectives
Primary: High current income Secondary: Capital appreciation
Principal investment strategies
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 in-
vestment grade securities, but may not invest more than
10% in securities rated lower than B or unrated securi-
ties of comparable quality. Below investment grade secu-
rities 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.
Travelers Series Fund
10
<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 Smith Barney 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.
Risk return bar chart
% Total Return
[BAR CHART]
19.18% 13.13% 13.85% 0.44% 2.60%
------ ------ ------ ----- -----
1995 1996 1997 1998 1999
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
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
One Five Since
year years inception
- -----------------------------------------
<S> <C> <C> <C>
Fund 2.60% 9.61% 8.52%
Salomon Index 1.34% 9.76% 8.93%*
Bear Stearns Index 2.30% 9.72% 9.23%*
- -----------------------------------------
</TABLE>
*Index comparisons begin on June 30, 1994
Travelers Series Fund
11
<PAGE>
Investments, Risks and Performance
Smith Barney Money Market Portfolio
Investment objective
Maximize current income consistent with preservation of
capital. The fund seeks to maintain a stable $1 share
price.
Principal investment strategies
Key investments The fund invests exclusively in high
quality U.S. dollar denominated short term debt securi-
ties. These include commercial paper, corporate and mu-
nicipal 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 securi-
ties rated by a nationally recognized rating organiza-
tion in the two highest short term rating categories, or
if unrated, of equivalent quality.
Effective Maturity: The fund invests exclusively in se-
curities 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.
Travelers Series Fund
12
<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.
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. There is no assurance
that the fund will be able to maintain a stable net asset value of $1.00 per
share.
- --------------------------------------------------------------------------------
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.
Risk return bar chart
% Total Return
[BAR CHART]
5.43% 4.94% 5.09% 5.04% 4.76%
----- ----- ----- ----- -----
1995 1996 1997 1998 1999
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:1.10% in 2nd quarter 1999
Risk return table
Average Annual Total Returns
(for the periods ended December 31, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
One Five Since
year years inception
- ------------------------------------
<S> <C> <C> <C>
Fund 4.76% 5.05% 4.97%
Treasury bill 4.74% 5.11% 5.10%*
- ------------------------------------
</TABLE>
* Index comparison begins on June 30, 1994.
The fund's 7-day yield as of December 31, 1999 was 5.29%.
Travelers Series Fund
13
<PAGE>
More on the Funds' Investments and Related Risks
Additional investments and investment techniques
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The section Smith Barney International Equity Portfolio
entitled "In- The fund may invest up to 20% of its assets in debt securi-
vestments, ties of any credit quality or maturity of foreign corporate
Risks and Per- and governmental issuers, as well as U.S. government securi-
formance" de- ties and money market obligations of U.S. and foreign corpo-
scribes the rate issuers.
funds' invest-
ment objec- MFS Total Return Portfolio
tives and The fund may invest without limit in ADRs and up to 20% of
their princi- its total assets in foreign securities.
pal investment
strategies and Smith Barney High Income Portfolio
risks. This Although the fund invests primarily in high yield securities,
section pro- the fund may also invest up to 35% of its assets in common
vides some ad- stock and common stock equivalents, including convertible se-
ditional in- curities, options, warrants and rights. The fund may invest
formation up to 20% of its assets in foreign currency denominated secu-
about the rities and without limit in U.S. dollar denominated securi-
funds' invest- ties of foreign issuers.
ments and cer-
tain invest-
ment 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 risk, is
included in
the Statement
of Additional
Information
(SAI). To find
out how to ob-
tain an SAI,
please turn to
the back cover
of this pro-
spectus.
- --------------------------------------------------------------------------------
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, depositary receipts and shares,
Portfolio and trust certificates, limited partnership interests, shares of
Smith Barney other investment companies, real estate investment trusts and
High Income equity 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.
Each of these funds may invest in mortgage-backed and asset-
MFS Total backed securities. Mortgage-related securities may be issued
Return and by private companies or by agencies of the U.S. government
Smith Barney and represent direct or indirect participations in, or are
High 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.
- --------------------------------------------------------------------------------
Travelers Series Fund
14
<PAGE>
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
High yield, lower quality securities
Each of these funds may invest in fixed income securities
that are high yield, lower quality securities rated by a rat-
MFS Total ing organization below its top four long term rating catego-
ries or unrated securities determined by the manager or
Return and subadviser to be of equivalent quality. The issuers of lower
quality bonds may be highly leveraged and have difficulty
Smith Barney servicing their debt, especially during prolonged economic
High recessions or periods of rising interest rates. The prices of
Income lower quality securities are volatile and may go down due to
Portfolios market perceptions of deteriorating issuer credit-worthiness
only 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.
Emerging market investments offer the potential of signifi-
Smith Barney cant gains but also involve greater risks than investing in
International more developed countries. Political or economic instability,
Equity and MFS lack of market liquidity and government actions such as cur-
Total Return rency controls or seizure of private business or property may
Portfolios be more likely in emerging markets.
only
Economic and Monetary Union (EMU) and the introduction of a
single European currency (the Euro), which began on January
1, 1999, may increase uncertainties relating to investment in
European markets. Among other things, EMU entails sharing a
single currency and official interest rate and adhering to
limits on government borrowing by participating countries.
EMU is driven by the expectation of economic benefits, howev-
er, there are significant risks associated with EMU. Monetary
and economic union on this scale has not been attempted be-
fore, and there is uncertainty whether participating coun-
tries will remain committed to EMU in the face of changing
economic conditions.
- --------------------------------------------------------------------------------
Travelers Series Fund
15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sovereign government and supranational debt
The fund may invest in all types of fixed income securities
MFS Total of governmental issuers in all countries, including emerging
Return markets. These sovereign debt securities may include:
Portfolio . Fixed income securities issued or guaranteed by
only 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.)
- --------------------------------------------------------------------------------
Derivatives
and hedging Each fund may, but need not, use derivative contracts, such
techniques as futures and options on securities, securities indices or
currencies; options on these futures; forward currency con-
All funds ex- tracts; and interest rate or currency swaps for any of the
cept Smith following purposes:
Barney Money
Market Portfo- . To hedge against the economic impact of adverse changes in
lio and Smith the market value of its securities, because of changes in
Barney Aggres- stock market prices, currency exchange rates or interest
sive Growth rates
Portfolio . 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.
- --------------------------------------------------------------------------------
Travelers Series Fund
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Securities
lending Each fund may engage in securities lending to increase its
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
turnover Each fund may engage in active and frequent trading to
achieve its principal investment strategies. Frequent trading
also increases transaction costs, which could detract from a
fund's performance.
- --------------------------------------------------------------------------------
Travelers Series Fund
17
<PAGE>
Management
The managers
SSB Citi Fund Management LLC (SSB Citi) or Travelers Investment Adviser Inc.
(TIA) is each fund's manager. SSB Citi selects investments for the funds for
which it serves as manager. TIA has engaged subadvisers to select investments
for funds for which TIA serves as manager.
SSB Citi Fund Management LLC
SSB Citi is a wholly owned subsidiary of Citigroup, Inc. 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. SSB Citi is located at 388
Greenwich Street, New York, New York 10013. SSB Citi acts as investment manager
to investment companies having aggregate assets of approximately $127 billion
as of January 31, 2000.
SSB Citi 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, 1999 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 Aggressive
Growth Portfolio N/A* 0.80%
Smith Barney High Income
Portfolio 0.60% 0.60%
Smith Barney Money
Market Portfolio 0.50% 0.50%
------------------------------------------------------------------------------
</TABLE>
* The Smith Barney Aggressive Growth Portfolio
commenced operations on November 1, 1999,
therefore no management fees were paid during
the fiscal year ended October 31, 1999.
Travelers Investment Adviser Inc.
Travelers Investment Adviser Inc. (TIA) is a wholly owned subsidiary of The
Plaza Corporation (Plaza), 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 SSB Citi, acts as investment manager to investment
companies having aggregate assets of approximately $3.3 billion as of January
31, 2000.
TIA manages the investment operations of the following fund (TIA fund) 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, 1999 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>
Travelers Series Fund
18
<PAGE>
The Subadviser and Portfolio Managers
The Smith Barney funds are managed solely by SSB Citi. 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, including where applicable, the portfolio manager employed by the
subadviser.
<TABLE>
<CAPTION>
Fund Portfolio Manager and Subadviser Business Experience
<S> <C> <C>
Smith Barney James Conheady (since inception) Investment Officer, SSB Citi;
International Equity SSB Citi Managing Director, Salomon Smith
Portfolio 7 World Trade Center Barney.
New York, New York 10048
Jeffrey Russell (since inception) Investment Officer, SSB Citi;
SSB Citi Managing Director, Salomon Smith
Barney.
- ----------------------------------------------------------------------------------------------------
Smith Barney Large Cap Ellen Cardozo Sonsino (since 1998) Investment Officer, SSB Citi;
Value Portfolio SSB Citi Managing Director and Senior
7 World Trade Center, Equity Portfolio Manager, Salomon
New York, New York 10048 Smith Barney.
- ----------------------------------------------------------------------------------------------------
Smith Barney Richard Freeman (since inception) Investment Officer, SSB Citi;
Aggressive Growth SSB Citi Managing Director of Salomon
Portfolio 7 World Trade Center Smith Barney.
New York, New York 10048
- ----------------------------------------------------------------------------------------------------
MFS Total Return David M. Calabro (since inception) Senior Vice President, MFS.
Portfolio Manager of investment team
Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116
- ----------------------------------------------------------------------------------------------------
Smith Barney High Income John C. Bianchi (since inception) Investment Officer, SSB Citi;
PortFolio SSB Citi Managing Director, Salomon Smith
388 Greenwich Street Barney.
New York, New York 10013
- ----------------------------------------------------------------------------------------------------
Money Market Portfolio Martin Hanley (since inception) Investment Officer, SSB Citi;
SSB Citi Director, Salomon Smith Barney.
388 Greenwich Street
New York, New York 10013
- ----------------------------------------------------------------------------------------------------
</TABLE>
Travelers Series Fund
19
<PAGE>
Distributor. The funds have entered into an agreement with CFBDS, Inc. to
distribute the funds' shares.
Year 2000 Issue. As the year 2000 began, there were few problems caused by the
inability of certain computer systems to tell the difference between the year
2000 and the year 1900 (commonly known as the "Year 2000" issue). It is still
possible that some computer systems could malfunction in the future because of
the Year 2000 issue or as a result of actions taken to address the Year 2000
issue. Fund management does not anticipate that its services or those of the
funds' other service providers will be adversely affected, but fund management
will continue to monitor the situation. If malfunctions related to the Year
2000 issue do arise, the funds and their investments could be negatively
affected.
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 $136.7 billion on behalf of 4.2 million investor accounts
as of December 31, 1999.
Travelers Series Fund
20
<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 or
quotations 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
21
<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
22
<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, is 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. There is no
information for Smith Barney Aggressive Growth Portfolio since no shares were
outstanding during the periods shown.
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney International Equity
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $12.60 $13.23 $12.18 $10.48 $10.55
- --------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment income 0.02 0.05 0.01 0.02 0.03(1)
Net realized and unrealized
gain (loss) 4.35 (0.68) 1.05 1.69 (0.10)
- --------------------------------------------------------------------------------
Total income (loss) from
operations 4.37 (0.63) 1.06 1.71 (0.07)
- --------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.05) -- (0.01) (0.01) --
- --------------------------------------------------------------------------------
Total distributions (0.05) -- (0.01) (0.01) --
- --------------------------------------------------------------------------------
Net asset value, end of year $16.92 $12.60 $13.23 $12.18 $10.48
- --------------------------------------------------------------------------------
Total return 34.73% (4.76)% 8.73% 16.36% (0.66)%
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) 308,875 $224,207 $219,037 $143,323 $53,538
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses (2) 1.00% 1.00% 1.01% 1.10% 1.44%
Net investment income 0.16 0.37 0.09 0.23 0.25
- --------------------------------------------------------------------------------
Portfolio turnover rate 36% 34% 38% 41% 29%
- --------------------------------------------------------------------------------
</TABLE>
(1) Includes realized gains and losses from foreign currency transactions.
(2) 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.
Travelers Series Fund
23
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney Large Cap Value
1999(1) 1998(1) 1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $18.94 $17.90 $14.84 $12.12 $10.14
- -----------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.27 0.31 0.25 0.32 0.28
Net realized and unrealized gain 1.38 1.47 3.16 2.62 1.76
- -----------------------------------------------------------------------------
Total income from operations 1.65 1.78 3.41 2.94 2.04
- -----------------------------------------------------------------------------
Less distributions from:
Net investment income (0.24) (0.21) (0.18) (0.17) (0.06)
Net realized gains (0.52) (0.53) (0.17) (0.05) --
- -----------------------------------------------------------------------------
Total distributions (0.76) (0.74) (0.35) (0.22) (0.06)
- -----------------------------------------------------------------------------
Net asset value, end of year $19.83 $18.94 $17.90 $14.84 $12.12
- -----------------------------------------------------------------------------
Total return 8.52% 9.65% 23.38% 24.55% 20.21%
- -----------------------------------------------------------------------------
Net assets, end of year (millions) $544 $424 $287 $139 $39
- -----------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.67% 0.68% 0.69% 0.73% 0.73%
Net investment income 1.35 1.59 2.01 2.35 2.70
- -----------------------------------------------------------------------------
Portfolio turnover rate 43% 36% 46% 32% 38%
- -----------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) The manager waived all or part of its fees for the year ended October 31,
1995. 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
-------------------------------------------------------------
<S> <C>
Per Share Decreases in Net Investment Income $0.02
-------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 0.94%
-------------------------------------------------------------
</TABLE>
Travelers Series Fund
24
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
MFS Total Return
1999(1) 1998 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $16.23 $15.31 $13.13 $11.53 $9.98
- -------------------------------------------------------------------------------
Income from operations:
Net investment income (2) 0.52 0.32 0.38 0.33 0.45
Net realized and unrealized
gain 0.72 1.36 2.27 1.62 1.15
- -------------------------------------------------------------------------------
Total income from operations 1.24 1.68 2.65 1.95 1.60
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.37) (0.28) (0.29) (0.27) (0.05)
Net realized gains (0.88) (0.48) (0.18) (0.08) --
- -------------------------------------------------------------------------------
Total distributions (1.25) (0.76) (0.47) (0.35) (0.05)
- -------------------------------------------------------------------------------
Net asset value, end of year $16.22 $16.23 $15.31 $13.13 $11.53
- -------------------------------------------------------------------------------
Total return 7.62% 10.94% 20.64% 17.16% 16.12%
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $621,828 $462,274 $263,585 $134,529 $49,363
- -------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.84% 0.84% 0.86% 0.91% 0.95%
Net investment income 3.11 3.32 3.54 3.82 4.40
- -------------------------------------------------------------------------------
Portfolio turnover rate 97% 118% 99% 139% 104%
- -------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) The manager waived all or part of its fees for the year ended October 31,
1995. 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
-------------------------------------------------------------
<S> <C>
Per Share Decreases in Net Investment Income $0.01
-------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.06%
-------------------------------------------------------------
</TABLE>
Travelers Series Fund
25
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney High Income
1999 1998(1) 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.97 $13.25 $12.09 $11.26 $10.07
- ------------------------------------------------------------------------------
Income (loss) from operations:
Net investment income (2) 0.92 1.21 0.88 1.14 0.93
Net realized and unrealized gain
(loss) (0.28) (1.58) 1.00 0.19 0.48
- ------------------------------------------------------------------------------
Total income (loss) from operations 0.64 (0.37) 1.88 1.33 1.41
- ------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.89 (0.74) (0.66) (0.50) (0.22)
Net realized gains -- (0.17) (0.06) -- --
- ------------------------------------------------------------------------------
Total distributions 0.89 (0.91) (0.72) (0.50) (0.22)
- ------------------------------------------------------------------------------
Net asset value, end of year $11.72 $11.97 $13.25 $12.09 $11.26
- ------------------------------------------------------------------------------
Total return 5.28% (3.38)% 16.24% 12.17% 14.30%
- ------------------------------------------------------------------------------
Net assets, end of year (millions) $199 $160 $124 $66 $20
- ------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (2) 0.66% 0.67% 0.70% 0.84% 0.70%
Net investment income 9.44 9.12 9.36 9.79 9.54
- ------------------------------------------------------------------------------
Portfolio turnover rate 73% 82% 89% 104% 57%
- ------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) The manager waived all or part of its fees for the year ended October 31,
1995. 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
-------------------------------------------------------------
<S> <C>
Per Share Decreases in Net Investment Income $0.04
-------------------------------------------------------------
Expense Ratios Without Fee Waivers and Reimbursement 1.07%
-------------------------------------------------------------
</TABLE>
Travelers Series Fund
26
<PAGE>
For a share of capital stock outstanding throughout each year ended October 31.
<TABLE>
<CAPTION>
Smith Barney Money Market
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------
<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 (1) 0.046 0.050 0.049 0.049 0.052
- ------------------------------------------------------------------------------
Total income from operations 0.046 0.050 0.049 0.049 0.052
- ------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.046) (0.050) (0.049) (0.049) (0.052)
- ------------------------------------------------------------------------------
Total distributions (0.046) (0.050) (0.049) (0.049) (0.052)
- ------------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------
Total return 4.66% 5.11% 5.05% 5.05% 5.35%
- ------------------------------------------------------------------------------
Net assets, end of year
(000's) $276,699 $164,677 $111,168 $99,150 $37,487
- ------------------------------------------------------------------------------
Ratios to average net assets:
Expenses (1) 0.54% 0.64% 0.65% 0.65% 0.65%
Net investment income 4.58 4.99 4.94 4.86 5.26
- ------------------------------------------------------------------------------
</TABLE>
(1) The manager waived all or part of its fees with respect to the fund for the
years ended October 31, 1997, 1996 and 1995. 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
------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Decreases in Net Investment Income $0.000(2) $0.001 $0.003
------------------------------------------------------------------------
Expense Ratios Without Fee Waivers and
Reimbursement 0.67% 0.74% 0.94%
------------------------------------------------------------------------
</TABLE>
(2) Amount represents less than $0.001.
Travelers Series Fund
27
<PAGE>
Travelers Series Fund Inc.
Additional Information
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about the funds' investments. These reports discuss the
market conditions and investment strategies that affected the funds'
performance.
The funds' send 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 funds. 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.
Information about the funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at 1-202-942-
8090. Reports and other information about the funds are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained for a duplicating fee by electronic request at
the following E-mail address: [email protected], or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102.
If someone makes a statement about the funds that is not in this prospectus,
you should not rely upon that information. The funds are not offering to sell
their shares to any person to whom the funds may not lawfully sell their
shares.
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
Smith Barney Aggressive Growth Portfolio
MFS Total Return Portfolio
Smith Barney High Income Portfolio
Smith Barney Money Market Portfolio
(Investment Company Act file no. 811-08372)
4/00
