N-CSRS 1 dncsrs.txt SMITH BARNEY TRAVELERS SERIES FUND ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM N-CSR ---------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-8372 TRAVELERS SERIES FUND INC. -------------------------------------------------- (Exact name of registrant as specified in charter) 125 Broad Street, New York, NY 10004 ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) Robert I. Frenkel, Esq. Smith Barney Fund Management LLC 300 First Stamford Place Stamford, CT 06902 --------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (800) 451-2010 Date of fiscal year end: OCTOBER 31 Date of reporting period: APRIL 30, 2004 ================================================================================ ITEM 1. REPORT TO STOCKHOLDERS. The Semi-Annual Report to Stockholders is filed herewith. TRAVELERS SERIES FUND INC. SMITH BARNEY AGGRESSIVE GROWTH PORTFOLIO SMITH BARNEY MID CAP CORE PORTFOLIO SEMI-ANNUAL REPORT | APRIL 30, 2004 NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE WHAT'S INSIDE Letter from the Chairman............ 1 Schedules of Investments............ 5 Statements of Assets and Liabilities 14 Statements of Operations............ 15 Statements of Changes in Net Assets. 16 Notes to Financial Statements....... 18 Financial Highlights................ 23
LETTER FROM THE CHAIRMAN [PHOTO] R. Jay Gerken R. JAY GERKEN, CFA Chairman, President and Chief Executive Officer Dear Shareholder, Stock returns were mixed during the period. The broader market, as measured by the S&P 500 Index,/i/ posted modest gains due to strong corporate earnings, positive economic news and continued low interest rates. However, sluggish job growth, high-energy prices, and geopolitical concerns made many investors cautious about some sectors of the market. These conditions benefited some of the more defensive industries, such as consumer staples and utilities, and hampered some of last year's better-performing sectors, such as technology and materials. In general, value stocks outperformed growth stocks for the six-month period, while large-cap stocks generally outperformed small- and mid-cap stocks. In recent months, the economy has shown clear signs of improvement. We've seen employment statistics finally beginning to accelerate and consumer spending has continued to be strong. The cyclical upswing seems to be gathering momentum and interest rates have bounced off the very low levels that were engendered by an accommodative Federal Reserve. The market has recently come under significant pressure as the fears of higher interest rates and a slowing economy in China have curbed investors enthusiasm for equities in spite of positive earnings surprises for the majority of companies. Within this environment, the funds performed as follows on the next page:/1/ /1/The fund is an underlying investment option of various variable annuity products. A variable annuity product is a contract issued by an insurance company where the annuity premium (a set amount of dollars) is immediately turned into units of a portfolio of securities. Upon retirement, the policyholder is paid according to accumulated units whose dollar value varies according to the performance of the securities within the sub accounts. Its objective is to preserve, through investment, the purchasing value of the annuity, which otherwise is subject to erosion through inflation. The fund's performance returns do not reflect the deduction of initial sales charges and expenses imposed in connection with investing in variable annuity contracts such as administrative fees, account charges and surrender charges, which if reflected, would reduce the performance of the fund. Past performance is no guarantee of future results. 1 Travelers Series Fund Inc. | 2004 Semi-Annual Report PERFORMANCE OF THE FUNDS AS OF APRIL 30, 2004 6 Months Smith Barney Aggressive Growth Portfolio 7.61% Russell 3000 Growth Index 4.13% Lipper Multi-Cap Growth Variable Funds Category Average 3.22% Smith Barney Mid Cap Core Portfolio 2.75% S&P MidCap 400 Index 6.93% Lipper Mid-Cap Growth Variable Funds Category Average 3.15% The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors' shares, when redeemed, may be worth more or less than their original cost. The performance returns set forth above do not reflect the reduction of initial charges and expenses imposed in connection with investing in variable annuity contracts such as administrative fees, account charges and surrender charges, which if reflected, would reduce the performance of the funds. All index performance reflects no deduction for fees, expenses or taxes. The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The S&P MidCap 400 Index is a market-value weighted index which consists of 400 domestic stocks chosen for market size, liquidity, and industry group representation. Please note that an investor cannot invest directly in an index. Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended April 30, 2004 and include the reinvestment of dividends and capital gains, if any. Returns were calculated among the 1,270 funds in the Lipper multi-cap growth variable funds category. Returns were calculated among the 1,000 funds in the Lipper mid-cap growth variable funds category. Smith Barney Aggressive Growth Portfolio For the six months ended April 30, 2004, the fund, returned 7.61%. The fund performed better than the fund's unmanaged benchmark, the Russell 3000 Growth Index,/ii/ which returned 4.13% for the same period. The fund also outperformed the Lipper multi-cap growth variable funds category average, which returned 3.22%./2/ The portfolio outperformed its benchmark index due largely to sector overweights and good stock selection in the healthcare and energy sectors, as well as a significant underweight and good stock selection in the poorly performing technology sector. In terms of individual holdings, the three biggest positive contributors to portfolio performance were all in the healthcare sector: biotechnology and biopharmaceutical firms Biogen Idec Inc. and ImClone Systems Inc., and specialty pharmaceutical producer Forest Laboratories, /2/Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended April 30, 2004, calculated among the 1,270 funds in the fund's Lipper category including the reinvestment of dividends and capital gains, if any. 2 Travelers Series Fund Inc. | 2004 Semi-Annual Report Inc. While the portfolio's performance for the six-month period was quite strong, some holdings detracted from performance. Two of the three biggest detractors were holdings in the hard-hit technology sector -- memory chip producer SanDisk Corp. and computer hard drive manufacturer Maxtor Corp. -- while another major detractor was biopharmaceutical company Chiron Corp./iii/ Smith Barney Mid Cap Core Portfolio For the six months ended April 30, 2004, the fund returned 2.75%. The fund underperformed the fund's unmanaged benchmark, the S&P MidCap 400 Index,/iv/ which returned 6.93% for the same period. The fund also lagged its Lipper mid-cap growth variable funds category average, which returned 3.15%./3/ The main reason for the underperformance was the fund's reluctance to invest in low-priced, high-volatility stocks. While these stocks appreciated strongly over the last six months, the fund generally avoided investing in them due to their high-risk nature. The fund focuses on stocks of higher-quality companies with good fundamentals and favorable long-term outlooks, which we believe offer better opportunities for long-term investors. At the end of April, the sectors of the portfolio that were the most overweighted versus the benchmark were industrials, technology and materials. While we continue to emphasize these sectors, during the period we reduced the portfolio's weighting in technology, specifically in the hardware area, in favor of the industrial sector./v/ Our core philosophy continues to be based on investing in what we believe are leading companies across a broad cross section of sectors and industries. Our selection process focuses on companies that we perceive to have significant advantages and excellent competitive positions in the marketplace. Information About Your Fund In recent months several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. The fund's Adviser and some of its affiliates have received requests for information from various government regulators regarding market timing, late trading, fees and other mutual fund issues in connection with various investigations. The fund has been informed that the Adviser and its affiliates are responding to those information requests, but are not in a position to predict the outcome of these requests and investigations. /3/Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended April 30, 2004, calculated among the 1,000 funds in the fund's Lipper category including the reinvestment of dividends and capital gains, if any. 3 Travelers Series Fund Inc. | 2004 Semi-Annual Report As always, thank you for your continued confidence in our stewardship of your assets. We look forward to helping you continue to meet your financial goals. Sincerely, /s/ R. Jay Gerken R. Jay Gerken, CFA Chairman, President and Chief Executive Officer May 24, 2004 The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole. Portfolio holdings and breakdowns are as of April 30, 2004 and are subject to change. Please refer to pages 5 through 13 for a list and percentage breakdown of each fund's holdings. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index. RISKS: Smith Barney Aggressive Growth Portfolio: Keep in mind, the fund may invest a significant portion of its assets in small- and mid-cap companies which may be more volatile than an investment that focuses only on large-cap companies. Smith Barney Mid Cap Core Portfolio: Mid-cap stocks may be more volatile than large-cap stocks. Additionally, the fund's performance may be influenced by political, social and economic factors affecting investments in companies in foreign countries. The fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on fund performance. /i/The S&P 500 Index is a market capitalization-weighted index of 500 widely held common stocks. /ii/The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. /iii/Portfolio holdings and breakdowns are as of April 30, 2004 and are subject to change and may not be representative of the portfolio manager's current or future investments. The fund's top ten holdings as of this date were: Forest Laboratories, Inc. (5.37%); UnitedHealth Group Inc. (5.14%); Biogen Idec Inc. (5.10%); Lehman Brothers Holdings Inc. (4.94%); Anadarko Petroleum Corp. (4.90%); Chiron Corp. (4.17%); Amgen Inc. (4.09%); Comcast Corp. Special Class A Shares (4.08%); Genzyme Corp. (3.69%); Weatherford International Ltd. (3.63%). Please refer to pages 5 through 8 for a list and percentage breakdown of the fund's holdings. The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager's current or future investments. The fund's top five sector holdings as of April 30, 2004 were: Healthcare (37.8%); Consumer Discretionary (14.4%); Information Technology (11.3%); Energy (9.9%); Financials (9.7%). The fund's portfolio composition is subject to change at any time. /iv/The S&P MidCap 400 Index is a market-value weighted index which consists of 400 domestic stocks chosen for market size, liquidity, and industry group representation. /v/The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager's current or future investments. The fund's top five sector holdings as of April 30, 2004 were: Industrials (19.1%); Consumer Discretionary (18.3%); Information Technology (15.9%); Financials (15.2%); Healthcare (9.7%). The fund's portfolio composition is subject to change at any time. 4 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) APRIL 30, 2004 SMITH BARNEY AGGRESSIVE GROWTH PORTFOLIO
SHARES SECURITY VALUE ------------------------------------------------------------------------------ COMMON STOCK -- 92.2% COMMINGLED FUND -- 1.7% Commingled Fund -- 1.7% 370,000 Nasdaq-100 Index Tracking Stock $ 12,850,100 ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY -- 14.2% Media -- 14.1% 1,068,275 Cablevision Systems Corp. -- NY Group, Class A Shares* 23,320,443 114,842 Comcast Corp., Class A Shares* 3,456,744 1,072,160 Comcast Corp., Special Class A Shares* 31,081,918 1,561,400 Liberty Media Corp., Series A Shares* 17,081,716 1,350,367 Time Warner Inc.* 22,713,173 274,699 Viacom Inc., Class B Shares 10,617,117 34,600 World Wrestling Entertainment, Inc. 476,096 ------------------------------------------------------------------------------ 108,747,207 ------------------------------------------------------------------------------ Specialty Retail -- 0.1% 100,000 Charming Shoppes, Inc.* 706,000 ------------------------------------------------------------------------------ TOTAL CONSUMER DISCRETIONARY 109,453,207 ------------------------------------------------------------------------------ ENERGY -- 9.8% Energy Equipment & Services -- 5.0% 165,800 Core Laboratories N.V.* 3,770,292 453,150 Grant Prideco, Inc.* 6,910,538 636,450 Weatherford International Ltd.* 27,672,846 ------------------------------------------------------------------------------ 38,353,676 ------------------------------------------------------------------------------ Oil & Gas -- 4.8% 695,800 Anadarko Petroleum Corp. 37,280,964 ------------------------------------------------------------------------------ TOTAL ENERGY 75,634,640 ------------------------------------------------------------------------------ FINANCIALS -- 9.5% Banks -- 1.3% 33,000 Astoria Financial Corp. 1,135,860 361,566 New York Community Bancorp, Inc. 9,064,459 ------------------------------------------------------------------------------ 10,200,319 ------------------------------------------------------------------------------ Diversified Financials -- 8.2% 72,725 CIT Group Inc. 2,499,558 512,842 Lehman Brothers Holdings Inc. 37,642,603 429,400 Merrill Lynch & Co., Inc. 23,286,362 2,415 National Financial Partners Corp. 75,469 ------------------------------------------------------------------------------ 63,503,992 ------------------------------------------------------------------------------ TOTAL FINANCIALS 73,704,311 ------------------------------------------------------------------------------
See Notes to Financial Statements. 5 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY AGGRESSIVE GROWTH PORTFOLIO
SHARES SECURITY VALUE -------------------------------------------------------------------------- HEALTHCARE -- 37.2% Biotechnology -- 22.5% 1,400 Albany Molecular Research, Inc.* $ 22,708 162,500 Alkermes, Inc.* 2,491,125 553,745 Amgen Inc.* 31,159,231 658,806 Biogen Idec Inc.* 38,869,554 110,150 CancerVax Corp.* 1,153,271 683,850 Chiron Corp.* 31,730,640 43,200 Genentech, Inc.* 5,304,960 645,168 Genzyme Corp.* 28,103,518 310,775 ImClone Systems Inc.* 20,784,632 224,750 Isis Pharmaceuticals, Inc.* 1,633,932 663,905 Millennium Pharmaceuticals, Inc.* 9,951,936 2,300 Nabi Biopharmaceuticals * 37,605 173,000 Nanogen, Inc.* 1,012,050 800 Tularik Inc.* 19,736 229,400 Vertex Pharmaceuticals Inc.* 1,982,016 -------------------------------------------------------------------------- 174,256,914 -------------------------------------------------------------------------- Healthcare Equipment & Supplies -- 0.4% 80,100 Biosite Inc.* 3,173,562 5,400 Cygnus, Inc.* 1,836 -------------------------------------------------------------------------- 3,175,398 -------------------------------------------------------------------------- Healthcare Providers & Services -- 5.1% 636,000 UnitedHealth Group Inc. 39,101,280 -------------------------------------------------------------------------- Pharmaceuticals -- 9.2% 633,800 Forest Laboratories, Inc.* 40,867,424 189,448 Johnson & Johnson 10,235,875 541,666 King Pharmaceuticals, Inc.* 9,343,739 62,189 Pfizer Inc. 2,223,879 34,288 Teva Pharmaceutical Industries Ltd., Sponsored ADR 2,110,769 280,000 Valeant Pharmaceuticals International 6,468,000 -------------------------------------------------------------------------- 71,249,686 -------------------------------------------------------------------------- TOTAL HEALTHCARE 287,783,278 -------------------------------------------------------------------------- INDUSTRIALS -- 6.0% Aerospace & Defense -- 2.3% 293,800 L-3 Communications Holdings, Inc. 18,139,212 -------------------------------------------------------------------------- Industrial Conglomerates -- 2.9% 812,412 Tyco International Ltd. 22,300,709 -------------------------------------------------------------------------- Machinery -- 0.8% 245,000 Pall Corp. 5,826,100 -------------------------------------------------------------------------- TOTAL INDUSTRIALS 46,266,021 --------------------------------------------------------------------------
See Notes to Financial Statements. 6 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY AGGRESSIVE GROWTH PORTFOLIO
SHARES SECURITY VALUE ----------------------------------------------------------- INFORMATION TECHNOLOGY -- 11.1% Communications Equipment -- 3.1% 161,100 C-COR.net Corp.* $ 1,462,788 25,000 CEVA, Inc.* 201,750 115,000 DSP Group, Inc.* 2,849,700 760,000 Motorola, Inc. 13,870,000 384,325 Nokia Oyj, Sponsored ADR 5,384,393 ---------------------------------------------------------- 23,768,631 ---------------------------------------------------------- Computers & Peripherals -- 1.5% 759,076 Maxtor Corp.* 4,941,585 242,000 Quantum Corp.* 757,460 260,000 SanDisk Corp.* 6,008,600 ---------------------------------------------------------- 11,707,645 ---------------------------------------------------------- Electronic Equipment & Instruments -- 0.0% 12,400 Excel Technology, Inc.* 419,616 ---------------------------------------------------------- Semiconductor Equipment & Products -- 5.3% 125,000 Cabot Microelectronics Corp.* 3,691,250 229,000 Cirrus Logic, Inc.* 1,426,670 115,000 Cree, Inc.* 2,133,250 297,334 Intel Corp. 7,650,404 1,279,300 Micron Technology, Inc.* 17,424,066 470,000 RF Micro Devices, Inc.* 3,459,200 10,300 Standard Microsystems Corp.* 245,552 241,091 Teradyne, Inc.* 4,913,435 ---------------------------------------------------------- 40,943,827 ---------------------------------------------------------- Software -- 1.2% 92,000 Advent Software, Inc.* 1,718,560 100,000 Autodesk, Inc. 3,350,000 62,264 Microsoft Corp. 1,616,996 105,000 RSA Security Inc.* 1,682,100 75,000 Verity, Inc.* 930,000 ---------------------------------------------------------- 9,297,656 ---------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY 86,137,375 ---------------------------------------------------------- TELECOMMUNICATION SERVICES -- 2.7% Diversified Telecommunication Services -- 0.2% 71,000 AT&T Corp. 1,217,650 ----------------------------------------------------------
See Notes to Financial Statements. 7 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY AGGRESSIVE GROWTH PORTFOLIO
SHARES SECURITY VALUE ----------------------------------------------------------------------------------------------- Wireless Telecommunication Services -- 2.5% 1,409,360 AT&T Wireless Services Inc.* $ 19,463,262 ----------------------------------------------------------------------------------------------- TOTAL TELECOMMUNICATION SERVICES 20,680,912 ----------------------------------------------------------------------------------------------- TOTAL COMMON STOCK (Cost -- $734,779,942) 712,509,844 ----------------------------------------------------------------------------------------------- FACE AMOUNT SECURITY VALUE ----------------------------------------------------------------------------------------------- REPURCHASE AGREEMENT -- 7.8% $60,314,000 Merrill Lynch, Pierce, Fenner & Smith Inc. dated 4/30/04, 1.020% due 5/3/04; Proceeds at maturity -- $60,319,127; (Fully collateralized by various U.S. Government Agency Obligations, 0.000% to 6.000% due 5/3/04 to 4/30/19; Market value -- $61,520,644) (Cost -- $60,314,000) 60,314,000 ----------------------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 100.0% (Cost -- $795,093,942**) $772,823,844 -----------------------------------------------------------------------------------------------
* Non income producing security. ** Aggregate cost for Federal income tax purposes is substantially the same. Abbreviation used in this schedule: ADR -- American Depositary Receipt See Notes to Financial Statements. 8 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY MID CAP CORE PORTFOLIO
SHARES SECURITY VALUE ------------------------------------------------------------------- COMMON STOCK -- 98.0% CONSUMER DISCRETIONARY -- 18.4% Hotels, Restaurants & Leisure -- 2.6% 52,875 Boyd Gaming Corp. $ 1,242,562 18,075 CBRL Group, Inc. 678,716 18,680 Landry's Restaurants, Inc. 625,406 2,825 Station Casinos, Inc. 127,351 ------------------------------------------------------------------- 2,674,035 ------------------------------------------------------------------- Household Durables -- 0.3% 12,350 D.R. Horton, Inc. 355,680 ------------------------------------------------------------------- Leisure Equipment & Products -- 2.1% 113,740 Marvel Enterprises, Inc.* 2,159,923 ------------------------------------------------------------------- Media -- 7.2% 16,075 The E.W. Scripps Co., Class A Shares 1,696,716 36,440 Emmis Communications Corp., Class A Shares* 852,696 59,425 Harte-Hanks, Inc. 1,423,823 74,730 Imax Corp.* 371,333 21,335 Meredith Corp. 1,086,805 8,375 Pixar, Inc.* 572,012 1,378 The Washington Post Co., Class B Shares 1,267,760 ------------------------------------------------------------------- 7,271,145 ------------------------------------------------------------------- Specialty Retail -- 4.3% 18,080 CDW Corp. 1,129,819 52,980 PETsMART, Inc. 1,467,546 19,075 The Sports Authority, Inc.* 731,336 31,925 Williams-Sonoma, Inc.* 1,036,924 ------------------------------------------------------------------- 4,365,625 ------------------------------------------------------------------- Textiles & Apparel -- 1.9% 21,166 Carter's, Inc.* 638,155 18,035 Coach, Inc.* 768,291 32,900 Tommy Hilfiger Corp.* 513,240 ------------------------------------------------------------------- 1,919,686 ------------------------------------------------------------------- TOTAL CONSUMER DISCRETIONARY 18,746,094 ------------------------------------------------------------------- CONSUMER STAPLES -- 3.5% Food Products -- 2.4% 15,500 Dean Foods Co.* 520,490 27,590 The Hain Celestial Group, Inc.* 546,282 43,330 Hormel Foods Corp. 1,321,132 ------------------------------------------------------------------- 2,387,904 -------------------------------------------------------------------
See Notes to Financial Statements. 9 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY MID CAP CORE PORTFOLIO SHARES SECURITY VALUE ---------------------------------------------------------- Personal Products -- 1.1% 24,612 Alberto-Culver Co., Class B Shares $ 1,160,702 ---------------------------------------------------------- TOTAL CONSUMER STAPLES 3,548,606 ---------------------------------------------------------- ENERGY -- 7.0% Energy Equipment & Services -- 4.0% 26,750 GlobalSantaFe Corp. 705,398 24,680 Nabors Industries, Ltd.* 1,094,805 16,830 Smith International, Inc.* 921,442 29,550 Weatherford International Ltd.* 1,284,834 ---------------------------------------------------------- 4,006,479 ---------------------------------------------------------- Oil & Gas -- 3.0% 29,355 Murphy Oil Corp. 2,010,818 20,360 Newfield Exploration Co.* 1,072,565 ---------------------------------------------------------- 3,083,383 ---------------------------------------------------------- TOTAL ENERGY 7,089,862 ---------------------------------------------------------- FINANCIALS -- 15.3% Banks -- 5.7% 24,875 Banknorth Group, Inc. 761,921 18,790 Comerica Inc. 970,128 34,200 Investors Financial Services Corp. 1,329,354 37,970 National Commerce Financial Corp. 1,009,622 27,350 New York Community Bancorp, Inc. 685,664 18,110 Zions Bancorp. 1,023,577 ---------------------------------------------------------- 5,780,266 ---------------------------------------------------------- Diversified Financials -- 2.2% 18,300 The Bear Stearns Cos. Inc. 1,466,562 62,960 Providian Financial Corp.* 763,705 ---------------------------------------------------------- 2,230,267 ---------------------------------------------------------- Insurance -- 7.4% 29,485 Ambac Financial Group, Inc. 2,034,465 5,950 Everest Re Group, Ltd. 506,821 23,995 IPC Holdings, Ltd. 883,016 24,700 Lincoln National Corp. 1,108,536 36,360 Old Republic International Corp. 844,279 16,935 PartnerRe Ltd. 970,376 33,565 Willis Group Holdings Ltd. 1,218,745 ---------------------------------------------------------- 7,566,238 ---------------------------------------------------------- TOTAL FINANCIALS 15,576,771 ---------------------------------------------------------- See Notes to Financial Statements. 10 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY MID CAP CORE PORTFOLIO SHARES SECURITY VALUE ------------------------------------------------------------------------ HEALTHCARE -- 9.8% Biotechnology -- 1.8% 22,490 Gilead Sciences, Inc.* $ 1,368,067 6,625 OSI Pharmaceuticals, Inc.* 488,859 ------------------------------------------------------------------------ 1,856,926 ------------------------------------------------------------------------ Healthcare Equipment & Supplies -- 2.4% 32,715 DENTSPLY International Inc. 1,585,369 9,675 Varian Medical Systems, Inc.* 830,502 ------------------------------------------------------------------------ 2,415,871 ------------------------------------------------------------------------ Healthcare Providers & Services -- 2.2% 28,250 Sierra Health Services, Inc.* 1,049,488 27,450 Universal Health Services, Inc., Class B Shares* 1,205,055 ------------------------------------------------------------------------ 2,254,543 ------------------------------------------------------------------------ Pharmaceuticals -- 3.4% 50,710 Medicis Pharmaceutical Corp., Class A Shares 2,176,473 50,570 NPS Pharmaceuticals, Inc.* 1,266,778 ------------------------------------------------------------------------ 3,443,251 ------------------------------------------------------------------------ TOTAL HEALTHCARE 9,970,591 ------------------------------------------------------------------------ INDUSTRIALS -- 19.2% Aerospace & Defense -- 1.4% 24,545 Alliant Techsystems Inc.* 1,455,273 ------------------------------------------------------------------------ Airlines -- 0.3% 11,125 JetBlue Airways Corp.* 307,940 ------------------------------------------------------------------------ Building Products -- 1.5% 14,445 American Standard Cos. Inc.* 1,519,470 ------------------------------------------------------------------------ Commercial Services & Supplies -- 4.0% 68,925 Allied Waste Industries, Inc.* 867,766 22,530 DST Systems, Inc.* 994,699 31,730 Manpower Inc. 1,488,137 19,225 Sylvan Learning Systems, Inc.* 677,681 ------------------------------------------------------------------------ 4,028,283 ------------------------------------------------------------------------ Construction & Engineering -- 0.8% 18,685 Jacobs Engineering Group Inc.* 779,351 ------------------------------------------------------------------------ Electrical Equipment -- 1.2% 36,505 Rockwell Automation, Inc. 1,193,348 ------------------------------------------------------------------------ Industrial Conglomerates -- 1.3% 21,815 Carlisle Cos. Inc. 1,292,539 ------------------------------------------------------------------------ See Notes to Financial Statements. 11 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY MID CAP CORE PORTFOLIO
SHARES SECURITY VALUE ------------------------------------------------------------------ Machinery -- 4.3% 19,455 Eaton Corp. $ 1,155,238 19,730 Kennametal Inc. 851,547 21,955 Navistar International Corp.* 991,268 57,020 Pall Corp. 1,355,936 ------------------------------------------------------------------ 4,353,989 ------------------------------------------------------------------ Road & Rail -- 2.9% 36,635 C.H. Robinson Worldwide, Inc. 1,503,500 60,625 Heartland Express Inc. 1,488,344 ------------------------------------------------------------------ 2,991,844 ------------------------------------------------------------------ Trading Companies & Distributors -- 1.5% 28,820 Fastenal Co. 1,581,353 ------------------------------------------------------------------ TOTAL INDUSTRIALS 19,503,390 ------------------------------------------------------------------ INFORMATION TECHNOLOGY -- 16.0% Communications Equipment -- 1.7% 94,260 3Com Corp.* 580,642 33,600 Avaya Inc.* 459,648 89,600 JDS Uniphase Corp.* 272,384 20,500 Juniper Networks, Inc.* 448,540 ------------------------------------------------------------------ 1,761,214 ------------------------------------------------------------------ Computers & Peripherals -- 1.1% 44,770 Electronics for Imaging, Inc.* 1,136,263 ------------------------------------------------------------------ Electronic Equipment & Instruments -- 2.8% 38,680 Celestica Inc., Subordinate Voting Shares* 679,994 16,380 Diebold, Inc. 754,954 48,525 Thermo Electron Corp.* 1,416,930 ------------------------------------------------------------------ 2,851,878 ------------------------------------------------------------------ Semiconductor Equipment & Products -- 3.1% 21,865 Actel Corp.* 435,551 26,850 Cymer, Inc.* 858,663 98,665 Integrated Device Technology, Inc.* 1,327,044 13,325 International Rectifier Corp.* 528,203 ------------------------------------------------------------------ 3,149,461 ------------------------------------------------------------------ Software -- 7.3% 28,205 Amdocs Ltd.* 748,843 24,675 BEA Systems, Inc.* 281,542 40,540 Mercury Interactive Corp.* 1,724,977 101,025 Quest Software, Inc.* 1,136,531 79,270 Siebel Systems, Inc.* 814,896 35,400 Synopsys, Inc.* 946,242 33,800 THQ Inc.* 626,652
See Notes to Financial Statements. 12 Travelers Series Fund Inc. | 2004 Semi-Annual Report SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) APRIL 30, 2004 SMITH BARNEY MID CAP CORE PORTFOLIO
SHARES SECURITY VALUE ---------------------------------------------------------------------------------------- Software -- 7.3% (continued) 41,150 VERITAS Software Corp.* $ 1,097,470 ---------------------------------------------------------------------------------------- 7,377,153 ---------------------------------------------------------------------------------------- TOTAL INFORMATION TECHNOLOGY 16,275,969 ---------------------------------------------------------------------------------------- MATERIALS -- 5.9% Chemicals -- 0.5% 9,675 Minerals Technologies Inc. 567,439 ---------------------------------------------------------------------------------------- Containers & Packaging -- 1.9% 111,810 Smurfit-Stone Container Corp.* 1,922,014 ---------------------------------------------------------------------------------------- Metals & Mining -- 1.8% 23,895 Compass Minerals International, Inc. 391,878 33,875 Glamis Gold Ltd.* 487,800 16,285 Inco Ltd.* 468,194 32,725 Placer Dome Inc. 458,150 ---------------------------------------------------------------------------------------- 1,806,022 ---------------------------------------------------------------------------------------- Paper & Forest Products -- 1.7% 41,695 Bowater Inc. 1,749,105 ---------------------------------------------------------------------------------------- TOTAL MATERIALS 6,044,580 ---------------------------------------------------------------------------------------- UTILITIES -- 2.9% Electric Utilities -- 0.8% 25,710 Wisconsin Energy Corp. 807,294 ---------------------------------------------------------------------------------------- Gas Utilities -- 0.9% 46,725 Southern Union Co.* 918,614 ---------------------------------------------------------------------------------------- Water Utilities -- 1.2% 59,321 Aqua America, Inc. 1,213,114 ---------------------------------------------------------------------------------------- TOTAL UTILITIES 2,939,022 ---------------------------------------------------------------------------------------- TOTAL COMMON STOCK (Cost -- $91,881,147) 99,694,885 ---------------------------------------------------------------------------------------- FACE AMOUNT SECURITY VALUE ---------------------------------------------------------------------------------------- REPURCHASE AGREEMENT -- 2.0% $2,004,000 UBS Securities LLC dated 4/30/04, 0.920% due 5/3/04; Proceeds at maturity -- $2,004,154; (Fully collateralized by U.S. Treasury Inflationary Index Notes, 3.000% due 7/15/12; Market value -- $2,044,093) (Cost -- $2,004,000) 2,004,000 ---------------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 100.0% (Cost -- $93,885,147**) $101,698,885 ----------------------------------------------------------------------------------------
* Non-income producing security. ** Aggregate cost for Federal income tax purposes is substantially the same. See Notes to Financial Statements. 13 Travelers Series Fund Inc. | 2004 Semi-Annual Report STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 2004
Smith Barney Smith Barney Aggressive Growth Mid Cap Core Portfolio Portfolio -------------------------------------------------------------------------------------------- ASSETS: Investments, at value (Cost -- $795,093,942 and $93,885,147, respectively) $772,823,844 $101,698,885 Cash 162 662 Dividends and interest receivable 118,668 33,409 Receivable for Fund shares sold 50,799 74,913 Receivable for securities sold -- 737,361 Prepaid expenses 232 102 Other receivables 61,715 5,910 ------------------------------------------------------------------------------------------- Total Assets 773,055,420 102,551,242 ------------------------------------------------------------------------------------------- LIABILITIES: Payable for securities purchased 11,064,180 157,021 Management fees payable 514,928 64,636 Payable for Fund shares reacquired 3,486 15,345 Accrued expenses 38,453 16,849 ------------------------------------------------------------------------------------------- Total Liabilities 11,621,047 253,851 ------------------------------------------------------------------------------------------- Total Net Assets $761,434,373 $102,297,391 ------------------------------------------------------------------------------------------- NET ASSETS: Par value of capital shares $ 619 $ 81 Capital paid in excess of par value 789,150,504 97,101,675 Accumulated net investment loss (1,600,662) (22,612) Accumulated net realized loss from investment transactions and futures contracts (3,845,990) (2,595,491) Net unrealized appreciation (depreciation) of investments (22,270,098) 7,813,738 ------------------------------------------------------------------------------------------- Total Net Assets $761,434,373 $102,297,391 ------------------------------------------------------------------------------------------- Shares Outstanding 61,881,172 8,061,213 ------------------------------------------------------------------------------------------- Net Asset Value $12.30 $12.69 -------------------------------------------------------------------------------------------
See Notes to Financial Statements. 14 Travelers Series Fund Inc. | 2004 Semi-Annual Report STATEMENTS OF OPERATIONS (UNAUDITED) For the Six Months Ended April 30, 2004
Smith Barney Smith Barney Aggressive Growth Mid Cap Core Portfolio Portfolio ---------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 323,653 $ 15,619 Dividends 1,045,415 366,595 Less: Foreign withholding tax (21,365) (309) ---------------------------------------------------------------------------- Total Investment Income 1,347,703 381,905 ---------------------------------------------------------------------------- EXPENSES: Management fees (Note 2) 2,873,950 365,581 Shareholder communications 22,312 4,814 Custody 18,393 14,868 Audit and legal 14,705 11,341 Directors' fees 10,962 2,822 Transfer agency services 2,490 2,474 Other 5,553 2,617 ---------------------------------------------------------------------------- Total Expenses 2,948,365 404,517 ---------------------------------------------------------------------------- Net Investment Loss (1,600,662) (22,612) ---------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS (NOTES 3 AND 5): Realized Gain From: Investment transactions 2,311,847 6,286,828 Futures contracts -- 101,477 ---------------------------------------------------------------------------- Net Realized Gain 2,311,847 6,388,305 ---------------------------------------------------------------------------- Change in Net Unrealized Appreciation (Depreciation) of Investments: Beginning of period (68,823,293) 12,108,416 End of period (22,270,098) 7,813,738 ---------------------------------------------------------------------------- Change in Net Unrealized (Appreciation) Depreciation 46,553,195 (4,294,678) ---------------------------------------------------------------------------- Net Gain on Investments and Futures Contracts 48,865,042 2,093,627 ---------------------------------------------------------------------------- Increase in Net Assets From Operations $ 47,264,380 $ 2,071,015 ----------------------------------------------------------------------------
See Notes to Financial Statements. 15 Travelers Series Fund Inc. | 2004 Semi-Annual Report STATEMENTS OF CHANGES IN NET ASSETS For the Six Months Ended April 30, 2004 (unaudited) and the Year Ended October 31, 2003
Smith Barney Aggressive Growth Portfolio 2004 2003 ----------------------------------------------------------------------------------- OPERATIONS: Net investment loss $ (1,600,662) $ (2,399,272) Net realized gain (loss) 2,311,847 (3,239,861) Decrease in net unrealized depreciation 46,553,195 117,888,578 --------------------------------------------------------------------------------- Increase in Net Assets From Operations 47,264,380 112,249,445 --------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS (NOTE 6): Net proceeds from sale of shares 94,937,784 113,070,096 Cost of shares reacquired (4,651,670) (16,650,404) --------------------------------------------------------------------------------- Increase in Net Assets From Fund Share Transactions 90,286,114 96,419,692 --------------------------------------------------------------------------------- Increase in Net Assets 137,550,494 208,669,137 NET ASSETS: Beginning of period 623,883,879 415,214,742 --------------------------------------------------------------------------------- End of period* $761,434,373 $623,883,879 --------------------------------------------------------------------------------- * Includes accumulated net investment loss of: $(1,600,662) -- ---------------------------------------------------------------------------------
See Notes to Financial Statements. 16 Travelers Series Fund Inc. | 2004 Semi-Annual Report STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) For the Six Months Ended April 30, 2004 (unaudited) and the Year Ended October 31, 2003
Smith Barney Mid Cap Core Portfolio 2004 2003 ------------------------------------------------------------------------------------ OPERATIONS: Net investment loss $ (22,612) $ (17,304) Net realized gain 6,388,305 2,012,052 Increase (decrease) in net unrealized appreciation (4,294,678) 12,637,664 -------------------------------------------------------------------------------- Increase in Net Assets From Operations 2,071,015 14,632,412 -------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS (NOTE 6): Net proceeds from sale of shares 14,748,525 18,586,469 Cost of shares reacquired (1,380,495) (3,004,974) -------------------------------------------------------------------------------- Increase in Net Assets From Fund Share Transactions 13,368,030 15,581,495 -------------------------------------------------------------------------------- Increase in Net Assets 15,439,045 30,213,907 NET ASSETS: Beginning of period 86,858,346 56,644,439 -------------------------------------------------------------------------------- End of period* $102,297,391 $86,858,346 -------------------------------------------------------------------------------- * Includes accumulated net investment loss of: $(22,612) -- --------------------------------------------------------------------------------
See Notes to Financial Statements. 17 Travelers Series Fund Inc. | 2004 Semi-Annual Report NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. Significant Accounting Policies The Smith Barney Aggressive Growth Portfolio and Smith Barney Mid Cap Core Portfolio ("Fund(s)") are separate diversified investment funds of the Travelers Series Fund Inc. ("Company"). The Company, a Maryland corporation, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company and consists of these Funds and thirteen other separate investment funds: Smith Barney Large Cap Value Portfolio, Strategic Equity Portfolio, Van Kampen Enterprise Portfolio, Smith Barney International All Cap Growth Portfolio, Travelers Managed Income Portfolio, Pioneer Strategic Income Portfolio, Salomon Brothers Strategic Total Return Bond Portfolio, Smith Barney High Income Portfolio, MFS Total Return Portfolio, Smith Barney Money Market Portfolio, AIM Capital Appreciation Portfolio, Smith Barney Large Capitalization Growth Portfolio and SB Adjustable Rate Income Portfolio. Shares of the Fund are offered only to insurance company separate accounts that fund certain variable annuity and variable life insurance contracts. The financial statements and financial highlights for the other funds are presented in separate shareholder reports. The following are significant accounting policies consistently followed by the Funds and are in conformity with generally accepted accounting principle ("GAAP"): (a) security transactions are accounted for on trade date; (b) securities traded on national securities markets are valued at the closing prices in the primary exchange on which they are traded; securities traded in the over-the-counter market and listed securities for which no sales prices were reported and U.S. government agencies and obligations are valued at the mean between the bid and asked prices; securities listed on the NASDAQ National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price on that day, at the last sale price; (c) securities maturing within 60 days are valued at cost plus accreted discount, or minus amortized premium, which approximates value; (d) securities for which market quotations are not available will be valued in good faith at fair value by or under the direction of the Board of Directors; (e) interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis; (f) dividend income is recorded on the ex-dividend date; foreign dividends are recorded on the ex-dividend date or as soon as practical after the Funds determine the existence of a dividend declaration after exercising reasonable due 18 Travelers Series Fund Inc. | 2004 Semi-Annual Report NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) diligence; (g) dividends and distributions to shareholders are recorded on the ex-dividend date; the Funds distribute dividends and capital gains, if any, at least annually; (h) gains or losses on the sale of securities are calculated by using the specific identification method; (i) the accounting records of the Funds are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, and income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. Differences between income or expense amounts recorded and collected or paid are adjusted when reported by the custodian; (j) the character of income and gains to be distributed is determined in accordance with income tax regulations which may differ from U.S. generally accepted accounting principles; (k) the Funds intend to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended, pertaining to regulated investment companies and to make distributions of taxable income sufficient to relieve it from substantially all Federal income and excise taxes; and (l) estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. 2. Management Agreement and Transactions with Affiliated Persons Smith Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary of Citigroup Inc. ("Citigroup") acts as investment manager of the Smith Barney Aggressive Growth Portfolio ("SBAG") and Smith Barney Mid Cap Core Portfolio ("SBMCC"). SBAG and SBMCC pay SBFM a management fee calculated at the annual rates of 0.80% and 0.75%, respectively, of the average daily net assets of each Fund. These fees are calculated daily and paid monthly. Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as the Funds' transfer agent and PFPC Inc. ("PFPC") acts as the Funds' sub-transfer agent. CTB receives account fees and asset-based fees that vary according to the size and type of account. PFPC is responsible for shareholder recordkeeping and financial processing for all shareholder accounts and is paid by CTB. For the six 19 Travelers Series Fund Inc. | 2004 Semi-Annual Report NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) months ended April 30, 2004, each Fund paid transfer agent fees of $2,500 to CTB. For the six months ended April 30, 2004, Citigroup Global Markets Inc. ("CGM"), another indirect wholly-owned subsidiary of Citigroup, received brokerage commissions totaling $5,383. Most of the officers and one Director of the Company are employees of Citigroup or its affiliates. 3. Investments During the six months ended April 30, 2004, the aggregate cost of purchases and proceeds from sales of investments (including maturities of long-term investments, but excluding short-term investments) were as follows: SBAG SBMCC ----------------------------------------------------------------- Purchases $115,791,535 $70,072,518 ---------------------------------------------------------------- Sales 9,146,362 55,250,060 ---------------------------------------------------------------- At April 30, 2004, the aggregate gross unrealized appreciation and depreciation of investments for Federal income tax purposes were substantially as follows: SBAG SBMCC -------------------------------------------------------------------- Gross unrealized appreciation $ 106,288,449 $11,272,885 Gross unrealized depreciation (128,558,547) (3,459,147) ------------------------------------------------------------------- Net unrealized appreciation (depreciation) $ (22,270,098) $ 7,813,738 ------------------------------------------------------------------- 4. Repurchase Agreements When entering into repurchase agreements, it is the Funds' policy that a custodian takes possession of the underlying collateral securities, the value of which at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Funds may be delayed or limited. 20 Travelers Series Fund Inc. | 2004 Semi-Annual Report NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. Futures Contracts Securities or cash equal to the initial margin amount are either deposited with the broker or segregated by the custodian upon entering into the futures contract. Additional securities are also segregated up to the current market value of the futures contract. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by "marking-to-market" on a daily basis to reflect the market value of the contract at the end of each day's trading. Variation margin payments are received or made and recognized as assets due from or liabilities due to broker, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the proceeds from (or cost of ) the closing transactions and the Fund's basis in the contract. The Funds enter into such contracts typically to hedge a portion of their portfolio. The Funds bear the market risk that arise from changes in the value of the financial instruments and securities indices. At April 30, 2004, SBAG and SBMCC did not hold any futures contracts. 6. Capital Shares At April 30, 2004, the Company had six billion shares of capital stock authorized with a par value of $0.00001 per share. Each share of a Fund represents an equal proportionate interest in that Fund with each other share of the same Fund and has an equal entitlement to any dividends and distributions made by the Fund. Transactions in shares of each Fund were as follows: Six Months Ended Year Ended April 30, 2004 October 31, 2003 -------------------------------------------------------------------------- Smith Barney Aggressive Growth Portfolio Shares sold 7,692,738 10,654,092 Shares reacquired (375,280) (1,773,901) -------------------------------------------------------------------------- Net Increase 7,317,458 8,880,191 -------------------------------------------------------------------------- Smith Barney Mid Cap Core Portfolio Shares sold 1,137,888 1,721,743 Shares reacquired (107,396) (298,046) -------------------------------------------------------------------------- Net Increase 1,030,492 1,423,697 -------------------------------------------------------------------------- 7. Additional Information The Funds have received the following information from Citigroup Asset Management ("CAM"), the Citigroup business unit which includes the Funds' 21 Travelers Series Fund Inc. | 2004 Semi-Annual Report NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Investment Manager and other investment advisory companies, all of which are indirect, wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an affiliate, into the transfer agent business in the period 1997-1999. As CAM currently understands the facts, at the time CAM decided to enter the transfer agent business, CAM sub-contracted for a period of five years certain of the transfer agency services to a third party and also concluded a revenue guarantee agreement with this sub-contractor providing that the sub-contractor would guarantee certain benefits to CAM or its affiliates (the "Revenue Guarantee Agreement"). In connection with the subsequent purchase of the sub-contractor's business by an affiliate of the current sub-transfer agent (PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee Agreement was amended eliminating those benefits in exchange for arrangements that included a one-time payment from the sub-contractor. The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue Guarantee Agreement with the sub-contractor at the time the Boards considered and approved the transfer agent arrangements. Nor were the Boards informed of the subsequent amendment to the Revenue Guarantee Agreement when that occurred. CAM has begun to take corrective actions. CAM will pay to the applicable funds approximately $17 million (plus interest) that CAM and its affiliates received from the Revenue Guarantee Agreement and its amendment. CAM also plans an independent review to verify that the transfer agency fees charged by CAM were fairly priced as compared to competitive alternatives. CAM is instituting new procedures and making changes designed to ensure no similar arrangements are entered into in the future. CAM has briefed the SEC, the New York State Attorney General and other regulators with respect to this matter, as well as the U.S. Attorney who is investigating the matter. CAM is cooperating with governmental authorities on this matter, the ultimate outcome of which is not yet determinable. 22 Travelers Series Fund Inc. | 2004 Semi-Annual Report FINANCIAL HIGHLIGHTS For a share of capital stock outstanding throughout the year ended October 31, unless otherwise noted:
Smith Barney Aggressive Growth Portfolio 2004/(1)/ 2003 2002 2001 2000/(2)(3)/ -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.43 $ 9.09 $12.32 $15.03 $10.00 ------------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment loss (0.03) (0.04) (0.05) (0.05) (0.03) Net realized and unrealized gain (loss) 0.90 2.38 (3.18) (2.66) 5.07 ------------------------------------------------------------------------------------------- Total Income (Loss) From Operations 0.87 2.34 (3.23) (2.71) 5.04 ------------------------------------------------------------------------------------------- Less Distributions From: Capital -- -- -- -- (0.01) ------------------------------------------------------------------------------------------- Total Distributions -- -- -- -- (0.01) ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.30 $11.43 $ 9.09 $12.32 $15.03 ------------------------------------------------------------------------------------------- Total Return/(4)/ 7.61%++ 25.74% (26.22)% (18.03)% 50.41% ------------------------------------------------------------------------------------------- Net Assets, End of Period (000s) $761,434 $623,884 $415,215 $366,294 $164,553 ------------------------------------------------------------------------------------------- Ratios to Average Net Assets: Expenses/(5)/ 0.82%+ 0.82% 0.83% 0.84% 0.99% Net investment loss (0.45)+ (0.49) (0.50) (0.40) (0.21) ------------------------------------------------------------------------------------------- Portfolio Turnover Rate 1% 0% 9% 3% 0% -------------------------------------------------------------------------------------------
(1) For the six months ended April 30, 2004 (unaudited). (2) For the period November 1, 1999 (commencement of operations) to October 31, 2000. (3) Per share amounts have been calculated using the monthly average shares method. (4) Total returns do not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected would reduce the total returns for all periods shown. (5) As a result of a voluntary expense limitation, the expense ratio will not exceed 1.00%. ++ Total return is not annualized, as it may not be representative of the total return for the year. + Annualized. 23 Travelers Series Fund Inc. | 2004 Semi-Annual Report FINANCIAL HIGHLIGHTS (CONTINUED) For a share of capital stock outstanding throughout the year ended October 31, unless otherwise noted:
Smith Barney Mid Cap Core Portfolio 2004/(1)/ 2003 2002 2001 2000/(2)/ ---------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.35 $10.10 $10.83 $14.22 $10.00 -------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment income (loss)/(3)/ (0.00)* (0.00)* (0.02) 0.02 0.06 Net realized and unrealized gain (loss) 0.34 2.25 (0.70) (3.36) 4.17 -------------------------------------------------------------------------------------- Total Income (Loss) From Operations 0.34 2.25 (0.72) (3.34) 4.23 -------------------------------------------------------------------------------------- Less Distributions From: Net investment income -- -- (0.01) (0.05) (0.01) -------------------------------------------------------------------------------------- Total Distributions -- -- (0.01) (0.05) (0.01) -------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.69 $12.35 $10.10 $10.83 $14.22 -------------------------------------------------------------------------------------- Total Return/(4)/ 2.75%++ 22.28% (6.64)% (23.56)% 42.36% -------------------------------------------------------------------------------------- Net Assets, End of Period (000s) $102,297 $86,858 $56,644 $34,376 $17,498 -------------------------------------------------------------------------------------- Ratios to Average Net Assets: Expenses/(3)(5)/ 0.83%+ 0.85% 0.90% 0.95% 0.95% Net investment income (loss) (0.05)+ (0.03) (0.10) 0.25 0.72 -------------------------------------------------------------------------------------- Portfolio Turnover Rate 59% 98% 79% 45% 61% --------------------------------------------------------------------------------------
(1) For the six months ended April 30, 2004 (unaudited). (2) For the period November 1, 1999 (commencement of operations) to October 31, 2000. (3) The manager agreed to waive a portion of its management fee for the year ended October 31, 2001 and the period ended October 31, 2000. If such fees were not waived, the per share decreases to net investment income and the actual expense ratios would have been as follows:
Per Share Decreases to Expense Ratios Net Investment Income Without Fee Waivers ---------------------- ------------------- 2001 $0.00* 0.96% 2000 0.04 1.46
(4) Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would be reduced. Total returns do not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected would reduce the total returns for all periods shown. (5) As a result of a voluntary expense limitation, the expense ratio will not exceed 0.95%. * Amount represents less than $0.01 per share. ++ Total return is not annualized, as it may not be representative of the total return for the year. + Annualized. 24 Travelers Series Fund Inc. | 2004 Semi-Annual Report TRAVELERS SERIES FUND INC. DIRECTORS INVESTMENT MANAGER Abraham E. Cohen Smith Barney Fund Management LLC Robert A. Frankel Michael E. Gellert CUSTODIAN R. Jay Gerken, CFA State Street Bank and Chairman Trust Company Rainer Greeven Susan M. Heilbron ANNUITY ADMINISTRATION OFFICERS Travelers Annuity Investor Services R. Jay Gerken, CFA One Cityplace President and Chief Hartford, CT 06103-3415 Executive Officer Andrew B. Shoup Senior Vice President and Chief Administrative Officer Richard A. Freeman Vice President and Investment Officer Lawrence B. Weissman, CFA Vice President and Investment Officer Kaprel Ozsolak Controller Andrew Beagley Chief Anti-Money Laundering Compliance Officer Robert I. Frenkel Secretary and Chief Legal Officer Travelers Series Fund Inc. Smith Barney Aggressive Growth Portfolio Smith Barney Mid Cap Core Portfolio The Funds are separate investment funds of the Travelers Series Fund Inc., a Maryland corporation. A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by telephoning the Funds (toll-free) at 1-800-451-2010 and by visiting the SEC's web site at www.sec.gov. This report is submitted for the general information of the shareholders of the Travelers Series Fund Inc. -- Smith Barney Aggressive Growth Portfolio and Smith Barney Mid Cap Core Portfolio. TRAVELERS SERIES FUND INC. 125 Broad Street 10th Floor, MF-2 New York, New York 10004 IN0896 6/04 04-6792 ITEM 2. CODE OF ETHICS. Not Applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not Applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant's internal control over financial reporting. ITEM 10. EXHIBITS. (a) Not applicable. (b) Attached hereto. Exhibit 99.CERT Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 99.906CERT Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized. TRAVELERS SERIES FUND INC. By: /s/ R. Jay Gerken -------------------------------- (R. Jay Gerken) Chief Executive Officer of Travelers Series Fund Inc. Date: July 6, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ R. Jay Gerken -------------------------------- (R. Jay Gerken) Chief Executive Officer of Travelers Series Fund Inc. Date: July 6, 2004 By: /s/ Andrew B. Shoup -------------------------------- (Andrew B. Shoup) Chief Administrative Officer of Travelers Series Fund Inc. Date: July 6, 2004