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 811-6465
THE TRAVELERS SERIES TRUST
(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: DECEMBER 31
Date of reporting period: DECEMBER 31, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
The Annual Report to Stockholders is filed herewith.
ANNUAL REPORT
DECEMBER 31, 2004
[UMBRELLA ART TOP]
[UMBRELLA ART BOTTOM]
THE TRAVELERS SERIES TRUST:
MFS VALUE PORTFOLIO
[TRAVELERS LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Cityplace
Hartford, CT 06103
ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST
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WHAT'S INSIDE
<Table>
LETTER FROM THE CHAIRMAN.................................... 1
MANAGER OVERVIEW............................................ 2
FUND AT A GLANCE............................................ 4
FUND EXPENSES............................................... 5
PERFORMANCE COMPARISON...................................... 7
SCHEDULE OF INVESTMENTS..................................... 8
STATEMENT OF ASSETS AND LIABILITIES......................... 13
STATEMENT OF OPERATIONS..................................... 14
STATEMENTS OF CHANGES IN NET ASSETS......................... 15
FINANCIAL HIGHLIGHTS........................................ 16
NOTES TO FINANCIAL STATEMENTS............................... 17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 22
ADDITIONAL INFORMATION...................................... 23
IMPORTANT TAX INFORMATION................................... 26
</Table>
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LETTER FROM THE CHAIRMAN
[R. JAY GERKEN PHOTO]
R. JAY GERKEN, CFA
Chairman, President and
Chief Executive Officer
DEAR SHAREHOLDER,
Despite sharply rising oil prices, threats of terrorism,
geopolitical concerns and uncertainties surrounding the
Presidential election, the U.S. economy continued to
expand during the reporting period. Following a robust
4.5% gain in the first quarter of 2004, gross domestic
product ("GDP")(i) growth was 3.3% in the second quarter
of the year. This decline was largely attributed to
higher energy prices. However, third quarter 2004 GDP
growth rose to a strong 4.0%. While fourth quarter GDP
figures have not yet been released, continued growth is
expected.
Turning to the financial markets, stocks in both the
U.S. and abroad rallied sharply during the fourth
quarter of 2004, helping to produce solid gains for the
year. With the uncertainty of the U.S. presidential
election behind them, coupled with falling oil prices,
investors were drawn to the equity markets. The overall
bond market also generated positive returns during the
fiscal year. This was surprising to many, given the
economic expansion and five interest rate(ii) hikes by
the Federal Reserve Board ("Fed")(iii).
Please read on for a more detailed look at prevailing
economic and market conditions during the fund's fiscal
year and to learn how those conditions have affected
fund performance.
INFORMATION ABOUT YOUR FUND
As you may be aware, several issues in the mutual fund and variable product
industry have recently come under the scrutiny of federal and state regulators.
Travelers Life & Annuity and some of its affiliates have received requests for
information from various government regulators regarding market timing, late
trading, fees, revenue sharing, producer compensation and other mutual fund and
variable product issues in connection with various investigations. The fund has
been informed that Travelers Life & Annuity and its affiliates are responding to
those information requests, but are not in a position to predict the outcome of
these requests and investigations.
As previously disclosed by Citigroup, the Staff of the Securities and Exchange
Commission ("SEC") has notified Citigroup Asset Management ("CAM") and Citicorp
Trust Bank ("CTB"), an affiliate of CAM, that the Staff is considering
recommending a civil injunctive action and/or an administrative proceeding
against CAM, CTB, the former CEO of CAM, two former employees and a current
employee of CAM, relating to the creation, operation and fees of an internal
transfer agent unit that serves various CAM-managed funds. Citigroup is
cooperating with the SEC and will seek to resolve this matter in discussion with
the SEC Staff. Although there can be no assurance, Citigroup does not believe
that this matter will have a material adverse effect on the fund. For further
information, please see the "Additional Information" note in the Notes to the
Financial Statements included in this report.
As always, thank you for your 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
January 20, 2005
1
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MANAGER OVERVIEW
MFS VALUE PORTFOLIO
PERFORMANCE UPDATE(1)
For the twelve months ended December 31, 2004, the MFS Value Portfolio returned
15.97%. The portfolio underperformed its unmanaged benchmark, the Russell 1000
Value Index,(iv) which returned 16.49% for the same period. The Lipper Variable
Large-Cap Value Funds Category Average(2) was 11.53%.
PERFORMANCE SNAPSHOT
AS OF DECEMBER 31, 2004
(UNAUDITED)
<Table>
<Caption>
6 MONTHS 12 MONTHS
MFS Value Portfolio 11.83% 15.97%
Russell 1000 Value Index 12.08% 16.49%
Lipper Variable Large-Cap Value Funds Category Average 8.42% 11.53%
</Table>
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.
PERFORMANCE FIGURES MAY REFLECT REIMBURSEMENTS AND/OR FEE WAIVERS,
WITHOUT WHICH THE PERFORMANCE WOULD HAVE BEEN LOWER.
PORTFOLIO RETURNS ASSUME THE REINVESTMENT OF INCOME DIVIDENDS AND
CAPITAL GAINS DISTRIBUTIONS AT NET ASSET VALUE AND THE DEDUCTION OF
ALL FUND EXPENSES.
Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the period ended December 31, 2004, including the
reinvestment of dividends and capital gains, if any, calculated among
the 83 funds for the six-month period and among the 82 funds for the
12-month period in the fund's Lipper category.
PORTFOLIO POSITIONING
For stock investors 2004 was a bumpy ride with a smooth finish. In the end,
improving fundamental factors, such as corporate spending and earnings growth,
triumphed and drove equity markets to solid gains for the year. During the
12-month reporting period, investors endured skyrocketing oil prices, rising
short-term interest rates, a volatile and retreating U.S. dollar, record budget
and trade deficits and war in Iraq. For a time, it seemed these factors would
lead to flat or negative annual performance for many investments. But by the
last quarter of 2004, oil prices retreated, investors seemed to adopt a less
negative view of other broad economic issues, and markets appeared to recognize
that both corporate profits and economic growth were up solidly, if not
spectacularly, for the year. At MFS(R), we believed that as the year came to a
close, the global economy was still in the midst of a sustainable broad-based
recovery.
(1) The fund is an underlying investment option of various variable annuity and
variable life products. The fund's performance returns do not reflect the
deduction of sales charges and expenses imposed in connection with investing
in variable annuity and variable life 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.
(2) Lipper, Inc. is a major independent mutual-fund tracking organization.
Average annual returns are based on the 12-month period ended December 31,
2004, including the reinvestment of dividends and capital gains, if any,
calculated among the 82 funds in the fund's Lipper category.
2
CONTRIBUTORS TO PERFORMANCE
The fund's holdings in the utilities and telecommunications, information
technology and consumer staples sectors generated its strongest relative returns
during the fiscal year. In the utilities and communications sector, power
company TXU CORP. was the fund's strongest relative performer. In addition, the
portfolio's holdings in long distance telephone and wireless service company
SPRINT CORP. boosted returns.
In the technology sector, a relative underweighting and, to a lesser extent,
stock selection helped performance. Underweighting personal computer and printer
firm HEWLETT-PACKARD CO. aided results, as its stock declined over the period.
Strong stock selection and a relative overweighting in the consumer staples area
contributed to performance, as a position in agribusiness giant
ARCHER-DANIELS-MIDLAND CO. rose sharply. Strong performing stocks in other
sectors included chemical company MONSANTO CO. and Swiss agrichemical firm
SYNGENTA AG. Underweighting pharmaceutical firm MERCK & CO., INC., whose stock
fell sharply over the period, also aided relative performance as well.
On the other hand, the portfolio's weakest-performing stocks over the period
were in leisure, financial services and retailing. In the leisure area, stock
selection and, to a lesser extent, a slight overweighting, detracted from
relative results. Our positions in media giant VIACOM INC. and newspaper
publisher TRIBUNE CO. were the largest detractors in the sector. Stock selection
in the financial services sector hurt relative performance as well. The most
significant detractor in the sector was home loan provider FANNIE MAE, a stock
that was not included in our benchmark. Stock selection in the retailing sector
was also a detriment to relative returns.
Other stocks that hurt relative performance included global investment banking
firm The GOLDMAN SACHS GROUP INC., pharmaceutical company PFIZER INC., UNION
PACIFIC CORP., the MELLON FINANCIAL CORP. and EXXON MOBIL CORP.
The fund's cash position detracted from relative performance as well. As with
nearly all mutual funds, this fund holds some cash to buy new holdings and to
provide liquidity. In a period when value stocks performed well, cash hurt the
fund's performance versus the benchmark, which has no cash position.
Sincerely,
- -s- Edward B. Baldini
Edward B. Baldini
Massachusetts Financial Services
- -s- Steven R. Gorham
Steven R. Gorham
Massachusetts Financial Services
January 20, 2005
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 December 31, 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 a percentage of net assets as
of this date were: Bank of America Corp. (4.1%), The Goldman Sachs Group Inc.
(3.1%), Altria Group, Inc. (2.7%), MetLife, Inc. (2.5%), Suntrust Banks Inc.
(2.3%), Sprint Corp. (2.2%), American Express Co. (2.2%), ConocoPhillips (2.1%),
JPMorgan Chase & Co. (2.0%), Fannie Mae (1.9%). Please refer to pages 8 through
12 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
a percentage of net assets as of December 31, 2004 were: Financials (28.2%);
Energy (10.8%); Consumer Staples (10.5%); Industrials (10.1%); Materials (9.4%).
The fund's portfolio composition is subject to change at any time.
All index performance reflects no deduction for fees, expenses or taxes. Please
note that an investor cannot invest directly in an index.
(i) Gross domestic product is a market value of goods and services produced by
labor and property in a given country.
(ii) The federal funds rate is the interest rate that banks with excess reserves
at a Federal Reserve district bank charge other banks that need overnight
loans.
(iii) The Fed is responsible for the formulation of a policy designed to promote
economic growth, full employment, stable prices and a sustainable pattern
of international trade and payments.
(iv) The Russell 1000 Value Index measures the performance of those Russell 1000
Index companies with lower price-to-book ratios and lower forecasted growth
rates.
3
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FUND AT A GLANCE (UNAUDITED)
(GRAPH)
<Table>
<Caption>
DECEMBER 31, 2004 JUNE 30, 2004
----------------- -------------
Financials 27.9 28.5
Energy 10.7 11.1
Consumer Staples 10.3 9.5
Industrials 10 7.8
Materials 9.3 9.4
Consumer Discretionary 8.4 8.4
Healthcare 7.6 8.1
Telecommunication Services 5.3 5.5
Utilities 5.2 5.4
Information Technology 1.6 2.6
Short-Term Investment 3.7 3.7
</Table>
4
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FUND EXPENSES (UNAUDITED)
EXAMPLE
As a shareholder of the Funds, you may incur two types of costs: (1)
transaction costs, including front-end and back-end sales charges (loads) on
purchase payments, reinvested dividends, or other distributions; and (2) ongoing
costs, including management fees; distribution and/or service (12b-1) fees; and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on July 1, 2004
and held for the six months ended December 31, 2004.
ACTUAL EXPENSES
The table below titled "Based on Actual Total Return" provides information
about actual account values and actual expenses. You may use the information
provided in this table, together with the amount you invested, to estimate the
expenses that you paid over the period. To estimate the expenses you paid on
your account, divide your ending account value by $1,000 (for example, an $8,600
ending account value divided by $1,000 = 8.6), then multiply the result by the
number under the heading entitled "Expenses Paid During the Period".
- --------------------------------------------------------------------------------
BASED ON ACTUAL TOTAL RETURN(1)
<Table>
<Caption>
EXPENSES
BEGINNING ENDING ANNUALIZED PAID
ACTUAL TOTAL ACCOUNT ACCOUNT EXPENSE DURING THE
RETURN(2) VALUE VALUE RATIO PERIOD(3)
- ------------------------------------------------------------------------------------------------------------------
MFS Value Portfolio 11.83% $1,000.00 $1,118.30 0.99% $5.27
- ------------------------------------------------------------------------------------------------------------------
</Table>
(1) For the six months ended December 31, 2004.
(2) Assumes reinvestment of dividends and capital gain distributions, if any, at
net asset value. Total return is not annualized, as it may not be
representative of the total return for the year. 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. Performance figures may reflect voluntary fee
waivers and/or expense reimbursements. Past performance is no guarantee of
future results. In the absence of voluntary fee waivers and/or expense
reimbursements, the total return would have been lower.
(3) Expenses (net of voluntary fee waiver and/or expense reimbursement) are
equal to the Fund's annualized expense ratio multiplied by the average
account value over the period, multiplied by the number of days in the most
recent fiscal half-year, then divided by 366.
5
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FUND EXPENSES (UNAUDITED) (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below titled "Based on Hypothetical Total Return" provides
information about hypothetical account values and hypothetical expenses based on
the actual expense ratio and an assumed rate of return of 5.00% per year before
expenses, which is not the Fund's actual return. The hypothetical account values
and expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use the information provided in this
table to compare the ongoing costs of investing in the Fund and other funds. To
do so, compare the 5.00% hypothetical example relating to the Fund with the
5.00% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the table below are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as front-end or back-end sales charges (loads). Therefore, the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BASED ON HYPOTHETICAL TOTAL RETURN(1)
<Table>
<Caption>
HYPOTHETICAL EXPENSES
ANNUALIZED BEGINNING ENDING ANNUALIZED PAID
TOTAL ACCOUNT ACCOUNT EXPENSE DURING THE
RETURN VALUE VALUE RATIO PERIOD(2)
- -----------------------------------------------------------------------------------------------------------------
MFS Value Portfolio 5.00% $1,000.00 $1,020.16 0.99% $5.03
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) For the six months ended December 31, 2004.
(2) Expenses (net of voluntary fee waiver and/or reimbursement) are equal to the
Fund's annualized expense ratio multiplied by the average account value over
the period, multiplied by the number of days in the most recent fiscal
half-year, then divided by 366.
6
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PERFORMANCE COMPARISON -- MFS VALUE PORTFOLIO AS OF 12/31/04 (UNAUDITED)
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------
Year Ended 12/31/04 15.97%
Five Years Ended 12/31/04 7.19
7/20/98* through 12/31/04 5.49
<Caption>
CUMULATIVE TOTAL RETURN
-----------------------
7/20/98* through 12/31/04 41.18%
* Commencement of operations.
</Table>
This chart assumes an initial investment of $10,000 made at
inception on July 20, 1998, assuming reinvestment of dividends,
through December 31, 2004. The Russell 1000 Index measures the
performance of the 1,000 largest companies in the Russell 3000
Index, which represents approximately 92% of the total market
capitalization of the Russell 3000 Index. The Russell 1000 Value
Index measures the performance of those Russell 1000 Index
companies with lower price-to-book ratios and lower forecasted
growth values.
(LINE GRAPH)
<Table>
<Caption>
MFS VALUE PORTFOLIO RUSSELL 1000 VALUE INDEX
------------------- ------------------------
7/20/98 10000 10000
12/98 9506 10495
12/99 9979 11266
12/00 11135 12057
12/01 11247 11382
12/02 9769 9614
12/03 12173 12502
12/31/04 14118 14563
</Table>
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Assumes reinvestment of dividends and capital gains distributions, if any, at
net asset value. All figures represent past performance and are not a guarantee
of future results. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. 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. Performance
figures may reflect voluntary fee waivers and/or expense reimbursements. In the
absence of voluntary fee waivers and/or expense reimbursements, the total return
would have been lower.
7
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SCHEDULE OF INVESTMENTS DECEMBER 31, 2004
<Table>
<Caption>
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------------
COMMON STOCK -- 97.5%
- -----------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 8.5%
HOTELS, RESTAURANTS & LEISURE -- 0.7%
9,580 McDonald's Corp. ........................................... $ 307,135
- -----------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS -- 0.3%
6,950 Hasbro, Inc. ............................................... 134,691
- -----------------------------------------------------------------------------------------
MEDIA -- 5.6%
17,250 Comcast Corp., Special Class A Shares(a).................... 566,490
49,730 Reed Elsevier PLC........................................... 457,797
9,290 Time Warner Inc.(a)......................................... 180,598
10,440 Tribune Co. ................................................ 439,942
21,670 Viacom Inc., Class B Shares................................. 788,571
8,310 The Walt Disney Co. ........................................ 231,018
- -----------------------------------------------------------------------------------------
2,664,416
- -----------------------------------------------------------------------------------------
SPECIALTY RETAIL -- 1.9%
23,060 The Gap, Inc. .............................................. 487,027
16,110 The TJX Cos., Inc. ......................................... 404,844
- -----------------------------------------------------------------------------------------
891,871
- -----------------------------------------------------------------------------------------
TOTAL CONSUMER DISCRETIONARY................................ 3,998,113
- -----------------------------------------------------------------------------------------
CONSUMER STAPLES -- 10.5%
BEVERAGES -- 1.1%
15,050 Diageo PLC.................................................. 214,233
5,480 PepsiCo, Inc. .............................................. 286,056
- -----------------------------------------------------------------------------------------
500,289
- -----------------------------------------------------------------------------------------
FOOD PRODUCTS -- 5.4%
34,506 Archer-Daniels-Midland Co. ................................. 769,829
9,850 H.J. Heinz Co. ............................................. 384,052
16,100 Kellogg Co. ................................................ 719,026
895 Nestle SA................................................... 233,359
18,030 Sara Lee Corp. ............................................. 435,244
- -----------------------------------------------------------------------------------------
2,541,510
- -----------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.3%
9,630 Kimberly-Clark Corp. ....................................... 633,750
- -----------------------------------------------------------------------------------------
TOBACCO -- 2.7%
20,680 Altria Group, Inc. ......................................... 1,263,548
- -----------------------------------------------------------------------------------------
TOTAL CONSUMER STAPLES...................................... 4,939,097
- -----------------------------------------------------------------------------------------
ENERGY -- 10.8%
ENERGY EQUIPMENT & SERVICES -- 1.5%
3,530 GlobalSantaFe Corp. ........................................ 116,878
9,260 Noble Corp.(a).............................................. 460,592
1,790 Schlumberger Ltd. .......................................... 119,840
- -----------------------------------------------------------------------------------------
697,310
- -----------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
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SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2004
<Table>
<Caption>
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------------
OIL & GAS -- 9.3%
14,600 BP PLC, Sponsored ADR....................................... $ 852,640
11,580 ConocoPhillips.............................................. 1,005,491
5,390 Devon Energy Corp. ......................................... 209,779
3,310 EOG Resources, Inc. ........................................ 236,202
16,780 Exxon Mobil Corp. .......................................... 860,143
5,050 Total S.A., Sponsored ADR................................... 554,692
15,570 Unocal Corp. ............................................... 673,247
- -----------------------------------------------------------------------------------------
4,392,194
- -----------------------------------------------------------------------------------------
TOTAL ENERGY................................................ 5,089,504
- -----------------------------------------------------------------------------------------
FINANCIALS -- 28.2%
BANKS -- 9.5%
41,578 Bank of America Corp. ...................................... 1,953,750
15,760 Mellon Financial Corp. ..................................... 490,294
10,200 PNC Financial Services Group, Inc. ......................... 585,888
14,840 SunTrust Banks, Inc. ....................................... 1,096,379
5,590 Wells Fargo & Co. .......................................... 347,418
- -----------------------------------------------------------------------------------------
4,473,729
- -----------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 12.4%
18,150 American Express Co. ....................................... 1,023,116
12,860 Fannie Mae.................................................. 915,761
2,600 Franklin Resources, Inc. ................................... 181,090
6,590 Freddie Mac................................................. 485,683
14,130 The Goldman Sachs Group, Inc. .............................. 1,470,085
24,670 JPMorgan Chase & Co. ....................................... 962,377
2,800 Lehman Brothers Holdings Inc. .............................. 244,944
8,550 MBNA Corp. ................................................. 241,024
6,030 Merrill Lynch & Co., Inc. .................................. 360,413
- -----------------------------------------------------------------------------------------
5,884,493
- -----------------------------------------------------------------------------------------
INSURANCE -- 6.3%
6,510 AFLAC, Inc. ................................................ 259,358
17,410 The Allstate Corp. ......................................... 900,445
2,910 The Chubb Corp. ............................................ 223,779
5,890 The Hartford Financial Services Group, Inc. ................ 408,236
28,780 MetLife, Inc. .............................................. 1,165,878
- -----------------------------------------------------------------------------------------
2,957,696
- -----------------------------------------------------------------------------------------
TOTAL FINANCIALS............................................ 13,315,918
- -----------------------------------------------------------------------------------------
HEALTHCARE -- 7.7%
HEALTHCARE EQUIPMENT & SUPPLIES -- 0.5%
6,760 Baxter International, Inc. ................................. 233,490
- -----------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2004
<Table>
<Caption>
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------------
PHARMACEUTICALS -- 7.2%
12,500 Abbott Laboratories......................................... $ 583,125
1,820 Eli Lilly and Co. .......................................... 103,285
13,940 Johnson & Johnson........................................... 884,075
22,540 Merck & Co., Inc. .......................................... 724,436
4,460 Novartis AG................................................. 223,977
5,820 Pfizer Inc. ................................................ 156,500
2,750 Roche Holding AG............................................ 315,491
9,960 Wyeth....................................................... 424,196
- -----------------------------------------------------------------------------------------
3,415,085
- -----------------------------------------------------------------------------------------
TOTAL HEALTHCARE............................................ 3,648,575
- -----------------------------------------------------------------------------------------
INDUSTRIALS -- 10.1%
AEROSPACE & DEFENSE -- 4.0%
13,750 Lockheed Martin Corp. ...................................... 763,812
12,650 Northrop Grumman Corp. ..................................... 687,654
4,050 United Technologies Corp. .................................. 418,568
- -----------------------------------------------------------------------------------------
1,870,034
- -----------------------------------------------------------------------------------------
AIR FREIGHT & COURIERS -- 0.0%
460 CNF Inc. ................................................... 23,046
- -----------------------------------------------------------------------------------------
BUILDING PRODUCTS -- 0.8%
10,140 Masco Corp. ................................................ 370,414
- -----------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 0.3%
3,700 Fiserv, Inc.(a)............................................. 148,703
- -----------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 1.8%
4,420 Cooper Industries, Ltd., Class A Shares..................... 300,074
7,600 Emerson Electric Co. ....................................... 532,760
- -----------------------------------------------------------------------------------------
832,834
- -----------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES -- 0.0%
450 Tyco International Ltd. .................................... 16,083
- -----------------------------------------------------------------------------------------
MACHINERY -- 1.7%
6,880 Deere & Co. ................................................ 511,872
1,870 Finning International Inc. ................................. 54,386
1,220 Illinois Tool Works Inc. ................................... 113,070
3,490 Sandvik AB.................................................. 140,217
- -----------------------------------------------------------------------------------------
819,545
- -----------------------------------------------------------------------------------------
ROAD & RAIL -- 1.5%
10,270 Burlington Northern Santa Fe Corp. ......................... 485,874
3,340 Union Pacific Corp. ........................................ 224,615
- -----------------------------------------------------------------------------------------
710,489
- -----------------------------------------------------------------------------------------
TOTAL INDUSTRIALS........................................... 4,791,148
- -----------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 1.6%
COMPUTERS & PERIPHERALS -- 0.6%
9,310 Hewlett-Packard Co. ........................................ 195,231
900 International Business Machines Corp. ...................... 88,722
- -----------------------------------------------------------------------------------------
283,953
- -----------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2004
<Table>
<Caption>
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------------
IT CONSULTING & SERVICES -- 1.0%
17,780 Accenture Ltd., Class A Shares(a)........................... $ 480,060
- -----------------------------------------------------------------------------------------
SOFTWARE -- 0.0%
48 Computer Associates International, Inc. .................... 1,491
- -----------------------------------------------------------------------------------------
TOTAL INFORMATION TECHNOLOGY................................ 765,504
- -----------------------------------------------------------------------------------------
MATERIALS -- 9.4%
CHEMICALS -- 7.2%
9,220 Air Products & Chemicals, Inc. ............................. 534,483
9,710 The Dow Chemical Co. ....................................... 480,742
12,830 E.I. du Pont de Nemours & Co. .............................. 629,312
8,920 Monsanto Co. ............................................... 495,506
11,730 PPG Industries, Inc. ....................................... 799,517
2,080 Praxair, Inc. .............................................. 91,832
3,830 Syngenta AG(a).............................................. 405,490
- -----------------------------------------------------------------------------------------
3,436,882
- -----------------------------------------------------------------------------------------
CONTAINERS & PACKAGING -- 0.4%
9,990 Smurfit-Stone Container Corp.(a)............................ 186,613
- -----------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 1.8%
3,800 Bowater Inc. ............................................... 167,086
15,950 International Paper Co. .................................... 669,900
- -----------------------------------------------------------------------------------------
836,986
- -----------------------------------------------------------------------------------------
TOTAL MATERIALS............................................. 4,460,481
- -----------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 5.4%
DIVERSIFIED TELECOMMUNICATION SERVICES -- 4.1%
42,370 Sprint Corp. ............................................... 1,052,894
21,470 Verizon Communications Inc. ................................ 869,750
- -----------------------------------------------------------------------------------------
1,922,644
- -----------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES -- 1.3%
233,960 Vodafone Group PLC.......................................... 633,128
- -----------------------------------------------------------------------------------------
TOTAL TELECOMMUNICATION SERVICES............................ 2,555,772
- -----------------------------------------------------------------------------------------
UTILITIES -- 5.3%
ELECTRIC UTILITIES -- 4.9%
5,490 Cinergy Corp. .............................................. 228,549
11,130 Dominion Resources, Inc. ................................... 753,946
7,030 Energy East Corp. .......................................... 187,560
3,380 Entergy Corp. .............................................. 228,454
3,080 Exelon Corp. ............................................... 135,736
2,190 FirstEnergy Corp. .......................................... 86,527
940 FPL Group, Inc. ............................................ 70,265
4,230 PPL Corp. .................................................. 225,374
1,830 Public Service Enterprise Group Inc. ....................... 94,739
4,650 TXU Corp. .................................................. 300,204
- -----------------------------------------------------------------------------------------
2,311,354
- -----------------------------------------------------------------------------------------
GAS UTILITIES -- 0.2%
2,250 KeySpan Corp. .............................................. 88,762
- -----------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2004
<Table>
<Caption>
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------------
WATER UTILITIES -- 0.2%
4,120 Nalco Holding Co.(a)........................................ $ 80,422
- -----------------------------------------------------------------------------------------
TOTAL UTILITIES............................................. 2,480,538
- -----------------------------------------------------------------------------------------
TOTAL COMMON STOCK (Cost -- $37,889,646).................... 46,044,650
- -----------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
FACE
AMOUNT
- -----------------------------------------------------------------------------------------
SHORT TERM INVESTMENT -- 3.7%
$1,758,000 Federal National Mortgage Association Discount Notes, zero
coupon bond to yield 1.25% due 1/3/05
(Cost -- $1,757,878)...................................... 1,757,878
- -----------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 101.2% (Cost -- $39,647,524*).......... 47,802,528
Liabilities in Excess of Other Assets -- (1.2%)............. (550,125)
- -----------------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0%.................................. $47,252,403
- -----------------------------------------------------------------------------------------
</Table>
(a) Non-income producing security.
* Aggregate cost for federal income tax purposes is $39,802,555.
Abbreviation used in this schedule:
-----------------------------------
ADR -- American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
12
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2004
<Table>
ASSETS:
Investments, at value (Cost -- $39,647,524)............... $47,802,528
Cash...................................................... 585
Dividends and interest receivable......................... 81,793
Receivable from administrator............................. 15,154
Receivable for Fund shares sold........................... 1,975
Receivable for open forward foreign currency contracts
(Notes 1 and 3)........................................ 12
Prepaid expense........................................... 8,414
- -------------------------------------------------------------------------
TOTAL ASSETS.............................................. 47,910,461
- -------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased.......................... 583,827
Investment advisory fee payable........................... 27,290
Trustees' fees payable.................................... 2,000
Payable for open forward foreign currency contracts (Notes
1 and 3)............................................... 86
Accrued expenses.......................................... 44,855
- -------------------------------------------------------------------------
TOTAL LIABILITIES......................................... 658,058
- -------------------------------------------------------------------------
TOTAL NET ASSETS............................................ $47,252,403
- -------------------------------------------------------------------------
NET ASSETS:
Paid-in capital (Note 4).................................. $39,047,409
Undistributed net investment income....................... 908
Accumulated net realized gain on investment
transactions........................................... 48,233
Net unrealized appreciation of investments and foreign
currencies............................................. 8,155,853
- -------------------------------------------------------------------------
TOTAL NET ASSETS............................................ $47,252,403
- -------------------------------------------------------------------------
SHARES OUTSTANDING.......................................... 3,835,283
- -------------------------------------------------------------------------
NET ASSET VALUE............................................. $12.32
- -------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME:
Dividends................................................. $ 894,663
Interest.................................................. 12,461
Less: Foreign withholding tax............................. (8,539)
- ------------------------------------------------------------------------
TOTAL INVESTMENT INCOME................................... 898,585
- ------------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 2).......................... 293,439
Audit and legal........................................... 40,859
Custody................................................... 37,861
Shareholder communications................................ 24,619
Administration fee (Note 2)............................... 23,475
Pricing fees.............................................. 11,266
Trustees' fees............................................ 9,673
Transfer agency services (Note 2)......................... 2,500
Other..................................................... 2,731
- ------------------------------------------------------------------------
TOTAL EXPENSES............................................ 446,423
Less: Fee waiver and expense reimbursement (Notes 2 and
6)..................................................... (56,897)
- ------------------------------------------------------------------------
NET EXPENSES.............................................. 389,526
- ------------------------------------------------------------------------
NET INVESTMENT INCOME....................................... 509,059
- ------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES (NOTES 1 AND 3):
Realized Gain (Loss) From:
Investment transactions................................ 2,337,715
Foreign currency transactions.......................... (392)
- ------------------------------------------------------------------------
NET REALIZED GAIN......................................... 2,337,323
- ------------------------------------------------------------------------
Net Change in Unrealized Appreciation/Depreciation From:
Investments............................................ 3,327,311
Foreign currencies..................................... 339
- ------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION OF
INVESTMENTS AND FOREIGN CURRENCIES..................... 3,327,650
- ------------------------------------------------------------------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCIES.............. 5,664,973
- ------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS...................... $6,174,032
- ------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31,
<Table>
<Caption>
2004 2003
- ---------------------------------------------------------------------------------------
OPERATIONS:
Net investment income..................................... $ 509,059 $ 486,498
Net realized gain......................................... 2,337,323 268,945
Net change in unrealized appreciation/depreciation........ 3,327,650 7,155,432
- ---------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS.................... 6,174,032 7,910,875
- ---------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (510,816) (493,786)
Net realized gains........................................ (389,047) --
- ---------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS........................................... (899,863) (493,786)
- ---------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares.......................... 9,087,552 5,804,112
Net asset value of shares issued for reinvestment of
dividends and distributions............................ 899,863 493,786
Cost of shares reacquired................................. (8,137,170) (4,566,914)
- ---------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS....... 1,850,245 1,730,984
- ---------------------------------------------------------------------------------------
INCREASE IN NET ASSETS...................................... 7,124,414 9,148,073
NET ASSETS:
Beginning of year......................................... 40,127,989 30,979,916
- ---------------------------------------------------------------------------------------
END OF YEAR*.............................................. $47,252,403 $40,127,989
- ---------------------------------------------------------------------------------------
* Includes undistributed net investment income of:.......... $908 $3,057
- ---------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
15
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout each year ended
December 31, unless otherwise noted:
<Table>
<Caption>
2004 2003 2002 2001(1) 2000(1)
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR.......... $10.83 $8.80 $10.83 $10.89 $9.93
- ---------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income..................... 0.14 0.13 0.12 0.11 0.11
Net realized and unrealized gain (loss)... 1.59 2.04 (1.53) (0.00)* 1.02
- ---------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations......... 1.73 2.17 (1.41) 0.11 1.13
- ---------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income..................... (0.14) (0.14) (0.21) (0.08) (0.08)
Net realized gains........................ (0.10) -- (0.41) (0.09) (0.09)
- ---------------------------------------------------------------------------------------------------
Total Dividends and Distributions........... (0.24) (0.14) (0.62) (0.17) (0.17)
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR................ $12.32 $10.83 $8.80 $10.83 $10.89
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN(2)............................. 15.97% 24.61% (13.14)% 1.00% 11.59%
- ---------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S)............. $47,252 $40,128 $30,980 $32,295 $23,326
- ---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3)(4)............................ 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income..................... 1.30 1.44 1.38 1.01 1.05
- ---------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE..................... 47% 57% 60% 123% 54%
- ---------------------------------------------------------------------------------------------------
</Table>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) 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.
Performance figures may reflect voluntary fee waivers and/or expense
reimbursements. Past performance is no guarantee of future results. In the
absence of voluntary fee waivers and/or expense reimbursements, the total
return would have been lower.
(3) The Travelers Insurance Company has agreed to reimburse the Fund for certain
expenses for the years ended December 31, 2004, 2003, 2002, 2001 and 2000,
respectively. In addition, Smith Barney Fund Management LLC voluntarily
waived a portion of its fee for the year ended December 31, 2004. If such
expenses were not voluntarily reimbursed and/or fees waived, the actual
expense ratios would have been 1.14%, 1.08%, 1.13%, 1.11% and 1.07% for the
years ended December 31, 2004, 2003, 2002, 2001 and 2000, respectively.
(4) As a result of an expense limitation, the ratio of expenses to average net
assets will not exceed 1.00%.
* Amount represents less than $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
16
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
MFS Value Portfolio ("Fund") is a separate investment fund of The Travelers
Series Trust ("Trust"). The Trust is a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. Shares of the Trust are offered exclusively for
use with certain variable annuity and variable life insurance contracts offered
through the separate accounts of various affiliated life insurance companies.
The following are significant accounting policies consistently followed by
the Fund and are in conformity with U.S. generally accepted accounting
principles ("GAAP"). 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.
(A) INVESTMENT VALUATION. Securities traded on national securities markets
are valued at the closing price on such markets or, if there were no sales
during the day, at the mean between the closing 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. Securities primarily traded
on foreign exchanges are generally valued at the closing values of such
securities on their respective exchanges. Securities traded in the over-the-
counter market are valued on the basis of the bid price at the close of business
on each day. When market quotations or official closing prices are not readily
available, or are determined not to reflect fair value, such as when the value
of a security has been significantly affected by events after the close of the
exchange or market on which the security is principally traded (for example, a
foreign exchange or market), but before the Fund calculates its net asset value,
the Fund may value these investments at fair value as determined in accordance
with the procedures approved by the Fund's Board of Trustees. Short-term
obligations with maturities of 60 days or less are valued at amortized cost,
which approximates value.
(B) FORWARD FOREIGN CURRENCY CONTRACTS. A forward foreign currency
contract is an agreement between two parties to buy and sell a currency at a set
price on a future date. The contract is marked-to-market daily and the change in
value is recorded by the Fund as an unrealized gain or loss. When a forward
foreign currency contract is extinguished, through either delivery or offset by
entering into another forward foreign currency contract, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value of the contract at the time it was
extinguished or offset. The Fund bears the market risk that arises from changes
in foreign currency exchange rates and the credit risk should a counterparty
fail to meet the terms of such contracts.
(C) SECURITY TRANSACTIONS AND INVESTMENT INCOME. Security transactions are
accounted for on a trade date basis. Interest income, adjusted for amortization
of premium and accretion of discount, is recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date. Foreign dividend income is recorded
on the ex-dividend date or as soon as practical after the Fund determines the
existence of a dividend declaration after exercising reasonable due diligence.
The cost of investments sold is determined by use of the specific identification
method.
(D) FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are
maintained in U.S. dollars. Transactions denominated in foreign currencies are
recorded at the current prevailing exchange rates. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollar amounts at the
current exchange rates at the end of the period. Translation gains or losses
resulting from changes in the exchange rates during the reporting period and
realized gains and losses on the settlement of foreign currency transactions are
reported in the statement of operations for the current period. The Fund does
not isolate that portion of realized gains and losses on investments in
securities, which is due to changes in the foreign exchange rates from that
which is due to changes in market prices of equity securities.
(E) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net
investment income and distributions of net realized gains to shareholders of the
Fund, if any, are declared at least annually. Dividends and distributions to
shareholders of the Fund are recorded on the ex-dividend date and are determined
in accordance with income tax regulations, which may differ from GAAP.
(F) FEDERAL AND OTHER TAXES. It is the Fund's policy to comply with the
federal income and excise tax requirements of the Internal Revenue Code of 1986,
as amended, applicable to regulated investment companies. Accordingly, the Fund
intends to distribute substantially all of its taxable income and net realized
gains on investments, if any, to shareholders each year. Therefore, no federal
income tax provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest, dividends and capital gains at
various rates.
17
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(G) RECLASSIFICATION. GAAP requires that certain components of net assets
be adjusted to reflect permanent differences between financial and tax
reporting. Accordingly, during the current year, $392 has been reclassified
between undistributed net investment income and accumulated net realized gain on
investment transactions as a result of permanent differences attributable to
foreign currency transactions treated as ordinary income for tax purposes. These
reclassifications have no effect on net assets or net asset value per share.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Travelers Asset Management International Company LLC ("TAMIC"), an indirect
wholly-owned subsidiary of Citigroup Inc. ("Citigroup"), acts as investment
adviser to the Fund. The Fund paid TAMIC an investment advisory fee calculated
at the annual rate of 0.75% of the Fund's average daily net assets up until
August 31, 2004. This fee is calculated daily and paid monthly.
Effective September 1, 2004, the investment advisory fee paid by the Fund
to TAMIC changed to the following:
<Table>
<Caption>
INVESTMENT
ADVISORY
AVERAGE DAILY NET ASSETS FEE RATE
- --------------------------------------------------------------------------
First $600 million.......................................... 0.750%
Next $300 million........................................... 0.725%
Next $600 million........................................... 0.700%
Next $1 billion............................................. 0.675%
Over $2.5 billion........................................... 0.625%
- --------------------------------------------------------------------------
</Table>
TAMIC has entered into a sub-advisory agreement with Massachusetts
Financial Services ("MFS"). Pursuant to the sub-advisory agreement, MFS is
responsible for the day-to-day portfolio operations and investment decisions for
the Fund. TAMIC paid MFS 0.375% of the Fund's average daily net assets up until
August 31, 2004.
Effective September 1, 2004, the sub-advisory fee paid by TAMIC to MFS
changed to the following:
<Table>
<Caption>
SUB-ADVISORY
AVERAGE DAILY NET ASSETS FEE RATE
- ----------------------------------------------------------------------------
First $600 million.......................................... 0.375%
Next $300 million........................................... 0.350%
Next $600 million........................................... 0.325%
Next $1 billion............................................. 0.300%
Over $2.5 billion........................................... 0.250%
- ----------------------------------------------------------------------------
</Table>
The Travelers Insurance Company ("TIC"), another indirect wholly-owned
subsidiary of Citigroup, acts as administrator to the Fund. The Fund pays TIC an
administration fee calculated at an annual rate of 0.06% of the Fund's average
daily net assets. This fee is calculated daily and paid monthly. TIC has entered
into a sub-administrative service agreement with Smith Barney Fund Management
LLC ("SBFM"), another indirect wholly-owned subsidiary of Citigroup. TIC pays
SBFM, as sub-administrator, a fee calculated at an annual rate of 0.02% of the
Fund's average daily net assets, plus $30,000, subject to a maximum of 0.06% of
the Fund's average daily net assets.
During the year ended December 31, 2004, the Fund had a contractual expense
limitation in place of 1.00%. As a result, TIC has agreed to reimburse the Fund
for expenses in the amount of $55,171. This expense limitation is renewed
annually and can be terminated at any time by TIC with 60 days' notice. In
addition, during the year ended December 31, 2004, SBFM voluntarily waived a
portion of its fee in the amount of $1,726.
Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as
the Fund's transfer agent. For the year ended December 31, 2004, the Fund paid
transfer agent fees of $2,500 to CTB.
One Trustee and all officers of the Trust are employees of Citigroup or its
affiliates and do not receive compensation from the Trust.
18
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
During the year ended December 31, 2004, the aggregate cost of purchases
and proceeds from sales of investments (excluding short-term investments) were
substantially as follows:
<Table>
- -------------------------------------------------------------------------
Purchases................................................... $19,636,739
Sales....................................................... 18,296,254
- -------------------------------------------------------------------------
</Table>
At December 31, 2004, aggregate gross unrealized appreciation and
depreciation of investments for federal income tax purposes were substantially
as follows:
<Table>
- ------------------------------------------------------------------------
Gross unrealized appreciation............................... $8,371,391
Gross unrealized depreciation............................... (371,418)
- ------------------------------------------------------------------------
Net unrealized appreciation................................. $7,999,973
- ------------------------------------------------------------------------
</Table>
At December 31 2004, the Fund had the following open forward foreign
currency contracts. The unrealized gain (loss) on the contracts reflected in the
accompanying financial statements were as follows:
<Table>
<Caption>
LOCAL MARKET SETTLEMENT UNREALIZED
FORWARD FOREIGN CURRENCY CONTRACTS CURRENCY VALUE DATE GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------
TO BUY:
British Pound...................................... 9,135 $17,502 1/4/05 $ 9
Canadian Dollar.................................... 1,074 892 1/4/05 3
Swedish Krona...................................... 10,791 1,618 1/4/05 (13)
Swiss Franc........................................ 19,105 16,744 1/3/05 (73)
- -------------------------------------------------------------------------------------------------------
Net Unrealized Loss on Open Forward Foreign
Currency Contracts............................... $(74)
- -------------------------------------------------------------------------------------------------------
</Table>
4. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of beneficial interest without par value. Transactions in shares of the
Fund were as follows:
<Table>
<Caption>
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
- ------------------------------------------------------------------------------------------------------
Shares sold................................................. 783,205 629,956
Shares issued on reinvestment............................... 72,951 45,825
Shares reacquired........................................... (727,251) (490,506)
- ------------------------------------------------------------------------------------------------------
Net Increase................................................ 128,905 185,275
- ------------------------------------------------------------------------------------------------------
</Table>
5. INCOME TAX INFORMATION AND DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid during the fiscal years ended
December 31, was as follows:
<Table>
<Caption>
2004 2003
- ------------------------------------------------------------------------------------------------------
Ordinary income............................................. $510,816 $493,786
Long-term capital gains..................................... 389,047 --
- ------------------------------------------------------------------------------------------------------
Total distributions paid.................................... $899,863 $493,786
- ------------------------------------------------------------------------------------------------------
</Table>
19
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of December 31, 2004, the components of accumulated earnings on a tax
basis were as follows:
<Table>
- ------------------------------------------------------------------------
Undistributed ordinary income............................... $ 834
Undistributed long-term capital gains....................... 203,264
- ------------------------------------------------------------------------
Total undistributed earnings................................ 204,098
Other book/tax temporary differences........................ 74*
Unrealized appreciation..................................... 8,000,822**
- ------------------------------------------------------------------------
Total accumulated earnings.................................. $8,204,994
- ------------------------------------------------------------------------
</Table>
* Other book/tax temporary differences are attributable primarily to the
realization for tax purposes of unrealized losses on certain foreign currency
contracts.
** The difference between book-basis and tax-basis unrealized appreciation is
attributable primarily to the tax deferral of losses on wash sales.
The Fund is liable for excise tax payments resulting from the timing of
required distribution payments made to taxable shareholders for the years
1999-2001. The actual amount of the liability is not yet determinable. However,
the Fund has been indemnified by SBFM for any associated excise tax liability as
well as any interest and penalties or any other costs. Accordingly, the Fund's
net asset value will not be impacted by the outcome of this matter.
6. ADDITIONAL INFORMATION
In connection with an investigation previously disclosed by Citigroup, the
Staff of the Securities and Exchange Commission ("SEC") has notified Citigroup
Asset Management ("CAM"), the Citigroup business unit that includes the funds'
investment manager and other investment advisory companies; Citicorp Trust Bank
("CTB"), an affiliate of CAM; Thomas W. Jones, the former CEO of CAM; and three
other individuals, one of whom is an employee and two of whom are former
employees of CAM, that the SEC Staff is considering recommending a civil
injunctive action and/or an administrative proceeding against each of them
relating to the creation and operation of an internal transfer agent unit to
serve various CAM-managed funds.
In 1999, CTB entered the transfer agent business. CTB hired an unaffiliated
subcontractor to perform some of the transfer agent services. The subcontractor,
in exchange, had signed a separate agreement with CAM in 1998 that guaranteed
investment management revenue to CAM and investment banking revenue to a CAM
affiliate. The subcontractor's business was later taken over by PFPC Inc., and
at that time the revenue guarantee was eliminated and a one-time payment was
made by the subcontractor to a CAM affiliate.
CAM did not disclose the revenue guarantee when the boards of various
CAM-managed funds hired CTB as transfer agent. Nor did CAM disclose to the
boards of the various CAM-managed funds the one-time payment received by the CAM
affiliate when it was made. As previously disclosed, CAM has already paid the
applicable funds, primarily through voluntary fee waivers, a total of
approximately $17 million (plus interest), which is the amount of revenue
received by Citigroup relating to the revenue guarantee.
In addition, the SEC Staff has indicated that it is considering
recommending action based on the adequacy of the disclosures made to the fund
boards that approved the transfer agency arrangement, CAM's initiation and
operation of, and compensation for, the transfer agent business and CAM's
retention of, and agreements with, the subcontractor.
Citigroup is cooperating fully in the SEC's investigation and is seeking to
resolve the matter in discussions with the SEC Staff. On January 20, 2005,
Citigroup stated that it had established an aggregate reserve of $196 million
($25 million in the third quarter of 2004 and $171 million in the fourth quarter
of 2004) related to its discussions with the SEC Staff. Settlement negotiations
are ongoing and any settlement of this matter with the SEC will require approval
by the Citigroup Board and acceptance by the Commission.
Unless and until any settlement is consummated, there can be no assurance
that any amount reserved by Citigroup will be distributed. Nor is there at this
time any certainty as to how the proceeds of any settlement would be
distributed, to whom any such distribution would be made, the methodology by
which such distribution would be allocated, and when such distribution would be
made.
Although there can be no assurance, Citigroup does not believe that this
matter will have a material adverse effect on the funds.
20
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. SUBSEQUENT EVENT
On January 31, 2005, Citigroup announced that it has reached an agreement
with MetLife, Inc. ("MetLife") to sell Citigroup's life insurance and annuity
businesses ("Travelers Life & Annuity") to MetLife. As part of this transaction,
TAMIC currently an indirect wholly owned subsidiary of Citigroup, would become
an indirect wholly owned subsidiary of MetLife. TAMIC is the investment adviser
to the Fund.
The transaction is subject to certain regulatory approvals, as well as
other customary conditions to closing. The transaction is expected to close this
summer.
In connection with this transaction, the Trust's Board of Trustees will be
asked to approve new investment advisory and administrative services contracts,
and, to the extent required by law, variable annuity and variable life contract
owners, who beneficially own the shares of the funds, will be asked to approve
new investment advisory agreements.
21
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
THE TRAVELERS SERIES TRUST:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of MFS Value Portfolio of The Travelers Series
Trust ("Trust") as of December 31, 2004, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2004, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of MFS
Value Portfolio of the Travelers Series Trust as of December 31, 2004, and the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended, in
conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
February 18, 2005
22
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
INFORMATION ABOUT TRUSTEES AND OFFICERS
The business and affairs of The Travelers Series Trust ("Trust") are
managed under the direction of the Trust's Board of Trustees. Information
pertaining to the Trustees and Officers of the Trust is set forth below. The
Statement of Additional Information includes additional information about the
Trustees and is available, without charge, upon request by calling the Trust's
administrator at 1-800-842-9368.
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE(1) AND PORTFOLIOS IN
POSITION(S) LENGTH FUND COMPLEX OTHER
NAME, ADDRESS HELD WITH OF TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY BOARD MEMBERSHIPS
AND BIRTH YEAR FUND SERVED PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES:
Frances M. Hawk CFA, CFP Trustee Since 1991 Private Investor 5 Board of Managers of 6
108 Oxford Hill Lane Variable Annuity
Downingtown, PA Separate Accounts of TIC
Birth Year: 1948
Lewis Mandell Trustee Since 1990 Professor, University of 5 Delaware North Corp.;
160 Jacobs Hall Buffalo Board of Managers of 6
Buffalo, NY Variable Annuity
Birth Year: 1943 Separate Accounts of TIC
Robert E. McGill, III Trustee Since 1990 Retired 5 Lydall Inc.; Board of
295 Hancock Road Managers of 6 Variable
Williamstown, MA Annuity Separate
Birth Year: 1931 Accounts of The
Travelers Insurance Co.
("TIC")
INTERESTED TRUSTEE:
R. Jay Gerken, CFA(2) Chairman, Since 2002 Managing Director of Citigroup 219 Chairman, Board of
Citigroup Asset Management President, Global Markets ("CGM"); Managers of 6 Variable
("CAM") Chief Chairman, President and Chief Annuity Separate
399 Park Avenue, 4th Floor Executive Executive Officer of Smith Accounts of TIC
New York, NY 10022 Officer and Barney Fund Management LLC
Birth Year: 1951 Trustee ("SBFM"), Travelers Investment
Adviser, Inc. ("TIA") and Citi
Fund Management Inc. ("CFM");
President and Chief Executive
Officer of certain mutual
funds associated with
Citigroup Inc. ("Citigroup");
formerly, Portfolio Manager of
Smith Barney Allocation Series
Inc. (from 1996 to 2001) and
Smith Barney Growth and Income
Fund (from 1996 to 2000)
</Table>
23
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ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE(1) AND PORTFOLIOS IN
POSITION(S) LENGTH FUND COMPLEX OTHER
NAME, ADDRESS HELD WITH OF TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY BOARD MEMBERSHIPS
AND BIRTH YEAR FUND SERVED PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS:
Andrew B. Shoup Senior Vice Since 2004 Director of CAM; Senior Vice N/A N/A
CAM President and President and Chief
125 Broad Street, 11th Chief Administrative Officer of
Floor Administrative mutual funds associated with
New York, NY 10004 Officer Citigroup; Treasurer of
Birth Year: 1956 certain mutual funds
associated with Citigroup;
Head of International Funds
Administration of CAM (from
2001 to 2003); Director of
Global Funds Administration of
CAM (from 2000 to 2001); Head
of U.S. Citibank Funds
Administration of CAM (from
1998 to 2000)
Kaprel Ozsolak Chief Since 2004 Vice President of CGM; Chief N/A N/A
CAM Financial Financial Officer and
125 Broad Street, 11th Officer and Treasurer of certain mutual
Floor Treasurer funds associated with
New York, NY 10004 Citigroup; Controller of
Birth Year: 1965 certain mutual funds
associated with Citigroup
(from 2002 to 2004)
William D. Wilcox Chief Since Counsel and Chief Compliance N/A N/A
One Cityplace Compliance 2004 Officer (since 1999), TIC;
Hartford, CT Officer Chief Anti-Money Laundering
Birth Year: 1964 Compliance Officer (since
2002), 6 Variable Annuity
Separate Accounts of TIC;
Chief Compliance Officer
(since 2004), 5 Mutual Funds
and 6 variable separate
accounts sponsored by TIC
</Table>
24
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE(1) AND PORTFOLIOS IN
POSITION(S) LENGTH FUND COMPLEX OTHER
NAME, ADDRESS HELD WITH OF TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY BOARD MEMBERSHIPS
AND BIRTH YEAR FUND SERVED PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew Beagley Chief Anti- Since Director of CGM (since 2000); N/A N/A
CAM Money 2002 Director of Compliance, North
399 Park Avenue, 4th Floor Laundering America, CAM (since 2000);
New York, NY 10022 Compliance Chief Anti-Money Laundering
Birth Year: 1962 Officer Compliance Officer, Chief
Compliance Officer and Vice
President of certain mutual
funds associated with
Citigroup; Director of
Compliance, Europe, the Middle
East and Africa, CAM (from
1999 to 2000); Compliance
Officer, SBFM, CFM, TIA,
Salomon Brothers Asset
Management Limited, Smith
Barney Global Capital
Management Inc.
Kathleen A. McGah Secretary Since 2004 Deputy General Counsel of TIC; N/A N/A
Travelers Life & Annuity Assistant secretary of 5
One Cityplace mutual funds and 6 variable
Hartford, CT 06103 separate accounts sponsored by
Birth Year: 1950 TIC (from 1995 to 2004)
Ernest J. Wright Assistant Since 2004 Vice President and Secretary N/A N/A
Travelers Life & Annuity Secretary of TIC; secretary of 5 mutual
One Cityplace funds and 6 variable separate
Hartford, CT 06103 accounts sponsored by TIC
Birth Year: 1940 (from 1994 to 2004)
</Table>
- ---------------
(1) Each Trustee and officer serves until his or her respective successor has
been duly elected and qualified.
(2) Mr. Gerken is an "interested person" of the Trust as defined in the
Investment Company Act of 1940, as amended, because Mr. Gerken is Managing
Director of CGM, an indirect wholly-owned subsidiary of Citigroup, and his
ownership shares and options to purchase shares of Citigroup, the indirect
parent of TIC.
25
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IMPORTANT TAX INFORMATION (UNAUDITED)
The following information is provided with respect to the ordinary income and
capital gain distributions paid by the Trust during the taxable year ended
December 31, 2004.
<Table>
- --------------------------------------------------------------------------------------
Record Date................................................. 6/24/2004 12/27/2004
Payable Date................................................ 6/25/2004 12/28/2004
- --------------------------------------------------------------------------------------
Dividends Qualifying for the Dividends
Received Deduction for Corporations....................... 100.00% 100.00%
- --------------------------------------------------------------------------------------
Interest from Federal Obligations........................... -- 1.12%
- --------------------------------------------------------------------------------------
Long-term Capital Gain Distributions Paid Per Share......... -- 0.1038
- --------------------------------------------------------------------------------------
</Table>
The law varies in each state as to whether and what percentage of dividend
income attributable to federal obligations is exempt from state income tax. We
recommend that you consult with your tax adviser to determine if any portion of
the dividends you received is exempt from state income taxes.
Please retain this information for your records.
26
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THE TRAVELERS SERIES TRUST
- --------------------------------------------------------------------------------
<Table>
TRUSTEES
R. Jay Gerken, CFA
Chairman
Frances M. Hawk,
CFA, CFP
Lewis Mandell
Robert E. McGill,
III
INVESTMENT ADVISER
OFFICERS
R. Jay Gerken, CFA Travelers Asset Management International Company LLC
President and
Chief Executive ADMINISTRATOR
Officer
The Travelers Insurance Company
Andrew B. Shoup
Senior Vice
President and CUSTODIAN
Chief Administrative
Officer
State Street Bank and Trust Company
Kaprel Ozsolak
Chief Financial TRANSFER AGENT
Officer
and Treasurer
Citicorp Trust Bank, fsb.
William D. Wilcox
Chief Compliance
Officer
Andrew Beagley
Chief Anti-Money
Laundering
Compliance Officer
Kathleen A. McGah
Secretary
Ernest J. Wright
Assistant Secretary
</Table>
The Fund is a separate investment fund of The Travelers Series Trust, a
Massachusetts business trust.
This report is prepared for the general information of variable annuity and life
contract owners and is not an offer of shares of The Travelers Series Trust: MFS
Value Portfolio and is not for use with the general public.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A FREE PROSPECTUS. INVESTORS
SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES
CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION
ABOUT THE FUND. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. The Fund's Form N-Q are available on the Commission's website at
www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the Commission's
Public Reference Room in Washington, D.C. and information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain
information on Form N-Q from the Fund, shareholders can call 1-800-451-2010.
Information on how the Fund voted proxies relating to portfolio securities
during the 12-month period ended June 30, 2004 and a description of the policies
and procedures that the Fund uses to determine how to vote proxies relating to
portfolio securities is available (1) without charge, upon request, by calling
1-800-451-2010, (2) on the Fund's website at www.citigroupAM.com and (3) on the
Sec's website at www.sec.gov.
Series Trust Annual (2-05) Printed in U.S.A.
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that Robert
E. McGill, a member of the Board's Audit Committee, possesses the
technical attributes identified in Instruction 2(b) of Item 3 to
Form N-CSR to qualify as an "audit committee financial expert," and
has designated Mr. McGill as the Audit Committee's financial expert.
Mr. McGill is an "independent" Trustee pursuant to paragraph (a)(2)
of Item 3 to Form N-CSR.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees for The Travelers Series Trust were $276,000 and $276,000
for the years ended 12/31/04 and 12/31/03.
(b) Audit-Related Fees for The Travelers Series Trust were $0 and $0 for
the years ended 12/31/04 and 12/31/03.
(c) Tax Fees for The Travelers Series Trust of $36,400 and $36,400 for
the years ended 12/31/04 and 12/31/03. These amounts represent
aggregate fees paid for tax compliance, tax advice and tax planning
services, which include (the filing and amendment of federal, state
and local income tax returns, timely RIC qualification review and
tax distribution and analysis planning) rendered by the Accountant
to Travelers Series Trust.
(d) All Other Fees for The Travelers Series Trust of $0 and $0 for the
years ended 12/31/04 and 12/31/03.
(e) (1) Audit Committee's pre-approval policies and procedures
described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
The Charter for the Audit Committee (the "Committee") of the Board
of each registered investment company (the "Fund") advised by Smith
Barney Fund Management LLC or Salomon Brothers Asset Management Inc
or one of their affiliates (each, an "Adviser") requires that the
Committee shall approve (a) all audit and permissible non-audit
services to be provided to the Fund and (b) all permissible
non-audit services to be provided by the Fund's independent auditors
to the Adviser and any Covered Service Providers if the engagement
relates directly to the operations and financial reporting of the
Fund. The Committee may implement policies and procedures by which
such services are approved other than by the full Committee.
The Committee shall not approve non-audit services that the
Committee believes may impair the independence of the auditors. As
of the date of the approval of this Audit Committee Charter,
permissible non-audit services include any professional services
(including tax services), that are not prohibited services as
described below, provided to the Fund by the independent auditors,
other than those provided to the Fund in connection with an audit or
a review of the financial statements of the Fund. Permissible
non-audit services may not include: (i) bookkeeping or other
services related to the accounting records or financial statements
of the Fund; (ii) financial information systems design and
implementation; (iii) appraisal or valuation services, fairness
opinions or contribution-in-kind reports; (iv) actuarial services;
(v) internal audit outsourcing services; (vi) management functions
or human resources; (vii) broker or dealer, investment adviser or
investment banking services; (viii) legal services and expert
services unrelated to the audit; and (ix) any other service the
Public Company Accounting Oversight Board determines, by regulation,
is impermissible.
Pre-approval by the Committee of any permissible non-audit services
is not required so long as: (i) the aggregate amount of all such
permissible non-audit services provided to the Fund, the Adviser and
any service providers controlling, controlled by or under common
control with the Adviser that provide ongoing services to the Fund
("Covered Service Providers") constitutes not more than 5% of the
total amount of revenues paid to the independent auditors during the
fiscal year in which the permissible non-audit services are provided
to (a) the Fund, (b) the Adviser and (c) any entity controlling,
controlled by or under common control with the Adviser that provides
ongoing services to the Fund during the fiscal year in which the
services are provided that would have to be approved by the
Committee; (ii) the permissible non-audit services were not
recognized by the Fund at the time of the engagement to be non-audit
services; and (iii) such services are promptly brought to the
attention of the Committee and approved by the Committee (or its
delegate(s)) prior to the completion of the audit.
(2) For The Travelers Series Trust, the percentage of fees that were
approved by the audit committee, with respect to: Audit-Related Fees
were 100% and 100% for the years ended 12/31/04 and 12/31/03; Tax
Fees were 100% and 100% for the years ended 12/31/04 and 12/31/03;
and Other Fees were 100% and 100% for the years ended 12/31/04 and
12/31/03.
(f) N/A
(g) Non-audit fees billed by the Accountant for services rendered to
Travelers Series Trust and CAM and any entity controlling,
controlled by, or under common control with CAM that provides
ongoing services to Travelers Series Trust. Fees billed to and paid
by Citigroup Global Markets, Inc. related to the transfer agent
matter as fully described in the notes to the financial statements
titled "additional information" were $75,000 and $0 for the years
ended 12/31/04 and 12/31/03.
(h) Yes. The Travelers Series Trust's Audit Committee has considered
whether the provision of non-audit services that were rendered to
Service Affiliates which were not pre-approved (not requiring
pre-approval) is compatible with maintaining the Accountant's
independence. All services provided by the Accountant to the
Travelers Series Trust or to Service Affiliates which were required
to be pre-approved were pre-approved as required.
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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. 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 11. EXHIBITS.
(a) Code of Ethics attached hereto.
Exhibit 99.CODE ETH
(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.
THE TRAVELERS SERIES TRUST
By: /s/ R. Jay Gerken
(R. Jay Gerken)
Chief Executive Officer of
THE TRAVELERS SERIES TRUST
Date: March 9, 2005
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
THE TRAVELERS SERIES TRUST
Date: March 9, 2005
By: /s/ KAPREL OZSOLAK
(KAPREL OZSOLAK)
Chief Financial Officer of
THE TRAVELERS SERIES TRUST
Date: March 9, 2005