DRAFT 2/24/2003
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement. |_| Confidential, for use of the
|_| Definitive proxy statement. Commissioner only (as
|_| Definitive additional materials. permitted by Rule 14a-6(e)(2).
|_| Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12.
The Travelers Series Trust
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
DRAFT 2/24/2003
THE TRAVELERS SERIES TRUST
Utilities Portfolio
One Cityplace
Hartford, Connecticut 06103
March 10, 2003
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Shareholder Meeting (the "Meeting")
of the Utilities Portfolio of Travelers Series Trust (the "Trust") will be held
at the Trust's offices at One Cityplace, Hartford, Connecticut 06103 on April
22, 2003 at 9:00 a.m. to approve or disapprove (1) a new Investment Advisory
Agreement between Travelers Asset Management International Company LLC and The
Travelers Series Trust on behalf of the Utilities Portfolio, and (2) a new
Investment Subadvisory Agreement between Travelers Asset Management
International Company LLC and Pioneer Investment Management, Inc. on behalf of
the Utilities Portfolio.
In addition, the Trust may act on any and all such other business as may
properly come before the Meeting. The Trust's Board of Trustees has fixed the
close of business on January 31, 2003 as the record date for the determination
of shareholders entitled to notice of, and to vote at, the Meeting and any
adjournments thereof (the "Meeting"). Please refer to the accompanying Proxy
Statement for more information about the proposals to be considered and acted
upon at the Meeting.
By order of the Board of Trustees.
Ernest J. Wright, Secretary
Please complete, date, sign, and return the enclosed proxy card as soon as
possible in the post-paid envelope provided. Your prompt response is
appreciated.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN.
DRAFT 2/24/2003
THE TRAVELERS SERIES TRUST
Utilities Portfolio
One Cityplace
Hartford, Connecticut 06103
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON April 22, 2003
The Board Of Trustees (the "Board") of The Travelers Series Trust (the
"Trust") Solicits Your Proxy For Use At A Special Meeting of Shareholders of
the Utilities Portfolio (the "Fund") And At Any Adjournment Of The Special
Meeting.
This proxy statement is being furnished in connection with the solicitation of
voting instructions, as further described below, from owners of variable
contracts ("contract owners") for use at a special meeting of shareholders of
the Fund to be held at the Trust's offices located at One Cityplace, 19th Floor,
Hartford, Connecticut 06103, Attn: Kathleen A. McGah, Assistant Secretary, at
9:00 a.m. on April 22, 2003, and any adjournments (the "Meeting"). The Board
expects this proxy material will be mailed to contract owners on or about March
10, 2003.
GENERAL
The purpose of the Meeting is to approve or disapprove two new agreements
for the provision of investment management services to the Fund (the
"Proposals"): (1) an Investment Advisory Agreement between Travelers Asset
Management International Company LLC ("TAMIC") and the Trust (the "New Advisory
Agreement"), and (2) an Investment Subadvisory Agreement between Pioneer
Investment Management, Inc. ("Pioneer") and TAMIC (the "New Subadvisory
Agreement"). In addition, the Fund may act on any and all such other business as
may properly come before the Meeting.
VOTE BY PROXY
As of the close of business on January 31, 2003 (the "record date"),
separate accounts that fund variable annuity contracts and variable life
insurance contracts issued by The Travelers Insurance Company and The Travelers
Life and Annuity Company (together, "TL&A") were the shareholders of record of
all of the Fund's outstanding shares. Notwithstanding the foregoing, TL&A has
prepared this Proxy Statement to seek instructions from contracts owners as to
how TL&A should vote the shares indirectly held by the contract owners with
respect to the Proposals. A voting instruction card is enclosed for your use.
TL&A will vote the Fund shares at the Meeting based upon the voting
instructions timely received from contract owners. You may revoke the voting
instruction card at any time before 5:00 p.m. Eastern time on April 21, 2003, by
executing and delivering later-dated signed voting instructions to TL&A. All
voting instruction cards that are properly executed, received in time,
1
DRAFT 2/24/2003
and not so revoked will be used to vote in accordance with the instructions on
the cards, if any. Voting instruction cards that are properly executed but
provide no specific instructions will be voted in favor of the Proposals. TL&A
will vote all shares for which no voting instruction cards are received in the
same proportion as the shares for which instruction cards are received.
REPORTS TO SHAREHOLDERS
The Trust will furnish, without charge, a copy of its Annual Report and
most recent Semi-Annual Report upon request. To request a copy of either report,
please contact the Trust at: The Travelers Series Trust, One Cityplace,
Hartford, Connecticut 06103, or by calling (800) 842-9406.
COST OF SOLICITATION
The Fund will pay all costs and expenses incurred in connection with the
solicitation of voting instructions on behalf of the Fund for use at the
Meeting, including the costs of printing, mailing, and the reasonable expenses
of legal counsel. The aggregate cost of conducting the Fund's solicitation is
expected to be approximately $20,000.
In addition to the solicitation of voting instructions by mail, the
Trust's trustees, officers, agents, and/or employees of TL&A may solicit voting
instructions in person, by telephone or by electronic mail (email). TL&A, also
located at One Cityplace, Hartford, Connecticut 06103, serves as the Fund's
sponsor and depositor.
SHAREHOLDERS AND THE VOTE
Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares. Only shareholders of record of the Fund
at the close of business on January 31, 2003, (the record date) will be entitled
to notice of and to vote at the Meeting.
The number of full and fractional votes for which a contract owner is
entitled to provide voting instructions is set forth on the enclosed
instructions card(s). Shares owned by two or more persons (whether as joint
tenants, co-fiduciaries, or otherwise) will be voted as follows, unless a
written instrument or court order providing to the contrary has been filed with
the Trust: (1) if only one person votes, that vote will bind all; (2) if more
than one person votes, the vote of the majority will bind all; and (3) if more
than one person votes and the vote is evenly divided, the vote will be cast
proportionately.
This proxy material is being mailed to owners of, or participants in,
variable annuity contracts and variable life insurance contracts who had
allocated amounts to the Fund through certain separate accounts as of the record
date (namely, the contract owners). The contract owners instruct TL&A how to
vote the shares in which the contract owners have an interest. TL&A will vote
all shares held by it as instructed by the contract owners or participants. TL&A
intends to vote all shares for which no instruction cards are received in the
same proportion as the shares for which instruction cards are received.
2
DRAFT 2/24/2003
To hold the Meeting, a majority of the Fund's shares entitled to vote must
be present in person or by proxy at the Meeting. In the event that a quorum is
present but sufficient votes in favor of the Proposal are not received by the
Meeting time, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such adjournment
requires the affirmative vote of a majority of the shares present in person or
by proxy at the Meeting to be adjourned. The persons named as proxies will vote
in favor of such adjournment if they determine that such adjournment and
additional solicitation is reasonable and in the interests of the Fund's
shareholders. The Fund's shareholders vote separately with respect to the
Proposals, pursuant to the Investment Company Act of 1940, as amended (the "1940
Act") and the Trust's Declaration of Trust.
Vote required: approval of each Proposal requires the affirmative vote of
the holders of the lesser of: (a) 67% of the Fund's shares present at the
Meeting or represented by proxy if more than 50% of the outstanding shares of
the Fund are present in person or by proxy; or (b) a majority of the Fund's
outstanding shares.
The Board has approved and recommends that Fund shareholders approve the
following Proposals:
PROPOSAL 1
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN TRAVELERS ASSET
MANAGEMENT INTERNATIONAL COMPANY LLC AND THE UTILITIES PORTFOLIO WHICH ALSO
CHANGES THE ADVISORY FEE.
Under Proposal 1, the Board is asking shareholders to approve a new
investment advisory agreement (the "New Advisory Agreement") between the Fund
and TAMIC. The approval is necessary because the Board has approved the
termination of the advisory services of the Fund's current investment adviser,
Smith Barney Fund Management LLC ("SBFM"), an indirect wholly owned subsidiary
of Citigroup Inc. The Board believes that the Fund's asset growth and
performance has not met with expectations. The New Advisory Agreement will
become effective May 1, 2003, subject to the approval of such Agreement
(Proposal 1) and the approval of the New Subadvisory Agreement by Fund
Shareholders (Proposal 2 below).
PROPOSAL 2
APPROVAL OF AN INVESTMENT SUBADVISORY AGREEMENT BETWEEN TRAVELERS ASSET
MANAGEMENT INTERNATIONAL COMPANY LLC ("TAMIC"), ON BEHALF OF UTILITIES
PORTFOLIO, AND PIONEER INVESTMENT MANAGEMENT, INC. ("Pioneer")
Under Proposal 2, the Board is asking shareholders to approve an
investment subadvisory agreement (the "New Subadvisory Agreement") on behalf of
the Fund between TAMIC and Pioneer. The New Subadvisory Agreement will become
effective May 1, 2003, subject to the approval of the such Agreement (Proposal
2) and the approval of the New Advisory Agreement by Fund Shareholders (Proposal
1 above).
3
DRAFT 2/24/2003
On January 29, 2003, the Board met in person at a meeting called for the
purpose of considering, among other things, the New Agreement with TAMIC and the
New Subadvisory Agreement with Pioneer. Forms of the New Agreement and New
Subadvisory Agreement are attached as Exhibit A and Exhibit B to this proxy
statement. TAMIC currently serves as investment adviser to several other
portfolios of the Trust. At the meeting, the Board also considered the
continuation of the Current Agreement and other alternatives. The Board reviewed
materials furnished by TAMIC and Pioneer describing Pioneer and its affiliates,
senior personnel, portfolio managers, analysts, and economists, Pioneer's method
of operation, investment philosophy proposed for implementation with the Fund,
Pioneer's performance record, and financial condition. The Board also considered
data provided on the Fund's lack of asset growth and market share, the Fund's
past performance with the current advisor in providing investment advisory
services, deregulation and other changes in the utilities market and regulatory
climate, comparable performance of other similar funds, and the past performance
of Pioneer in providing investment advisory services to funds similar to the
Fund. A representative of Pioneer was present by telephone to talk with the
Board and responded to questions.
The Board determined to terminate the Current Agreement and to enter into
two new agreements, the New Agreement and New Subadvisory Agreement. In doing
so, the Board's conclusion was based on several factors. The Board reviewed the
past performance records of SBFM and TAMIC over relevant periods of time as well
as the background and experience of the various officers and managers employed
by each company. The Board also reviewed the past performance of Pioneer.
Although the Board considered that both SBFM and Pioneer could provide high
quality advisory services to the Fund, the Board considered the significant
breadth and depth of personnel and marketing and other services in addition to
advisory services available through Pioneer. The Board concluded that the
extensive resources, investment expertise and market share of the Pioneer
professionals could positively benefit Fund shareholders. The Board also
considered the investment philosophy of SBFM, which uses a value business-trend
analysis to research industry and company fundamentals in selecting securities
to purchase for the Fund, and determined that Pioneer's proposed approach -
namely, selecting securities based upon fundamental analysis (such as analysis
of earnings, cash flows, competitive position and management's abilities)
performed by portfolio managers and Pioneer's large group of equity research
analysts -- could potentially enhance the Fund's performance.
After carefully evaluating the foregoing materials and other factors, the
Board, including the members of the Board who are not "interested persons" of
the Trust, as such term is defined in the 1940 Act ("Independent Trustees"),
approved the New Agreement and New Subadvisory Agreement and approved the
submission of the New Agreement and New Subadvisory Agreement for approval by
the Fund's shareholders. Only shareholders of the Fund may vote to approve the
New Agreement and New Subadvisory Agreement.
If the Fund's shareholders approve the New Agreement, and the New
Subadvisory Agreement, they will become effective as of May 1, 2003, will
continue initially for a two-year period and would continue automatically for
successive annual periods thereafter, provided such continuance is approved at
least annually: (1) by the Board or by the vote of a majority of the outstanding
voting securities of the Fund, and, in either case, (2) by a majority of the
Independent Trustees. If shareholders fail to approve the New Agreement and New
Subadvisory Agreement, the Board will consider what alternatives may be most
appropriate for the Fund and
4
DRAFT 2/24/2003
its shareholders, including resubmitting the proposed New Agreement and New
Subadvisory Agreement for shareholder approval.
Provisions of the New Agreements
New Advisory Agreement
The Fund's advisory fee will increase under the New Agreement. The annual
advisory fee under the New Agreement is 0.75% of the Fund's average daily net
assets. The fee is calculated daily and paid monthly.
The following chart compares the Fund's management fee under the terms of
the Current Advisory Agreement for the fiscal year ended December 31, 2002 to
the management fee that the Fund would have incurred during that time period
under the terms of the New Advisory Agreement:
Difference As a
Percentage of
Management Fee
Current Advisory New Advisory Paid for Fiscal
Agreement Agreement Difference in Year Ended
Management Fee Management Fee Dollars December 31, 2002
-------------- -------------- ------- -----------------
$183,378 $211,590 $28,212 16%
The New Advisory Agreement provides that TAMIC is not subject to liability
to the Trust for any act or omission in the course of, or connected with,
rendering services under the New Advisory Agreement, except by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under the New Advisory Agreement.
The New Agreement may be terminated with respect to the Fund without
penalty upon sixty (60) days' written notice to TAMIC by the Board or by a
majority vote of those persons having voting rights in respect of the Fund, or
upon sixty (60) days' written notice to the Board by TAMIC. The New Agreement
terminates automatically in the event of its "assignment" (within the meaning of
the 1940 Act).
New Subadvisory Agreement
Under the terms of the New Subadvisory Agreement, Pioneer is required to
act as the investment subadviser to the Fund and, subject to the supervision of
the Board and TAMIC, to manage the investment and reinvestment of the assets of
the Fund, with full investment discretion and authority, in a manner consistent
with the Fund's investment objectives, policies and restrictions. The New
Subadvisory Agreement also requires Pioneer to perform investment research and
evaluate financial data; to consult with, make recommendations to, and report
regularly to the Board; and to furnish requested information to appropriate
regulatory authorities.
The annual subadvisory fee under the New Subadvisory Agreement is 0.375%
of the Fund's average daily net assets. The fee is calculated daily and paid
monthly. The fee will be paid by TAMIC out of the fee earned by TAMIC under the
New Advisory Agreement.
5
DRAFT 2/24/2003
The New Subadvisory Agreement provides that Pioneer is not subject to
liability to the Trust for any act or omission in the course of, or connected
with, rendering services under the New Subadvisory Agreement, except by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under the New Subadvisory Agreement.
The New Agreement may be terminated with respect to the Fund without
penalty upon sixty (60) days' written notice to Pioneer by the Board or by a
majority vote of those persons having voting rights in respect of the Fund, or
upon sixty (60) days' written notice to the Board by Pioneer. The New Agreement
terminates automatically in the event of its "assignment" (within the meaning of
the 1940 Act).
Comparison of Management Fees
The Fund's management fees will increase under the New Advisory
Agreement. The following tables compare the fees and expenses paid by the Fund
under the terms of the Current Advisory Agreement for the fiscal year ended
December 31, 2002, to the fees and expenses that the Fund would have paid under
the New Advisory Agreement:
Comparative Expense Table - Utilities Portfolio
Annual Fund Operating Expenses (as a percentage of average net assets)
Current Advisory Agreement New Advisory Agreement
-------------------------- ----------------------
Management Fee 0.65% 0.75%
Rule 12b-1 Fee None None
Other Expenses 0.25% 0.25%
----- -----
Total Operating Expenses 0.90% 1.00%
Note: The preceding table does not reflect separate account expenses incurred by
contract holders, including sales load.
6
DRAFT 2/24/2003
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example
illustrates the expenses on a $10,000 investment in the Fund for the time period
indicated with a redemption of all shares held at the end of those periods. The
Example also assumes a 5% annual return and that the Fund's operating expenses
remain the same. Although actual costs may be higher or lower, based on these
assumptions, the costs would be:
1 Years 3 Years 5 Years 10 Years
------- ------- ------- --------
Current Advisory $92 $287 $498 $1,108
Agreement
New Advisory $102 $318 $552 $1,225
Agreement
Information About TAMIC
TAMIC is a registered investment adviser, and has provided investment
advisory services since ____. TAMIC' principal offices are located at 242
Trumbull Street, Hartford, Connecticut. TAMIC is an indirect wholly owned
subsidiary of Citigroup Inc. As of December 31, 2002, TAMIC had approximately
$___ billion in assets under management. TAMIC's directors and principal
officers are as follows:
- --------------------------------------------------------------------------------
Name and Address* Position with TAMIC Principal Occupation
- --------------------------------------------------------------------------------
David A. Tyson Director, President
- --------------------------------------------------------------------------------
Joseph Rueli, Jr. Director, Senior Vice
President, Chief Financial
Officer
- --------------------------------------------------------------------------------
F. Denney Voss Director, Senior Vice
President, Chief Investment
Officer
- --------------------------------------------------------------------------------
John R. Britt Director, Secretary
- --------------------------------------------------------------------------------
Eugene Collins Senior Vice President
- --------------------------------------------------------------------------------
Thomas Hajdukiewicz Senior Vice President
- --------------------------------------------------------------------------------
Glenn Marchak Senior Vice President
- --------------------------------------------------------------------------------
James Metz Senior Vice President
- --------------------------------------------------------------------------------
David Miller Senior Vice President
- --------------------------------------------------------------------------------
Emil Molinaro Senior Vice President
- --------------------------------------------------------------------------------
Patricia Uzzel Compliance Officer
- --------------------------------------------------------------------------------
*Address: 242 Trumbull Street, Hartford, CT 06103
Information About Pioneer
Pioneer is an wholly owned subsidiary of Pioneer Investment management USA
Inc., which, in turn, is wholly owned subsidiary of Pioneer Global Asset
Management S.p.A. ("PGAM"). PGAM is wholly owned subsidiary of UniCredito
Italiano S.p.A., one of the largest banking groups in Italy. PGAM provides
investment management and financial services to
7
DRAFT 2/24/2003
mutual funds, institutional and other clients. As of December 31, 2002, assets
under management were approximately $__ billion worldwide, including over $__
billion in assets under management by Pioneer. Pioneer's main office is at 60
State Street, Boston, Massachusetts 02109. The firm's U.S. mutual fund history
includes creating in 1928 one of the first mutual funds. Pioneer's directors and
principal officers are as follows:
- ------------------------------------------------------------------------------------------
Name and Address Position with Pioneer and Principal Occupation
- ------------------------------------------------------------------------------------------
John F. Cogan, Jr. Chairman and Director
- ------------------------------------------------------------------------------------------
Daniel T. Geraci President and Director
- ------------------------------------------------------------------------------------------
John A. Carey Executive Vice President - Director of Portfolio Management US
- ------------------------------------------------------------------------------------------
Marco Pirondini Executive Vice President - Director of Global Equity Research
- ------------------------------------------------------------------------------------------
Dorothy E. Bourassa Senior Vice President and General Counsel
- ------------------------------------------------------------------------------------------
Mark D. Goodwin Senior Vice President and Chief Financial Officer
- ------------------------------------------------------------------------------------------
Martin J. Wolin Assistant Vice President and Director Compliance
- ------------------------------------------------------------------------------------------
Robert C. Pieroni Vice President and Director of Investment Operations
- ------------------------------------------------------------------------------------------
Robert F. Gauvain Senior Vice President - Director of Trading, US
- ------------------------------------------------------------------------------------------
From time to time, Pioneer may receive brokerage and research services
from brokers that execute securities transactions for the Fund. The commission
to be paid by the Fund to a broker that provides such services to Pioneer may be
greater than the commission would be if the Fund used a broker that does not
provide the same level of brokerage and research services. Additionally, Pioneer
may use such services for clients other than the Fund from which the related
commissions are derived.
Pioneer also serves as investment adviser or subadviser to certain
portfolios of other registered investment companies having an investment
objective similar to that of the Fund. The size of such other portfolios and the
rate of Pioneer's compensation are as follows:
- --------------------------------------------------------------------------------
Fund Management Fee Assets Under Management
(12/31/02)
- --------------------------------------------------------------------------------
Pioneer Fund 0.60% of the fund's average $5,379,335,068
daily net assets, which can
increase to a maximum of 0.70%
or decrease to a minimum of
0.50% depending on the
performance of the fund's Class
A shares relative to the Lipper
Growth and Income Fund Index
- --------------------------------------------------------------------------------
Pioneer Fund VCT 0.65% of the fund's average $178,110,221
Portfolio, a series daily net assets.
of Pioneer Variable
Contracts Trust
- --------------------------------------------------------------------------------
8
DRAFT 2/24/2003
Evaluation by the Board of Trustees
In determining whether or not to approve the New Agreement and New
Subadvisory Agreement and recommend approval to shareholders, the Board,
including the Independent Trustees, considered various materials and
representations provided by Pioneer.
The Trustees considered the following information, among other things: (1)
the background and experience of the TAMIC and Pioneer persons who would be
responsible for the Fund's management under the New Agreement and New
Subadvisory Agreement, respectively; (2) compensation to be received by TAMIC
and Pioneer under the New Agreement and New Subadvisory Agreement; and (3) the
commonality of the provisions of the New Agreement and Current Agreement.
Further, the Board considered: (1) the nature and quality of the services
rendered by TAMIC to other portfolios of the Trust, and other portfolios similar
to the Fund; (2) the fairness of the compensation payable to TAMIC under the New
Agreement and Pioneer under the New Subadvisory Agreement; (3) the results
achieved by TAMIC for the other portfolios of the Trust TAMIC advises, and for
other portfolios similar to the Fund; and (4) the personnel, operations and
financial condition, and investment management capabilities, methodologies,
performance, and investment style of Pioneer. The Board noted that the Fund's
name would be changed to incorporate the Pioneer name and investment approach of
the new subadviser, that the Fund's investment objective of "current income and
secondarily long-term capital appreciation" would be modified to seek
"reasonable income and capital growth," and that the Fund's principal investment
policies would be modified to implement Pioneer's bottom-up, fundamental company
value analysis to investment. The name of the Fund will be changed to Pioneer
Fund Portfolio.
More Information on Proposed Changes in Investment Objective and Management
Style
The Fund's current investment objective is "current income and secondarily
long-term capital appreciation." The Fund normally invests at least 80% of its
assets in securities of companies engaged in the utilities industry. A company
is considered to be engaged in the utility industry if at least 50% of gross
income or net profits is derived from utility operations, or 50% of its assets
are devoted to utility operations, or it is regulated as a utility by a
governmental body.
The Board believes that the Fund's asset growth and performance has not
met with expectations. Therefore, the Board believes that current and future
owners of interests in the Fund should be better served if the Fund were to
change its investment adviser and engage a subadviser and change its investment
objective to seek "reasonable income and capital growth." To pursue this
investment objective, the Fund normally invests in a broad list of carefully
selected, reasonably priced securities rather than in securities whose prices
reflect a premium resulting from their current market popularity. The portfolio
invests the major portion of its assets in equity securities, primarily of U.S.
issuers. Equity securities include common stocks and other equity instruments,
such as convertible debt, depositary receipts, warrants, rights, interests in
real estate investment trusts (REITs) and preferred stocks. Although the
portfolio focuses on securities that have paid dividends in the preceding 12
months, it may purchase or hold securities that do not provide income if the
portfolio expects them to increase in value. The
9
DRAFT 2/24/2003
Fund's prospectus and registration materials will continue to disclose these and
other relevant risks.
The Board considered a number of factors regarding the change in
investment objective and policies, including: (1) the prior performance of the
Fund; (2) the nature and quality of services to be rendered by Pioneer; and (3)
Pioneer's experience managing other registered investment companies or
portfolios that have investment objectives, policies, strategies, and risks
substantially similar to those of the Fund. The Board was satisfied that Pioneer
was knowledgeable and experienced in the operations of the relevant financial
markets and in the laws that are applicable to such operations, and had the
personnel, financial resources and standing in the financial community to enable
it to manage the Fund effectively.
Summary
Based upon its review, the Board determined that approving TAMIC as the
new investment adviser and Pioneer as the new investment subadviser and the New
Agreement and new Subadvisory Agreement is in the best interests of the Fund and
its shareholders. Accordingly, after consideration of the above and such other
factors and information it considered relevant, the Board of Trustees
unanimously approved the New Agreement and new Subadvisory Agreement and voted
to recommend its approval by the Fund's shareholders.
Vote Required
Shareholders of Utilities Portfolio must approve both the New Agreement
and the New Subadvisory Agreement for the Fund. Approval of the Proposals by the
Fund require an affirmative vote of the lesser of: (1) 67% or more of the shares
of the Fund's shares present at the Meeting if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (2) more than 50% of
the outstanding shares of the Fund.
The Board of Trustees, including a majority of the Independent Trustees,
recommends that you vote "for" the New Agreement and New Subadvisory Agreement
under Proposal 1 and Proposal 2, respectively.
GENERAL INFORMATION
Other Matters to Come Before the Meeting
The Trust's Management does not know of any matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the proxy holders will vote thereon in
accordance with their best judgment.
10
DRAFT 2/24/2003
Voting Rights
This Proxy Statement, and the accompanying solicitation of voting
instructions, is being sent to variable life insurance policyholders and
variable annuity contract holders whose policies or contracts are funded by the
separate accounts that invest in the Trust's Utilities Portfolio. The number of
shares as to which voting instructions may be given under a policy or contract
is determined by the number of full and fractional shares of the Fund held in a
separate account with respect to that particular policy or contract.
The Fund's shareholders of record (which are the insurance companies that
invest in the shares) at the close of business on January 31, 2003 (the record
date) will be entitled to be present and vote at the Meeting with respect to
shares of the Fund owned as of such record date. For the Fund, as of the record
date the total number of shares outstanding and entitled to vote was
18,677,045.788 shares.
A majority of the outstanding shares of the Fund on the record date,
represented in person or by proxy, must be present to constitute a quorum. If a
quorum is not present at the Meeting, or if a quorum is present but, at the
Meeting, sufficient votes to approve the Proposals are not received, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. A shareholder vote may be taken on the
Proposals in this Proxy Statement prior to any adjournment if sufficient votes
have been received with respect to a Proposals. Any adjournment will require the
affirmative vote of a majority of the shares represented at the Meeting in
person or by proxy. The persons named in the enclosed proxies will vote in favor
of such adjournment those proxies which they are entitled to vote in favor of
any Proposal that has not been adopted, will vote against any adjournments those
proxies required to be voted against any Proposal that has not been adopted, and
will not vote any proxies that direct them to abstain from voting on such
Proposals.
TL&A, through certain of its separate accounts, owns all of the shares of
the Fund and has undertaken to vote all shares in accordance with voting
instructions received on a timely basis from the contract owners of variable
life insurance policies and variable annuity contracts who have allocated
amounts to one or more of the separate account subdivisions, or sub-accounts,
that invest in the Fund. TL&A will vote the shares of the Fund for which no
timely instructions are received, and any shares owned by separate accounts
funding qualified plans, in proportion to the voting instructions that are
received with respect to all policies and contracts participating in the Fund.
Voting instruction cards that are properly executed and returned but that have
no voting designation with respect to a Proposal will be voted "For" the
Proposal 1 and Proposal 2.
Voting instructions may be revoked at any time prior to 5:00 p.m. Eastern
time on April 21, 2003 (the deadline set forth above for timely receipt of
voting instructions), by executing and delivering later-dated signed voting
instructions to TL&A.
Service Providers
The Trust has no underwriter or distributor. The Travelers Insurance
Company, One Cityplace, Hartford, Connecticut 06103 serves as the Trust's
administrator. Smith Barney Fund
11
DRAFT 2/24/2003
Management LLC, an affiliate of TL&A, serves as subadministrator to the Trust
and is compensated by The Travelers Insurance Company.
Shareholder Proposals
The Trust does not have annual or any other regularly scheduled meetings
of shareholders, and currently has no plans to hold another meeting of
shareholders of the Fund. Special Meetings of the shareholders may be called by
the Board upon the written request of shareholders owning at least 25% of the
outstanding shares entitled to vote and such written shareholder requests must
be received by the Trust's Secretary at One Cityplace, Hartford, Connecticut
06103 within a reasonable time before the solicitation is made.
Contract owners should submit their proposals for a subsequent shareholder
meeting by Certified Mail - Return Receipt Requested by December 31, 2003. The
Securities and Exchange Commission has adopted certain requirements that apply
to any proposals of shareholders.
Affiliated Brokerage
During the last fiscal year, the Fund did not pay any brokerage
commissions to an affiliate.
Officers of the Trust
- --------------------------------------------------------------------------------
Name Title Position Held Since
- --------------------------------------------------------------------------------
R. Jay Gerken Chairman and President September 13, 2002
- --------------------------------------------------------------------------------
Ernest J. Wright Secretary October 21, 1994
- --------------------------------------------------------------------------------
Kathleen A. McGah Assistant Secretary January 27, 1995
- --------------------------------------------------------------------------------
Lewis E. Daidone Chief Administrative May 10, 2002
Officer
- --------------------------------------------------------------------------------
Richard Peteka Treasurer May 10, 2002
- --------------------------------------------------------------------------------
Marianne Motley Assistant Treasurer October 25, 1996
- --------------------------------------------------------------------------------
Kaprel Ozsolak Controller May 10, 2002
- --------------------------------------------------------------------------------
Michael Buono Assistant Controller May 10, 2002
- --------------------------------------------------------------------------------
Joseph Genco Assistant Controller May 10, 2002
- --------------------------------------------------------------------------------
Wendy Stenicka Assistant Controller May 10, 2002
- --------------------------------------------------------------------------------
In order that the presence of a quorum at the meeting may be assured,
prompt execution and return of the enclosed voting instruction form is
requested. A self-addressed, postage-paid envelope is enclosed for your
convenience.
12
Exhibit A
FORM OF
INVESTMENT ADVISORY AGREEMENT
ENTERED INTO BETWEEN
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY LLC
AND
THE TRAVELERS SERIES TRUST
This Investment Advisory Agreement (the "Agreement") is entered into as of
May 1, 2003 by and between The Travelers Series Trust (the "Trust") by itself
and on behalf of Pioneer Fund Portfolio (the "Portfolio") and Travelers Asset
Management International Company, LLC a New York corporation ("TAMIC").
WHEREAS, the Trust desires that TAMIC provide certain investment
management and advisory services for the Portfolio; and
WHEREAS, TAMIC desires to accept such appointment to provide advisory
services to the Portfolio in the manner and on the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Trust and TAMIC agree as follows:
1. Investment Description; Appointment
The Trust desires to employ its capital relating to the Portfolio by
investing and reinvesting in investments of the kind and in accordance with the
investment objective(s), policies and limitations authorized by its Board of
Trustees (the "Board") and as specified in the prospectus (the "Prospectus") and
the statement of additional information (the "SAI") filed with the Securities
and Exchange Commission as part of the Trust's Registration Statement on Form
N-1A as may be periodically amended. Copies of the Prospectus and the SAI have
been and will be (following amendments) forwarded to TAMIC. The Trust desires to
employ and accordingly appoints TAMIC to act as investment adviser to the
Portfolio. TAMIC accepts the appointment, and subject to the supervision of the
Board, agrees to furnish the services contemplated herein for the compensation
set forth below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board,
TAMIC will manage the investment operations of the Portfolio and will furnish or
cause to be furnished to the Trust advice and assistance with respect to the
acquisition, holding or disposal of the Portfolio's investments, in accordance
with the investment objectives, policies and restrictions as communicated to it
by the Board and as are contained in the Prospectus and SAI. It is expressly
understood and the Trust, subject to the approval of the Board, hereby agrees
that TAMIC may enter into agreements, pursuant to which a duly organized
investment adviser (the "Sub-Adviser") may be appointed to provide investment
advice or other services to the Portfolio.
TAMIC shall remain responsible for ensuring that each Sub-Adviser conducts its
operations in a manner consistent with the terms of this Agreement.
3. Information Provided to the Company
TAMIC shall keep the Board and the Trust informed of developments
materially affecting the Portfolio. In this regard, TAMIC shall provide such
periodic reports concerning the obligations assumed under this agreement as the
Trust and the Board may from time to time reasonably request. Additionally,
TAMIC shall ensure that the Sub-Adviser, at least quarterly, will provide the
Board with a written certification that the Portfolio is in compliance with the
Portfolio's investment objectives and practices.
4. Standard of Care
TAMIC shall exercise its best judgment and shall act in good faith
in rendering the services contemplated herein. TAMIC shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect TAMIC
against any liability to the Trust or the shareholders of the Portfolio to which
TAMIC would otherwise be subject by reason of its willful misfeasance, bad
faith, or gross negligence on its part in the performance of its duties or by
reason of TAMIC's disregard of its obligations and duties under this Agreement.
5. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Trust will pay TAMIC an annual fee calculated at .75% of the
Portfolio's average daily net assets. The parties understand that the fee will
be calculated daily and paid monthly. The fee for the period from the Effective
Date (defined below) of the Agreement to the end of the month during which the
Effective Date occurs shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this Agreement
before the end of a month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to TAMIC, the value of the Portfolio's net
assets shall be computed at the times and in the manner specified in the
Prospectus and/or the SAI.
6. Expenses
TAMIC shall bear all expenses (excluding brokerage costs, custodian
fees, auditors fees or other expenses to be borne by either the Portfolio or the
Trust) in connection with the performance of its services under this Agreement
and shall pay: (a) any sub-investment adviser fee to the Portfolio under any and
all Subadvisory Agreement(s), and (b) any other fees required to be paid to any
Sub-Adviser. The Trust will bear certain other expenses to be incurred in its
operation, including, but not limited to, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment
2
instruments; (iii) fees and expenses of the Trust's trustees other than those
who are "interested persons" of the Trust; (iv) legal and audit expenses; (v)
custodian, registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Trust and the
Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefor; (ix) insurance premiums for fidelity bond and other coverage; (x)
investment management fees; (xi) expenses of typesetting for printing
prospectuses and statements of additional information and supplements thereto;
(xii) expense of printing and mailing prospectuses and statements of additional
information and supplements thereto; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and legal obligation that the
Portfolio may have to indemnify the Trust's trustees, officers and/or employees
or agents with respect thereto. The Trust will bear all other expenses that
TAMIC has not specifically assumed hereunder.
7. Services to Other Companies or Accounts
The Trust understands that TAMIC now acts, will continue to act and
may act in the future as investment manager or adviser to fiduciary and other
managed accounts, and as investment manager or adviser to other investment
companies, and the Trust has no objection to TAMIC's so acting, provided that
whenever the Trust or the Portfolio and one or more other investment companies
or accounts managed or advised by TAMIC have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed to be equitable to each company or account. The Trust
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for an affected Portfolio. The Trust also understands
that the persons employed by TAMIC to assist in the performance of TAMIC's
duties under this Agreement may not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of TAMIC or any affiliate of TAMIC to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
8. Term of Agreement
This Agreement shall become effective July 20, 1998 (the "Effective
Date") and shall continue for an initial two-year term and shall continue
thereafter so long as such continuance is specifically approved at least
annually as required by the Investment Company Act of 1940, as amended (the
"1940 Act"). This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board or by vote of holders of a majority (as defined in the 1940
Act and the rules thereunder) of the outstanding voting securities of the Trust,
or upon 60 days' written notice, by TAMIC. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act and the
rules thereunder).
3
9. Representations
The Trust represents that a copy of the Declaration of Trust is on
file with the Secretary of the State of Massachusetts. The Trust further
represents that it shall maintain compliance with applicable regulatory mandates
and requirements, including but not limited to compliance with any reporting
required or information requested by the California Commissioner of Insurance.
TAMIC also represents that it shall maintain compliance with applicable
regulatory mandates including periodic reporting requirements, including but not
limited to compliance with any reporting or information requested by the
California Commissioner of Insurance.
10. Miscellaneous
This Agreement may be signed in more than one counterpart. It shall
be governed by the laws of the state of Connecticut.
11. Cooperation with Investigations
TAMIC and the Trust each agree to cooperate with each other in the
event that either should become involved in any investigation, legal proceeding,
claim, suit, or other similar action arising from the performance of the
obligations described in this Agreement.
12. Compliance with Applicable Law
TAMIC agrees to conduct itself in a manner consistent with
applicable laws and regulation, including but not limited to Sections 2a-7,
5(b), 12, 17, 18, and 36 of the 1940 Act. Additionally, TAMIC shall assume
responsibility for ensuring compliance with the applicable investment
diversification requirements set forth in both the 1940 Act and Section 817(h)
of the Internal Revenue Code of 1986, as amended. TAMIC shall also ensure that
its activities are conducted in a manner consistent with a Code of Ethics
maintained pursuant to Section 17j-1 of the 1940 Act. TAMIC agrees to use good
faith efforts to ensure that any sub-adviser appointed shall adopt and follow a
similar Code of Ethics. TAMIC also agrees that it shall conduct its activities
in a manner consistent with any No-Action Letter, order or rule promulgated by
the SEC applicable to the Trust or the Portfolio.
13. Limitation of Liability
Except as may otherwise be prohibited by the Investment Company Act
of 1940 or other applicable federal securities law, neither TAMIC nor any of its
officers, directors, employees or agents shall be subject to any liability to
the Trust or any shareholder of the Trust for any error or judgment, mistake of
law, or any loss arising out of any investment or other act or omission in the
course of, connected with, or arising out of any services to be rendered under
this Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement. To the extent permitted
under federal and state law, the Trust shall hold harmless and indemnify TAMIC
for any loss, liability, cost, damage or expense (including
4
reasonable attorneys fees and costs) arising from any claim or demand by any
past or present shareholder of the Trust that is not based upon TAMIC's willful
misfeasance, bad faith, or gross negligence in the performance of its duties or
the reckless disregard of its obligations and duties under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Agreement to be signed by their respective officials thereto duly authorized as
of the day and year first above written.
Travelers Asset Management International Company LLC
By:
------------------------------------------
Its:
------------------------------------------
The Travelers Series Trust
By:
------------------------------------------
Its:
------------------------------------------
5
Exhibit B
FORM OF
INVESTMENT SUBADVISORY AGREEMENT
ENTERED INTO BETWEEN
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY, LLC
AND
PIONEER INVESTMENT MANAGEMENT INC.
This Investment Subadvisory Agreement (the "Agreement") is entered into as
of May 1, 2003, by and between Travelers Asset Management International Company
LLC, a limited liability company duly organized and existing under the laws of
the State of New York ("TAMIC"), and Pioneer Investment Management Inc., a
corporation duly organized and existing under the laws of the Commonwealth of
Massachusetts (the "Subadviser").
WHEREAS, TAMIC and The Travelers Series Trust, an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act") and organized a Massachusetts business trust (the
"Trust"), have entered into an Investment Advisory Agreement dated May 1, 2003,
(the "Investment Advisory Agreement"), a copy of which is attached as Exhibit A
hereto;
WHEREAS, pursuant to the Investment Advisory Agreement, TAMIC has agreed
to provide investment management and advisory services to the Pioneer Fund
Portfolio, a series of the Trust (the "Portfolio"); and
WHEREAS, the Investment Advisory Agreement provides that TAMIC may engage
a duly-organized subadviser, to furnish investment information, services and
advice to assist TAMIC in carrying out its responsibilities under the Investment
Advisory Agreement, provided that TAMIC obtains the consent and approval of the
Board of Trustees of the Trust (the "Board") and a majority of those trustees
who are not parties to the Investment Advisory Agreement or "interested parties"
of any party thereto in accordance with the requirements of the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, TAMIC desires to retain the Subadviser to render investment
advisory services to TAMIC in the manner and on the terms set forth in this
Agreement, and the Subadviser desires to provide such services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, TAMIC and the Subadviser agree as follows:
1. Investment Description; Appointment
(a) Investment Description. The Trust desires to employ its capital
relating to the Portfolio by investing and reinvesting in investments of the
kind and in accordance with the investment objective(s), policies and
limitations specified in the prospectus (the "Prospectus") and the statement of
additional information (the "SAI") filed with the Securities and Exchange
Commission (the "SEC") as part of the Trust's Registration Statement on Form
N-lA, as may be
periodically amended. TAMIC agrees promptly to provide copies of all amendments
and supplements to the current Prospectus and the SAI, and copies of any
procedures adopted by the Board applicable to the Subadviser and any amendments
thereto (the "Board Procedures"), to the Subadviser on an on-going basis. Until
TAMIC delivers any such amendment or supplement or Board Procedures, the
Subadviser shall be fully protected in relying on the last Prospectus and SAI
and any Board Procedures, if any, previously furnished to the Subadviser. In
addition, TAMIC shall furnish the Subadviser with a certified copy of any
financial statement or report prepared for the Trust with respect to the
Portfolio by certified or independent auditors, and with copies of any financial
statements or reports made by the Trust to shareholders or to any state or
federal regulatory agency. TAMIC shall also inform the Subadviser of the results
of any audits or examinations by regulatory authorities pertaining to the
Subadviser's responsibilities for the Portfolio. TAMIC further agrees to furnish
the Subadviser with any materials or information that the Subadviser may
reasonably request to enable it to perform its functions under this Agreement.
(b) Appointment of Subadviser. TAMIC hereby engages the services of the
Subadviser in connection with the investment and reinvestment of the Portfolio's
assets. Pursuant to this Agreement and subject to the oversight and supervision
by TAMIC and the Board, the Subadviser shall manage the investment and
reinvestment of the Portfolio's assets. Subject to the terms and conditions of
this Agreement, the Subadviser hereby accepts the engagement by the Adviser in
the foregoing capacity and agrees, at the Subadviser's own expense, to render
the services set forth herein and to provide the office space, furnishings,
equipment, and personnel required by the Subadviser to perform these services on
the terms and for the compensation provided in this Agreement. Except as
specified herein, the Subadviser agrees that it shall not delegate any material
obligation assumed pursuant to this Agreement to any third party without first
obtaining the written consent of both the Trust and TAMIC.
2. Services as Subadviser
Subject to the supervision, direction and approval of the Board and TAMIC,
the Subadviser shall conduct a continual program of investment, evaluation,
sale, and reinvestment of the Portfolio's assets. The Subadviser is authorized,
in its sole discretion and without prior consultation with TAMIC, to: (a) obtain
and evaluate pertinent economic, financial, and other information affecting the
economy generally and certain companies as such information relates to
securities which are purchased for or considered for purchase in the Portfolio;
(b) manage the Portfolio's assets in accordance with the Portfolio's investment
objectives) and policies as stated in the Prospectus and the SAI, rules and
regulations under the ; (c) make investment decisions for the Portfolio; (d)
place purchase and sale orders for portfolio transactions on behalf of the
Portfolio and manage otherwise uninvested cash assets of the Portfolio; (e)
price such Portfolio securities as TAMIC and Subadviser shall mutually agree
upon from time to time; (f) execute account documentation, agreements, contracts
and other documents as the Subadviser shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of the assets
of the Portfolio (in such respect, and only for this limited purpose, the
Subadviser shall act as TAMIC's and the Trust's agent and attorney-in-fact); (g)
employ professional portfolio managers and securities analysts who provide
research services to the Portfolio; and (h) regularly report to TAMIC and to the
Board with respect to its subadvisory
2
activities. The Subadviser shall execute trades, and in general take such action
as is appropriate to effectively manage the Portfolio's investment practices. In
addition,
(i) The Subadviser shall furnish TAMIC with daily information concerning
portfolio transactions and quarterly and annual reports concerning transactions
and performance of the Portfolio in such form as may be mutually agreed upon,
and the Subadviser agrees to review the Portfolio and discuss the management of
the Portfolio with TAMIC and the Board as either or both shall from time to time
reasonably request.
(ii) The Subadviser shall maintain and preserve such records related to
the Portfolio's transactions as are required under any applicable state or
federal securities law or regulation including: the Investment Company Act of
1940, as amended (the "1940 Act"), the Securities Exchange Act of 1934, as
amended (the "1934 Act), and the Investment Advisers Act of 1940, as amended
(the "Advisers Act"). The Subadviser shall maintain and preserve all books and
other records not related to the Portfolio's transactions as required under such
rules. The Subadviser shall timely furnish to TAMIC all information relating to
the Subadviser's services hereunder reasonably requested by TAMIC to keep and
preserve the books and records of the Trust. The Subadviser agrees that all
records which it maintains for the Portfolio, are the property of the Trust and
the Subadviser will. surrender promptly to the Trust copies of any of such
records.
(iii) The Subadviser shall comply with Board Procedures and any amendments
thereto. The Subadviser shall notify TAMIC immediately upon detection of any
material breach of such Board Procedures.
(iv) The Subadviser shall maintain a written code of ethics (the "Code of
Ethics") that it reasonably believes complies with the requirements of Rule
17j-1 under the 1940 Act, a copy of which it will provide to TAMIC and the Trust
upon any reasonable request. The Subadviser shall follow such Code of Ethics in
performing its services under this Agreement. Further, the Subadviser represents
that it has policies and procedures regarding the detection and prevention of
the misuse of material, nonpublic information by the Subadviser and its
employees as required by the Insider Trading and Securities Fraud Enforcement
Act of 1988, a copy of which it will provide to TAMIC and the Trust upon any
reasonable request.
(v) The Subadviser shall manage the investment and reinvestment of the
assets of the Portfolio in a manner consistent with the diversification
requirements of Section 817 and Section 851 of the Internal Revenue Code of
1986, as amended (the "Code"). The Subadviser will also manage the investments
of the Portfolio in a manner consistent with any and all investment restrictions
(including diversification requirements) contained in the 1940 Act, any SEC
no-action letter or order applicable to the Company, and any applicable state
securities law or regulation. TAMIC shall provide Subadviser with copies of any
such SEC no-action letter or Order.
(vi) The Subadviser shall submit on a quarterly basis to the Board and
TAMIC a written certification detailing any variation from applicable investment
objectives, practices, policies or procedures, or from its Code of Ethics.
3
3. Information to be Provided to the Trust and TAMIC
The Subadviser shall keep the Trust and TAMIC informed of developments
materially affecting the Portfolio. In this regard, the Subadviser shall provide
to the Trust, TAMIC and their respective officers such periodic reports
concerning the obligations assumed under this Agreement as the Trust and TAMIC
may from time to time reasonably request. Additionally, the Subadviser shall, at
least quarterly, provide TAMIC and the Board with a written certification that
the Portfolio is in compliance with the Portfolio's investment objectives and
practices, the 1940 Act and applicable rules and regulations under the 1940 Act,
and the requirements of Subchapter M and Section 817(h) under the Internal
Revenue Code of 1986, as amended (the "Code").
4. Standard of Care
The Subadviser shall exercise its best judgment and shall act in good
faith and use reasonable care and in a manner consistent with applicable federal
and state laws and regulations in rendering the services it agrees to provide
under this Agreement. The Subadviser shall not be liable for or subject to any
damages, expenses, or losses in connection with any error of judgment or mistake
of law or for any loss suffered by the Trust, the Portfolio or TAMIC in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Subadviser against any liability to the Trust, the Portfolio, TAMIC or to the
shareholders of the Trust to which the Subadviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Subadviser's disregard of its
obligations and duties under this Agreement.
5. Subadviser's Duties Regarding Portfolio Transactions
(a) Placement of Orders. The Subadviser shall take all actions that it
considers necessary to implement the investment policies of the Portfolio, and,
in particular, to place all orders for the purchase or sale of securities or
other investments for the Portfolio with brokers or dealers the Subadviser
selects. To that end, the Subadviser is authorized as the Trust's agent to give
instructions to the Trust's custodian as to deliveries of securities or other
investments and payments of cash for the Portfolio's account. In connection with
the selection of brokers or dealers and the placement of purchase and sale
orders, the Subadviser is directed at all times to seek to obtain best execution
and price within the policy guidelines determined by the Board and set forth in
the Trust's current Prospectus and SAI, subject to provisions (b), (c) and (d)
of this Section 5.
(b) Selection of Brokers and Dealers. To the extent permitted by the
policy guidelines set forth in the Trust's current Prospectus and SAI, in the
selection of brokers and dealers to execute portfolio transactions, the
Subadviser is authorized to consider not only the available prices and rates of
brokerage commissions, but also other relevant factors, which may include,
without limitation: the execution capabilities of the brokers and dealers; the
research, custody, and other services provided by the brokers and dealers that
the Subadviser believes will enhance its general portfolio management
capabilities; the size of the transaction; the difficulty
4
of execution; the operational facilities of these brokers and dealers; the risk
to a broker or dealer of positioning a block of securities; and the overall
quality of brokerage and research services provided by the brokers and dealers.
In connection with the foregoing, the Subadviser is specifically authorized to
pay those brokers and dealers who provide brokerage and research services to the
Subadviser a higher commission than that charged by other brokers and dealers if
the Subadviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the services in terms of either the
particular transaction or in terms of the Subadviser's overall responsibilities
with respect to the Portfolio and to any other client accounts or portfolios
that the Subadviser advises. The execution of such transactions shall not be
considered to represent an unlawful breach of any duty created by this Agreement
or otherwise.
(c) Soft Dollar Arrangements. On an ongoing basis, but not less often than
annually, the Subadviser shall identify and provide a written description to the
Trust and TAMIC of all "soft dollar" arrangements that the Subadviser maintains
with respect to the Portfolio or with brokers or dealers that execute
transactions for the Portfolio. Prior to the commencement of the active
management of the Portfolio, and periodically thereafter, but not less often
than annually, the Subadviser shall provide the Trust and TAMIC with a written
description of all arrangements with third parties and other individuals,
entities, brokers, or money management firms that have or may receive or share
in the payment of fees for services in connection with securing or continuing
this Agreement.
(d) Aggregated Transactions. The Subadviser is authorized to aggregate
purchase and sale orders for securities held (or to be held) by the Portfolio
with similar orders being made on the same day for other client accounts or
portfolios that the Subadviser manages. When an order is so aggregated: (1) the
actual prices applicable to the aggregated transaction will be averaged, and the
Portfolio and each other account or portfolio participating in the aggregated
transaction shall be treated as having purchased or sold the Portfolio's portion
of the securities at this average price; and (2) all transaction costs incurred
in effecting the aggregated transaction shall be shared on a pro-rata basis
among the accounts or portfolios (including the Portfolio) participating in the
transaction. When recommending or effecting a transaction in a particular
security or investment for more than one client account or portfolio (including
the Portfolio), the Subadviser may allocate the recommendations or transactions
among all accounts and portfolios for whom the recommendation is made or
transaction is effected on a basis that the Subadviser considers equitable. The
Subadviser recognizes that in some cases this procedure may adversely affect the
size of the position obtainable for the Portfolio.
6. Information and Reports
(a) TAMIC and the Subadviser will provide the other party with a list, to
the best of TAMIC's or the Subadviser's respective knowledge, of each affiliated
person (and any affiliated person of such an affiliated person) of TAMIC or the
Subadviser, as the case may be, and each of TAMIC and the Subadviser agrees
promptly to update such list whenever TAMIC of the Subadviser becomes aware of
any additional affiliated persons.
(b) Prior to each Board meeting, the Subadviser will provide TAMIC and the
Board with reports regarding its management of the Portfolio during the interim
period, in such form as
5
may be mutually agreed upon by the Subadviser and TAMIC. The Subadviser will
also provide TAMIC with any information regarding its management of the
Portfolio required for any meeting of the Board, any shareholder report, amended
registration statement or prospectus supplement filed by the Portfolio with the
SEC. The Subadviser will submit on a quarterly basis to the Board and TAMIC a
written certification detailing any variation from applicable investment
policies or procedure, and/or from its Code of Ethics.
7. Compensation
In consideration of the services rendered, the facilities furnished, and
the expenses assumed pursuant to this Agreement, TAMIC will pay the Subadviser a
fee at the annual rate of 0.375% of the Portfolio's average daily net assets.
The parties understand that the fee will be calculated daily and paid monthly.
The Subadviser shall have no right to obtain compensation directly from the
Trust or the Portfolio for services provided hereunder and agrees to look solely
to TAMIC for payment of fees due. The fee for the period from the Effective Date
(defined below) of the Agreement to the end of the month during which the
Effective Date occurs shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this Agreement
before the end of a month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to the Subadviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Prospectus and the SAI, and on days on which the net assets are
not so determined, the net asset value computation to be used shall be as
determined on the immediately preceding day on which the net assets were
determined.
8. Expenses
The Subadviser shall bear all expenses (excluding brokerage costs,
custodian fees, auditor fees and other expenses to be borne by either the
Portfolio or the Trust) in connection with the performance of its services under
this Agreement. The Trust will bear certain other expenses to be incurred in its
operation, including, but not limited to, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses of the
Trust's trustees other than those who are "interested persons" of the Trust;
(iv) legal and audit expenses; (v) custodian, registrar and transfer agent fees
and expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio; (viii)
all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) insurance premiums
for fidelity bond and other coverage; (x) investment management fees; (xi)
expenses of typesetting for printing prospectuses and statements of additional
information and supplements thereto; (xii) expenses of printing and mailing
prospectuses and statements of additional information and supplements thereto;
and (xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and legal obligations that the Portfolio may have to indemnify the Trust's
trustees, officers and/or
6
employees or agents with respect thereto. The Trust and TAMIC shall assume all
other expenses that the Subadviser has not specifically assumed hereunder.
9. Services to Other Companies or Accounts
TAMIC understands that the Subadviser and its affiliates now act, will
continue to act and may act in the future as investment manager or adviser to
fiduciary and other managed accounts, and as an investment manager or adviser to
other investment companies, including any offshore entities or private accounts.
TAMIC has no objection to the Subadviser and its affiliates so acting, provided,
that, whenever the Portfolio and one or more other investment companies or
accounts managed or advised by the Subadviser and its affiliates have available
funds for investment, investments suitable and appropriate for each will be
allocated in accordance with a formula believed to be equitable to each company
and account. TAMIC represents that the Trust recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for the
Portfolio and that the Trust also understands that the persons employed by the
Subadviser to assist in the performance of the Subadviser's duties under this
Agreement may not devote their full time to such service, and that nothing
contained in this Agreement shall be deemed to limit or restrict the right of
the Subadviser to engage in and devote time and attention to other businesses or
to render services of whatever kind or nature. This Agreement shall not in any
way limit or restrict the Subadviser or any of its directors, officers,
employees, or agents from buying, selling or trading any securities or other
investment instruments for its or their own account or for the account of others
for whom it or they may be acting, provided that such activities will not
adversely affect or otherwise impair the performance by the Subadviser of its
duties and obligations under this Agreement.
10. Delegation of Proxy Voting Rights
TAMIC delegates to the Subadviser discretionary authority to exercise
voting rights with respect to the securities and other investments held by the
Portfolio. The Subadviser shall provide the Trust and TAMIC with a written copy
of its proxy voting guidelines. The Subadviser shall exercise these voting
rights unless and until the Trust or TAMIC revokes this delegation in writing.
The Trust or TAMIC may revoke this delegation at any time without cause. The
Subadviser shall maintain and preserve a record, for a period of not less than
five (5) years or other such period under Rule 204-2 of the Advisers Act, of the
Subadviser's voting procedures, and of the Subadviser's actual votes with
respect to the Portfolio's securities and other investments including all
information and data required to be filed on Form N-PX by the Trust, and the
Subadviser shall supply this record to the Trust and TAMIC, or any authorized
representative of the Trust or TAMIC, periodically, but at least quarterly,
provided that the Trust shall receive a record of all proxy votes and other
information and data necessary to complete Form N-PX for each fiscal year ending
June 30 reasonably thereafter, but no later than the July 31st following said
June 30th in accordance with the 1940 Act rules and regulations governing proxy
votes.
7
11. Affiliated Brokers
The Subadviser or any of its affiliates may act as broker in connection
with the purchase or sale of securities or other investments for the Portfolio,
subject to: (a) the requirement that the Subadviser seek to obtain best
execution and price within the policy guidelines determined by the Board and set
forth in the Trust's current prospectus and SAI; (b) the provisions of the
Advisers Act; (c) the provisions of the 1934 Act, including, but not limited to,
Section 11(a) thereof; and (d) other provisions of applicable law. These
brokerage services are not within the scope of the duties of the Subadviser
under this Agreement. Subject to the requirements of applicable law and any
procedures adopted by the Board, the Subadviser or its affiliates may receive
brokerage commissions, fees or other remuneration from the Portfolio or the
Trust for these services in addition to the Subadviser's fees for services under
this Agreement.
12. Custody
Nothing in this Agreement shall require the Subadviser to take or receive
physical possession of cash, securities, or other investments of the Portfolio.
13. Registration as Investment Adviser
The Subadviser is registered as an investment adviser with the SEC under
the Advisers Act. The Subadviser shall remain so registered throughout the term
of this Agreement and shall notify the Trust and TAMIC immediately if the
Subadviser ceases to be so registered as an investment adviser.
14. Code of Ethics
The Subadviser certifies that it has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act, and that it
has instituted procedures reasonably necessary to prevent Access Persons (as
defined under Rule 17j-1) from violating its code of ethics. The Subadviser will
provide the Trust and TAMIC with a copy of that code, together with evidence of
the code's adoption. At each quarterly Board meeting during the time that this
Agreement remains in effect, the president or a vice president of the Subadviser
shall certify to the Trust and TAMIC that it has complied with the requirements
of Rule 17j-1 during the previous quarter and that there have been no violations
of its code of ethics or, if a violation has occurred, that appropriate action
has been taken in response to the violation; provided, that, no less frequently
than annually, the appropriate officer of the Subadviser shall furnish a written
report to the Trust and TAMIC that complies with the requirements of Rule 17j-1
with respect to these reports regarding issues, material violations, and any
related sanctions in connection with the administration of the code of ethics,
or as otherwise required pursuant to Rule 17j-1. Upon written request of the
Trust or TAMIC, the Subadviser shall permit representatives of the Trust or
TAMIC to examine the reports (or summaries of the reports) required to be made
by Rule 17j-1(d)(1) and other records evidencing enforcement of the code of
ethics.
8
15. Term of Agreement; Termination of Agreement; Amendment of Agreement
(a) Term. This Agreement shall become effective [May 1, 2003] (the
"Effective Date"), and shall continue for an initial two-year term and shall
continue thereafter so long as such continuance is specifically approved at
least annually as required by the 1940 Act.
(b) Termination. This Agreement may be terminated, without penalty, (1) by
the Board or by vote of holders of a majority of the outstanding shares of the
Portfolio upon sixty (60) days' written notice to TAMIC and Subadviser, (2) by
TAMIC upon 60 days' written notice to the Trust and Subadviser, or (3) by
Subadviser upon 60 days' written notice to the Trust and TAMIC. This Agreement
will also terminate automatically in the event of its assignment or in the event
of the assignment or termination of the Investment Advisory Agreement.
(c) Amendment. This Agreement may be amended by the parties only if the
amendment is specifically approved by: (1) a majority of those trustees who are
not parties to this Agreement or "interested persons" of any party cast in
person at a meeting called for the purpose of voting on the Agreement's
approval; and (2) if required by applicable law, the vote of a majority of
outstanding shares of the Portfolio.
16. Representations and Covenants of TAMIC
TAMIC represents and covenants to Subadviser as follows:
(a) It is duly organized and validly existing under New York law with
the power to own and possess its assets and carry on its business as
the business is now being conducted.
(b) The execution, delivery and performance by TAMIC of this Agreement
are within TAMIC's powers and have been duly authorized by all
necessary action on the part of its Board, and no action by or in
respect of, or filing with, any governmental body, agency or
official is required on the part of TAMIC for the execution,
delivery and performance of this Agreement by the parties hereto,
and the execution, delivery and performance of this Agreement by the
parties hereto does not contravene or constitute a default under (1)
any provision of applicable law, rule or regulation, (2) TAMIC's
governing instruments, or (3) any agreement, judgment, injunction,
order, decree or other instruments binding upon TAMIC.
(c) It is not prohibited by the 1940 Act or the Advisors Act from
performing the services contemplated by this Agreement.
(d) It has met, and shall continue to seek to meet for the duration of
this Agreement, any other applicable federal or state requirements,
or the applicable requirements of any regulatory of industry
self-regulatory agency, necessary to be met by TAMIC in order to
perform the services contemplated by this Agreement.
9
(e) It (1) is registered with the SEC as an investment adviser under the
Advisers Act, (2) is registered and licensed as an investment
adviser under the laws of all jurisdictions in which its activities
require it to be so licensed, and (3) shall promptly notify the
Subadviser of the occurrence of any event that would disqualify
TAMIC from serving as an investment adviser to an investment company
pursuant to Section 9(a) of the 1940 Act.
(f) It acknowledges that it has received a copy of the Subadviser's Form
ADV at least 48 hours prior to the execution of this Agreement and
has delivered a copy of the same to the Trust.
(h) The Trust is registered as an open-end management investment company
under the 1940 Act and that the Trust's shares representing an
interest in the Portfolio are registered under the Securities Act of
1933 and under any applicable state securities laws.
17. Representations and Covenants of the Subadviser
The Subadviser represents and covenants to TAMIC as follows:
(a) It is duly organized and validly existing under Massachusetts law
with the power to own and possess its assets and carry on its
business as this business is now being conducted.
(b) It has the authority to enter into and perform the services
contemplated by this Agreement.
(c) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement.
(d) It has met, and shall continue to seek to meet for the duration of
this Agreement, any other applicable federal or state requirements,
or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform the
services contemplated by this Agreement.
(e) It (1) is registered with the SEC as an investment adviser under the
Advisers Act, (2) is registered or licensed as an investment adviser
under the laws of jurisdictions in which its activities require it
to be so registered or licensed, and (3) shall promptly notify the
Trust of the occurrence of any event that would disqualify it from
serving as an investment adviser to an investment company pursuant
to Section 9(a) of the 1940 Act.
(f) It has provided TAMIC with a copy of its Form ADV as most recently
filed with the SEC and will, promptly after filing any amendment to
its Form ADV with the SEC, furnish a copy of such amendments to
TAMIC. The information contained in the Subadviser's Form ADV is
accurate and complete in all material respects
10
and does not omit to state any material fact necessary in order to
make the statements made, in light of the circumstances under which
they were made, not misleading.
(g) It shall be responsible for the management of the Portfolio in
accordance with the Prospectus and SAI and in compliance with the
requirements applicable to a regulated investment company under
Subchapter M of the Code. The Subadviser also shall comply with the
diversification requirements for variable annuity, life insurance,
or endowment contracts pursuant to Section 817(h) of the Code and
United States Treasury Regulation Section 1.817-5, each as may be
amended from time to time. The Subadviser shall promptly inform the
Trust and TAMIC if any information in the Prospectus or SAI, or if
any action relating to the Subadviser or its services to the
Portfolio is (or will become) inaccurate, incomplete, or no longer
compliant with Section 817(h) of the Code or Treasury Regulation
Section 1.817-5, if applicable.
(i) It shall carry out its responsibilities under this Agreement in
compliance with (1) federal and state law, including securities law,
governing its activities; (2) the Portfolio's investment objective,
policies, and restrictions, as set forth in the Prospectus and SAI,
as amended from time to time; and (3) any policies or directives as
the Board may from time to time establish or issue and communicate
to the Subadviser in writing. The Trust shall promptly notify TAMIC
in writing of changes to (2) or (3) above.
(j) It shall at all times comply with applicable laws and related
regulations of the 1940 Act, including but not limited to Sections
2(a), 5(b), 12, 17, 18 and 36 thereof.
(k) It shall conducted its activities under this Agreement in a manner
consistent with its code of ethics maintained pursuant to Section
17j-1 of the 1940 Act.
(l) It shall conduct its activities in a manner consistent with any
no-action letter, order or rule promulgated by the SEC applicable to
the Trust or the Portfolio.
18. Cooperation with Regulatory Authorities or Other Actions
The parties to this Agreement each agree to cooperate in a reasonable
manner with each other in the event that any of them should become involved in a
legal, administrative, judicial or regulatory action, claim, or suit as a result
of performing its obligations under this Agreement.
19. Records
(a) Maintenance of Records. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the 1940
Act, all records relating to the Portfolio's investments that are required to be
maintained by the Trust pursuant to
11
the requirements of paragraphs (b)(5), (b)(6), (b)(7), (b)(9), (b)(10), and (f)
of Rule 31a-1 under the 1940 Act.
(b) Ownership of Records. The Subadviser agrees that all books and records
that the Subadviser maintains for the Portfolio or the Trust are the Trust's
property and further agrees to surrender promptly to the Trust or TAMIC any
books, records, or information upon the request of the Trust or TAMIC; provided,
however, that the Subadviser may retain copies of the records at its own cost.
All the requested books and records shall be made available, within five (5)
business days of a written request, to the Trust's accountants or auditors
during regular business hours at the Subadviser's offices. The Trust, TAMIC or
their respective authorized representatives shall have the right to copy any
records in the Subadviser's possession that pertain to the Portfolio or the
Trust. These books, records, information, or reports shall be made available to
properly authorized government representatives consistent with state and federal
law and/or regulations. In the event of the termination of this Agreement, all
these books, records, or other information shall be returned to the Trust or
TAMIC. The Subadviser agrees that the policies and procedures it has established
for managing the Portfolio, including, but not limited to, all policies and
procedures designed to ensure compliance with federal and state regulations
governing the adviser/client relationship and management and operation of the
Portfolio, shall be made available for inspection by the Trust, TAMIC or their
respective authorized representatives upon reasonable written request within not
more than five (5) business days.
20. Confidentiality.
(a) Non-Disclosure by Subadviser. The Subadviser agrees that the
Subadviser will not disclose or use any records or confidential information
obtained pursuant to this Agreement in any manner whatsoever, except as
authorized in this Agreement or specifically by TAMIC or the Portfolio or Trust,
or if this disclosure or use is required by federal or state regulatory
authorities or by a court.
(b) Non-Disclosure Exceptions. The Subadviser may disclose the investment
performance of the Portfolio; provided, that the disclosure does not reveal the
identity of TAMIC, the Portfolio, or the Trust. The Subadviser may, however,
disclose that TAMIC, the Trust and Portfolio are the Subadviser's clients,
provided, that the disclosure does not reveal the investment performance or the
composition of the Portfolio.
21. Limitation of Liability; Indemnification
(a) Limitation of Liability. Except as provided herein and as may
otherwise be provided by the 1940 Act or federal securities laws, neither TAMIC
or the Subadviser, nor any of their officers, directors, employees or agent,
shall be subject to any liability or subject to any damages, expenses, or losses
in connection with any error of judgment, mistake of law, or any loss to each
other or the Trust arising out of any investment or other act or omission in the
course of, connected with, or arising out of any services to be rendered under
this Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement.
12
(b) Subadviser Indemnity to TAMIC. The Subadviser agrees to indemnify and
defend the TAMIC and TAMIC's officers, directors, partners, employees, and any
person who controls TAMIC for any loss, liability, cost, damage, or expenses
(including reasonable investigation and defense costs and reasonable attorneys
fees and costs) arising out of any claim, demand, action, suit, or proceeding
arising out of (1) the Subadviser's negligence in connection with the
performance of its duties or the reckless disregard of its obligations and
duties under this Agreement, or (2) any actual or alleged material misstatement
or omission in the Fund's registration statement, any proxy statement, or
communication to current or prospective investors in a Portfolio relating to
disclosure about the Subadviser in writing provided to the Adviser or the Fund
by the Subadviser.
(c) TAMIC Indemnity to Subadviser. TAMIC agrees to indemnify and defend
the Subadviser and the Subadviser's officers, directors, partners, employees,
and any person who controls the Subadviser for any loss, liability, cost,
damage, or expenses (including reasonable investigation and defense costs and
reasonable attorneys fees and costs) arising out of any claim, demand, action,
suit, or proceeding arising out of (1) any matter to which this Agreement
relates unless the Subadviser is negligent in the performance of its duties or
reckless disregard of its obligations and duties under this Agreement, or (2)
any actual or alleged material misstatement or omission in the Trust's
registration statement, any proxy statement, or other communication to current
or prospective investors in a Portfolio (other than a misstatement or omission
relating to disclosure about the Subadviser provided to TAMIC or the Trust by
the Subadviser).
(d) Indemnification Procedures. Promptly after receipt of notice of the
commencement of any action by a party seeking to be indemnified under this
Section 21 (the "Indemnified Party"), the Indemnified Party shall, if a claim in
respect thereof is to be made against a party against whom indemnification is
sought under this Section 21 (the "Indemnifying Party"), notify the Indemnifying
Party in writing of the commencement thereof; provided, however, that the
omission to notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability which it may have to any Indemnified Party otherwise
than under the provisions hereof, and shall relieve it from liability hereunder
only to the extent that such omission results in the forfeiture by the
Indemnifying Party of rights or defenses with respect to such action. In any
action or proceeding, following provision of proper notice by the Indemnified
Party of the existence of such action, the Indemnifying Party shall be entitled
to participate in any such action and, to the extent that it shall wish,
participate jointly with any other Indemnifying Party similarly notified, to
assume the defense thereof, with counsel of its choice (unless any conflict of
interest requires the appointment of separate counsel), and after notice from
the Indemnifying Party to such Indemnified Party of its election to assume the
defense of the action, the Indemnifying Party shall not be liable to such
Indemnified Party hereunder for any legal expense of the other counsel
subsequently incurred without the Indemnifying Party's consent by such
Indemnified Party in connection with the defense thereof. The Indemnified Party
shall cooperate in the defense or settlement of claims so assumed. The
Indemnifying Party shall not be liable hereunder for the settlement by the
Indemnified Party for any claim or demand unless the Indemnifying Party has
previously approved the settlement or it has been notified of such claim or
demand and has failed to provide a defense in accordance with the provisions
hereof. In the event that any proceeding involving the Indemnifying Party shall
be commenced by the Indemnified Party in connection with the Agreement, or the
transactions
13
contemplated hereunder, and such proceeding shall be finally determined by a
court of competent jurisdiction in favor of the Indemnifying Party, the
Indemnified Party shall be liable to the Indemnifying Party for any reasonable
attorney's fees and direct costs relating to such proceedings. The
indemnifications provided in this Section 21 shall survive the termination of
this Agreement.
22. Survival
All representations and warranties made by the Subadviser and TAMIC herein
shall survive for the duration of this Agreement and the parties hereto shall
immediately notify, but in no event later than five (5) days, each other in
writing upon becoming aware that any of the foregoing representations and
warranties are no longer true.
23. Use of Name
[The Trust and TAMIC, together with its subsidiaries and affiliates may
use the names "Pioneer Investment Management Inc." or "Pioneer" or any
derivative thereof or logo associated therewith in offering materials of the
Portfolio only with the prior approval of the Subadviser and only for so long as
this Agreement or any extension, renewal, or amendment hereof remains in effect.
At such time as this Agreement shall no longer be in effect, the Trust and TAMIC
together with its subsidiaries and affiliates each agree that they shall cease
to use such names or any other name indicating that it is advised by or
otherwise connected with the Subadviser and shall promptly change its name
accordingly. The Trust acknowledges that it has adopted the name "Pioneer
Investment Management Inc." or "Pioneer" or any derivative thereof or logo
associated therewith in offering materials of the Portfolio only with the prior
approval of the Subadviser and through permission of the Subadviser, and agrees
that the Subadviser reserves to itself and any successor to its business the
right to grant the non-exclusive right to use the aforementioned names or any
similar names to any other corporation or entity, including but not limited to
any investment company of which the Subadviser or any subsidiary or affiliate
thereof or any successor to the business of any thereof shall be the investment
subadviser.]
24. Governing Law
This Agreement shall be governed by, construed under and interpreted and
enforced in accordance with the laws of the state of New York, without regard to
principles of conflicts of laws.
25. Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby.
26. Definitions
The terms "assignment," "affiliated person," and "interested person," when
used in this Agreement, shall have the respective meanings specified in Section
2(a) the 1940 Act. The term
14
"majority of the outstanding shares" means the lesser of (a) sixty-seven percent
(67%) or more of the shares present at a meeting if more than fifty percent
(50%) of these shares are present or represented by proxy, or (b) more than
fifty percent (50%) of the outstanding shares.
27. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of such counterparts together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY, LLC
By:
---------------------------------------
Name:
Title:
PIONEER INVESTMENT MANAGEMENT INC.
By:
---------------------------------------
Name:
Title:
15
THE TRAVELERS INSURANCE COMPANY
THE TRAVELERS LIFE AND ANNUITY COMPANY
Please fold and detach card at perforation before mailing
UTILITIES PORTFOLIO INSTRUCTION CARD FOR THE MEETING
TO BE HELD ON APRIL 22, 2003.
Voting Instructions solicited by The Travelers Insurance Company and The
Travelers Life and Annuity Company in connection with a solicitation of proxies
by the Board of Trustees of Utilities Portfolio (the "Portfolio") for a special
meeting of shareholders (the "Meeting") to be held on April 22, 2003.
I hereby instruct The Travelers Insurance Company or The Travelers Life and
Annuity Company, as appropriate, to vote the shares of the Fund as to which I am
entitled to give instructions at the Meeting to be held on April 22, 2003, at
9:00 a.m. Eastern time, at the Fund's office, One Cityplace, Hartford,
Connecticut 06103, or any adjournment(s) thereof, as instructed on the reverse
side.
I hereby revoke any and all voting instructions with respect to such shares
previously given by me. I acknowledge receipt of the Proxy Statement dated March
10, 2003. I realize that if I return this form without providing any
instructions regarding a proposal, my timely returning of this form will be
deemed to be an instruction to vote in favor of the proposal.
Date _______________________________
These voting instructions may be revoked at
any time prior to the Meeting by notifying
the secretary of The Travelers or the
secretary of the Fund, in writing by 5:00
p.m. on April 21, 2003.
____________________________________________
Signature and title
If the contract is held jointly, each
contract owner should sign. If only one
signs, his or signature will be binding. If
the contract owner is a corporation, the
President or a Vice President should sign in
his or her own name, indicating title. If
the contract owner is a partnership, a
partner should sign in his or her name,
indicating that he or she is a "Partner." If
the contract owner is a trust, the trustee
should sign in his or her own name,
indicating hat he or she is a "Trustee."
Please fold and detach card at perforation before mailing
THIS INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD
OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSALS. THE SHARES REPRESENTED HEREBY
WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
BENEFICIAL OWNER. IF NO DIRECTION IS MADE, THIS INSTRUCTION CARD WILL BE VOTED
FOR THE PROPOSALS.
Please vote by filling in the appropriate box below.
FOR AGAINST ABSTAIN
1. Proposal to approve a new Investment Agreement [ ] [ ] [ ]
between Travelers Asset Management International
Company LLC and the Utilities Portfolio of The
Travelers Series Trust.
FOR AGAINST ABSTAIN
2. Proposal to approve a new Investment Subadvisory [ ] [ ] [ ]
Agreement between Travelers Asset Management
International Company LLC and Pioneer Investment
Management Inc. on behalf of the Utilities
Portfolio.