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:
|_| Preliminary proxy statement. |_| Confidential, for use of the
|X| 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
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 The 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.
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, 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
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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.
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
3
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).
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
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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 SBFM's investment philosophy in selecting Utilities securities,
which uses a value approach to business-trend analysis (based on the
characteristics of sustainable dividend growth, leading/ strong market
position, experienced management team, established profitability, strong
financials and cash flow, and attractive restructuring possibilities) to
research company fundamentals. The Board determined that Pioneer's proposed
approach, namely selecting securities based on fundamental analysis (such as
analysis of earnings, cash flows, competitive position and corporate
management's abilities), with the analysis performed on companies representing
a wide range of industries by Pioneer's portfolio managers and 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 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:
5
Difference As a
Percentage of
Current Advisory New Advisory Management Fee Paid
Agreement Agreement for Fiscal Year Ended
Management Fee Management Fee Difference in 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.
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).
6
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.
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
Agreement ......... $ 92 $287 $498 $1,108
New Advisory
Agreement ......... $102 $318 $552 $1,225
Information About TAMIC
TAMIC is a registered investment adviser, and has provided investment
advisory services since 1978. TAMIC's 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
$13.7 billion in assets under management. TAMIC's directors and principal
officers are as follows:
7
Name and Address* Position with TAMIC Principal Occupation
- ------------------------- ---------------------------------- ------------------------
David A. Tyson .......... Director, Chairman Investment Professional
Joseph Rueli, Jr. ....... Director, Senior Vice President, Finance
Chief Financial Officer
F. Denney Voss .......... Director, Senior Vice President, Investment Professional
Chief Investment Officer
John R. Britt ........... Director, Secretary Attorney
Eugene Collins .......... Senior Vice President Investment Professional
Kimerly Guerrero ........ Senior Vice President Investment Professional
Thomas Hajdukiewicz ..... Senior Vice President Investment Professional
Richard John ............ Senior Vice President Investment Professional
Glenn Marchak ........... Senior Vice President Investment Professional
James Metz .............. Senior Vice President Finance
David Miller ............ Senior Vice President Investment Professional
Emil Molinaro ........... Senior Vice President Investment Professional
Jordan Stitzer .......... Senior Vice President Investment Professional
Patricia Uzzel .......... Compliance Officer Compliance
- ----------------
* 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 mutual funds, institutional and
other clients. As of December 31, 2002, assets under management were
approximately $108 billion worldwide, including over $22 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
8
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:
Assets Under Management
Fund Management Fee (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 of daily net assets.
Pioneer Variable
Contracts Trust
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
9
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 would invest 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 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
10
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.
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
11
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 Management LLC, an affiliate of TL&A, serves
as subadministrator to the Trust and is compensated by The Travelers Insurance
Company.
12
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 Officer May 10, 2002
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.
13
Exhibit A
FORM OF
INVESTMENT ADVISORY AGREEMENT
ENTERED INTO BETWEEN
THE TRAVELERS SERIES TRUST
AND
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY LLC
This Investment Advisory Agreement (the "Agreement") is entered into as of
[May 1, 2003] by and between The Travelers Series Trust, a Massachusetts
business trust (the "Trust"), and Travelers Asset Management International
Company LLC, a limited liability company duly organized and existing under the
law of the state of New York ("TAMIC").
WHEREAS, the Trust is a series-type, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series, including the Pioneer Fund Portfolio
(the "Portfolio"); and
WHEREAS, the Trust desires to retain TAMIC to provide or to arrange to
provide investment management and advisory services to the Portfolio, in the
manner and on the terms and conditions set forth in this Agreement; and
WHEREAS, TAMIC is willing to provide or to arrange to provide such
services to the Portfolio, in the manner and on the terms and conditions 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
(a) 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 hereby appoints TAMIC to provide investment advisory
services for the Portfolio. Pursuant to this Agreement and subject to the
oversight and supervision by the Board, TAMIC shall manage the investment and
reinvestment, or arrange for the investment and reinvestment, of the
Portfolio's assets. TAMIC hereby accepts the appointment by the Trust in the
foregoing capacity and agrees, at TAMIC's own expense, to render the services
set forth herein and to provide the office space, furnishings, equipment, and
personnel
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required by TAMIC to perform these services on the terms and for the
compensation provided in this Agreement.
(b) The Trust agrees to provide TAMIC promptly with copies of all
amendments and supplements to the current Prospectus and the SAI, and copies of
any procedures and guidelines adopted by the Board applicable to the Portfolio
and any amendments thereto (the "Board Procedures"), on an on-going basis.
Until the Trust delivers any such amendment or supplement or Board Procedures,
TAMIC shall be fully protected in relying on the last Prospectus and SAI and
any Board Procedures, , previously furnished to TAMIC. In addition, the Trust
shall furnish TAMIC 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.
The Trust shall also inform TAMIC of the results of any audits or examinations
by regulatory authorities pertaining to TAMIC's responsibilities for the
Portfolio. The Trust further agrees to furnish TAMIC with any materials or
information that TAMIC may reasonably request to enable it to perform its
functions under this Agreement.
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 objective, policies and restrictions as communicated to it
by the Board and as are set forth in the Prospectus and SAI. TAMIC shall not
delegate any of the Adviser's duties under this Agreement to any other duly
organized investment adviser (a "Subadviser") until the Board and a majority of
those trustees who are not parties to this Agreement or "interested persons" of
any party have approved said Subadviser; provided, that, in the event that
TAMIC is authorized to delegate any of its duties under this Agreement to a
Subadviser, TAMIC shall retain overall responsibility for these delegated
powers and functions and any and all obligations and liabilities in connection
therewith, and TAMIC shall remain responsible for ensuring that each Subadviser
conducts its operations in a manner consistent with the terms of this
Agreement.
3. Information to be Provided to the Trust
TAMIC shall keep the Board and the Trust informed of developments
materially affecting the Portfolio. In this regard, TAMIC shall provide to the
Board and the Trust's officers 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, or shall ensure that any
Subadviser shall, at least quarterly, provide 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
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Subchapter M and Section 817(h) under the Internal Revenue Code of 1986, as
amended (the "Code").
4. Standard of Care
TAMIC shall exercise its best judgment and shall act in good faith in
rendering the services contemplated herein. TAMIC and any of its officers,
directors, employees, agents, representatives, or persons controlled by it (the
"Related Parties") shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust or the Portfolio in connection with
the matters to which this Agreement relates, provided that TAMIC shall be
liable to the Trust, the Portfolio and the Portfolio's shareholders for conduct
that constitutes 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. TAMIC's Duties Regarding Portfolio Transactions
(a) Placement of Orders. TAMIC 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 TAMIC selects. To that
end, TAMIC 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, TAMIC 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, TAMIC 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
TAMIC believes will enhance its general portfolio management capabilities; the
size of the transaction; the difficulty 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, TAMIC is specifically authorized to pay those brokers and dealers
who provide brokerage and research services to TAMIC a higher commission than
that charged by other brokers and dealers if TAMIC 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 TAMIC's
overall responsibilities with respect to the Portfolio and to any other client
accounts or portfolios that TAMIC advises. The execution of such transactions
shall not be considered to represent an unlawful breach of any duty created by
this Agreement or otherwise.
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(c) Soft Dollar Arrangements. On an ongoing basis, but not less often than
annually, TAMIC shall identify and provide a written description to the Trust
of all "soft dollar" arrangements that TAMIC 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, TAMIC shall
provide the Trust 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. TAMIC 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
TAMIC manages. When an order is so aggregated: (a) 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 (b) 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), TAMIC
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 TAMIC considers equitable. The Portfolio and TAMIC each recognize
that in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio.
6. Compensation
In consideration of the services rendered, the facilities furnished, and
the expenses assumed pursuant to this Agreement, the Trust will pay TAMIC a fee
at the annual rate of 0.75% 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 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.
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7. Expenses
TAMIC 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
and shall pay: (a) any subadviser fee incurred under any and all Subadvisory
Agreement(s) with respect to the Portfolio, and (b) any other fees required to
be paid to any Subadviser. 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 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.
8. Services to Other Companies or Accounts
(a) 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 the 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 that 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. This
Agreement shall not in any way limit or restrict TAMIC or any of its
A-5
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
TAMIC of its duties and obligations under this Agreement.
(b) Moreover, by reason of investment banking and other activities, TAMIC
or its affiliates may from time to time acquire privileged and confidential
information about corporations or other entities and their securities, The
Trust recognizes and acknowledges that TAMIC or it affiliates will not be free
to divulge such information to the Trust or to act upon such information.
9. Delegation of Proxy Voting Rights
The Trust delegates to TAMIC the Trust's discretionary authority to
exercise voting rights with respect to the securities and other investments
held by the Portfolio. TAMIC shall exercise these voting rights unless and
until the Trust revokes this delegation in writing. The Trust may revoke this
delegation at any time without cause. TAMIC shall provide the Trust with a
written copy of its proxy voting guidelines. TAMIC shall maintain and preserve
a record, in an easily accessible place for a period of not less than five (5)
years or other such period under Rule 204-2 of the Advisers Act, of TAMIC's
voting procedures, and of TAMIC's actual votes with respect to those securities
and other investments including all information and data required to be filed
on Form N-PX by the Trust, and TAMIC shall supply this record to the Trust, or
any authorized representative of the Trust, 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.
10. Affiliated Brokers and Transactions
(a) Affiliated Brokers. TAMIC 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 TAMIC 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
Investment Advisers Act of 1940, as amended (the "Advisers Act"); (c) the
provisions of the Securities Exchange Act of 1934, as amended, including, but
not limited to, Section 11(a) thereof and any exchange on which a security may
be listed or traded; and (d) other provisions of applicable law. These
brokerage services are not within the scope of the duties of TAMIC under this
Agreement. Subject to the requirements of applicable law and any procedures
adopted by the Board, TAMIC or its affiliates may receive brokerage
commissions, fees or other remuneration from the Portfolio or the Trust for
these services in addition to TAMIC's fees for services under this Agreement.
A-6
(b) Affiliated Transactions. Provided that the Trust has approved
procedures under an applicable exemptive rule of the 1940 Act and subject to
said procedures, TAMIC is hereby authorized to engage in agency cross
transactions with other registered investment companies or clients advised by
TAMIC.
11. Custody
Nothing in this Agreement shall require TAMIC to take or receive physical
possession of cash, securities, or other investments of the Portfolio.
12. Registration as Investment Adviser
TAMIC is registered as an investment adviser with the U.S. Securities and
Exchange Commission ("SEC") under the Advisers Act. TAMIC shall remain so
registered throughout the term of this Agreement and shall notify the Trust
immediately if TAMIC ceases to be so registered as an investment adviser.
13. Code of Ethics
TAMIC 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. TAMIC will provide
the Trust 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 TAMIC shall certify to
the Trust that TAMIC 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 TAMIC shall furnish a written report to the Trust
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, TAMIC shall permit
representatives of the Trust to examine the reports (or summaries of the
reports) required to be made by Rule 17j-1(d)(1) relating to enforcement of the
code of ethics.
14. 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
A-7
Portfolio upon sixty (60) days' written notice to TAMIC, or (2) by TAMIC upon
60 days' written notice to the Trust. This Agreement will also terminate
automatically in the event of its assignment.
(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.
15. Representations and Covenants of the Trust
(a) The Trust represents that a copy of the Declaration of Trust is on
file with the Secretary of State of the Commonwealth of Massachusetts and the
clerk of the City of Boston. The Trust further represents and covenants 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.
(b) The Trust represents and covenants that it is duly organized and
validly existing under Massachusetts law with the power to own and possess the
Trust's assets and carry on the Trust's business as this business is now being
conducted;
(c) The Trust represents and covenants that it has the authority to enter
into and perform the services contemplated by this Agreement; and
(d) The Trust represents and covenants that it is (and during the term of
this Agreement, will remain) 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 (and during the term of this Agreement will remain)
registered under the Securities Act of 1933 and under any applicable state
securities laws.
16. Representations and Covenants of TAMIC
(a) TAMIC represents and covenants that it: (1) is duly organized and
validly existing under New York law with the power to own and possess TAMIC's
assets and carry on TAMIC's business as this business is now being conducted;
(2) has the authority to enter into and perform the services contemplated by
this Agreement; (3) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement; (4) 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; and (5) shall promptly
notify the Trust of the occurrence of any event that would disqualify it from
serving as an investment adviser to an investment
A-8
company pursuant to Section 9(a) of the 1940 Act. TAMIC also represents and
covenants 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.
(b) TAMIC represents and covenants that 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. TAMIC shall also 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. TAMIC
shall promptly inform the Trust if any information in the Prospectus or SAI, or
if any action relating to TAMIC 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.
(c) TAMIC represents that 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 Adviser in
writing. The Trust shall promptly notify TAMIC in writing of changes to (2) or
(3) above, which shall be implemented as soon as reasonably possible.
(d) TAMIC represents and covenants that it shall conduct its activities
under this Agreement in a manner consistent with its code of ethics maintained
pursuant to Rule 17j-1 under Section 17(j) of the 1940 Act. TAMIC also agrees
to require that any Subadviser shall adopt and follow a similar code of ethics
and that such Subadviser shall be obligated to provide a copy of said code,
together with certifications of its adoption and other matters pursuant to Rule
17j-1, to the Trust.
(e) TAMIC represents and covenants 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, provided that the Trust has given
copies of such no-action letters and orders to TAMIC.
17. 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.
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18. Records
(a) Maintenance of Records. TAMIC 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 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. TAMIC agrees that all books and records which
TAMIC maintains for the Portfolio or the Trust are the Trust's property and
further agrees to surrender promptly to the Trust any books, records, or
information upon the Trust's request; provided, however, that TAMIC 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 TAMIC's
offices. The Trust or the Trust's authorized representatives shall have the
right to copy any records in TAMIC'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. TAMIC 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
or either of their authorized representatives not less frequently than
annually.
19. Limitation of Liability
Except as may otherwise be prohibited by the 1940 Act or other applicable
federal securities law, TAMIC and/or its Related Parties shall not be liable 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 that TAMIC or its Related Parties shall be liable by
reason of conduct that constitutes 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
and its Related Parties for any loss, liability, cost, damage or expense
(including reasonable attorneys fees and costs) arising from any claim or
demand by any past or present shareholder of the Trust except if the loss,
liability, cost, damage or expense (including reasonable attorneys fees and
costs) is based upon TAMIC's or a Related Party'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.
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20. 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.
21. 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.
22. 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 "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.
23. 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.
THE TRAVELERS SERIES TRUST
By:
------------------------------------------------
Name:
Title:
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY LLC
By:
------------------------------------------------
Name:
Title:
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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 State of
Delaware (the "Subadviser"). The Subadviser is a member of the UniCredito
Italiano Banking Group, register of banking groups.
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 as 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
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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 to provide promptly 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 TAMIC 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 1940 Act; (c) make
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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 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 other reports as agreed upon from time to time
concerning transactions and performance of the Portfolio, in such form as may
be mutually agreed upon from time to time. 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 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") (collectively, the "Record
Retention Rules"). TAMIC and the Trust shall maintain and preserve all books
and other records not related to the Portfolio's transactions as required under
such rules. The Subadviser shall furnish to TAMIC all information relating to
the Subadviser's services hereunder reasonably requested by TAMIC within a
reasonable period of time after TAMIC makes such request. The Subadviser agrees
that all records which it maintains for the Portfolio under the Record
Retention Rules are the property of the Trust and that the Subadviser will
surrender, within a reasonable period of time (which shall not exceed 30 days)
after TAMIC or the Trust makes such a request to surrender, such records.
(iii) The Subadviser shall comply with Board Procedures and any amendments
thereto provided to the Subadviser by TAMIC or the Trust. 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
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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 Trust, and any
applicable state securities law or regulation. TAMIC shall provide Subadviser
with copies of any such SEC no-action letter or Order.
3. Information and Reports
(a) The Subadviser shall keep the Trust and TAMIC informed of developments
relating to its duties as subadviser of which the Subadviser has, or should
have, knowledge that materially affect the Portfolio. In this regard, the
Subadviser shall provide the Trust, TAMIC, and their respective officers with
such periodic reports concerning the obligations the Subadviser has 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 Code. The Subadviser also shall
certify quarterly to the Trust and TAMIC that it and its "advisory persons" (as
defined in Rule 17j-1) have complied materially with the requirements of Rule
17j-1 during the previous quarter or, if not, explain what the Subadviser has
done to seek to ensure such compliance in the future. Annually, the Subadviser
shall furnish a written report, which complies with the requirements of Rule
17j-1, concerning the Subadviser's Code of Ethics to the Trust and TAMIC.
(b) Each of 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 or the Subadviser
becomes aware of any changes that should be added to or deleted from the list
of affiliated persons.
(c) Prior to each Board meeting, the Subadviser will provide TAMIC and the
Board with reports regarding the Subadviser's management of the Portfolio
during the most recently completed quarter, to include written certifications
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 the diversification requirements
of Section 817(h) under the Code, and otherwise in such form as may be mutually
agreed upon
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by the Subadviser and TAMIC. The Subadviser will also provide TAMIC with any
information reasonably requested regarding its management of the Portfolio
required for any meeting of the Board, or for any shareholder report, amended
registration statement, or prospectus supplement to be filed by the Trust with
the SEC.
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.
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 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.
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(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. On occasions when the Subadviser deems the
purchase or sale of a security or futures contract to be in the best interest
of the Portfolio well as other clients, the Subadviser is authorized, but not
required, to aggregate purchase and sale orders for securities or futures
contracts 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, 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 and consistent with its fiduciary obligations to
the Portfolio and its other clients. The Subadviser, TAMIC and the Trust
recognize that in some cases this procedure may adversely affect the size of
the position obtainable for the Portfolio.
6. 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.
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7. 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 employees or agents with respect thereto. The
Trust and TAMIC shall assume all other expenses that the Subadviser has not
specifically assumed hereunder.
8. 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
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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.
9. 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, pursuant to the requirements
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 ("Required
Proxy Information") by the Trust for the fiscal year ending each June 30th
pursuant to the requirements of the 1940 Act, and the Subadviser shall supply
such Required Proxy Information to the Trust and TAMIC, or any authorized
representative of the Trust or TAMIC, periodically, but at least for each
quarterly board meeting, provided that the Subadviser shall provide the Trust
within a reasonable period , but not later than the July 31st following said
June 30th with a record of all Required Proxy Information necessary to comply
with the 1940 Act filing requirements governing proxy votes for each fiscal
year ending June 30th.
10. 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.
11. Custody
Nothing in this Agreement shall require the Subadviser to take or receive
physical possession of cash, securities, or other investments of the Portfolio.
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12. 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, and annually will
comply with the requirements of Rule 17j-1 with respect to reporting to the
Trust and the Board. Upon written request of the Trust or TAMIC with respect to
violations of the code of ethics directly affecting the Portfolio, the
Subadviser shall permit representatives of the Trust or TAMIC to examine
reports (or summaries of the reports) required to be made by Rule 17j-1(d)(1)
relating to enforcement of the code of ethics.
13. 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, (i) 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, (ii) by
TAMIC upon 60 days' written notice to the Trust and Subadviser, or (iii) 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: (i) 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 (ii) if required by applicable law, the vote of a majority of
outstanding shares of the Portfolio.
14. 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
limited liability company action, 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
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parties hereto, and the execution, delivery and performance of this
Agreement by the parties hereto does not contravene or constitute a
default under (i) any provision of applicable law, rule or regulation,
(ii) TAMIC's governing instruments, or (iii) 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.
(e) It (i) is registered with the SEC as an investment adviser under the
Advisers Act, (ii) 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 (iii) 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.
(g) 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.
(h) It shall carry out its responsibilities under this Agreement in
compliance with (i) federal and state law, including securities law,
governing its activities; (ii) the Portfolio's investment objective,
policies, and restrictions, as set forth in the Prospectus and SAI, as
amended from time to time; and (iii) 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 (ii) or (iii) above, and upon receipt of such
notice, TAMIC shall promptly notify the Subadviser in writing of such
changes to (ii) or (iii) above.
15. Representations and Covenants of the Subadviser
The Subadviser represents and covenants to TAMIC as follows:
(a) It is duly organized and validly existing under Delaware law with the
power to own and possess its assets and carry on its business as this
business is now being conducted.
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(b) The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action on the part of its board of
directors, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the
Subadviser 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 (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser governing
instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instruments binding upon the Subadviser.
(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 (i) is registered with the SEC as an investment adviser under the
Advisers Act, (ii) 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 (iii) 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 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
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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.
(h) It shall carry out its responsibilities under this Agreement in
compliance with (i) federal and state law, including securities law,
governing its activities; (ii) the Portfolio's investment objective,
policies, and restrictions, as set forth in the Prospectus and SAI, as
amended from time to time; and (iii) any policies or directives as the
Board may from time to time establish or issue and communicate to the
Subadviser in writing. The Trust or TAMIC shall promptly notify the
Subadviser in writing of changes to (ii) or (iii) above.
(i) 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.
(j) 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; provided, however, that the Trust or TAMIC
has provided the Subadviser with copies of any such no-action letters,
orders or rules (except rules generally applicable to all registered
investment companies promulgated under the 1940 Act)
16. 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.
17. 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 the requirements of paragraphs (b)(5),
(b)(6), (b)(7), (b)(9), (b)(10), and (f) of Rule 31a-1, as such may be amended
from time to time, under the 1940 Act with respect to the Subadviser's
responsibilities hereunder for the Portfolio (the "Portfolio's Books and
Records").
(b) Ownership of Records. The Subadviser agrees that the Portfolio's Books
and Records are the Trust's property and further agrees to surrender promptly
to the Trust or TAMIC the Portfolio's Books and Records upon the request of the
Trust or TAMIC; provided, however, that the Subadviser may retain copies of the
records at its own cost. The Portfolio's Books and Records shall be made
available, within two
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(2) 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, the Portfolio's Books and Records 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 two (2) business days.
18. 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.
19. Limitation of Liability; Indemnification
(a) Limitation of Liability. Except as provided herein and as may
otherwise be provided by the 1940 Act or other federal securities laws, TAMIC
and its respective officers, directors, employees, agents, representatives or
persons controlled by them (collectively, the "Related Parties") on the one
hand, and the Subadviser and the Subadviser Related Parties on the other hand,
shall not be liable to each other, 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 that
TAMIC, the Subadviser and any respective Related Party shall be so liable by
reason of conduct that constitutes 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.
B-13
(b) Subadviser Indemnity to TAMIC. The Subadviser agrees to indemnify and
defend TAMIC and TAMIC's Related Parties 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 (i) the Subadviser's conduct that
constitutes 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, or (ii) any actual or alleged material
misstatement or omission in the Trust's registration statement, any proxy
statement, or communication to current or prospective investors in the
Portfolio relating to disclosure about the Subadviser in writing provided to
TAMIC or the Trust by the Subadviser.
(c) TAMIC Indemnity to Subadviser. TAMIC agrees to indemnify and defend
the Subadviser and the Subadviser's Related Parties 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 (i) any matter to which this
Agreement relates, except with respect to conduct of the Subadviser or the
Subadviser's Related Parties that constitutes 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, or (ii) 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 the 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 19 (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 19 (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
B-14
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 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 19 shall survive the termination of
this Agreement.
20. 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.
21. 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.
B-15
22. 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.
23. 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.
24. 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 "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.
25. 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:
B-16
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 the 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 Insurance
Company 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.