SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement. |_| Confidential, for use of the
|_| Definitive proxy statement. Commissioner only (as permitted by
|_| Definitive additional materials. 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
MFS Research Portfolio
One Cityplace, 19th Floor
Hartford, Connecticut 06103
October 1, 2003
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting (the "Meeting") of the
shareholders of the MFS Research Portfolio (the "Fund"), a portfolio of The
Travelers Series Trust (the "Trust"), will be held at the Trust's offices at One
Cityplace, 19th Floor, Hartford, Connecticut 06103 on November 14, 2003 at 9:00
a.m. to approve or disapprove a new investment subadvisory agreement between
Travelers Asset Management International Company LLC and Merrill Lynch
Investment Managers, L.P. on behalf of the Fund.
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 September 10, 2003 as the record date for the determination
of shareholders entitled to notice of, and to vote at, the Meeting and any
adjournments thereof. 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 voting instruction
card as soon as possible in the post-paid envelope provided. Your prompt
response is appreciated.
YOUR VOTING INSTRUCTIONS ARE VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF
SHARES THAT YOU OWN.
THE TRAVELERS SERIES TRUST
MFS Research Portfolio
One Cityplace, 19th Floor
Hartford, Connecticut 06103
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 14, 2003
The Board of Trustees (the "Board") of The Travelers Series Trust (the "Trust")
Solicits Your Voting Instructions for Use at a Special Meeting of the
Shareholders of the MFS Research 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
annuity contracts or life insurance policies ("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 November 14, 2003, and
at any adjournments thereof (the "Meeting"). The Board expects that this proxy
statement will be mailed to contract owners on or about October 1, 2003.
GENERAL
The purpose of the Meeting is to approve or disapprove a new subadvisory
agreement for providing investment advisory services to the Fund (the
"Proposal"). Under the Proposal, you will be asked to approve the Investment
Subadvisory Agreement (the "New Subadvisory Agreement") between the Fund's
investment adviser, Travelers Asset Management International Company LLC
("TAMIC"), and Merrill Lynch Investment Managers, L.P. ("MLIM"). In addition,
the Fund may act on any and all such other business as may properly come before
the Meeting. A form of the New Subadvisory Agreement is attached as Exhibit A to
this Proxy Statement.
VOTING INSTRUCTIONS
As of the close of business on September 10, 2003 (the "record date"),
separate accounts that fund variable annuity contracts and variable life
insurance policies ("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
contract owners as to how TL&A should vote the shares associated with their
insurance contract and/or policy with respect to the Proposal. 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
instructions at any time before 5:00 p.m. Eastern time on November 13, 2003, by
executing and delivering later-dated signed voting instructions to TL&A. TL&A
will use all voting instruction cards that are properly executed, received in
time, and not so revoked 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 Proposal. 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, 19th
Floor, 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 $32,000.
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 September 10, 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 associated with contracts owned by two or more
persons (whether as joint tenants, co-fiduciaries, or otherwise) will be voted
as follows, unless a written instrument or court order providing to the contrary
has been filed with the Trust: (1) if only one person votes, that vote will bind
all; (2) if more than one person votes, the vote of the majority will bind all;
and (3) if more than one person votes and the vote is evenly divided, the vote
will be cast proportionately.
This proxy material is being mailed to owners of, or participants in, the
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. Only the Fund's shareholders vote on the Proposal under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Trust's
Agreement and Declaration of Trust.
Vote required: approval of the 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 Proposal:
PROPOSAL
APPROVAL OF THE INVESTMENT SUBADVISORY AGREEMENT BETWEEN TRAVELERS ASSET
MANAGEMENT INTERNATIONAL COMPANY LLC, ON BEHALF OF MFS RESEARCH PORTFOLIO, AND
MERRILL LYNCH INVESTMENT MANAGERS, L.P.
Under the Proposal, the Board is asking shareholders to approve the New
Subadvisory Agreement between TAMIC (on behalf of the Fund) and MLIM. The
approval is necessary because the Board has approved the termination of the
investment subadvisory agreement (the "Current Subadvisory Agreement") between
TAMIC,
2
on behalf of the Fund, and the Fund's current subadviser, Massachusetts
Financial Services Company ("MFS"). The New Subadvisory Agreement will become
effective [on or after] November 17, 2003, subject to the approval of the New
Subadvisory Agreement under this Proposal by the shareholders of the Fund. Only
shareholders of the Fund may vote to approve the New Subadvisory Agreement.
If the Fund's shareholders approve the New Subadvisory Agreement, it would
become effective on or after November 17, 2003, would continue initially for a
two-year period, and, thereafter, would continue automatically for successive
annual periods, 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 members of the Board who
are not "interested persons" (as such term is defined in the 1940 Act) of the
Trust (the "Independent Trustees"). If shareholders fail to approve the New
Subadvisory Agreement, the Board will consider what alternatives may be most
appropriate for the Fund and its shareholders, including resubmitting the
proposed New Subadvisory Agreement for shareholder approval.
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 06115. TAMIC is an indirect wholly owned
subsidiary of Citigroup, Inc., whose principal offices are located at 399 Park
Avenue, New York, New York 10022. As of December 31, 2002, TAMIC had
approximately $13.7 billion in assets under management. TAMIC's directors and
principal executive officers are as follows:
Principal Occupation
Name and Address* Position with TAMIC (need titles in CII)
- --------------------- --------------------------------------- ---------------------
David A. Tyson Director, Chairman
Joseph Rueli, Jr. Director, Senior Vice President, Chief
Financial Officer
F. Denney Voss Director, Senior Vice President, Chief
Investment Officer
John R. Britt Director, Secretary
Eugene Collins Senior Vice President
Kimberly Guerrero Senior Vice President
Thomas Hajdukiewicz Senior Vice President
Glenn Marchak Senior Vice President
James Metz Senior Vice President
David Miller Senior Vice President
Emil Molinaro Senior Vice President
Jordan Stitzer Senior Vice President
Patricia Uzzel Compliance Officer
- ------------
* Address: 242 Trumbull Street, Hartford, CT 06115
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Information About MLIM
MLIM is a wholly owned subsidiary of Merrill Lynch & Co., Inc. ("Merrill
Lynch"), whose principal offices are located at Princeton, New Jersey. Founded
in 1885, Merrill Lynch is a leading global financial management and advisory
company that is publicly held and trades on the New York Stock Exchange. MLIM
was established in 1976 to provide an array of investment products to retail and
institutional clients. As of December 31, 2002, Merrill Lynch had assets under
management of approximately $442 billion worldwide, including over $__ billion
in assets under management by MLIM. MLIM's principal offices are located at
Princeton, New Jersey. MLIM's directors and principal officers are as follows:
Name and Address Position with MLIM and Principal Occupation
- ---------------------- --------------------------------------------------------------------------
Robert C. Doll, Jr.* President and Chief Investment Officer
Brian A. Murdock* First Vice President
Brian Fullerton* Head of Investments and Head of Global Alternatives and Risk Management
Lawrence D. Haber* Chief Financial Officer
Andrew Donohue* Global General Counsel
Anthony J. Patti* Head of Americas Risk and Performance
Kevin McKenna* Managing Director and Head of Fixed Income Division
Frank Salerno* Managing Director and Chief Operating Officer for the institutional asset
management business
Thomas J. Verage* Managing Director responsible for equity investments
Jay Willoughby* Chief Investment Officer of Private Investors unit
John M. Loffredo* Co-Head of Tax Exempt Investments
Kenneth A. Jacob* Co-Head of Tax Exempt Investments
Archie J. Struthers* Head of Managed Account Team and Director of Private Investors unit
- ------------
* Merrill Lynch Investment Managers, L.P., P.O. Box 9011, Princeton, NJ
08453-9011.
From time to time, MLIM 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 MLIM 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, MLIM may use such
services for clients other than the Fund from which the related commissions are
derived.
MLIM also serves as investment adviser or subadviser to certain portfolios
of other registered investment companies having investment objectives similar to
that of the Fund. The size of such other portfolios and the rate of MLIM's
compensation are as follows:
Assets Under Management
Fund Management Fee (12/31/02)
- ------ ---------------- ------------------------
MLIM's broker-dealer affiliates currently distribute variable life
insurance contracts issued by TL&A, an affiliate of TAMIC. In the future, MLIM's
broker-dealer affiliates may also distribute variable annuity contracts issued
by TL&A.
4
Provisions of the New Subadvisory Agreement
Under the terms of the New Subadvisory Agreement, MLIM would serve as the
investment subadviser to the Fund, subject to the supervision of the Board and
TAMIC, and manage the day-to-day 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 MLIM to (1) perform investment research and
evaluate financial data, (2) consult with, make recommendations to, and report
regularly to the Board, (3) vote proxies on the Fund's behalf with respect to
portfolio securities held by the Fund, and (4) 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
Investment Advisory Agreement between the Trust and TAMIC.
The New Subadvisory Agreement provides that MLIM 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 Subadvisory Agreement may be terminated without penalty upon sixty-
(60) days' written notice to MLIM 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 MLIM. The New Subadvisory Agreement terminates
automatically in the event of its "assignment" (as such term is defined under
the 1940 Act).
Material Differences Between the Current Subadvisory Agreement and the New
Subadvisory Agreement
There are no material differences between the Current Subadvisory Agreement
and the New Subadvisory Agreement. The subadvisory fee, which would be payable
by TAMIC at the annual rate of 0.375% of the Fund's average daily net assets,
remains the same.
Evaluation by the Board of Trustees
On July 25, 2003, the Board met in person at a meeting called for the
purpose of considering, among other things, retaining MLIM to act as subadviser
to the Fund under the terms of the New Subadvisory Agreement. The Board reviewed
materials furnished by management and MLIM describing (1) MLIM and its
affiliates, senior personnel, portfolio managers, analysts, and economists, (2)
MLIM's method of operation and proposed investment philosophy for the Fund, and
(3) MLIM's performance record and financial condition. The Board also considered
data provided by management on the Fund's lack of asset growth and market share,
the Fund's past performance under the Current Subadvisory Agreement with MFS as
its subadviser, comparable performance of other similar funds, and the past
performance of MLIM in providing investment advisory services to funds managed
in a substantially similar manner to what has been proposed for the Fund. A
representative of MLIM was present at the meeting to talk with the Board and
responded to questions.
The Board also considered the investment philosophy of the Fund under MFS's
current management, which is long-term growth of capital and future income by
investing at least 80% of its net assets in common stock of companies of any
size. The Board noted that under the management of MFS; (1) a committee of
investment research analysts allocates the Fund's assets among various
industries, and (2) the Fund focuses on companies that the subadviser believes
have favorable prospects for long-term growth, superior management, dominant or
growing market shares and attractive valuations based on current and expected
earnings or cash flow. The Board noted that this approach has yielded results
that have underperformed the Fund's benchmark and its peer group.
[The Board determined that MLIM's proposed approach to managing the Fund --
namely, achieving the Fund's investment object by investing primarily at least
80% of its assets in a diversified portfolio of equity securities of large cap
companies located in the United States included in the Russell 1000 Index, using
an investment approach that blends growth and value -- likely potentially
enhance the Fund's performance.]
5
[In determining whether or not to approve the New Subadvisory Agreement and
recommend its approval to shareholders, the Board, including the disinterested
Trustees, considered various materials and representations provided by MLIM,
including, among other things:
(1) the background and experience of the MLIM persons who would be
responsible for the Fund's management under the New Subadvisory
Agreement, respectively;
(2) compensation to be received by MLIM under the New Subadvisory
Agreement; and
(3) the commonality of the provisions of the New Subadvisory Agreement and
Current Agreement.
Other factors also considered were:
(1) the fairness of the compensation payable to MLIM under the New
Subadvisory Agreement;
(2) the results achieved by MLIM for the other portfolios portfolios
similar to the Fund;
(3) the personnel, operations and financial condition, and investment
management capabilities, methodologies, performance, and investment
style of MLIM;
(4) the proposal to change the Fund's name to incorporate the MLIM name
and investment approach of the new subadviser, namely
(a) that the Fund's investment objective of "long-term growth of
capital and future income" would be modified to "long-term
capital growth, current income from dividends and interest would]
not be an important consideration in selecting portfolio
securities"; and
(b) that the Fund's principal investment policies would be to invest
primarily in a diversified portfolio of equity securities of
large cap companies located in the United States using an
investment approach that blends growth and value.
If the Proposal is approved, the Fund's name would be changed to Merrill
Lynch Large Cap Core Portfolio.]
[The Board reviewed MFS's performance record over relevant periods of time
as well as the background and experience of MFS's various officers and managers.
The Board also reviewed MLIM's past performance. The Board considered MLIM's
significant breadth and depth of personnel and marketing and other services in
addition to advisory services available through MLIM. The Board concluded that
the extensive resources, investment expertise, and market profile of the MLIM
professionals could positively benefit Fund shareholders.]
[After carefully evaluating the foregoing materials and other factors, the
Board, including the disinterested Trustees, unanimously concluded that it would
be in the best interests of the Fund and its shareholders to terminate the
Current Subadvisory Agreement and enter into the New Subadvisory Agreement with
MLIM as the new investment subadviser to the Fund. Accordingly, after
consideration of the above and such other factors and information it considered
relevant, the Board unanimously approved the New Subadvisory Agreement and voted
to recommend its approval by the Fund's shareholders.]
VOTE REQUIRED
Approval of the Proposal by the Fund requires 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 disinterested Trustees,
recommends that you vote "FOR" the approval of the New Subadvisory Agreement
under the Proposal.
MORE INFORMATION ON PROPOSED CHANGES IN INVESTMENT OBJECTIVE AND MANAGEMENT
STYLE
The Fund's current investment objective is "long term growth of capital and
future income." The Fund normally invests at least 80% of its net assets in
securities of companies of any size.
6
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 subadviser and change its investment objective to seek "long term
capital growth." To pursue this investment objective, the Fund will normally
invest at least 80% of its assets in equity securities of large-cap companies
MLIM selects from among those that are, at the time of purchase, included in the
Russell 1000[RegTM] Index.
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 MLIM; and (3) MLIM'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 MLIM was
knowledgeable and experienced in the operations of the relevant financial
markets and in the laws that are applicable to such operations, and had the
personnel, financial resources and standing in the financial community to enable
it to manage the Fund effectively.
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 Fund. 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 September 10, 2003 (the record
date) will be entitled to be present and vote at the Meeting with respect to
shares of the Fund owned as of such record date. For the Fund, as of the record
date the total number of shares outstanding and entitled to vote was __________
shares.
Twenty-five percent (25%) 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 voting
instruction cards will vote in favor of such adjournment those cards that they
are entitled to vote in favor of any Proposal that has not been adopted, will
vote against any adjournments those cards require to be voted against any
Proposal that has not been adopted, and will not vote any shares with respect to
cards 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
7
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 the Proposal will be voted "FOR" the Proposal.
Voting instructions may be revoked at any time prior to 5:00 p.m. Eastern
time on November 13, 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 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.
Shareholder Proposals
The Trust is not required to, and does not generally hold, annual or any
other regularly scheduled meetings of shareholders, and currently has no plans
to hold another meeting of shareholders of the Fund. The Agreement and
Declaration of Trust provides that special meetings of the shareholders to vote
on the removal of a trustee may be called by the Board upon the written request
of shareholders owning at least 25% of the outstanding shares entitled to vote.
Written shareholder requests on that and any other request 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.
8
EXHIBIT A
FORM OF
INVESTMENT SUBADVISORY AGREEMENT
ENTERED INTO BETWEEN
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY LLC
AND
MERRILL LYNCH INVESTMENT MANAGERS, L.P.
This Investment Subadvisory Agreement (the "Agreement") is entered into as
of [November 17, 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 Merrill Lynch Investment Managers,
L.P. ("MLIM"), a limited partnership duly organized and existing under the laws
of the State of Delaware (the "Subadviser").
WHEREAS, TAMIC and The Travelers Series Trust, an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act") and organized as a Massachusetts business trust (the
"Trust"), have entered into an Investment Advisory Agreement dated March 20,
1998, (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 Merrill Lynch
Large Cap Core 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 persons"
of any party thereto in accordance with the requirements of the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, TAMIC desires to retain the Subadviser to render investment
advisory services to TAMIC in the manner and on the terms set forth in this
Agreement, and the Subadviser desires to provide such services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, TAMIC and the Subadviser agree as follows:
1. Investment Description; Appointment
(a) Investment Description. The Trust desires to employ its capital
relating to the Portfolio by investing and reinvesting in investments of the
kind and in accordance with the
investment objective(s), policies and limitations specified in the prospectus
(the "Prospectus") and the statement of additional information (the "SAI") filed
with the Securities and Exchange Commission (the "SEC") as part of the Trust's
Registration Statement on Form N-lA, as may be periodically amended. TAMIC
agrees 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 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
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Subadviser shall act as TAMIC's and the Trust's agent and attorney-in-fact); and
(g) employ professional portfolio managers and securities analysts who provide
research services to the Portfolio.. The Subadviser shall in general take such
action as is appropriate to effectively manage the Portfolio's investment
practices. In addition,
(i) The Subadviser shall furnish TAMIC [routinely] 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 and
frequency 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 the records specified in
Section 16 of this Agreement and any other 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"). TAMIC and the Trust shall maintain and preserve all other
books and records for the Portfolio 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.
(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 as soon as reasonably practicable 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 will be provided to TAMIC and the
Trust, and shall institute procedures reasonably necessary to prevent Access
Person (as defined in Rule 17j-1) from violating its Code of Ethics. The
Subadviser shall follow such Code of Ethics in performing its services under
this Agreement. Further, the Subadviser represents that it has policies and
procedures regarding the detection and prevention of the misuse of material,
nonpublic information by the Subadviser and its employees as required by the
Insider Trading and Securities Fraud Enforcement Act of 1988, a copy of which it
will provide to TAMIC and the Trust upon any reasonable request.
(v) The Subadviser shall manage the investment and reinvestment of the
assets of the Portfolio in a manner consistent with the requirements of
Subchapter M and the diversification requirements of Section 817(h) 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
applicable investment restrictions (including diversification requirements)
contained in the 1940 Act and the rules and regulations thereunder, 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.
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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 would 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, 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 by the Subadviser and TAMIC. 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. 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.
(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) The Subadviser will also provide TAMIC with any information reasonably
requested regarding its management of the Portfolio required for any shareholder
report, amended registration statement, or prospectus supplement to be filed by
the Trust with the SEC. The Subadviser shall promptly inform the Trust and TAMIC
if any information in the Prospectus or SAI is (or will become) inaccurate or
incomplete, or if the Portfolio no longer is compliant with Section 817(h) of
the Code or Treasury Regulation Section 1.817-5, if applicable.
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.
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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.
(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, and of all research and other services provided
to Subadviser by a broker or dealer (whether prepared by such broker or dealer
or by a third party) as a result, in whole or in part, of the direction of
Portfolio transactions to the broker or dealer. 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
5
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 reasonably 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.
7. Expenses
The Subadviser shall bear all expenses (excluding expenses to be borne by
either the Portfolio or the Trust as described in the following sentence) 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 who are not
"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
6
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.
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 reasonably believed to be equitable to
each such company and account. TAMIC represents that the Trust recognizes that
in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio and that the Trust also understands that the
persons employed by the Subadviser to assist in the performance of the
Subadviser's duties under this Agreement may not devote their full time to such
service, and that nothing contained in this Agreement shall be deemed to limit
or restrict the right of the Subadviser to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
This Agreement shall not in any way limit or restrict the Subadviser or any of
its directors, officers, employees, or agents from buying, selling or trading
any securities or other investment instruments for its or their own account or
for the account of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance by the
Subadviser of its duties and obligations under this Agreement.
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 policies and procedures. 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 each twelve-month period ending
June 30th pursuant to the requirements of the 1940 Act and the rules and
regulations thereunder. The Subadviser shall supply such Required Proxy
Information to the Trust and TAMIC, or any authorized representative of the
Trust or TAMIC, not later than the July 31st following said June 30th.
7
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 1940
Act and 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.
12. Term of Agreement; Termination of Agreement; Amendment of Agreement
(a) Term. This Agreement shall become effective [November 17, 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.
13. 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.
8
(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 by the Board of
Trustees of the Trust, and no action by or in respect of, or filing
with, any governmental body, agency or official is required on the
part of TAMIC for the execution, delivery and performance of this
Agreement by the parties hereto, and the execution, delivery and
performance of this Agreement by the parties hereto does not
contravene or constitute a default under (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 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 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
interests 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.
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14. 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.
(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's 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 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
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to the Subadviser in writing. The Trust or TAMIC shall promptly
notify the Subadviser in writing of changes to (ii) or (iii) above.
15. 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.
16. 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 (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.
17. 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.
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(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 also 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.
18. 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) 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 or the Portfolio 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) TAMIC'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 other
communication to current or prospective investors in the Portfolio (other than a
misstatement or omission relating to disclosure about the Subadviser or the
Portfolio provided to TAMIC or the Trust in writing 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
12
Party"), notify the Indemnifying Party in writing of the commencement thereof;
provided, however, that the omission to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which it may have to any
Indemnified Party otherwise than under the provisions hereof, and shall relieve
it from liability hereunder only to the extent that such omission results in the
forfeiture by the Indemnifying Party of rights or defenses with respect to such
action. In any action or proceeding, following provision of proper notice by the
Indemnified Party of the existence of such action, the Indemnifying Party shall
be entitled to participate in any such action and, to the extent that it shall
wish, participate jointly with any other Indemnifying Party similarly notified,
to assume the defense thereof, with counsel of its choice (unless any conflict
of interest requires the appointment of separate counsel), and after notice from
the Indemnifying Party to such Indemnified Party of its election to assume the
defense of the action, the Indemnifying Party shall not be liable to such
Indemnified Party hereunder for any legal expense of the other counsel
subsequently incurred without the Indemnifying Party's consent. 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.
19. 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
notify each other in writing immediately upon becoming aware, but in no event
later than five (5) days after becoming aware, that any of the foregoing
representations and warranties are no longer true.
20. Use of Name
The Trust and TAMIC, together with its subsidiaries and affiliates may use
the names "Merrill Lynch Investment Managers," or "Merrill Lynch" "Merrill" or
any derivative thereof or logo associated therewith in offering materials of the
Portfolio only with the prior written 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 (except to the extent that the Trust
and TAMIC may be required by law to disclose the former name and/or subadviser
of the Portfolio or disclosure of such former name and/or subadviser is
reasonably necessary to avoid investor confusion), and shall promptly change its
name accordingly. The Trust acknowledges that it has adopted the name "Merrill
Lynch Investment Managers," "Merrill
13
Lynch" or "Merrill" 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
adviser or subadviser.
21. Limitation on Consultation
In accordance with Rule 17a-10 under the 1940 Act and any other applicable
law, the Subadviser shall not consult with any other subadviser to the Portfolio
or any subadviser to any other portfolio of the Trust or to any other investment
company or investment company series for which TAMIC serves as investment
adviser concerning transactions for the Portfolio in securities or other assets.
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.
14
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:
MERRILL LYNCH INVESTMENT MANAGERS, L.P.
By:
---------------------------------------
Name:
Title:
15
THE TRAVELERS INSURANCE COMPANY
THE TRAVELERS LIFE AND ANNUITY COMPANY
Please fold and detach card at perforation before mailing
MFS RESEARCH PORTFOLIO INSTRUCTION CARD FOR THE MEETING
TO BE HELD ON NOVEMBER 14, 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 MFS Research Portfolio (the "Portfolio") for a
special meeting of shareholders (the "Meeting") to be held on November 14, 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 November 14, 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
October 1, 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 and the secretary of
The Travelers Life and Annuity Company
or the secretary of the Fund, in writing
by 5:00 p.m. on November 13, 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 PROPOSAL. 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 PROPOSAL.
Please vote by filling in the appropriate box below.
FOR AGAINST ABSTAIN
1. Proposal to approve a new Investment [ ] [ ] [ ]
Subadvisory Agreement between Travelers
Asset Management International Company LLC
and Merrill Lynch Investment Managers,
L.P. on behalf of the MFS Research
Portfolio.