MANAGED ASSETS TRUST
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
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
MANAGED ASSETS TRUST
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(Name of Registrant as Specified In Its Charter)
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:_________________________
(2) Aggregate number of securities to which transaction
applies:____________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing is calculated and state how it was
determined):________________________________________________________
(4) Proposed maximum aggregate value of transaction:____________________
(5) Total fee paid:_____________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:_____________________________________________
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(4) Date Filed:_________________________________________________________
[FORM OF SUPPLEMENTAL SOLICITATION LETTER]
THE TRAVELERS LIFE AND ANNUITY COMPANY
THE TRAVELERS INSURANCE COMPANY
CITICORP LIFE INSURANCE COMPANY
FIRST CITICORP LIFE INSURANCE COMPANY
THE TRAVELERS SERIES TRUST
Convertible Securities Portfolio
Disciplined Mid Cap Stock Portfolio
Equity Income Portfolio
Federated High Yield Portfolio
Federated Stock Portfolio
Large Cap Portfolio
Mondrian International Stock Portfolio
(formerly, Lazard International Stock Portfolio)
MFS Mid Cap Growth Portfolio
MFS Value Portfolio
Mercury Large Cap Core Portfolio
(formerly, Merrill Lynch Large Cap Core Portfolio)
Pioneer Fund Portfolio
Social Awareness Stock Portfolio
Travelers Quality Bond Portfolio
U.S. Government Securities Portfolio
Zero Coupon Bond Fund Portfolio (Series 2005)
MANAGED ASSETS TRUST
CAPITAL APPRECIATION FUND
HIGH YIELD BOND TRUST
MONEY MARKET PORTFOLIO
One Cityplace, Hartford, Connecticut 06103
May __, 2005
Dear Variable Annuity Contract or
Variable Life Insurance Policy Owner:
Shares of the above-named portfolios (the "Portfolios") of The Travelers
Series Trust (the "Trust"), and the Managed Assets Trust, the Capital
Appreciation Fund, the High Yield Bond Trust, and/or the Money Market Portfolio
(such four funds the "Separate Funds," and, together with the Portfolios, the
"Funds") have been purchased at your direction by The Travelers Life and Annuity
Company, The Travelers Insurance Company, Citicorp Life Insurance Company or
First Citicorp Life Insurance Company (collectively, "TL&A") through one or more
of its separate accounts to fund benefits payable under your variable annuity
contract or variable life insurance policy (collectively, the "variable
contracts"). TL&A, as the shareholder of record and legal owner of those
separate accounts, has been asked (i) for each Fund, except for the Social
Awareness Stock Portfolio of the Trust, to approve a new investment advisory
agreement between the Fund (or, in the case of the Portfolios, the Trust, on
behalf of each Portfolio) and Travelers Asset Management International Company
LLC ("TAMIC"), the investment adviser to each Fund; (ii) to approve a proposal
with respect to the future operation of each Fund (except the Social Awareness
Stock Portfolio of the Trust) whereby TAMIC may from time to time, subject to
approval by the Board of Trustees and to the extent permitted by an exemption
("manager of managers exemption") granted by the Securities and Exchange
Commission, enter into new or amended agreements with subadvisers with respect
to the Fund without obtaining shareholder approval of such agreements, and to
permit such subadvisers to manage the assets of the Fund pursuant to such
subadvisory agreement; (iii) to elect a new member to the Board of Trustees of
the Trust and each Separate Fund; and (iv) for the Mondrian International Stock
Portfolio of the Trust, to approve a new subadvisory agreement between TAMIC and
Mondrian Investment Partners Ltd. ("Mondrian"), the subadviser for that
Portfolio.
As an owner of a variable contract with an interest in one or more of
those separate accounts, TL&A is asking you for instructions as to how to vote
the shares of each Fund that are attributable to your variable contract.
YOUR VOTE IS IMPORTANT!
TAMIC is the investment adviser for each Fund, except for the Social
Awareness Stock Portfolio of the Trust. Citigroup Inc. ("Citigroup") has reached
an agreement with MetLife, Inc. ("MetLife") to sell TL&A to MetLife. As part of
this transaction, TAMIC, which is currently an indirect wholly owned subsidiary
of Citigroup, would become an indirect wholly owned subsidiary of MetLife. Under
applicable law, a change of control of TAMIC may therefore be deemed to occur,
which in turn results in the assignment of TAMIC's investment advisory
agreements with the Funds, as well as its subadvisory agreements with the
various subadvisers, and the termination of those agreements pursuant to the
terms of those agreements.
The Funds are seeking approval by the variable contract owners of new
investment advisory agreements with TAMIC. With respect to the subadvisory
agreements, upon becoming a subsidiary of MetLife, TAMIC would also be able to
utilize an exemption, if approved by the variable contract owners, from the
Securities and Exchange Commission that would allow TAMIC to operate as a
"manager of managers" to the Funds. As a manager of managers, TAMIC would retain
the responsibility for hiring and, when appropriate, replacing subadvisers.
TAMIC would be permitted, subject to certain conditions and to Board of Trustees
approval, to enter into new subadvisory agreements for the Funds, including new
agreements with the current subadvisers of the Funds whose current subadvisory
agreements will be terminated as a result of the sale of TL&A to MetLife. TAMIC
would not need, however, to obtain variable contract owner approval, which would
otherwise be required, to enter into a new agreement with the current subadviser
or a new subadviser.
The Funds' current trustee who is affiliated with Citigroup has informed
the Funds' Board of Trustees that if the sale of TL&A to MetLife is consummated,
he will resign as a Board member. Accordingly, it is being proposed that
contract owners elect, subject to consummation of the sale, a trustee affiliated
with MetLife to replace the current trustee affiliated with Citigroup.
The approval of the new subadvisory agreement with Mondrian is in
connection with the decision of the Board of Trustees of the Trust to replace
Lazard Asset Management LLC as subadviser to the Mondrian International Stock
Portfolio (formerly, the Lazard International Stock Portfolio) with Mondrian
effective May 1, 2005.
After carefully considering the merits of the proposals, the Board of
Trustees of the Trust and the Separate Funds (the "Board") has determined that
approval of the proposals is in the best interests of each Fund's shareholders,
and indirectly the underlying contract owners of the Funds.
The Board recommends that you read the enclosed materials carefully and
then instruct TL&A to vote FOR the proposals. PLEASE TAKE A MOMENT NOW TO SIGN
AND RETURN THE VOTING INSTRUCTION FORM(S) IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
For more information, please call TL&A at 1-800-842-9368.
Respectfully,
The Travelers Life and Annuity Company The Travelers Insurance Company
Citicorp Life Insurance Company First Citicorp Life Insurance Company
WE URGE YOU TO SIGN AND RETURN THE VOTING INSTRUCTION FORM(S) IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
THE TRAVELERS SERIES TRUST
CONVERTIBLE SECURITIES PORTFOLIO
DISCIPLINED MID CAP STOCK PORTFOLIO
EQUITY INCOME PORTFOLIO
FEDERATED HIGH YIELD PORTFOLIO
FEDERATED STOCK PORTFOLIO
LARGE CAP PORTFOLIO
MONDRIAN INTERNATIONAL STOCK PORTFOLIO
(FORMERLY, LAZARD INTERNATIONAL STOCK PORTFOLIO)
MFS MID CAP GROWTH PORTFOLIO
MFS VALUE PORTFOLIO
MERCURY LARGE CAP CORE PORTFOLIO
(FORMERLY, MERRILL LYNCH LARGE CAP CORE PORTFOLIO)
PIONEER FUND PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
TRAVELERS QUALITY BOND PORTFOLIO
U.S. GOVERNMENT SECURITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIO (SERIES 2005)
MANAGED ASSETS TRUST
CAPITAL APPRECIATION FUND
HIGH YIELD BOND TRUST
MONEY MARKET PORTFOLIO
ONE CITYPLACE
HARTFORD, CONNECTICUT 06103
MAY , 2005
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
To the Shareholders of the Funds:
NOTICE IS HEREBY GIVEN THAT Special Meetings of the shareholders (the
"Shareholders") of the above-named portfolios of The Travelers Series Trust (the
"Trust"), and the Managed Assets Trust, the Capital Appreciation Fund, the High
Yield Bond Trust and the Money Market Portfolio (such four funds, the "Separate
Funds," and, together with the portfolios of the Trust, the "Funds") will be
held at One Cityplace, Hartford, Connecticut 06103, on June 10, 2005 at 9:00
a.m. (Eastern time), for the following purposes:
ITEM 1. Except for the Social Awareness Stock Portfolio of the
Trust, to consider and approve new investment advisory agreements between
each
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Fund, or the Trust on behalf of a Fund, and Travelers Asset Management
International Company LLC ("TAMIC").
ITEM 2. To consider and approve a proposal with respect to the
future operation of each Fund (except for the Social Awareness Stock
Portfolio of the Trust) whereby TAMIC may from time to time, subject to
approval by the Board of Trustees and to the extent permitted by an
exemption granted by the Securities and Exchange Commission, enter into
new or amended agreements with subadvisers with respect to the Fund
without obtaining Shareholder approval of such agreements, and to permit
such subadvisers to manage the assets of the Fund pursuant to such
subadvisory agreements.
ITEM 3. To elect a new member of the Board of Trustees.
ITEM 4. To consider and approve a new subadvisory agreement for the
Mondrian International Stock Portfolio of the Trust between TAMIC and
Mondrian Investment Partners Ltd., the subadviser of the Portfolio.
ITEM 5. To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN
FAVOR OF ITEMS 1, 2, 3 AND 4.
Shareholders of record as of the close of business on April 15, 2005 are
entitled to notice of, and to vote at, the Special Meetings or any
adjournment(s) thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST AND THE SEPARATE FUNDS. PROXIES MAY BE REVOKED AT ANY TIME
BEFORE THEY ARE EXERCISED BY SUBMITTING A WRITTEN NOTICE OF REVOCATION OR
SUBSEQUENTLY EXECUTED VOTING INSTRUCTIONS OR BY ATTENDING THE SPECIAL MEETINGS
AND VOTING IN PERSON.
By Order of the Board of Trustees
_______________________________________
Kathleen A. McGah, Secretary
May , 2005
Hartford, Connecticut
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THE TRAVELERS SERIES TRUST
Convertible Securities Portfolio
Disciplined Mid Cap Stock Portfolio
Equity Income Portfolio
Federated High Yield Portfolio
Federated Stock Portfolio
Large Cap Portfolio
Mondrian International Stock Portfolio
(FORMERLY, LAZARD INTERNATIONAL STOCK PORTFOLIO)
MFS Emerging Growth Portfolio
MFS Mid Cap Growth Portfolio
MFS Value Portfolio
Mercury Large Cap Core Portfolio
(FORMERLY, MERRILL LYNCH LARGE CAP CORE PORTFOLIO)
Pioneer Fund Portfolio
Social Awareness Stock Portfolio
Travelers Quality Bond Portfolio
U.S. Government Securities Portfolio
Zero Coupon Bond Fund Portfolio (Series 2005)
MANAGED ASSETS TRUST
CAPITAL APPRECIATION FUND
HIGH YIELD BOND TRUST
MONEY MARKET PORTFOLIO
ONE CITYPLACE
HARTFORD, CONNECTICUT 06103
(800) 842-9368
JOINT PROXY STATEMENT
This Joint Proxy Statement ("Proxy Statement") is being furnished in
connection with the solicitation of voting instructions by the Board of Trustees
(the "Board of Trustees" or the "Trustees") of The Travelers Series Trust (the
"Trust"), Managed Assets Trust ("MAT"), Capital Appreciation Fund ("CAF"), High
Yield Bond Trust ("HYBT") and Money Market Portfolio ("MMP") (MAT, CAF, HYBT,
MMP, referred to collectively herein as the "Separate Funds" and, together with
the portfolios of the Trust, referred to collectively herein as the "Funds") for
use at the joint special meeting of the shareholders of the Funds
("Shareholders") scheduled for June 10, 2005 at 9:00 a.m. (Eastern time), and
any adjournments thereof, at the offices of the Funds at the address set forth
above on this Proxy Statement (the "Meeting"). At the Meeting, Shareholders of
each Fund (except for the Social Awareness Stock Portfolio of the Trust) will be
asked to consider and approve (i) a new investment advisory agreement between
the Fund, or the Trust on behalf of the Fund, and Travelers Asset Management
International Company LLC ("TAMIC") and (ii) a proposal (the "manager of
managers proposal") with respect to the future operation of the Fund whereby
TAMIC may from time to time, subject to the approval of the Board of Trustees of
the Fund and to the extent permitted by an exemption granted by the Securities
and Exchange Commission ("SEC"), enter into new or amended agreements with
subadvisers with respect to the Fund without obtaining shareholder approval of
such subadvisory
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agreements, and to permit such subadvisers to manage the assets of the Fund
pursuant to such subadvisory agreements. The Shareholders of each of the
Separate Funds and of the Trust will be asked to elect a new member of the Board
of Trustees. In addition, the shareholders of the Mondrian International Stock
Portfolio of the Trust will be asked to consider and approve a new subadvisory
agreement between TAMIC and Mondrian Investment Partners Ltd. ("Mondrian"), the
subadviser for that Portfolio (this proposal, together with the three proposals
set forth above, are collectively referred to herein as the "Proposals").
Shareholders of each Fund will vote separately on the Proposals relating to
their Fund for the new investment advisory agreement and the managers of
managers exemption. Shareholders of each of the Separate Funds and the Trust
will vote separately on the election of a new Trustee. Only Shareholders of the
Mondrian International Stock Portfolio will vote on the approval of the new
subadvisory agreement with Mondrian. The Funds that will vote on each Proposal
are set forth in the table below.
PROPOSAL TO
PROPOSAL TO APPROVE NEW PROPOSAL TO APPROVE
APPROVE MANAGER INVESTMENT NEW SUBADVISORY
OF MANAGERS ADVISORY AGREEMENT ELECTION OF NEW TRUSTEE AGREEMENT
-------------------- -------------------- -------------------------- ---------------------
FUNDS VOTING ON PROPOSAL All Funds, except All Funds, except Each Separate Fund and the Mondrian International
the Social Awareness the Social Awareness Trust, voting separately Stock Portfolio
Stock Portfolio, Stock Portfolio,
voting separately voting separately
This Proxy Statement describes more fully the Proposals. Forms of the new
investment advisory agreements are included as Appendices A-1 through A-5 of
this Proxy Statement. The form of the new subadvisory agreement with Mondrian
for the Mondrian International Stock Portfolio is included as Appendix B.
Shares of the Funds are not offered directly to the public but are sold
only to insurance companies and their separate accounts as the underlying
investment medium for owners of variable annuity contracts and variable life
insurance policies (collectively, the "variable contracts"). As of the record
date for the Meeting, The Travelers Insurance Company, The Travelers Life and
Annuity Company, and their affiliates (collectively, "TL&A"), on behalf of
separate accounts registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), unregistered separate accounts, and related
subaccounts (collectively, the "separate accounts"), are the legal owners of
100% of the shares of each Fund.
TL&A shall vote all shares of each Fund with respect to each Proposal
(for, against or abstain from voting) in the same proportion as the timely
instructions received from owners of variable contracts that had contract values
allocated on the record date to a separate account investing in shares of the
Fund (collectively, the "contract owners"). Accordingly, TL&A is furnishing this
Proxy Statement to contract owners in connection with the solicitation of voting
instructions from the contract owners regarding approval of the Proposals.
The Meeting will be held on June 10, 2005 at 9:00 a.m. (Eastern time) at
the Fund's offices at One Cityplace, Hartford, Connecticut 06103. It is expected
that this Proxy Statement will be mailed on or about May , 2005. Shareholders
of record at the close of business on April 15, 2005 (the "Record
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Date") are entitled to vote on the Proposals. At the Meeting, Shareholders will
consider and approve or disapprove each Proposal.
The chart below lists the number of shares of each Fund that were
outstanding as of the close of business on the Record Date. Each share of a Fund
is entitled to one vote, with proportionate voting for fractional shares.
TOTAL NUMBER OF SHARES OUTSTANDING
NAME OF PORTFOLIO AS OF APRIL 15, 2005
- --------------------------------------------- ----------------------------------
Convertible Securities Portfolio 8,702,509.879
Disciplined Mid Cap Stock Portfolio 9,730,895.900
Equity Income Portfolio 21,297,827.200
Federated High Yield Portfolio 9,911,542.885
Federated Stock Portfolio 1,891,256.020
Large Cap Portfolio 19,017,865.981
Mondrian International Stock Portfolio 16,384,444.905
MFS Mid Cap Growth Portfolio 46,443,746.109
MFS Value Portfolio 4,643,225.150
Mercury Large Cap Core Portfolio 13,737,077.276
Pioneer Fund Portfolio 2,841,212,.625
Social Awareness Stock Portfolio 3,868,821.090
Travelers Quality Bond Portfolio 16,456,254.008
U.S. Government Securities Portfolio 19,084,559.893
Zero Coupon Bond Fund Portfolio (Series 2005) 476,522.441
Managed Assets Trust 17,304,827.095
Capital Appreciation Fund 15,355,285.488
High Yield Bond Trust 11,313,527.417
Money Market Portfolio 324,098,894.640
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH PROPOSAL.
COPIES OF EACH FUND'S MOST RECENT ANNUAL AND SEMIANNUAL REPORTS ARE
AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY CALLING TL&A (TOLL-FREE) AT 1-
The first three Proposals are related to the proposed sale of TL&A by
Citigroup Inc. ("Citigroup") to MetLife, Inc. ("MetLife") as described in
greater detail under Proposal 1 below. This sale is expected to close on or
about June 30, 2005 (the "MetLife Closing Date"). The approval of the new
subadvisory agreement with Mondrian (Proposal 4) is in connection with the
decision of the Board of Trustees of the Trust to replace Lazard Asset
Management LLC as subadviser to the Mondrian
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International Stock Portfolio (formerly, the Lazard International Stock
Portfolio) with Mondrian effective May 1, 2005.
PROPOSAL 1. APPROVAL OF INVESTMENT ADVISORY AGREEMENT.
SUMMARY
TAMIC currently serves as investment adviser to each Fund (except the
Social Awareness Stock Portfolio) pursuant to a separate investment advisory
agreement between TAMIC and each Fund or the Trust on behalf of each of its
Portfolios (the "Current Advisory Agreements"). For certain of the Funds, TAMIC
has entered into subadvisory and sub-subadvisory agreements with other
investment advisers. As explained in more detail below, Shareholders are being
asked to approve new investment advisory agreements between TAMIC and each Fund
or the Trust (the "New Advisory Agreements"). THE NEW ADVISORY AGREEMENTS WILL
CONTAIN TERMS SUBSTANTIALLY THE SAME AS THOSE IN THE CURRENT ADVISORY
AGREEMENTS.
MetLife and Citigroup have announced an agreement for the sale of TL&A by
Citigroup to MetLife (the "MetLife Transaction") for $11.5 billion, subject to
closing adjustments. The MetLife Transaction includes the acquisition of TL&A
subsidiary TAMIC, the investment adviser to the Funds, by MetLife. The
Shareholders of the Funds are not being asked to approve the MetLife
Transaction. However, given that the Funds' investment adviser will have a new
parent company (MetLife) and that under the 1940 Act, a change in control of the
investment adviser results in a termination of that adviser's investment
advisory contracts, the Current Advisory Agreements and current subadvisory and
sub-subadvisory agreements (the "Current Subadvisory and Sub-Subadvisory
Agreements") between TAMIC and the respective subadviser and/or sub-subadviser
of a Fund, if any, will terminate upon the effective date of the sale of TL&A.
Thus, the New Advisory Agreements must be submitted to a vote of the
Shareholders.
Under the terms of the MetLife Transaction, Citigroup will receive $1.0 to
$3.0 billion in MetLife equity securities and the balance in cash. The MetLife
Transaction is subject to certain domestic and international regulatory
approvals, as well as other customary conditions to closing. It is planned that
the closing of the MetLife Transaction will take place on June 30, 2005 or soon
thereafter.
MetLife, through its subsidiaries and affiliates, is a leading provider of
insurance and other financial services to individual and institutional
customers. In the United States, the MetLife companies serve individuals in
approximately 13 million households and provide benefits to 37 million customers
and their family members through their employee benefit plan sponsors.
Representatives of MetLife have represented to the Board of Trustees that
MetLife has no current intention of proposing changes to the investment
objectives, policies and restrictions of the Funds, or of merging the Funds with
any other investment companies or series thereof sponsored by MetLife. However,
such representatives have indicated that MetLife plans to cause TAMIC, subject
to Board approval, to retain a current affiliate of TAMIC, Salomon Brothers
Asset Management Inc. ("Salomon"), as a temporary subadviser for those Funds
that are now managed directly by TAMIC without a subadviser, effective on or
about the MetLife Closing Date. Certain of the portfolio managers employed by
Salomon are also currently employees of TAMIC and are the current portfolio
managers of some of these Funds. Therefore, for certain of the Funds, there is
expected to be no change in the day-to-day portfolio manager, while in certain
other of these Funds there will be. Furthermore, MetLife may in the future make
or recommend to the Trustees such additional changes to any Funds, including
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merging one or more Funds into other MetLife-sponsored funds, as it determines
are appropriate and as permitted by applicable law.
In connection with the closing of the MetLife Transaction, MetLife,
Citigroup and certain of their affiliates will enter into a Distribution
Agreement under which Citigroup-affiliated broker-dealers will, subject to the
terms and conditions of such Distribution Agreement, continue to offer existing
TL&A insurance contracts for a period of ten years from the MetLife Closing
Date. In addition, MetLife, Citigroup and certain of their affiliates will enter
into an Investment Products Agreement under which the existing TL&A insurance
products will, for a period of five years after the MetLife Closing Date and
subject to the other terms and conditions of the Investment Products Agreement,
continue to include the same Citigroup-sponsored funds that are currently
included as investment options under such products.
As reflected by Proposal 2, representatives of MetLife have recommended
that each Fund (except the Social Awareness Stock Portfolio) operate in the
future as a "manager of managers" fund. (Please see Proposal 2 for more
information.) Thus, if Proposal 2 is approved by the Shareholders of each Fund
at the Meeting, new subadvisory and sub-subadvisory agreements for the Funds
will be approved only by the Board of the Trust or the Separate Fund, as
permitted by the manager of managers proposal.
MetLife has agreed that it will satisfy certain conditions set forth in
Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe
harbor, which allows an investment adviser to an investment company or any of
its affiliated persons to receive any amount or benefit in connection with a
change in control of the investment adviser so long as certain conditions are
met. One such provision provides that no "unfair burden" may be imposed upon the
investment company as a result of such a change-in-control transaction or any
express or implied terms, conditions or understandings applicable thereto. The
term "unfair burden" is defined in Section 15(f) to include any arrangement,
during the two-year period after the change in control, whereby the investment
adviser, or any interested person of such adviser, receives or is entitled to
receive any compensation, directly or indirectly, from the investment company or
its shareholders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company).
The Funds have not been advised by MetLife or TAMIC of any circumstance
arising from the MetLife Transaction that might result in the imposition of an
"unfair burden" on the Funds as a result of the MetLife Transaction. Moreover,
MetLife has agreed that for a period of not less than two years after the
consummation of the MetLife Transaction, it will refrain from imposing an
"unfair burden" on the Funds in connection with the MetLife Transaction.
Proposal 1 assumes the consummation of the MetLife Transaction. Should the
MetLife Transaction fail to close, then there would be no change in control of
TAMIC, and no consequent termination of the Current Advisory Agreements. Thus no
vote would be necessary to approve any new agreements.
- 10 -
THE INVESTMENT ADVISORY AGREEMENTS
THE CURRENT ADVISORY AGREEMENTS
The following chart lists the date of each Current Advisory Agreement, the
date it was last considered and renewed or approved by the Trustees, the date on
which it was last approved by Shareholders subsequent to the commencement of
operations of the Fund, and the reason it was last submitted for Shareholder
approval.
DATE LAST
APPROVED BY
DATE LAST APPROVED SHAREHOLDERS AND
DATE OF CURRENT OR RENEWED BY REASONS FOR
NAME OF PORTFOLIO ADVISORY AGREEMENT TRUSTEES SUBMISSION
- -------------------------------------- ------------------ ------------------ ----------------
Convertible Securities Portfolio May 1, 1998, as July 23, 2004 N.A.
last amended
October 31, 2003
Disciplined Mid Cap Stock Portfolio January 1, 1997, July 23, 2004 N.A.
as last amended
October 31, 2003
Equity Income Portfolio August 1, 1996, July 23, 2004 N.A.
as last amended
September 1, 2004
Federated High Yield Portfolio August 1, 1996 as July 23, 2004 N.A.
last amended
October 31, 2003,
Federated Stock Portfolio August 1, 1996 as July 23, 2004 N.A.
last amended
October 31, 2003,
Large Cap Portfolio August 1, 1996, July 23, 2004 N.A.
as last amended
September 1, 2004
Mondrian International Stock Portfolio August 1, 1996, July 23, 2004 N.A.
as last amended
May 1, 2005
MFS Mid Cap Growth Portfolio March 20, 1998, July 23, 2004 N.A.
as last amended
September 1, 2004
MFS Value Portfolio July 20, 1998, as July 23, 2004 N.A.
last amended
September 1, 2004
Mercury Large Cap Core Portfolio March 20, 1998, July 23, 2004 N.A.
as last amended
September 1, 2004
- 11 -
DATE LAST
APPROVED BY
DATE LAST APPROVED SHAREHOLDERS AND
DATE OF CURRENT OR RENEWED BY REASONS FOR
NAME OF PORTFOLIO ADVISORY AGREEMENT TRUSTEES SUBMISSION
- -------------------------------------- ------------------ ------------------ ----------------
Pioneer Fund Portfolio May 1, 2003, as October 29, 2004 N.A.
last amended
December 1, 2004
Travelers Quality Bond Portfolio August 1, 1996, July 23, 2004 N.A.
as last amended
October 31, 2003
U.S. Government Securities Portfolio December 30, July 23, 2004 N.A.
1992, as last
amended October
31, 2003
Zero Coupon Bond Fund Portfolio July 1, 1995, as July 23, 2004 N.A.
(Series 2005) last amended
October 31, 2003
Managed Assets Trust December 30, July 23, 2004 N.A.
1992, as last
amended October
31, 2003
Capital Appreciation Fund July 1, 1996, as July 23, 2004 N.A.
last amended
September 1, 2004
High Yield Bond Trust December 30, July 23, 2004
1992, as last
amended October
31, 2003
Money Market Portfolio December 30, July 23, 2004
1992, as last
amended October
31, 2003
The key terms, including fee rates, of the Current Advisory Agreements are
set out in detail under the heading "The New Advisory Agreements" below.
The following table sets forth the aggregate advisory fees paid by the
Funds to TAMIC for the fiscal year ended December 31, 2004.
NAME OF PORTFOLIO AGGREGATE ADVISORY FEES PAID (1)
- --------------------------------------------- --------------------------------
Convertible Securities Portfolio $ 561,951
Disciplined Mid Cap Stock Portfolio $1,237,113
Equity Income Portfolio $2,383,119
Federated High Yield Portfolio $ 520,768
Federated Stock Portfolio $ 196,073
- 12 -
NAME OF PORTFOLIO AGGREGATE ADVISORY FEES PAID (1)
- --------------------------------------------- --------------------------------
Large Cap Portfolio $1,848,132
Mondrian International Stock Portfolio $1,264,681
MFS Mid Cap Growth Portfolio $1,593,939
MFS Value Portfolio $ 293,439
Mercury Large Cap Core Portfolio $ 920,627
Pioneer Fund Portfolio $ 217,848
Travelers Quality Bond Portfolio $ 642,159
U.S. Government Securities Portfolio $ 680,899
Zero Coupon Bond Fund Portfolio (Series 2005) $ 5,282
Managed Assets Trust $1,444,024
Capital Appreciation Fund $ 455,866
High Yield Bond Trust $ 440,316
Money Market Portfolio $1,093,070
(1) Net of applicable expense caps.
THE NEW ADVISORY AGREEMENTS
The New Advisory Agreements are the same in all material respects as the
Current Advisory Agreements, except that for certain of the Agreements, language
will be added to make explicit the authority of TAMIC to hire subadvisers. In
addition, each New Advisory Agreement will reflect the MetLife Closing Date as
its new effective date. Forms of the New Advisory Agreements for the Funds are
attached to this proxy statement as Appendices A-1 through A-5. While the New
Advisory Agreements may vary in certain respects from Fund to Fund, the terms of
the New Advisory Agreements set forth below are included in substance in all
such Agreements.
Under the New Advisory Agreements, TAMIC will continue to provide
investment advisory services to each Fund, including furnishing to the Fund
advice and assistance with respect to the acquisition, holding or disposal of
the Fund's investments in accordance with the investment objectives, policies
and restrictions of the Fund. The New Advisory Agreements explicitly authorize
TAMIC, subject to the approval of the Board of Trustees, to enter into
agreements with other investment advisers to provide investment advice or other
services to the Fund. The Agreements provide that TAMIC remains responsible for
ensuring that any such subadviser conducts its operations in a manner consistent
with the terms of the Agreement.
All services under the New Advisory Agreements must be provided in
accordance with the provisions of the 1940 Act and any rules or regulations
thereunder, the Securities Act of 1933 and any rules or regulations thereunder,
the Internal Revenue Code, any other applicable provision of law, the Agreement
and Declaration of Trust of the Fund or Trust, the by-laws of the Fund or Trust,
any policies adopted by the Trustees, and the investment policies of each Fund
as disclosed in the registration statement of the Fund or Trust on file with the
Securities and Exchange Commission (the "SEC"), as amended from time to time.
- 13 -
As compensation for its services, TAMIC will be entitled to receive from
each Fund fees calculated as a percentage of each Fund's average daily net
assets (except for the MFS Mid Cap Growth Portfolio and MFS Value Portfolio,
where the fee is based on the combined assets of certain Funds). Fees under the
New Advisory Agreements will be calculated at the same rate as those incurred
under the Current Advisory Agreements. The annual rate paid by each Fund is set
forth below. The table also shows any expense caps that are in place. Under an
Expense Cap Agreement, The Travelers Insurance Company has agreed to reimburse
each of the Funds for the amounts by which a Fund's aggregate annual expenses,
including investment advisory fees, but excluding brokerage commissions,
interest charges and taxes, exceeds the expense caps shown below for any year.
The Travelers Insurance Company may terminate the Expense Cap Agreement upon 60
days notice.
ADVISORY FEE PAID TO TAMIC
(AS A PERCENTAGE OF
FUND DAILY NET ASSETS) EXPENSE CAP
- ------------------------------------------ ----------------------------------------- -----------
Convertible Securities 0.60% 0.80%
Disciplined Mid Cap Stock 0.70% 0.95%
Equity Income 0.75% on the first $250 million; 0.95%
0.70% on the next $500 million;
0.65% over $750 million
Federated High Yield 0.65% 0.95%
Federated Stock 0.625% 0.95%
Large Cap 0.75% on the first $250 million; 0.95%
0.70% on the next $500 million;
0.65% over $750 million
Mondrian International Stock 0.775% on the first $100 million; 1.25%
0.65% over $100 million
MFS Mid Cap Growth+ 0.7775% on the first $600 million; 1.00%
0.7525% on the next $300 million;
0.7275% on the next $600 million;
0.7025% on the next $1 billion and
0.6525% over $2.5 billion
MFS Value Portfolio+ 0.750% on the first $600 million; 1.00%
0.725% on the next $300 million;
0.700% on the next $600 million;
0.675% on the next $1 billion;
0.625% over $2.5 billion
- -------------------
+ For the purposes of meeting the various asset levels and determining an
effective fee rate for the MFS Mid Cap Growth Portfolio and the MFS Value
Portfolio, the combined average daily net assts of such Funds and a portfolio of
another investment company for which an affiliate of TAMIC is investment adviser
and Massachusetts Financial Services Company is subadviser is used. This method
of calculating the fee for these Funds went into effect on February 25, 2005.
- 14 -
ADVISORY FEE PAID TO TAMIC
(AS A PERCENTAGE OF
FUND DAILY NET ASSETS) EXPENSE CAP
- ------------------------------------------ ----------------------------------------- -----------
Mercury Large Cap Core 0.775% on the first $250 million; 1.00%
0.750% on the next $250 million;
0.725% on the next $500 million;
0.700% on the next $1 billion;
0.650% over $2 billion
Pioneer Fund Portfolio 0.750% on the first $250 million; 1.25%
0.700% on the next $250 million;
0.675% on the next $500 million;
0.650% on the next $1 billion;
0.600% over $2 billion
Travelers Quality Bond 0.3233% 0.75%
U.S. Government Securities 0.3233% 1.25%
Zero Coupon Bond Fund Portfolio (Series 0.10% 0.15%
2005)
Managed Assets Trust 0.50% 1.25%
Capital Appreciation Fund 0.70% on the first $1.5 billion; 1.25%
0.65% over $1.5 billion
High Yield Bond Trust 0.50% of the first $50 million; 1.25%
0.40% on the next $100 million;
0.30% on the next $100 million;
0.25% over $250 million
Money Market Portfolio 0.3233% 0.40%
Contingent upon receipt of shareholder approval, the New Advisory
Agreements will be effective upon the MetLife Closing, and will continue in
effect until July, 2005, when the annual review of such Agreements for renewal
had been planned independently of the MetLife Transaction. Thereafter, each New
Advisory Agreement will continue in effect as to any Fund for successive annual
periods, provided their continuance is approved at least annually by (1) a
majority vote, cast in person at a meeting called for that purpose, of the
Trustees or (2) a vote of the holders of a majority of the outstanding voting
securities (as defined by the 1940 Act) of the Fund and (3) in either event by a
majority of the Trustees who are not "interested persons," as defined in the
1940 Act, of TAMIC (the "Independent Trustees").
Under the New Advisory Agreements, TAMIC will continue to provide, at its
expense, office space, facilities and equipment for carrying out its agreed-upon
duties. TAMIC or an affiliate also bears the cost of reasonable compensation,
fees, and related expenses of the Trust's or Separate Fund's officers and the
Trustees that are "interested persons" of the Trust or Separate Fund. Other
expenses incurred in the operation of a Fund are generally paid by such Fund.
The New Advisory Agreement for each Fund provides that it may be
terminated by the Trustees, a majority of Shareholders of the Fund, or TAMIC at
any time (although some of the Agreements limit TAMIC's ability to terminate),
without penalty, by giving the other party 60 days' written notice. The New
Advisory Agreements also provide that TAMIC shall not be liable for any error of
judgment or mistake of law, any loss arising out of any investment, or any act
or omission taken with respect to a
- 15 -
Fund, except for willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of TAMIC's disregard of its obligations
and duties thereunder.
TAMIC acts as investment adviser to two other investment companies with
investment objectives similar to the Travelers Quality Bond Portfolio of the
Trust. Specifically, the Travelers Managed Income Portfolio of the Travelers
Series Fund Inc. and the Travelers Quality Bond Account for Variable Annuities
are similar in investment objectives to the Travelers Quality Bond Portfolio.
TAMIC receives a management fee of 0.65% of the daily net assets of the
Travelers Managed Income Portfolio, and in turn pays 0.10% to another entity
owned by Citigroup for administrative services. As of December 31, 2004, the
total assets in the Travelers Managed Income Portfolio were $ .
TAMIC receives an advisory fee of 0.3233% of the daily net assets of the
Travelers Quality Bond Account for Variable Annuities. As of December 31, 2004,
the total assets in that Account were $101,206,514.
TRUSTEES' CONSIDERATIONS
In connection with making its determinations, the Board was provided with
information about MetLife and its purchase of TL&A from Citigroup. At a
telephonic meeting on March 17, 2005 and in-person meetings on March 29 and 30,
2005, the Trustees discussed with certain MetLife representatives MetLife's
intentions regarding the preservation and strengthening of TAMIC's business and
MetLife's intentions regarding staffing changes and executive leadership changes
at TAMIC. The MetLife representatives also discussed and provided the Trustees
with certain written information on MetLife's business and products, including
the experience of MetLife's advisory subsidiaries in overseeing subadvised
mutual funds. The Trustees also discussed the plans and anticipated roles and
responsibilities of certain TAMIC employees and officers after the MetLife
Transaction.
Among other things, the Trustees considered:
- the ability of TAMIC to continue its oversight of both the
investment and compliance operations of the subadvisers and sub-subadvisers
after the change in control;
- the intention of MetLife to integrate TL&A, including TAMIC, into
MetLife's current businesses to create a single business operation;
- anticipated changes to back office operations relating to the
Funds, including the provision of administrative and transfer agency services,
after the change in control; and
- the fact that the terms of each New Advisory Agreement, including
the fees, would be identical to the Current Advisory Agreement it is replacing,
except for the inception date and, for certain of the Funds, the express
authority for TAMIC to retain subadvisers.
The Trustees were also informed that, in light of personnel changes at
TAMIC that are expected to occur or on about the MetLife Closing Date, MetLife
intends to hire Salomon Brothers Asset Management ("Salomon"), currently an
affiliate of TAMIC (though Salomon will not be an affiliate after the MetLife
Closing Date), as temporary subadviser for those Funds that are now managed
directly by TAMIC without a subadviser, effective on or about the MetLife
Closing Date. They were told that certain of the portfolio managers to be
employed by Salomon to manage the Funds are also currently employees of TAMIC
and are the current portfolio managers of some of these Funds, so for certain of
these Funds, there is expected to be no change in the day-to-day portfolio
manager, while in certain
- 16 -
other of these Funds there will be. The Trustees were also told that after the
MetLife Closing Date, MetLife's plan is for TAMIC to conduct a formal search for
candidates to act as subadviser on an ongoing basis to those Funds, and to make
a recommendation to the Board, probably in the Fall of 2005.
The Board also considered the agreements between MetLife and Citigroup
entered into in connection with the MetLife Transaction under which
Citigroup-affiliated broker-dealers will continue to offer the existing TL&A
insurance contracts and such contracts will continue to include
Citigroup-sponsored funds as investment options, as discussed in more detail
under "Summary" above.
The Board also considered its plans to perform a full review of the New
Advisory Agreements pursuant to Section 15(c) of the 1940 Act at its regularly
scheduled July Board meeting, which will occur approximately three weeks after
the MetLife Closing Date. In light of the continuity of investment management
under the New Advisory Agreements, the short period between the effective date
of those Agreements and the upcoming full review, and MetLife's plans to conduct
a formal search for a subadviser for the Funds for which Salomon would serve as
temporary subadviser, the Board did not deem it necessary at this time to
conduct an in-depth review of the services provided by TAMIC under the
Agreements. Nonetheless, with respect to the nature, extent and quality of the
services provided by TAMIC and the investment performance of the Funds, the
Board noted that the performance of the Funds had generally been good and that
TAMIC had taken steps to address situations where this was not the case,
including by recommending the replacement of subadvisers where appropriate. As
to the profits realized by TAMIC from its relationship with the Funds, the Board
noted that it was satisfied that TAMIC's profits were not excessive in the past,
and that it was not possible to predict how the MetLife Transaction would affect
such profits. As to whether economies of scale would be realized as the Funds
grow and whether fee levels reflect any such economies of scale, the Board noted
that the investment advisory fee rates for most of the Funds included
"breakpoints" that reduced the fees payable at higher asset levels, and noted
its intention to explore the possibility of instituting breakpoints for those
Funds where they were not currently in place. The Trustees also considered such
additional factors they felt were relevant.
After carefully considering the information described above, the Trustees,
including the Independent Trustees, unanimously voted to approve the New
Advisory Agreement for each Fund and to recommend that each Fund's Shareholders
vote to approve the New Advisory Agreement for their Fund.
In the event that the Shareholders of any Fund have not approved the New
Advisory Agreement for their Fund by the MetLife Closing Date, TAMIC will enter
into an interim advisory agreement with the Fund, or the Trust on behalf of a
Fund, pursuant to Rule 15a-4 under the 1940 Act, which will take effect
immediately following the closing of the MetLife Transaction. The interim
advisory agreement for a Fund will be in substantially the form of the proposed
New Advisory Agreement for the Fund but also will include certain provisions
required by Rule 15a-4. These provisions include a maximum term of 150 days, a
provision that the Trustees or a majority of the Fund's shareholders may
terminate the agreement at any time without penalty on not more than 10 days'
written notice, and a provision that the compensation earned by TAMIC thereunder
will be held in an interest-bearing escrow account until shareholder approval of
the New Advisory Agreement is obtained, after which the amount in the escrow
account, together with any interest, will be paid to TAMIC. If a Fund has not
received the requisite shareholder approval for the New Advisory Agreement
within 150 days after the MetLife Closing Date, the Trustees will consider other
appropriate arrangements subject to approval in accordance with the 1940 Act.
- 17 -
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMEND
THAT YOU VOTE FOR APPROVAL OF EACH NEW ADVISORY AGREEMENT.
INVESTMENT ADVISER
TAMIC, a Delaware limited liability company, serves as investment adviser
to all of the Funds (except for the Social Awareness Stock Portfolio), as well
as to certain other registered investment companies or their series. TAMIC also
provides investment advice to individual and pooled pension and profit-sharing
accounts and non-affiliated insurance companies. TAMIC is a registered
investment adviser that has provided investment advisory services since its
incorporation in 1978. TAMIC is currently an indirect wholly owned subsidiary of
The Travelers Insurance Company, which is an indirect wholly owned subsidiary of
Citigroup. TAMIC's principal offices are located at 242 Trumbull Street,
Hartford, Connecticut, 06115. The principal executive officer and directors of
TAMIC are set forth in the following table.
OFFICER OR DIRECTOR PRINCIPAL OCCUPATION ADDRESS
Peter J. Wilby Managing Director, Chief Investment Officer North 399 Park Avenue
Director American Fixed Income, High Yield and Emerging New York, NY 10043
Markets - Citigroup Asset Management
James C. Zelter Chief Investment Officer - Citigroup Global 390 Greenwich Street
Director Investments New York, NY 10013
David A. Torchia Managing Director - Citigroup Asset Management 399 Park Avenue
Director New York, NY 10043
David P. Marks Chief Investment Officer - Citigroup Insurance 242 Trumbull St
President Investments Hartford, CT 06103
The investment adviser for the Social Awareness Stock Portfolio is Smith
Barney Fund Management, 125 Broad Street, New York, New York 10004.
OTHER SERVICES
Subject to review by each Board, the Funds are expected, at the time of or
shortly after the closing of the MetLife Transaction, to retain certain other
service providers that would involve changes from those currently providing
similar services to the Funds. Citicorp Trust Bank, fsb ("CTB"), a subsidiary of
Citigroup, serves as the transfer agent and PFPC Inc. serves as sub-transfer
agent for the Separate Funds and the Trust. With respect to the Funds that it
manages, TAMIC has entered into sub-administration agreements with Smith Barney
Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary of Citigroup,
under which SBFM performs pricing, bookkeeping, and other administrative
services for the Funds, and similar sub-administration agreements will be
entered into between TAMIC and SBFM with respect to the Funds. State Street Bank
and Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110 serves
as the custodian for the Funds.
- 18 -
The arrangements with the Citigroup affiliates CTB and SBFM are expected
to be terminated at the time of or shortly after the closing of the MetLife
Transaction, subject to review by MetLife and each Board. In this regard,
MetLife intends to propose to each Board for its approval the replacement of
such service providers with the service providers generally used by other
MetLife investment companies. State Street serves as administrative agent for
one such investment company, while MetLife serves as transfer agent to such
companies. State Street serves as custodian for such companies, as it does for
the Funds.
BROKERAGE
TAMIC's policy with respect to the selection of brokers to execute
transactions in the Funds' portfolio securities is set forth after Proposal 4.
PROPOSAL 2. FUTURE SUBADVISORY AGREEMENTS WITHOUT SHAREHOLDER VOTE
Each Fund (except for the Social Awareness Stock Portfolio, which is not
managed by TAMIC) proposes, to the extent permitted by an exemption granted by
the SEC and subject to the approval of the Board of Trustees, to permit TAMIC to
enter into new or amended agreements with any subadviser with respect to the
Fund without obtaining shareholder approval of such agreements, and to permit
such subadvisers to manage the assets of the Fund pursuant to such subadvisory
agreements.
The 1940 Act generally provides that an investment adviser or subadviser
to a mutual fund may act as such only pursuant to a written agreement that has
been approved by a vote of the fund's shareholders, as well as by a vote of a
majority of the trustees of the fund who are not parties to such agreement or
interested persons of any party to such agreement. Certain MetLife subsidiaries,
which are registered with the SEC as "investment advisers", however, have
received from the SEC an exemption from the shareholder approval voting
requirement in certain circumstances (the "SEC Exemption").
Upon becoming an indirect subsidiary of MetLife, the SEC exemption would
also apply to TAMIC and, subject to certain conditions, any Fund advised by
TAMIC. Under the SEC Exemption, TAMIC would be permitted, under specified
conditions, to enter into new and amended subadvisory agreements for the
management of a Fund, including agreements with new subadvisers and agreements
with existing subadvisers if there is a material change in the terms of the
subadvisory agreement, or if there is an "assignment," as defined in the 1940
Act, or other event causing termination of the existing subadvisory agreement,
without obtaining the approval of the Fund's shareholders of such new or amended
subadvisory agreement. Such agreements must nevertheless be approved by the
Trustees, in accordance with the requirements of the 1940 Act. One of the
conditions of the SEC Exemption is that within 90 days after entering into a new
or amended subadvisory agreement without shareholder approval, the Fund must
provide to shareholders an information statement setting forth substantially the
information that would be required to be contained in a proxy statement for a
meeting of shareholders to vote on the approval of the agreement. Furthermore,
the Fund would still require shareholder approval to materially amend its
investment advisory agreement with TAMIC (including any amendment to raise the
management fee rate payable under such agreement) or to enter into a new
investment advisory agreement with TAMIC or any other adviser.
The SEC has proposed a new Rule 15a-5 under the 1940 Act which would
codify the relief granted by the SEC Exemption. While the proposed rule
generally contains the same conditions as the SEC exemption obtained by MetLife,
there are some differences. The conditions of the new Rule would likely
supersede the conditions of the SEC exemption obtained by MetLife. As proposed,
the most
- 19 -
significant difference in the conditions of the proposed new Rule is that the
name of each Fund must have the investment adviser's name precede the name of
the subadviser, if the subadviser's name is included in the name of the Fund. To
the extent that the Rule as finally adopted has this or other different
conditions, TAMIC and the Funds will likely have to comply with this and any
other different conditions contained in the final version of the Rule as adopted
by the SEC.
The Trust and the Separate Funds are requesting shareholder approval of
this Proposal for several reasons. As described under Proposal 1, the Trust and
the Separate Funds each utilizes an adviser/subadviser management structure,
where TAMIC acts as each Fund's investment adviser (except for the Social
Awareness Stock Portfolio), delegating the day-to-day portfolio management to a
subadviser. Under such a structure, the Fund's subadviser acts in a capacity
similar to that of the portfolio manager in a more traditional structure that
does not involve a subadviser. Specifically, each Fund's subadviser, like a
portfolio manager in a more traditional mutual fund advisory structure, manages
the Fund under the oversight and supervision of the Fund's adviser. If the Fund
were to change subadvisers, TAMIC would continue in its role as adviser and
would continue to exercise oversight and supervision of the Fund's investment
affairs as conducted by the new subadviser. Changing the Fund's subadviser is,
therefore, analogous to the adviser's replacing the portfolio manager of a
single-manager managed fund who is employed by the adviser, which does not
require shareholder approval under the 1940 Act.
In addition, given the Fund's management structure, the shareholder
approval requirement under the 1940 Act may cause a Fund's shareholders to incur
unnecessary expenses and could hinder the prompt implementation of subadvisory
changes that are in the best interest of the shareholders, such as prompt
removal of a subadviser if circumstances warrant such removal. The Trustees
believe that without the ability to promptly employ or re-employ a subadviser,
investors' expectations may be frustrated and a Fund and its shareholders could
be disadvantaged under certain circumstances. These circumstances include: (a)
where a subadviser has been terminated because its performance was
unsatisfactory or its retention was otherwise deemed inadvisable, (b) where a
subadviser has resigned and (c) where there has been an "assignment" (i.e., a
change in the actual control or management of a subadviser) or other event
causing the termination of a subadvisory agreement.
In the absence of an exemption, to obtain the shareholder approval
required by the 1940 Act for a subadvisory agreement, a Fund would need to
convene a shareholder's meeting, which invariably involves considerable delay
and expense. Where TAMIC, as adviser, has recommended replacement of a
subadviser, and the Trustees have determined that such replacement is necessary
or appropriate, the Fund could receive less than satisfactory subadvisory
services prior to the time that an agreement with a new subadviser is approved
by shareholders. Also, in that situation or where there has been an unexpected
resignation or change in control of a subadviser (events which, in many cases,
are beyond the control of the Fund), the Fund may be forced to operate with a
less than satisfactory subadviser for some period of time. In such
circumstances, without the ability to engage a new subadviser promptly, TAMIC,
as the adviser, might have to assume direct responsibility on a temporary basis
for management of the assets previously assigned to a subadviser.
If this manager of managers Proposal is approved by the Shareholders at
the Meeting, it is the present intention of MetLife and TAMIC to use the
authority granted by the exemption to retain the present subadvisers and
sub-subadvisers of the Funds, and, as previously discussed, hire Salomon to be
the subadviser for those Funds which currently are managed directly by TAMIC
without a subadviser.
If the MetLife Transaction is not consummated, then TAMIC will not have
the authority to enter into new or amended agreements without shareholder
approval, since the SEC Exemption only applies
- 20 -
to affiliates of MetLife. However, TAMIC would have the ability, subject to
Board approval, to apply to the SEC for its own exemption as well as the ability
to utilize proposed Rule 15a-5 if and when it is actually adopted, without
seeking any additional shareholder approval.
If the Shareholders of a Fund do not approve this Proposal, the Trustees
of the Fund will consider such alternative actions as may be in the best
interests of the Fund.
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND VOTE TO APPROVE THE PROPOSED GRANT
OF AUTHORITY TO PERMIT TAMIC TO ENTER INTO NEW OR AMENDED AGREEMENTS WITH
SUBADVISERS WITH RESPECT TO THE FUND WITHOUT OBTAINING SHAREHOLDER APPROVAL OF
SUCH AGREEMENTS, AND TO PERMIT SUCH SUBADVISERS TO MANAGE THE ASSETS OF THE FUND
PURSUANT TO SUCH SUBADVISORY AGREEMENTS.
PROPOSAL 3. ELECTION OF NEW TRUSTEE.
Ms. Elizabeth Forget, a [INSERT TITLE] of MetLife, has been nominated by
the Board of Trustees, pursuant to a recommendation of the Nominating and
Administration Committee of the Board, to serve as a member of the Board of
Trustees of each Separate Fund and the Trust, effective on the MetLife Closing
Date. If elected by the contract owners at the Meeting, Ms. Forget will replace
Mr. Jay Gerken, who, in connection with the sale of TAMIC to MetLife described
in Proposal 1 above, will resign as a member of the Board. Ms. Forget will serve
until her successor is elected and qualified. It is expected that if so elected,
Ms. Forget would also replace Mr. Gerken as Chairman, President and CEO of the
Separate Funds and the Trust. Ms. Forget's current principal occupation and
other relevant circumstances are set forth in the table below.
If the MetLife Transaction is not consummated, then this Proposal will not
take effect. In that event, Ms. Forget will not become a Trustee or officer of
the Separate Funds or the Trust.
For the year ended December 31, 2004, the Board of Trustees met [INSERT
NUMBER OF MEETINGS] times. Each member of the Board attended at least
seventy-five percent of the Board meetings.
Shareholders of the Fund can send communications to the Board of Trustees
by submitting them to the Board in care of the Secretary to the Board listed
below, using the address on the cover page of this Joint Proxy Statement.
The following tables give information about each Trustee and the officers
of the Funds. As with Mr. Gerken, it is expected that the Board of Trustees of
the Funds will be replacing the current officers with new officers affiliated
with MetLife as part of the transactions described above in Proposal 1.
- 21 -
OFFICERS AND INTERESTED TRUSTEES
Number of
Term of Portfolios in Other
Office and Fund Complex Directorships of
Position(s) Held Length of Overseen by Public Companies
Name Address and Age with Funds Time Served Principal Occupation During Last Five Years Trustee Held by Trustee
- -------------------- ---------------- ----------- ------------------------------------------- ------------- ----------------
*R. Jay Gerken Chairman, Since 2002 Managing Director (1989 to present) of N/A N/A
399 Park Avenue President, CEO Citigroup Global Markets Inc.; Chairman,
New York, NY and Trustee President and CEO of Smith Barney Fund
Age 53 Management LLC; Travelers Investment Adviser,
Inc. and CitiFund Management Inc. Chairman,
Chief Executive Officer and President, Board
of Managers (2002-present), six Variable
Annuity Separate Accounts of The Travelers
Insurance Company+.
*Elizabeth Forget Nominee as New
[address] Trustee
Ernest J. Wright Assistant Since 2004 Vice President and Secretary (1996-present), N/A N/A
One Cityplace Secretary to the Assistant Secretary (1994-1996), Counsel
Hartford, Connecticut Board (1987-present), The Travelers Insurance
Age 64 Company; Secretary (1994 to 2004), Assistant
Secretary (2004 to present), six Variable
Annuity Separate Accounts of The Travelers
Insurance Company+.
Kathleen A. McGah Secretary to the Since 2004 Deputy General Counsel (1999 - present), N/A N/A
One Cityplace Board Assistant Secretary (1995-present), The
Hartford, Connecticut Travelers Insurance Company; Assistant
Age 54 Secretary (1995 to 2004), Secretary (2004 to
present), six Variable Annuity Separate
Accounts of The Travelers Insurance Company+;
Assistant Secretary, (1995 to 2004); Prior to
January 1995, Counsel, ITT Hartford Life
Insurance Company.
Andrew B. Shoup Senior Vice Since 2004 Director of Citigroup Asset Management; N/A N/A
125 Broad Street President and Treasurer of certain mutual funds associated
New York, New York Chief with Citigroup. Head of International Funds
Age 48 Administrative Administration of CAM (2001-2003); Director of
Officer Global Funds Administration of CAM from
2000-2001; Head of U.S. Citibank Funds
Administration of CAM (1998-2000).
Kaprel Ozsolak Treasurer (Trust) Since 2002 Vice President of Citigroup Global Markets Inc. N/A N/A
125 Broad Street
New York, New York Controller Since 2002
Age 39 (Separate Funds)
Andrew Beagley Chief Anti-Money Since 2002 Director of Citigroup Global Markets, Inc. N/A N/A
399 Park Avenue Laundering (since 2000); Director of Compliance, North
New York, New York Compliance America, Citigroup Asset Management (since
Age 40 Officer 2000); Chief Anti-Money Laundering Compliance
Officer and Vice President of certain mutual
funds associated with Citigroup; Director of
Compliance, Europe, the Middle East and
Africa, Citigroup Asset Management (from 1999
to 2000); Compliance Officer, Salomon Brothers
Asset Management Limited, Smith Barney Global
Capital Management Inc., Salomon Brothers
Asset Management Asia Pacific Limited (from
1997 to 1999.
- 22 -
William D. Wilcox Chief Compliance Since 2002 Counsel and Chief Compliance Officer (1999 - N/A N/A
One Cityplace Officer (Trust) present); The Travelers Insurance Company.
Hartford, CT
Age 40 Chief Compliance
Officer
(Separate Funds) Since 2004
INDEPENDENT TRUSTEES
Number of
Portfolios in Other
Position(s) Term of Office Fund Complex Directorships of
Held with and Length of Overseen by Public Companies
Name Address and Age Funds Time Served Principal Occupation During Last Five Years Trustee Held by Trustee
- --------------------- ----------- -------------- ------------------------------------------------ ------------- ------------------
Robert E. McGill, III Trustee Since 1991 Retired manufacturing executive. Director (1995- 40++ None
295 Hancock Street (Trust and 2000), Chemfab Corporation (specialty materials
Williamstown, MA Separate manufacturer); Director (1999-2001),
Age 73 Funds) Ravenwood Winery, Inc.; Director (1999-2003),
Lydall Inc. (manufacturer of fiber materials);
Member, Board of Managers (1974-present), six
Variable Annuity Separate Accounts of The
Travelers Insurance Company+.
Lewis Mandell Trustee Since 1991 Professor of Finance and Managerial Economics, 40++ Director (2000-
Trustee (Trust) University at Buffalo since 1998. Dean, School present),
160 Jacobs Hall of Management (1998-2001), University at Delaware North
Buffalo, NY Trustee Buffalo; Member, Board of Managers (1990- Corp. (hospitality
Age 61 (Separate Since 1990 present), six Variable Annuity Separate Accounts business)
Funds) of The Travelers Insurance Company+.
Frances M. Hawk, Trustee Since 1991 Private Investor (1997-present). Member, Board 40++ None
CFA, CFP (Trust and of Managers (1991-present), six Variable
Trustee Separate Annuity Separate Accounts of The Travelers
108 Oxford Hill Lane Funds) Insurance Company+.
Downingtown, PA
Age 56
- --------------
- 23 -
* Mr. Gerken is an "interested person" within the meaning of the 1940
Act, as amended, by virtue of his position as Managing Director of Citigroup
Global Markets Inc., an indirect wholly owned subsidiary of Citigroup, and his
ownership of shares and options to purchase shares of Citigroup, the indirect
parent of The Travelers Insurance Company. Ms. Forget, if elected as a Trustee,
will be an "interested person" by virtue of her position as of MetLife.
+ The six Variable Annuity Separate Accounts are: The Travelers Growth
and Income Stock Account for Variable Annuities, The Travelers Quality Bond
Account for Variable Annuities, The Travelers Money Market Account for Variable
Annuities, Tactical Growth and Income Stock Account for Variable Annuities,
Tactical Short-Term Bond Account for Variable Annuities and Tactical Aggressive
Stock Account for Variable Annuities.
++ Seven of these 40 portfolios have not yet commenced operations.
The Independent Trustees will continue to be independent after the MetLife
Closing Date.
Effective January 1, 2003, Mr. Knight Edwards retired from his position on
the Board. He remains as an Emeritus Trustee. An Emeritus Trustee is permitted
to attend meetings, but has no voting powers.
COMMITTEES
To operate more efficiently, the Board has established two operating
committees. The Nominating and Administration Committee recommends candidates
for the nomination as independent members of the Board The Committee also
periodically reviews Board governance procedures, composition of the Board, and
compensation for the Board of Trustees, and the Committee monitors the
performance of legal counsel employed by the Funds and the Independent Trustees.
The Nominating and Administration Committee will consider nominees
recommendations by shareholders. Such recommendations should be submitted to the
Fund in care of The Travelers Insurance Company, using the address on the cover
page of this Joint Proxy Statement. Biographical and occupational information
about the candidate must be included, as well as the written consent of the
candidate to serve on the Board if elected.
In addition to shareholder recommendations, recommendations for candidates
for Independent Trustee may be made by any of the Trustees or by management of
the Separate Fund or Trust. In evaluating candidates for nomination to the Board
of Trustees as Independent Trustees, the Nominating and Administration Committee
requires that the candidate be independent in terms of both the letter and
spirit of the 1940 Act. The Committee will consider the effect of any
relationships beyond those set forth in the 1940 Act that might impair
independence. The Committee will consider whether it may be appropriate to add
individuals with different backgrounds or skill sets from those on the Board
already.
For the year ended December 31, 2004, the Nominating and Administration
Committee met one time. The charter of the Committee is attached hereto as
Appendix C. It is not available on any website.
The Audit Committee monitors the appointment, compensation and termination
of the Funds' independent auditors. The Committee also monitors the overall
quality of the Funds' financial reports and other financial information, the
independence and audit work of the Funds' independent auditors and the Funds'
financial reporting policies, practices and internal controls. For the year
ended December 31, 2004, the Audit Committee met two times.
- 24 -
For the year ended December 31, 2004, the members of the Nominating and
Administration Committee and the Audit Committee were Robert E. McGill III,
Lewis Mandell, and Frances M. Hawk. Trustees do not receive any additional
compensation for their committee services.
COMPENSATION
Members of the Board who are also officers or employees of Citigroup Inc.
or its subsidiaries (after the MetLife Closing Date, of MetLife, Inc. or its
subsidiaries) are not entitled to any fee for their services to the Fund.
Independent Trustees receive an aggregate retainer of $30,000 for service on the
Boards of the Trust and Separate Funds and the six Variable Annuity Separate
Accounts established by The Travelers Insurance Company. They also receive an
aggregate fee of $3,500 for each meeting of such Boards attended and an
additional fee of $1,000 for the second and each subsequent day of a regular
scheduled meeting. Board Members with 10 years of service may agree to provide
services as an emeritus trustee at age 72. Upon reaching 80 years of age, a
Trustee must elect status as a emeritus trustee. An emeritus trustee will
receive 50% of the annual retainer and 50% of meeting fees, if attended, but in
no event for more than 10 years. The chart below shows the compensation paid to
Board Members for the year ended December 31, 2004. Mr. Knight Edwards, as
Emeritus Trustee, was paid $10,585 for the year ended December 31, 2004.
Compensation Table
Interested Trustees
Pension or Retirement Total Compensation
Aggregate Benefits Accrued As From Fund and Fund
Compensation From Part of Complex Paid to
Name of Person, Position Each Fund(1) Fund Expenses Trustees
- ------------------------ ----------------- ---------------------- -------------------
Elizabeth Forget(2)
Chairman and Trustee N/A N/A N/A
Independent Trustees
Pension or Retirement Total Compensation
Aggregate Benefits Accrued As From Fund and Fund
Compensation From Part of Complex Paid to
Name of Person, Position Each Fund(1) Fund Expenses Trustees
- ------------------------ ----------------- ---------------------- -------------------
Robert E. McGill, III
Trustee $2,634.62 N/A $68,500(3)
Lewis Mandell
Trustee $1,923.08 N/A $50,000
Frances M. Hawk, CFA,
CFP
Trustee $2,096.15 N/A $54,500
- 25 -
- -----------------
(1) No compensation was deferred for any Trustee or Officer under a
deferred compensation plan.
(2) Ms. Forget was not a Trustee during 2004.
(3) Mr. McGill received additional compensation for attending meetings of
a task force of the directors, trustees and managers of the various Citigroup
sponsored investment companies as a representative of the Independent Trustees
of the Funds.
The table below sets forth the dollar range of equity securities in the
Funds beneficially owned by a Trustee, and, on an aggregate basis, in all
registered investment companies overseen by a Trustee in the complex of funds,
as of December 31, 2004.
Aggregate Dollar Range of Equity
Securities in all Registered
Investment Companies Overseen by
Dollar Range of Equity Trustees in Family of Investment
Trustee Securities in the Funds Companies
- --------------------- ----------------------- --------------------------------
Elizabeth Forget None None
Robert E. McGill, III None None
Lewis Mandell None None
Frances M. Hawk None None
PROPOSAL 4. APPROVAL OF SUBADVISORY AGREEMENT FOR MONDRIAN INTERNATIONAL STOCK
PORTFOLIO (FORMERLY, LAZARD INTERNATIONAL STOCK PORTFOLIO).
The new subadvisory agreement for the Mondrian International Stock
Portfolio (the "Mondrian Fund") will reflect a new subadviser for such Fund.
Specifically, the Board of Trustees determined to replace Lazard Asset
Management LLC ("Lazard") with Mondrian Investment Partners Ltd. ("Mondrian") as
the subadviser for the Mondrian Fund effective May 1, 2005, subject to
subsequent approval by the Shareholders of the Mondrian Fund. In connection with
this change, the name of the Mondrian Fund was changed from the Lazard
International Stock Portfolio to the Mondrian International Stock Portfolio.
The date of the current sub-investment advisory agreement between TAMIC
and Lazard is August 1, 1996, as last amended on September 1, 2004. It was last
approved or renewed by the Board of
- 26 -
Trustees of the Trust on July 23, 2004. The current subadvisory agreement has
not been submitted for approval to the Shareholders of the Mondrian Fund since
the commencement of operations of the Fund. The aggregate subadvisory fee paid
by TAMIC to Lazard for the fiscal year ended December 31, 2004 is $ .
A copy of the new subadvisory agreement with Mondrian is included as
Appendix B. Except for the name of the subadviser and the inception date of the
new agreement, there are no material differences between the old subadvisory
agreement with Lazard and the new subadvisory agreement with Mondrian. In
particular, the subadvisory fee paid by TAMIC to the subadviser is the same in
both agreements. As compensation for its services, Mondrian will be entitled to
receive from TAMIC fees calculated as a percentage of the Mondrian Fund's
average daily net assets. Such fee is 0.425% of the first $100 million of assets
of the Fund, and 0.30% of assets in excess of $100 million. The Mondrian Fund
does not pay any portion of the subadviser's fee, nor does the Mondrian Fund
have any obligation or responsibility to do so.
Under the new subadvisory agreement, Mondrian will provide subinvestment
advisory services to the Mondrian Fund, including a continual program of
investment, evaluation and, if appropriate in its view, the sale and
reinvestment of the Fund's assets. Mondrian makes all determinations with
respect to the purchase and sale of the portfolio securities (subject to the
Mondrian Fund's investment objective, policies, and restrictions and to the
supervision of the Board of Trustees of the Trust and TAMIC) and places, in the
Fund's name, all orders for execution of the portfolio transactions.
All services under the new subadvisory agreements must be provided in
accordance with the provisions of the 1940 Act and any rules or regulations
thereunder, the Securities Act of 1933 and any rules or regulations thereunder,
the Internal Revenue Code, any other applicable provision of law, the Trust's
Agreement and Declaration of Trust and by-laws, any policies adopted by the
Trustees, and the investment policies of the Mondrian Fund as disclosed in the
Trust's registration statement on file with the SEC, as amended from time to
time.
The new subadvisory agreement became effective on May 1, 2005, and will,
contingent upon receipt of shareholder approval, continue in effect until July,
2006. Thereafter, the new subadvisory agreement will continue in effect as to
the Fund for successive annual periods, provided its continuance is approved at
least annually by (1) a majority vote, cast in person at a meeting called for
that purpose, of the Trustees or (2) a vote of the holders of a majority of the
outstanding voting securities (as defined by the 1940 Act) of the Mondrian Fund
and (3) in either event by a majority of the Independent Trustees.
The new subadvisory agreement for the Mondrian Fund provides that it may
be terminated by the Trustees, by a majority of shareholders of the Fund, by
Mondrian, or by TAMIC at any time, without penalty, by giving the other party 60
days' written notice. The new subadvisory agreement also provides that Mondrian
shall not be liable for any error of judgment or mistake of law, any loss
arising out of any investment, or any act or omission taken with respect to the
Fund, except for willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of Mondrian's reckless disregard of its
obligations and duties thereunder.
While from time to time, Mondrian may act as investment adviser to other
investment companies with investment objectives similar to the Mondrian Fund,
Mondrian at the present time is not an investment adviser to any such investment
companies.
- 27 -
With Mondrian as subadviser, the Mondrian Fund will continue to invest at
least 80% of its assets in equity securities, and to use a value approach to
invest primarily in equity securities of non-U.S. domiciled companies located in
developed markets. However, Mondrian selects securities for investment in a
somewhat different manner than does Lazard. Lazard uses a traditional, bottom-up
value approach to evaluate stocks demonstrating potential capital growth based
on the following characteristics: low price-to-earnings ratio, inexpensive
markets worldwide, potential for management change, potential to improve
profitability, unrecognized assets, strong financial position, strong cash flow,
established industry position, industry with positive growth outlook, and
healthy balance sheet with low corporate debt.
Mondrian uses a value driven dividend discount methodology designed to
isolate value across country boundaries. This approach centers on future
anticipated dividends and discounts the value of those dividends back to what
they would be worth if paid at present. Comparisons of the values of different
possible investments are then made. Mondrian also considers the effects of
currency adjustment on dollar-based, U.S. investors. This approach attempts to
identify the amount of goods and services that a dollar will buy in the U.S. and
compares that to the amount of a foreign currency required to buy the same
amount of goods and services in another country. When the dollar buys less, the
foreign currency may be overvalued and, conversely, the foreign currency may be
undervalued when the dollar buys more. Mondrian believes that securities
available in an undervalued currency may be attractive investments.
In making the determination to change subadvisers for the Mondrian Fund,
the Board of Trustees, at meetings held on January 19, 2005 and March 29 and 30,
2005, considered the disappointing performance of the Fund, both since its
inception in 1996 and over more recent periods, relative to other similar
investment companies and its benchmark index, the Morgan Stanley Capital
International Europe, Australia and Far East GDP Index. In this regard, the
Trustees considered the extent to which such disappointing performance could be
attributed to the stated management style of the Fund as opposed to poor
investment decision-making, but nonetheless concluded that retaining a new
subadviser for the Fund was appropriate in light of such performance. In
approving Mondrian as the new subadviser for the Mondrian Fund, the Trustees
considered information regarding the nature, extent, and quality of the services
to be provided by Mondrian, specifically seeking assurances from representatives
of Mondrian and TAMIC that they are comfortable that administrative or
compliance issues will not arise because Mondrian is a non-U.S. entity that does
not currently manage other U.S. registered investment companies. The Trustees
considered Mondrian's performance in managing similar international securities
portfolios, including when Mondrian had been named Delaware International
Advisers Limited, and had been a subsidiary of [DELAWARE GROUP]. Because the
Fund had not been managed by Mondrian, the Board did not review profitability
information regarding Mondrian. As to whether economies of scale would be
realized as the Fund grows and whether fee levels would reflect any such
economies of scale, the Board noted the "breakpoints" in the investment advisory
and subadvisory fees for the Fund that would reduce the fees payable at higher
asset levels. Finally, the Board considered that, except for the subadviser and
the inception date, the new subadvisory agreement for the Mondrian Fund is
substantially identical to the agreement with Lazard, including the subadvisory
fees payable by TAMIC to the subadviser.
If the Mondrian Fund does not receive the requisite Shareholder approval
for the new subadvisory agreement at the Meeting, the Board of Trustees of the
Trust will consider other appropriate arrangements subject to approval in
accordance with the 1940 Act.
MONDRIAN
- 28 -
Mondrian is located at 80 Cheapside, 3rd Floor, London, England, EC2V 6EE.
Prior to September 24, 2004, Mondrian was known as Delaware International
Advisers Limited. Mondrian currently manages assets of $303 million in the
concentrated large cap value equity style as of March 31, 2005. Fifty-seven
percent of the outstanding voting securities of Mondrian is currently owned by
members of Mondrian's management. Forty-three percent of the outstanding voting
securities is owned by a private equity fund affiliated with Hellman & Friedman
LLC.
The principal executive officer and directors of Mondrian are set forth in
the following table.
OFFICER OR DIRECTOR PRINCIPAL OCCUPATION ADDRESS
- ------------------- -------------------- -------
David G. Tilles Managing Director, Chief Investment Officer 80 Cheapside, 3rd Floor London,
- Mondrian England, EC2V 6EE
Clive A. Gillmore Deputy Managing Director, Head of Emerging Markets 80 Cheapside, 3rd Floor London,
and Small Cap Team - Mondrian England, EC2V 6EE
Elizabeth A. Desmond Director, Co-Chief Investment Officer, Developed 80 Cheapside, 3rd Floor London,
Markets - Mondrian England, EC2V 6EE
Nigel May Director, Co-Chief Investment Officer, Developed 80 Cheapside, 3rd Floor London,
Markets - Mondrian England, EC2V 6EE
Hamish O. Parker Director, Developed Equity Markets - Mondrian 80 Cheapside, 3rd Floor London,
England, EC2V 6EE
Graham Roger Director - Mondrian 80 Cheapside, 3rd Floor London,
Heywood Kitson England, EC2V 6EE
Christopher A. Moth Director, Chief Investment Officer - Mondrian 80 Cheapside, 3rd Floor London,
England, EC2V 6EE
John Kirk Director - Mondrian 80 Cheapside, 3rd Floor London,
England, EC2V 6EE
THE TRUSTEES OF THE TRUST, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR APPROVAL OF THE NEW SUBADVISORY
AGREEMENT FOR THE MONDRIAN FUND.
BROKERAGE
The policy of TAMIC and Mondrian (the "advisers") in selecting brokers to
execute transactions in the Funds' portfolio securities, is to seek best
execution of orders at the most favorable prices. The determination of what may
constitute best execution and price in the execution of a securities transaction
by a broker involves a number of considerations, including, without limitation:
- the overall direct net economic result to the Funds, involving both
price paid or received and any commissions and other cost paid;
- the efficiency with which the transaction is effected;
- the ability to effect the transaction at all where a large block is
involved;
- 29 -
- the availability of the broker to stand ready to execute potentially
difficult transactions in the future; and
- the financial strength and stability of the broker.
Such considerations are judgmental and are weighed by the advisers in
determining the overall reasonableness of brokerage commissions paid. In
addition to the foregoing, one factor in the selection of brokers is the receipt
of research services, analyses and reports concerning issuers, industries,
securities, economic factors and trends, and other statistical and factual
information. The brokerage commission paid by a Fund for a transaction may be
greater than the commission that would have been charged by another broker if
the difference is determined in good faith to be justified in light of the
brokerage and information provided. The cost, value and specific application of
such information may not be determinable, and it is not practical to allocate
these costs, values or specific applications among the Funds and other clients
of the advisers. Accordingly, the advisers or their other clients may indirectly
benefit from the availability of such information. This situation may create a
conflict of interest for the advisers. Similarly, the Funds may indirectly
benefit from information made available as a result of transactions for other
clients of the advisers.
Purchases and sales of bonds and money market instruments usually are
principal transactions and normally are purchased directly from the issuer or
from the underwriter or market maker for the securities. There usually are no
brokerage commissions paid for such purchases. Purchases from the underwriters
include the underwriting commission or concession, and purchases from dealers
serving as market makers include the spread between the bid and asked prices.
The advisers' policies with respect to brokerage are and will be reviewed
by the Board of Trustees periodically. Because of the possibility of further
regulatory developments affecting the securities exchanges and brokerage
practices generally, or due to other appropriate factors, the foregoing
practices may be changed, modified or eliminated.
VOTING INFORMATION
TL&A is the record owner of all of the shares of each Fund. TL&A will vote
a Fund's shares at the Meetings in accordance with the timely instructions
received from persons entitled to give voting instructions under the variable
contracts. Contract owners and certain annuitants and/or beneficiaries have the
right to instruct TL&A as to the number of shares (and fractional shares)
attributable to their variable contract's value on the record date allocated to
the separate account that holds shares of a Fund.
TL&A will vote shares attributable to variable contracts as to which no
voting instructions are received in the same proportion (for, against, or
abstain) to those for which timely instructions are received. In other words,
TL&A is entitled to vote shares for which no instructions are received, but will
do so in the same proportion as shares for which instructions have been received
from contract owners. If a Voting Instruction Form is received that does not
provide any instructions as to one or more of the Proposals, TL&A will consider
its timely receipt as an instruction to vote in favor of the Proposal(s).
Contract owners may submit Voting Instruction Forms by simply enclosing
the executed Voting Instruction Form in the postage-paid envelope found within
the voting instruction package.
In certain circumstances, TL&A has the right to disregard voting
instructions from certain owners. TL&A does not believe that these circumstances
exist with respect to matters currently before
- 30 -
shareholders and contract owners. Contract owners may revoke previously
submitted voting instructions given to TL&A by notifying TL&A in writing at any
time before 5:00 p.m. (Eastern time) on June 9, 2005 or by attending and voting
in person at the Meetings. The expenses of soliciting voting instructions will
be borne 50% by MetLife and 50% by [CITIGROUP ENTITY]. The solicitation will be
made primarily by mail, but TL&A and its affiliates may make telephone,
electronic, or oral communications to contract owners.
One-fourth of the outstanding shares of a Fund represented in person or by
proxy must be present at a Meeting to constitute a quorum. As the record owner
of all of the shares of each Fund, TL&A's presence at a Meeting will be
sufficient to constitute a quorum. If a quorum is not present at a Meeting, or
if a quorum is present but, at the Meeting, sufficient votes to approve the
Proposals are not received, the persons with proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any
adjournment will require the affirmative vote of a majority of the shares
represented at the Meeting in person or by proxy. Based on voting instructions
received, proxies will vote in favor of such adjournment those instructions that
are in favor of a Proposal, will vote against any adjournments those
instructions that are against the Proposal, and will abstain from voting with
respect to any adjournment those instructions that are marked to abstain in
connection with the Proposal.
Except for the election of the new Trustee, approval of a Proposal by a
Fund's Shareholders requires the affirmative vote of the holders of the lesser
of (a) 67% or more of the voting securities present at the Meeting or
represented by proxy if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy or (b) more than 50% of the
outstanding voting securities of the Fund. Shareholders of record are entitled
to one vote for each full share owned, with a fractional vote for each
fractional share. With respect to the election of a new Trustee, under the terms
of the Agreement and Declaration of Trust for each of the Separate Funds, the
affirmative vote of a plurality of the shares of the Fund entitled to vote is
required to elect a Trustee. Under the terms of the Agreement and Declaration of
Trust for the Trust, the affirmative vote of a majority of the shares of the
Trust entitled to vote is required to elect a Trustee. Each Separate Fund votes
separately as to the election of the new Trustee, and the Portfolios of the
Trust vote in the aggregate, not separately for each Portfolio.
The Board of Trustees has fixed April 15, 2005 as the record date for
determining Shareholders entitled to receive notice of and to vote at the
Meetings. To be counted, TL&A must receive an owner's properly executed Voting
Instruction Form at the its office by 5:00 p.m. Eastern time on June 9, 2005.
The name, address and percentage ownership of the persons who owned
beneficially more than 5% of a Fund through any separate accounts of TL&A
invested in a Fund, and the percentage of such ownership, are as follows:
PERCENTAGE OF FUND OWNED ON RECORD
NAME AND ADDRESS FUND DATE
- ---------------- ---- ----------------------------------
The Trustees and officers of the Trust and each Separate Fund beneficially owned
in the aggregate less than 1% of each Fund.
- 31 -
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP ("KPMG") currently serves as the independent registered public
accounting firm for the Trust and the Separate Funds. As a result of insurance
services provided to KPMG by MetLife, KPMG is not considered independent of
MetLife and will not be permitted to serve as the independent registered public
accounting firm for the Trust or the Separate Funds after the MetLife
Transaction. The Board of Trustees of the Trust and of each of the Separate
Funds intends to select a successor accounting firm in the near future.
KPMG has no direct or material indirect interest in a Fund.
Representatives of KPMG will not be present at the Meeting.
To the extent required by applicable regulations, pre-approval by the
Audit Committee of the Board is needed for all audit and permissible non-audit
services rendered by KPMG to each Fund and all permissible non-audit services
rendered by KPMG to TL&A and any entity controlling, controlled by or under
common control with TL&A that provides ongoing services to a Fund (each, a
"Service Affiliate") if the services relate directly to the operations and
financial reporting of such Fund. Pre-approval is currently on an
engagement-by-engagement basis.
Schedule A attached hereto includes tables that set forth for each Fund,
for each Fund's two most recent fiscal years, the fees billed by KPMG for (a)
all audit and non-audit services provided directly to the Fund and (b) those
non-audit services provided to the Fund's Service Affiliates that relate
directly to the Fund's operations and financial reporting under the following
captions:
(i) Audit Fees - fees related to the audit and review of the financial
statements included in annual reports and registration statements, and
other services that are normally provided in connection with statutory and
regulatory filings or engagements.
(ii) Audit-Related Fees - fees related to assurance and related services
that are reasonably related to the performance of the audit or review of
financial statements, but not reported under "Audit Fees," including
accounting consultations, agreed-upon procedure reports, attestation
reports, comfort letters and internal control reviews.
(iii) Tax Fees - fees associated with tax compliance, tax advice and tax
planning, including services relating to the filing or amendment of
federal, state or local income tax returns, regulated investment company
qualification reviews and tax distribution and analysis reviews.
(iv) All Other Fees - fees for products and services provided to the Fund
by KPMG other than those reported under "Audit Fees," "Audit-Related Fees"
and "Tax Fees."
Schedule A attached hereto also sets forth the aggregate fees billed by
KPMG, for each Fund's two most recent fiscal years, for non-audit services
rendered to each Fund and to each Fund's Service Affiliates.
The Audit Committee has considered whether the provision by KPMG of
non-audit services to the Fund's Service Affiliates that were not pre-approved
by the Audit Committee (because such services were provided prior to the
effectiveness of SEC rules requiring pre-approval or because such services did
not relate directly to the operations and financial reporting of the Fund) was
compatible with maintaining the independence of KPMG as the Fund's principal
auditor.
- 32 -
OTHER INFORMATION
None of the Funds has a principal underwriter.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meetings.
However, if any other matters come before the Meetings, it is the Board's
intention that, except where contract owners' Instruction Forms contain specific
restrictions to the contrary, proxies will vote on such matters in accordance
with the judgment of the proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to a Separate Fund or to the Trust
in writing at the address on the cover page of this Proxy Statement or by
telephoning 1-800-842-9368.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO DATE AND SIGN THE ENCLOSED VOTING INSTRUCTIONS FORMS AND RETURN IT IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- 33 -
APPENDIX A-1
(MODEL NEW INVESTMENT ADVISORY AGREEMENT FOR ALL THE PORTFOLIOS OF THE TRAVELERS
SERIES TRUST EXCEPT FOR THE PIONEER FUND, U.S. GOVERNMENT SECURITIES AND ZERO
COUPON BOND FUND PORTFOLIOS.)
INVESTMENT ADVISORY AGREEMENT
ENTERED INTO BETWEEN
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY LLC
AND
THE TRAVELERS SERIES TRUST
This Investment Advisory Agreement (the "Agreement") is entered into as of
June 30, 2005 by and between The Travelers Series Trust (the "Trust") by itself
and on behalf of [NAME OF PORTFOLIO] Portfolio (the "Portfolio") and Travelers
Asset Management International Company, a limited liability company duly
organized and existing under the law of the state of New York ("TAMIC").
WHEREAS, the Trust desires that TAMIC provide certain investment management
and advisory services for the Portfolio; and
WHEREAS, TAMIC desires to accept such appointment to provide advisory
services to the Portfolio in the manner and on the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Trust and TAMIC agree as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Trust desires to employ its capital relating to the Portfolio by
investing and reinvesting in investments of the kind and in accordance with the
investment objective(s), policies and limitations authorized by its Board of
Trustees (the "Board") and as specified in the prospectus (the "Prospectus") and
the statement of additional information (the "SAI") filed with the Securities
and Exchange Commission as part of the Trust's Registration Statement on Form
N-1A as may be periodically amended. Copies of the Prospectus and the SAI have
been and will be (following amendments) forwarded to TAMIC. The Trust desires to
employ and accordingly appoints TAMIC to act as investment adviser to the
Portfolio. TAMIC accepts the appointment, and subject to the supervision of the
Board, agrees to furnish the services contemplated herein for the compensation
set forth below.
2. SERVICES AS INVESTMENT ADVISER
Subject to the supervision, direction and approval of the Board, TAMIC
will manage the investment operations of thePortfolio and will furnish or cause
to be furnished to the Trust advice and assistance with respect to the
acquisition, holding or disposal of the Portfolio's
investments, in accordance with the investment objectives, policies and
restrictions as communicated to it by the Board and as are contained in the
Prospectus and SAI. It is expressly understood and the Trust, subject to the
approval of the Board, hereby agrees that TAMIC may enter into agreements,
pursuant to which a duly organized investment adviser (the "Sub-Adviser") may be
appointed to provide investment advice or other services to the Portfolio. TAMIC
shall remain responsible for ensuring that each Sub-Adviser conducts its
operations in a manner consistent with the terms of this Agreement.
3. INFORMATION PROVIDED TO THE COMPANY
TAMIC shall keep the Board and the Trust informed of developments
materially affecting the Portfolio. In this regard, TAMIC shall provide such
periodic reports concerning the obligations assumed under this agreement as the
Trust and the Board may from time to time reasonably request. Additionally,
TAMIC shall ensure that the Sub-Adviser, at least quarterly, will provide the
Board with a written certification that the Portfolio is in compliance with the
Portfolio's investment objectives and practices.
4. STANDARD OF CARE
TAMIC shall exercise its best judgment and shall act in good faith in
rendering the services contemplated herein.TAMIC shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect TAMIC
against any liability to the Trust or the shareholders of the Portfolio to which
TAMIC would otherwise be subject by reason of its willful misfeasance, bad
faith, or gross negligence on its part in the performance of its duties or by
reason of TAMIC's disregard of its obligations and duties under this Agreement.
5. COMPENSATION
In consideration of the services rendered pursuant to this Agreement,
the Trust will pay TAMIC [INSERT FEE SCHEDULE]. The parties understand that the
fee will be calculated daily and paid monthly. The fee for the period from the
Effective Date (defined below) of the Agreement to the end of the month during
which the Effective Date occurs shall be prorated according to the proportion
that such period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to TAMIC, the value of
the Portfolio's net assets shall be computed at the times and in the manner
specified in the Prospectus and/or the SAI.
6. EXPENSES
TAMIC shall bear all expenses (excluding brokerage costs, custodian
fees, auditors fees or other expenses to be borne by either the Portfolio or the
Trust) in connection with the performance of its services under this Agreement
and shall pay: (a) any sub-investment
2
adviser fee to the Portfolio under any and all Subadvisory Agreement(s), and (b)
any other fees required to be paid to any Sub-Adviser. The Trust will bear
certain other expenses to be incurred in its operation, including, but not
limited to, (i) interest and taxes; (ii) brokerage commissions and other costs
in connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Trust's trustees other than those
who are "interested persons" of the Trust; (iv) legal and audit expenses; (v)
custodian, registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Trust and the
Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefor; (ix) insurance premiums for fidelity bond and other coverage; (x)
investment management fees; (xi) expenses of typesetting for printing
prospectuses and statements of additional information and supplements thereto;
(xii) expense of printing and mailing prospectuses and statements of additional
information and supplements thereto; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and legal obligation that the
Portfolio may have to indemnify the Trust's trustees, officers and/or employees
or agents with respect thereto. The Trust will bear all other expenses that
TAMIC has not specifically assumed hereunder.
7. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The Trust understands that TAMIC now acts, will continue to act and
may act in the future as investment manager or adviser to fiduciary and other
managed accounts, and as investment manager or adviser to other investment
companies, and the Trust has no objection to TAMIC's so acting, provided that
whenever the Trust or the Portfolio and one or more other investment companies
or accounts managed or advised by TAMIC have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed to be equitable to each company or account. The Trust
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for an affected Portfolio. The Trust also understands
that the persons employed by TAMIC to assist in the performance of TAMIC's
duties under this Agreement may not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of TAMIC or any affiliate of TAMIC to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
8. TERM OF AGREEMENT
This Agreement shall become effective June 30, 2005 (the "Effective
Date") and shall continue thereafter so long as such continuance is specifically
approved at least annually as required by the Investment Company Act of 1940, as
amended (the "1940 Act"). This Agreement is terminable, without penalty, on 60
days' written notice, by the Board or by vote of holders of a majority (as
defined in the 1940 Act and the rules thereunder) of the outstanding voting
securities of the Trust, or upon 60 days' written notice, by TAMIC. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act and the rules thereunder).
3
9. REPRESENTATIONS
The Trust represents that a copy of the Declaration of Trust is on
file with the Secretary of the State of Massachusetts. The Trust further
represents that it shall maintain compliance with applicable regulatory mandates
and requirements, including but not limited to compliance with any reporting
required or information requested by the California Commissioner of Insurance.
TAMIC also represents that it shall maintain compliance with applicable
regulatory mandates including periodic reporting requirements, including but not
limited to compliance with any reporting or information requested by the
California Commissioner of Insurance.
10. MISCELLANEOUS
This Agreement may be signed in more than one counterpart. It shall be
governed by the laws of the state of Connecticut.
11. COOPERATION WITH INVESTIGATIONS
TAMIC and the Trust each agree to cooperate with each other in the
event that either should become involved in any investigation, legal proceeding,
claim, suit, or other similar action arising from the performance of the
obligations described in this Agreement.
12. COMPLIANCE WITH APPLICABLE LAW
TAMIC agrees to conduct itself in a manner consistent with applicable
laws and regulation, including but not limited to Sections 2a-7, 5(b), 12, 17,
18, and 36 of the 1940 Act. Additionally, TAMIC shall assume responsibility for
ensuring compliance with the applicable investment diversification requirements
set forth in both the 1940 Act and Section 817(h) of the Internal Revenue Code
of 1986, as amended. TAMIC shall also ensure that its activities are conducted
in a manner consistent with a Code of Ethics maintained pursuant to Section
17j-1 of the 1940 Act. TAMIC agrees to use good faith efforts to ensure that any
sub-adviser appointed shall adopt and follow a similar Code of Ethics. TAMIC
also agrees that it shall conduct its activities in a manner consistent with any
No-Action Letter, order or rule promulgated by the SEC applicable to the Trust
or the Portfolio.
13. LIMITATION OF LIABILITY
Except as may otherwise be prohibited by the Investment Company Act of
1940 or other applicable federal securities law, neither TAMIC nor any of its
officers, directors, employees or agents shall be subject to any liability to
the Trust or any shareholder of the Trust for any error or judgment, mistake of
law, or any loss arising out of any investment or other act or omission in the
course of, connected with, or arising out of any services to be rendered under
this Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under
4
this Agreement. To the extent permitted under federal and state law, the Trust
shall hold harmless and indemnify TAMIC for any loss, liability, cost, damage or
expense (including reasonable attorneys fees and costs) arising from any claim
or demand by any past or present shareholder of the Trust that is not based upon
TAMIC's willful misfeasance, bad faith, or gross negligence in the performance
of its duties or the reckless disregard of its obligations and duties under this
Agreement.
14. DELEGATION OF PROXY VOTING RESPONSIBILITY
TAMIC shall be responsible for voting proxies on securities held by the
Portfolio for delegating such responsibility to a Sub-Adviser appointed pursuant
to this Agreement. TAMIC represents that it or its delegee has adopted and
implemented written policies and procedures reasonably designed to ensure that
it will vote proxies in the best interest of the Portfolio and its shareholders,
which policies and procedures describe how TAMIC or its delegee addresses
material conflicts of interest between its interests and those of the Portfolio
with respect to proxy voting. TAMIC shall furnish the Trust with such
information reasonably requested by the Trust, in such form as may be requested,
as is necessary (1) for a summary description of TAMIC's or its delegee's proxy
voting policies and procedures to be included in the registration statement with
respect to the Trust, and (2) for the proxy voting record for the Portfolio to
be filed with the SEC in accordance with the requirement of Form N-PX (or any
successor form).
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Agreement to be signed by their respective officials thereto duly authorized as
of the day and year first above written.
Travelers Asset Management International Company
LLC
By:
---------------------------------------------
Its:
---------------------------------------------
The Travelers Series Trust
By:
---------------------------------------------
Its:
---------------------------------------------
5
APPENDIX A-2
(NEW INVESTMENT ADVISORY AGREEMENT FOR PIONEER STOCK PORTFOLIO)
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
June 30, 2005 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
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 required by TAMIC to perform these
services on the terms and for the compensation provided in this Agreement.
1
(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 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,
2
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.
(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.
3
(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 an
amount equivalent on an annual basis to the following:
AGGREGATE NET ASSET VALUE
ANNUAL MANAGEMENT FEE OF THE PORTFOLIO
- --------------------- --------------- ----------------------------
0.750% of the first $ 250,000,000
0.700% of the next $ 250,000,000
0.675% of the next $ 500,000,000
0.650% of the next $ 1,000,000,000
0.600% of amounts over $ 2,000,000,000
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.
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
4
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 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.
5
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.
(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.
6
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 June 30, 2005 (the
"Effective Date"), and shall continue thereafter so long as such continuance is
specifically approved at least annually as required by the 1940 Act.
(b) TERMINATION. This Agreement may be terminated, without penalty, (1) by
the Board or by vote of holders of a majority of the outstanding shares of the
Portfolio upon sixty (60) days' written notice to TAMIC, 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.
7
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.
8
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 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.
(f) 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.
9
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.
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
10
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.
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:
11
APPENDIX A-3
(FORM OF NEW INVESTMENT ADVISORY AGREEMENT FOR THE U.S. GOVERNMENT SECURITIES
PORTFOLIO)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of this 30th day of June, 2005,
between Travelers Asset Management International Company LLC a limited liability
company duly organized and existing under the law of the state of New York
(hereinafter "TAMIC") and the U.S. Government Securities Portfolio (hereinafter
the "Portfolio"), a separate series of the Travelers Series Trust (the "Trust"),
a Massachusetts business trust established in Massachusetts by an Agreement and
Declaration of Trust dated October 11, 1991, as amended and/or restated from
time to time (the "Declaration of Trust").
WITNESSETH:
WHEREAS, the Portfolio and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for the
Portfolio.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. The Portfolio hereby employs TAMIC to manage the investment and
reinvestment of the assets of the Portfolio and to perform the other services
herein set forth, subject to the supervision of the Board of Trustees of the
Trust (hereinafter the "Board") for the period and on the terms herein set
forth. TAMIC hereby accepts such employment and agrees during such period, at
its own expense, to render the services and to assume the obligations herein set
forth for the compensation herein provided.
2. In carrying out these obligations to manage the investment and reinvestment
of the assets of the Portfolio, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial data
and other information relevant to the investment policy of the Portfolio,
affecting the economy generally and individual companies or industries, the
securities of which are held by the Portfolio or are under consideration
for inclusion therein;
b. be authorized to purchase supplemental research and other services
from brokers at additional cost to the Portfolio;
c. regularly furnish to the Board recommendations with respect to any
investment program for approval, modification or rejection by the Board;
d. take such steps as are necessary to implement the investment program
approved by the Board;
e. regularly report to the Board with respect to implementation of the
approved investment program and any other activities in connection with the
administration of the assets of the Portfolio; and
f. vote proxies on securities held by the Portfolio or delegate such
responsibility to a sub-adviser appointed pursuant to this Agreement. TAMIC
represents that it or its delegee has adopted and implemented written
policies and procedures reasonably designed to ensure that it will vote
proxies in the best interest of the Portfolio and its shareholders, which
policies and procedures describe how TAMIC or its delegee addresses
material conflicts of interest between its interests and those of the
Portfolio with respect to proxy voting. TAMIC shall furnish the Trust with
such information reasonably requested by the Trust, in such form as may be
requested, as is necessary (1) for a summary description of TAMIC's or its
delegee's proxy voting policies and procedures to be included in the
registration statement with respect to the Trust, and (2) for the proxy
voting record for the Portfolio to be filed with the SEC in accordance with
the requirement of Form N-PX (or any successor form).
3. TAMIC may engage a sub-adviser to furnish investment management information
and advice to assist TAMIC in carrying out its responsibilities under this
Agreement. TAMIC shall remain responsible for ensuring that each sub-adviser
conducts its operations in a manner consistent with the terms of this Agreement
4. Any investment program undertaken by TAMIC pursuant to this Agreement and
any other activities undertaken by TAMIC on behalf of the Portfolio shall at all
times be subject to any directives of the Board or any duly constituted
committee thereof acting pursuant to like authority.
5. For the services rendered hereunder, TAMIC will receive an amount
equivalent on an annual basis to 0.3233% of the average daily net assets of the
Portfolio, such fees to be deducted on each valuation date.
6. The services of TAMIC to the Portfolio hereunder are not to be deemed
exclusive and TAMIC shall be free to render similar services to others so long
as its services hereunder are not impaired or interfered with thereby.
7. If approved by a vote of a majority of the outstanding voting securities of
the Portfolio (as defined in the Investment Company Act of 1940), this
Investment Advisory Agreement:
a. may not be terminated by TAMIC, without the prior approval of a new
Investment Advisory Agreement by a vote of a majority of the outstanding voting
securities of the Portfolio, and shall be subject to termination, without the
payment of any penalty, upon sixty days' written notice to the investment
adviser, by the Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Portfolio;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of the Portfolio;
c. shall automatically terminate upon assignment by either party; and
d. shall continue in effect for a period of more than two years from the
date of its execution, only so long as such continuance is specifically approved
(i) at least annually by a vote of a majority of the Board of Trustees who are
not parties to, or interested persons of any party to, such agreement, cast in
person at a meeting called for the purpose of voting on such approval and at
which the Board has been furnished such information as may be reasonably
necessary to evaluate the terms of said agreement, or (ii) by a vote of a
majority of the outstanding voting securities of the Portfolio.
8. This Agreement is made on behalf of the Portfolio by an officer or Trustee
of the Trust, not individually, but solely as an officer or Trustee under the
Declaration of Trust, and the obligations under this Agreement are not binding
upon, nor shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Trust personally, but shall
bind only the Trust's property.
9. TAMIC agrees that it shall furnish to the California Commissioner of
Insurance any information or reports concerning the Portfolio as the
Commissioner, in the performance of his or her duties, may request.
10. TAMIC hereby acknowledges that all books and records relating to the
services provided to the Portfolio hereunder are the property of the Trust and
subject to its control; provided, however, that during the term of the
Agreement, the Trust shall not exercise such control so as to interfere with the
performance of TAMIC's duties hereunder.
11. This Investment Advisory Agreement is subject to the provisions of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory
Agreement to be signed by their respective officials thereunto duly authorized
and seals to be affixed, in the case of TAMIC, as of the day and year first
above written.
U.S. GOVERNMENT SECURITIES PORTFOLIO OF THE
TRAVELERS SERIES TRUST
By:
-----------------------------
Chairman, Board of Trustees
WITNESS:
- ---------------------------
Secretary, Board of Trustees
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY LLC
By:
---------------------
President
ATTEST: (Seal)
- ------------------------------
Corporate Secretary
APPENDIX A-4
FORM OF
INVESTMENT ADVISORY AGREEMENT
JULY 1, 1995
Travelers Asset Management International Company LLC
One Cityplace
Hartford, Connecticut 06103
Dear Sirs:
The Travelers Series Trust (the Trust) a business trust organized under the
laws of the Commonwealth of Massachusetts, confirms its agreement with Travelers
Asset Management International Company LLC (the Adviser) as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Zero Coupon Bond Fund Portfolios (Series 2005) of The Travelers Series
Trust (the "Portfolio") desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Prospectus (the Prospectus) and Statement of Additional
Information (the Statement) filed with the Securities and Exchange Commission as
part of the Trust's Registration Statement on Form N-1A, as amended from time to
time, and in the manner and to the extent as may from time to time be approved
by the Board of Trustees of the Trust. Copies of the Trust's Prospectus and the
Statement have been or will be submitted to the Adviser. The Trust desires to
employ and hereby appoints the Adviser to act as its investment adviser. The
Adviser accepts the appointment and agrees to furnish the services for the
compensation set forth below.
2. SERVICES AS INVESTMENT ADVISER
Subject to the supervision and direction of the Board of Trustees of the
Trust, the Adviser will (a) manage the portfolio accordance with the Portfolio's
investment objective and policies as stated in the Prospectus and the Statement;
(b) make investment decisions for the Portfolio; (c) place purchase and sale
orders for portfolio transactions for the Portfolio; and (d) employ professional
portfolio managers and securities analysts who provide research services to the
Portfolio. In providing those services, the Adviser will conduct a continual
program of investment, evaluation and, if appropriate, sale and reinvestment of
the Portfolio's assets.
It is expressly understood and the Trust, subject to the approval of the
Board, hereby agrees that TAMIC may enter into agreements, pursuant to which a
duly organized investment adviser (the "Sub-Adviser") may be appointed to
provide investment advice or other services to the Portfolio. TAMIC shall remain
responsible for ensuring that each Sub-Adviser conducts its operations in a
manner consistent with the terms of this Agreement.
3. COMPLIANCE WITH INTERNAL REVENUE CODE REQUIREMENTS
Adviser represents and warrants that the Portfolio will at all time be
invested in such a manner as to ensure compliance with section 817(h) of the
Internal Revenue Code of 1986, as amended (the Code) and Treasury Regulations
Section 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulation. Adviser will be relieved of this
obligation and shall be held harmless when direction from the Trust causes
non-compliance with Section 817(h) and/or Regulation Section 1.817-5. Adviser
agrees to provide quarterly reports to the life insurance company that issues
the variable annuity, endowment or life insurance contracts (the Life Company),
executed by a duly authorized officer of Adviser, within fifteen (15) days of
the close of each calendar quarter certifying as to compliance with such Section
or Regulations. In addition to the quarterly reports, Life Company may request
and Adviser agrees to provide Section 817 diversification compliance reports at
more frequent intervals, as reasonably requested by Life Company. Adviser also
represents and warrants that it shall manage the investment and reinvestment of
the assets of the Portfolio in compliance with the annual gross income
qualification requirements of Section 851(b)(2) and 851(b)(3) of the Code, and
with the diversification requirements of Section 851(b)(4) of the Code.
Adviser agrees to indemnify and hold harmless the Trust and the Life
Company and each of their directors and officers and each person, if any, who
controls the Trust or Life Company within the meaning of Section 15 of the
Securities Act of 1933 (collectively, the Indemnified Parties for purposes of
this Paragraph 3) against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties, or any of them, may become subject under any statute, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements arise out of or result
from any material breach of the representation and warranty contained in this
Paragraph 3, resulting from gross negligence, willful misfeasance, bad faith, or
reckless disregard of duties of Adviser including a failure to comply with the
diversification requirements described in this Paragraph 3. Adviser, may rely on
Treasury Regulation Section 1.817-5(a)(2) in the event of a material breach of
diversification requirements under Section 817(h) as described this Paragraph 3.
4. BROKERAGE
In selecting brokers or dealers to execute transactions on behalf of the
Portfolio, the Adviser will seek the best overall terms available. In assessing
the best overall terms available for any transaction, the Adviser will consider
factors it deems relevant, including, but not limited to, the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
selecting brokers or dealers to execute a particular transaction, and in
evaluating the best overall terms available, the Adviser is authorized to
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Portfolio and/or other accounts over which the Adviser or its affiliates
exercise investment discretion.
2
5. INFORMATION PROVIDED TO THE TRUST
The Adviser will keep the Trust informed of developments materially
affecting the Portfolio's portfolio, and will, on its own initiative, furnish
the Trust from time to time with whatever information the Adviser believes is
appropriate for this purpose.
6. STANDARD OF CARE
The Adviser shall exercise its best judgment in rendering the services
listed in paragraph 2 above. Except as provided in paragraph 3 above, Adviser
shall not be liable for any error of judgment or mistakes of law or for any loss
suffered by the Portfolio or the Trust in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect the Adviser against any liability, to the Trust
or to its shareholders to which the Adviser would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Adviser's reckless disregard of
its obligations and duties under this Agreement.
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, the
Trust will pay the Adviser on the first business day of each week a fee for the
prior week which is an amount equivalent on an annual basis to .10% of the
average daily net assets of the Portfolio.
The fee for the period from the date the Portfolio commences its investment
operations to the end of the month during which the Portfolio commences its
investment operations shall be prorated according to the proportion that such
period bears to the full weekly 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 weekly period and
shall be payable upon the date termination of this Agreement. For the purpose of
determining fees payable to the Adviser, the value of the Portfolio's net assets
shall be computed at the times and in the manner specified in the Trust's
Prospectus and/or the Statement.
8. EXPENSES
The Adviser will bear all expenses in connection with 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, investment advisory,
sub-investment advisory and administration fees; fees for necessary professional
and brokerage services; fees for any pricing service; the costs regulatory
compliance; and costs associated with maintaining the Trust's legal existence
and shareholder relations.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The Trust understands that the Adviser now acts, will continue to act and
may act in the future as investment adviser to fiduciary and other managed
accounts, and as investment adviser to other investment companies, and the Trust
has no objection to the Adviser's so acting, provided that whenever the
Portfolio and one or more other investment companies or other clients advised by
the Adviser have available funds for investment, transactions in such securities
3
will generally be allocated daily among the clients pro rata in relation to the
size of the order, using the daily average price. The Trust recognizes that in
some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio; however, Adviser agrees that the Portfolio shall
not be disadvantaged in relation to other clients of Adviser when the same or
similar advice or decisions are made for more than one client. In addition, the
Trust understands that the persons employed by the Adviser to assist in the
performance of the Adviser's duties under this Agreement will not devote their
full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
10. TERM OF AGREEMENT
This Agreement shall become effective as of the date the Portfolio
commences its investment operations and continue for an initial two-year term
and shall continue thereafter so long such continuance is specifically approved
at least annually by the Board of Trustees of the Trust or (ii) a vote of a
majority (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act") of the Portfolio's outstanding voting on securities, provided that
in either event the continuance is also approved by a majority of the Board of
Trustees who are not interested persons (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting such approval. This agreement is terminable, without penalty
on 60 days written notice, by the board of Trustees of the Trust or by vote of
holders of a majority of assignment (as defined in the 1940 Act). This agreement
will also terminate automatically in the event of its assignment; (as defined in
the 1940 Act). This Agreement may not be terminated by Adviser without the prior
approval of a new Investment Advisory Agreement by a vote of a majority of the
outstanding voting securities of the Portfolio.
11. REPRESENTATION BY THE TRUST
The Trust represents that a copy of the Trust's Agreement and Declaration
of Trust is on file with the Secretary of the Commonwealth of Massachusetts and
with the City of Boston.
12. LIMITATION OF LIABILITY
The Trust and the Adviser agree that the obligations of the Trust under
this Agreement shall not be binding upon any of the Trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future, of the
Trust individually, but are binding only upon the assets and property of the
Trust as provided in the Agreement and Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees, and signed by
an authorized officer of the Trust acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the assets and property
of the Trust as provided in the Agreement and Declaration of Trust.
4
13. INFORMATION AND REPORTS TO CALIFORNIA COMMISSIONER
Adviser agrees that it shall furnish to the California Commissioner of
Insurance any information or reports concerning the Trust or the Portfolio as
the Commissioner, in the performance of his or her duties, may reasonably
request.
14. BOOKS AND RECORDS
Adviser acknowledges that all books and records which it maintains for the
Trust in performing its duties under this Agreement are the property of the
Trust and subject to its control; provided, however, that during the term of
this Agreement the Trust shall not exercise such control so as to interfere with
the performance of the Adviser's duties hereunder.
15. DELEGATION OF PROXY VOTING RESPONSIBILITY
TAMIC shall be responsible for voting proxies on securities held by the
Portfolio for delegating such responsibility to a Sub-Adviser appointed pursuant
to this Agreement. TAMIC represents that it or its delegee has adopted and
implemented written policies and procedures reasonably designed to ensure that
it will vote proxies in the best interest of the Portfolio and its shareholders,
which policies and procedures describe how TAMIC or its delegee addresses
material conflicts of interest between its interests and those of the Portfolio
with respect to proxy voting. TAMIC shall furnish the Trust with such
information reasonably requested by the Trust, in such form as may be requested,
as is necessary (1) for a summary description of TAMIC's or its delegee's proxy
voting policies and procedures to be included in the registration statement with
respect to the Trust, and (2) for the proxy voting record for the Portfolio to
be filed with the SEC in accordance with the requirement of Form N-PX (or any
successor form).
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance of this Agreement by signing and returning the enclosed copy of
this Agreement.
Very truly yours,
THE ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 2005)
OF THE TRAVELERS SERIES TRUST
By:
---------------------------------
Accepted:
Travelers Asset Management
International Company LLC
By:
--------------------------------
5
APPENDIX A-5
(FORM OF NEW INVESTMENT ADVISORY AGREEMENT FOR THE SEPARATE FUNDS)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of this 30th day of June, 2005,
between Travelers Asset Management International Company LLC a limited liability
company duly organized and existing under the law of the state of New York
(hereinafter "TAMIC") and [NAME OF SEPARATE FUND] (hereinafter the "Trust"), a
Massachusetts business trust established in Massachusetts by a Declaration of
Trust dated [DATE OF DECLARATION], as amended and/or restated from time to time
(the "Declaration of Trust").
WITNESSETH:
WHEREAS, the Trust and TAMIC wish to enter into an agreement setting forth
the terms upon which TAMIC will perform certain services for the Trust.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. The Trust hereby employs TAMIC to manage the investment and reinvestment of
the assets of the Trust and to perform the other services herein set forth,
subject to the supervision of the Board of Trustees of the Trust (hereinafter
the "Board") for the period and on the terms herein set forth. TAMIC hereby
accepts such employment and agrees during such period, at its own expense, to
render the services and to assume the obligations herein set forth for the
compensation herein provided.
2. In carrying out these obligations to manage the investment and reinvestment
of the assets of the Trust, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial data
and other information relevant to the investment policy of the Trust,
affecting the economy generally and individual companies or industries, the
securities of which are included in the Trust's portfolio or are under
consideration for inclusion therein;
b. be authorized to purchase supplemental research and other services
from brokers at additional cost to the Trust;
c. regularly furnish to the Board recommendations with respect to any
investment program for approval, modification or rejection by the Board;
d. take such steps as are necessary to implement the investment program
approved by the Board;
e. regularly report to the Board with respect to implementation of the
approved investment program and any other activities in connection with the
administration of the assets of the Trust; and
f. vote proxies on securities held by the Trust or delegate such
responsibility to a sub-adviser appointed pursuant to this Agreement. TAMIC
represents that it or its delegee has adopted and implemented written
policies and procedures reasonably designed to ensure that it will vote
proxies in the best interest of the Trust and its shareholders, which
policies and procedures describe how TAMIC or its delegee addresses
material conflicts of interest between its interests and those of the Trust
with respect to proxy voting. TAMIC shall furnish the Trust with such
information reasonably requested by the Trust, in such form as may be
requested, as is necessary (1) for a summary description of TAMIC's or its
delegee's proxy voting policies and procedures to be included in the
registration statement with respect to the Trust, and (2) for the proxy
voting record for the Trust to be filed with the SEC in accordance with the
requirement of Form N-PX (or any successor form).
3. TAMIC may engage a sub-adviser to furnish investment management information
and advice to assist TAMIC in carrying out its responsibilities under this
Agreement. TAMIC shall remain responsible for ensuring that each sub-adviser
conducts its operations in a manner consistent with the terms of this Agreement
4. Any investment program undertaken by TAMIC pursuant to this Agreement and
any other activities undertaken by TAMIC on behalf of the Trust shall at all
times be subject to any directives of the Board or any duly constituted
committee thereof acting pursuant to like authority.
5. For the services rendered hereunder, TAMIC will receive an amount
equivalent on an annual basis to [INSERT FEE SCHEDULE],
such fees to be deducted on each valuation date.
6. The services of TAMIC to the Trust hereunder are not to be deemed exclusive
and TAMIC shall be free to render similar services to others so long as its
services hereunder are not impaired or interfered with thereby.
7. If approved by a vote of a majority of the outstanding voting securities of
the Trust (as defined in the Investment Company Act of 1940), this Investment
Advisory Agreement:
a. may not be terminated by TAMIC, without the prior approval of a new
Investment Advisory Agreement by a vote of a majority of the outstanding
voting securities of the Trust, and shall be subject to termination,
without the payment of any penalty, upon sixty days' written notice to the
investment adviser, by the Board of Trustees or by a vote of a majority of
the outstanding voting securities of the Trust;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of the Trust;
c. shall automatically terminate upon assignment by either party; and
d. shall continue in effect for a period of more than two years from the
date of its execution, only so long as such continuance is specifically
approved (i) at least annually by a vote of a majority of the Board of
Trustees who are not parties to, or interested persons of any party to,
such agreement, cast in person at a meeting called for the purpose of
voting on such approval and at which the Board has been furnished such
information as may be reasonably necessary to evaluate the terms of said
agreement, or (ii) by a vote of a majority of the outstanding voting
securities of the Trust.
8. This Agreement is made on behalf of the Trust by an officer or Trustee of
the Trust, not individually, but solely as an officer or Trustee under the
Declaration of Trust, and the obligations under this Agreement are not binding
upon, nor shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Trust personally, but shall
bind only the Trust's property.
9. TAMIC agrees that it shall furnish to the California Commissioner of
Insurance any information or reports concerning the Trust as the Commissioner,
in the performance of his or her duties, may request.
10. TAMIC hereby acknowledges that all books and records relating to the
services provided to the Trust hereunder are the property of the Trust and
subject to its control; provided, however, that during the term of the
Agreement, the Trust shall not exercise such control so as to interfere with the
performance of TAMIC's duties hereunder.
11. This Investment Advisory Agreement is subject to the provisions of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory
Agreement to be signed by their respective officials thereunto duly authorized
and seals to be affixed, in the case of TAMIC, as of the day and year first
above written.
[NAME OF FUND]
By:
----------------------------------
Chairman,Board of Trustees
WITNESS:
- ----------------------------
Secretary, Board of Trustees
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY LLC
By:
---------------------------------
President
ATTEST:(Seal)
- -------------------
Corporate Secretary
APPENDIX B
(FORM OF NEW SUBADVISORY AGREEMENT FOR MONDRIAN INTERNATIONAL STOCK PORTFOLIO.)
INVESTMENT SUBADVISORY AGREEMENT
ENTERED INTO BETWEEN
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY LLC
AND
MONDRIAN INVESTMENT PARTNERS, LIMITED
This Investment Subadvisory Agreement (the "Agreement") is entered into as
of May 1, 2005, 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 Mondrian Investment Partners, Limited
("Mondrian"), a limited partnership duly organized and existing under the laws
of England and Wales (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 Mondrian
International Stock Portfolio (formerly Lazard International Stock 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. TAMIC shall also promptly inform
the Subadviser of the results of any audits or examinations by regulatory
authorities pertaining to the Subadviser's responsibilities for the Portfolio.
TAMIC shall also promptly inform the Subadviser of any litigation, injunction,
action or proceeding 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
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 17 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.
(iv) The Subadviser shall maintain a written code of ethics (the "Code of
Ethics") that it reasonably believes complies with the requirements of Rule
204A-1 under the Investment Advisers Act of 1940 and 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 Persons (as defined
in Rules 204A-1 and 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"). TAMIC shall promptly
provide the Subadviser with copies of the requirements of Subchapter M and the
diversification requirements of Section 817(h) of the Code and any changes or
modification to such provisions. 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.
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.
4. RULE 38a-1 COMPLIANCE
The Subadviser represents, warrants and agrees that it has adopted and
implemented, and throughout the term of this Agreement will maintain in effect
and implement, policies and procedures reasonably designed to prevent, detect
and correct violations by the Subadviser and its supervised persons, and, to the
extent the activities of the Subadviser in respect of the Trust could affect the
Trust, by the Trust, of "federal securities laws" (as defined in Rule 38a-1
under the 1940 Act), and that the Subadviser has provided the Trust with true
and complete copies of its policies and procedures (or summaries thereof) and
related information requested by the Trust. The Subadviser agrees to cooperate
with periodic reviews by the Trust's compliance personnel of the Subadviser's
policies and procedures, their operation and implementation and
other compliance matters and to provide to the Trust from time to time such
additional information and certifications in respect of the Subadviser's
policies and procedures, compliance by the Subadviser with federal securities
laws and related matters as the Trust's compliance personnel may reasonably
request. Subadviser agrees to promptly notify TAMIC of any material compliance
violations which affect the Portfolio.
5. STANDARD OF CARE
The Subadviser shall exercise its reasonable 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.
6. 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
under 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 as 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
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.
7. COMPENSATION
In consideration of the services rendered, the facilities furnished, and
the expenses assumed pursuant to this Agreement, TAMIC will pay the Subadviser a
fee at the annual rate of 0.425% of the Portfolio's average daily net assets for
the first $100 million and 0.30% of the Portfolio's average daily net assets
over $100 million. The parties understand that the fee will be calculated daily
and paid monthly. The Subadviser shall have no right to obtain compensation
directly from the Trust or the Portfolio for services provided hereunder and
agrees to look solely to TAMIC for payment of fees due. The fee for the period
from the Effective Date (defined below) of the Agreement to the end of the month
during which the Effective Date occurs shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Subadviser, the value of the Portfolio's net assets shall be computed at the
times and in the manner specified in the Prospectus and the SAI, and on days on
which the net assets are not so determined, the net asset value computation to
be used shall be as determined on the immediately preceding day on which the net
assets were determined.
8. EXPENSES
The Subadviser shall bear all expenses (excluding 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 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.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
TAMIC understands that the Subadviser and its affiliates now act, will
continue to act and may act in the future as investment manager or adviser to
fiduciary and other managed accounts, and as an investment manager or adviser to
other investment companies, including any offshore entities or private accounts.
TAMIC has no objection to the Subadviser and its affiliates so acting, PROVIDED,
that, whenever the Portfolio and one or more other investment companies or
accounts managed or advised by the Subadviser and its affiliates have available
funds for investment, investments suitable and appropriate for each will be
allocated in accordance with a formula 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.
10. DELEGATION OF PROXY VOTING RIGHTS
The Subadviser shall be responsible for voting proxies on securities held
by the Portfolio. The Subadviser represents that is has adopted and implemented
written policies and procedures that are, and are reasonably designed to ensure
that the Subadviser will vote proxies, in compliance with the 1940 Act and the
rules and regulations thereunder. The Subadviser shall provide the Trust in a
timely manner with (1) such records of its proxy voting on behalf of the
Portfolio as necessary for the Trust to comply with the requirements of Form
N-PX, or any successor law, rule, regulation, or SEC position, and (2) such
information as necessary for a summary description of the Subadviser's proxy
voting policies and procedures to be included in the registration statement with
respect to the Trust.
11. AFFILIATED BROKERS
The Subadviser or any of its affiliates may act as broker in connection
with the purchase or sale of securities or other investments for the Portfolio,
subject to: (a) the requirement that the Subadviser seek to obtain best
execution and price within the policy guidelines determined by the Board and set
forth in the Trust's current prospectus and SAI; (b) the provisions of the 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.
12. CUSTODY
Nothing in this Agreement shall require the Subadviser to take or receive
physical possession of cash, securities, or other investments of the Portfolio.
13. TERM OF AGREEMENT; TERMINATION OF AGREEMENT; AMENDMENT OF AGREEMENT
(a) TERM. This Agreement shall become effective May 1, 2005 (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 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 and the Form ADV for [Mondrian Investment Partners (U.S.), Inc.] [what will
this entity be doing?, Would we need to appoint them as a sub-adviser as well?]
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 TAMIC 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 the laws of England
and Wales 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 that are communicated to the Subadviser in writing. The
Trust or TAMIC shall promptly notify the Subadviser in writing of changes to
(ii) or (iii) above.
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 (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, the regulatory bodies of the Untied Kingdom or by a court of the
United States, England and Wales or any other jurisdiction.
(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.
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) 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 Subadviser's management of the Portfolio provided in
writing to TAMIC or the Trust by the Subadviser or which has been reviewed and
approved 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
Subadviser's management of the Portfolio provided in writing to TAMIC or the
Trust by the Subadviser or which has been reviewed and approved 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
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.
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
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.
21. USE OF NAME
The Trust and TAMIC, together with its subsidiaries and affiliates may use
the names "Mondrian Investment Partners Limited" or "Mondrian" 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,
provided that the Trust and TAMIC agree that "Limited" or "Ltd." shall also be
used when the name "Mondrian Investment Partners" is used. 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
"Mondrian Investment Partners Limited", or "Mondrian" 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.
22. 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,
other than for purposes of complying with conditions of paragraphs (a) and (b)
of Rule 12d3-1 under the 1940 Act.
23. 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.
24. 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.
25. 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.
26. 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:
MONDRIAN INVESTMENT PARTNERS, LIMITED
By:
--------------------------------------
Name:
Title:
APPENDIX C
CAPITAL APPRECIATION FUND
MONEY MARKET PORTFOLIO
HIGH YIELD BOND TRUST
MANAGED ASSETS TRUST
THE TRAVELERS SERIES TRUST
NOMINATING AND ADMINISTRATION COMMITTEE CHARTER
(a) Nominating and Administration Committee Membership
The Nominating and Administration Committee shall be composed entirely of
non-interested and independent Trustees*.
(b) Board Nominations and Functions
1. The Committee shall nominate and elect candidates for "non-interested"
Trustee membership on the Board of Trustees ("Board"). The Committee shall
evaluate candidates' qualifications for Board membership as non-interested
Trustees and their independence from the Funds' manager and other
principal service providers. Persons selected must be non-interested and
independent in terms of both the letter and the spirit of the Investment
Company Act of 1940. The Committee shall also consider the effect of any
relationships beyond those delineated in the 1940 Act that might impair
independence, e.g., business, financial or family relationships with
managers or service providers.
2. The Committee shall periodically review Board governance procedures and
shall recommend any appropriate changes to the full Board.
3. The Committee shall periodically review the composition of the Board to
determine whether it may be appropriate to add individuals with different
backgrounds or skill sets from those already on the Board.
4. The Committee shall periodically review Trustee compensation and shall
recommend any appropriate changes to the non-interested and independent
Trustees as a group.
- ---------------------------
* "Trustee" shall refer to both trustees and managers.
(c) Committee Nominations and Functions
1. The Committee shall make nominations for membership on all committees and
shall review committee assignments at least annually.
2. The Committee shall review as necessary the responsibilities of any
committees of the Board, whether there is a continuing need for each
committee, whether there is a need for additional committees of the Board,
and whether committees should be combined or reorganized. The Committee
shall make recommendations for any such action to the full Board.
(d) Other Powers and Responsibilities
1. The Committee shall monitor the performance of legal counsel employed by
the Funds and the non-interested and independent Trustees, and shall be
responsible for the supervision of counsel for the non-interested and
independent Trustees.
2. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including authority to retain special
counsel and other experts or consultants at the expense of the appropriate
Fund(s).
3. The Committee shall review this Charter at least annually and recommend
any changes to the full Board.
SCHEDULE A
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
Fees billed by KPMG for services provided directly to each Fund during each of
the last two fiscal years:
FUND BILLING DATE AUDIT FEES AUDIT-RELATED FEES TAX FEES
- ---- ------------ ---------- ------------------ --------
Convertible ------------------------ ----------------------- ----------------------- ---------------------
Securities ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
Disciplined Mid ------------------------ ----------------------- ----------------------- ---------------------
Cap Stock ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
Equity Income ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
Federated High ------------------------ ----------------------- ----------------------- ---------------------
Yield Portfolio ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
Federated Stock ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
Large Cap ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
Mondrian ------------------------ ----------------------- ----------------------- ---------------------
International ------------------------ ----------------------- ----------------------- ---------------------
Stock Portfolio ------------------------ ----------------------- ----------------------- ---------------------
MFS Mid Cap ------------------------ ----------------------- ----------------------- ---------------------
Growth ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
Mercury Large ------------------------ ----------------------- ----------------------- ---------------------
Cap Core ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
Pioneer Fund ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
Social ------------------------ ----------------------- ----------------------- ---------------------
Awareness ------------------------ ----------------------- ----------------------- ---------------------
Stock Portfolio ------------------------ ----------------------- ----------------------- ---------------------
Travelers ------------------------ ----------------------- ----------------------- ---------------------
Quality Bond ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
U.S. ------------------------ ----------------------- ----------------------- ---------------------
Government ------------------------ ----------------------- ----------------------- ---------------------
Securities ------------------------ ----------------------- ----------------------- ---------------------
Portfolio
Zero Coupon ------------------------ ----------------------- ----------------------- ---------------------
Bond Fund ------------------------ ----------------------- ----------------------- ---------------------
Portfolio (Series ------------------------ ----------------------- ----------------------- ---------------------
2005)
Managed Assets ------------------------ ----------------------- ----------------------- ---------------------
Trust ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
Capital ------------------------ ----------------------- ----------------------- ---------------------
Appreciation ------------------------ ----------------------- ----------------------- ---------------------
Fund ------------------------ ----------------------- ----------------------- ---------------------
High Yield ------------------------ ----------------------- ----------------------- ---------------------
Bond Trust ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
Money Market ------------------------ ----------------------- ----------------------- ---------------------
Portfolio ------------------------ ----------------------- ----------------------- ---------------------
------------------------ ----------------------- ----------------------- ---------------------
For each Fund's last two fiscal years, no fees were billed by KPGM that would be
disclosed under the caption "All Other Fees" to any Fund.
Fees billed by KPMG for services provided to each Fund's Service Affiliates that
relate directly to such Fund's operations and financial reporting:
FUND BILLING DATE AUDIT-RELATED FEES (1) TAX FEES (1) ALL OTHER FEES (1)
- ---- ------------ ---------------------- ------------ ------------------
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Convertible ------------------------ ----------------------- ----------------------- ---------------------
Securities
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Disciplined Mid ------------------------ ----------------------- ----------------------- ---------------------
Cap Stock
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Equity Income ------------------------ ----------------------- ----------------------- ---------------------
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Federated High ------------------------ ----------------------- ----------------------- ---------------------
Yield Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Federated Stock ------------------------ ----------------------- ----------------------- ---------------------
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Large Cap ------------------------ ----------------------- ----------------------- ---------------------
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Mondrian ------------------------ ----------------------- ----------------------- ---------------------
International
Stock Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
MFS Mid Cap ------------------------ ----------------------- ----------------------- ---------------------
Growth Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Mercury Large ------------------------ ----------------------- ----------------------- ---------------------
Cap Core
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Pioneer Fund ------------------------ ----------------------- ----------------------- ---------------------
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
SocialAwareness ------------------------ ----------------------- ----------------------- ---------------------
Stock Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Travelers ------------------------ ----------------------- ----------------------- ---------------------
Quality Bond
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
U.S. ------------------------ ----------------------- ----------------------- ---------------------
Government
Securities
Portfolio
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Zero Coupon ------------------------ ----------------------- ----------------------- ---------------------
Bond Fund
Portfolio (Series
2005)
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Managed Assets ------------------------ ----------------------- ----------------------- ---------------------
Trust
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Capital ------------------------ ----------------------- ----------------------- ---------------------
Appreciation
Fund
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
High Yield ------------------------ ----------------------- ----------------------- ---------------------
Bond Trust\
Service ------------------------ ----------------------- ----------------------- ---------------------
Affiliates of ------------------------ ----------------------- ----------------------- ---------------------
Money Market ------------------------ ----------------------- ----------------------- ---------------------
Portfolio
(1) This amount reflects the fees billed to Service Affiliates of the Fund for
non-audit services relating directly to the operations and financial reporting
of the Fund (which services also related to the operations and financial
reporting of all investment companies within the funds complex).
For periods prior to May 6, 2003, the amounts shown above under "Audit-Related
Fees," "Tax Fees" and "All Other Fees" relate to permitted non-audit services
that would have been subject to pre-approval if the SEC rules relating to
pre-approval of non-audit services had been in effect. During the periods
indicated in the table above, no services described under "Audit-Related Fees,"
"Tax Fees" or "All Other Fees" were approved pursuant to the de minimis
exception set forth in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Aggregate fees billed by KPMG for each Fund's two most recent fiscal years for
non-audit services rendered to each Fund and to each Fund's Service Affiliates:
AGGREGATE FEES PAID AGGREGATE FEES PAID
FOR FISCAL YEAR ENDED FOR FISCAL YEAR ENDED
FUND DECEMBER 31, 2003 DECEMBER 31, 2004
- ---- --------------------- ---------------------
Convertible Securities Portfolio $ $
Disciplined Mid Cap Stock Portfolio $ $
Equity Income Portfolio $ $
Federated High Yield Portfolio $ $
Federated Stock Portfolio $ $
Large Cap Portfolio $ $
Mondrian International Stock Portfolio $ $
MFS Mid Cap Growth Portfolio $ $
MFS Value Portfolio $ $
Mercury Large Cap Core Portfolio $ $
Pioneer Fund Portfolio $ $
Social Awareness Stock Portfolio $ $
Travelers Quality Bond Portfolio $ $
U.S. Government Securities Portfolio $ $
Zero Coupon Bond Fund Portfolio (Series 2005) $ $
Managed Assets Trust $ $
Capital Appreciation Fund $ $
High Yield Bond Trust $ $
Money Market Portfolio $ $
FORM OF PROXY [SEPARATE FUND FORM]
VOTING INSTRUCTIONS FORM - [NAME OF FUND]
The Travelers Insurance Company The Travelers Life and Annuity Company
Citicorp Life Insurance Company First Citicorp Life Insurance Company
Voting Instructions solicited by The Travelers Insurance Company, The Travelers
Life and Annuity Company, Citicorp Life Insurance Company, and First Citicorp
Life Insurance Company in connection with a solicitation of proxies by the Board
of Trustees of [name of Fund] (the "Fund") for a special meeting of shareholders
of the Fund to be held on June 10, 2005.
I hereby instruct The Travelers Insurance Company, The Travelers Life and
Annuity Company, Citicorp Life Insurance Company, or First Citicorp Life
Insurance Company, as appropriate, to vote the shares of Fund as to which I am
entitled to give instructions at the Special Meeting of Shareholders of the Fund
to be held on June 10, 2005 at 9:00 a.m. Eastern Time, at One Cityplace,
Hartford, Connecticut 06103, or any adjournment(s) thereof, as follows:
Please vote by marking the appropriate box below:
For Against Abstain
1. To approve a new investment advisory agreement for the Portfolio. [ ] [ ] [ ]
For Against Abstain
2. To approve a manager of managers proposal for the Portfolio. [ ] [ ] [ ]
3. Election of Trustee. For Withhold
Elizabeth Forget has been nominated by the Board of Trustees of the Fund to serve
until her successor is elected and qualified. [ ] [ ]
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 May
__, 2005. 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.
These voting instructions may be revoked prior to the special meeting by
notifying the secretary of The Travelers or the secretary of the Fund, in
writing by 5:00 p.m. on June 9, 2005.
If a contract is held jointly, each contract owner should sign. If only one
signs, his or her 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 own 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 that he or she is a "Trustee."
Signature and title: ________________ Signature (joint owners): ______________
Date: _______________________________ Date: __________________________________
FORM OF PROXY [TRUST FORM]
VOTING INSTRUCTIONS FORM - [NAME OF] PORTFOLIO
The Travelers Insurance Company The Travelers Life and Annuity Company
Citicorp Life Insurance Company First Citicorp Life Insurance Company
Voting Instructions solicited by The Travelers Insurance Company, The Travelers
Life and Annuity Company, Citicorp Life Insurance Company, and First Citicorp
Life Insurance Company in connection with a solicitation of proxies by the Board
of Trustees of The Travelers Series Trust (the "Trust") for a special meeting of
shareholders of the [name of] Portfolio (the "Portfolio") of the Trust to be
held on June 10, 2005.
I hereby instruct The Travelers Insurance Company, The Travelers Life and
Annuity Company, Citicorp Life Insurance Company, or First Citicorp Life
Insurance Company, as appropriate, to vote the shares of the Portfolio of the
Trust as to which I am entitled to give instructions at the Special Meeting of
Shareholders of the Portfolio to be held on June 10, 2005 at 9:00 a.m. Eastern
Time, at One Cityplace, Hartford, Connecticut 06103, or any adjournment(s)
thereof, as follows:
Please vote by marking the appropriate box below:
For Against Abstain
1. To approve a new investment advisory agreement for the Portfolio. [ ] [ ] [ ]
For Against Abstain
2. To approve a manager of managers proposal for the Portfolio. [ ] [ ] [ ]
3. Election of Trustee For Withhold
Elizabeth Forget has been nominated by the Board of Trustees of the Trust to serve
until her successor is elected and qualified. [ ] [ ]
4. To approve a new subinvestment advisory agreement for the Portfolio [ONLY FOR For Against Abstain
THE MONDRIAN PORTFOLIO.] [ ] [ ] [ ]
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 May
__, 2005. 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.
These voting instructions may be revoked prior to the special meeting by
notifying the secretary of The Travelers or the secretary of the Trust, in
writing by 5:00 p.m. on June 9, 2005.
If a contract is held jointly, each contract owner should sign. If only one
signs, his or her 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 own 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 that he or she is a "Trustee."
Signature and title: ________________ Signature (joint owners): __________
Date: ________________________________ Date: ______________________________