THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (check the appropriate box):
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing is calculated and state how it was determined):
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or the Form or Schedule and the date of its filing.
1) Amount previously paid:
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4) Date Filed: _______________
THE TRAVELERS INSURANCE COMPANY
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR
VARIABLE ANNUITIES ("ACCOUNT GIS")
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE
ANNUITIES ("ACCOUNT MM")
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE
ANNUITIES ("ACCOUNT QB")
(Each an "Account" and, Collectively, the "Accounts")
One Cityplace, Hartford, Connecticut 06103
May 11, 2005
Dear Variable Annuity Contract Owner:
Units of the above-named Accounts of The Travelers Insurance Company ("TIC")
have been purchased at your direction to fund benefits payable under your
variable annuity contract (the "variable contracts"). As owner of the units of
the Accounts, you are being asked (i) to approve a new investment advisory
agreement between each Account and Travelers Asset Management International
Company LLC ("TAMIC"), the investment adviser to each Account; (ii) to approve
a proposal with respect to the future operation of each Account whereby TAMIC
may from time to time, to the extent permitted by an exemption ("manager of
managers exemption") granted by the Securities and Exchange Commission and
subject to approval by the Board of Managers, enter into new or amended
agreements with subadvisers with respect to the Account without obtaining
contract owner approval of such agreements, and to permit such subadvisers to
manage the assets of the Account pursuant to such subadvisory agreements; and
(iii) to elect a new member to the Board of Managers of each Account.
TAMIC is the investment adviser for each Account. Citigroup Inc. ("Citigroup")
has reached an agreement with MetLife, Inc. ("MetLife") to sell TIC 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. 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 Accounts, as well as its subadvisory agreement with the subadviser for
Account GIS, and the termination of those agreements by operation of law and
pursuant to the terms of those agreements, effective as of the closing date of
the sale of TIC, which currently is scheduled to occur on June 30, 2005 or soon
thereafter. Therefore, shareholder approval of the new advisory agreements in
needed to enable TAMIC to continue to provide advisory services to the
Accounts.
It is proposed that TAMIC will continue to provide advisory services to
the Accounts at the same fee rates as currently apply. With respect to any
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 Accounts. As a manager of managers, TAMIC
would retain the responsibility for hiring and, when appropriate, replacing
subadvisers. Subject to certain conditions, TAMIC would be permitted to enter
into a new subadvisory agreement for an Account, subject to Board approval.
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 current member of the Accounts' Boards of Managers who is affiliated
with Citigroup has informed the Accounts' Board that if the sale of TIC to
MetLife is consummated, he will resign as a Board member. Accordingly, it is
being proposed that variable contract owners elect, subject to consummation of
the sale, a manager affiliated with MetLife to replace the current member of
the Board affiliated with Citigroup.
After carefully considering the merits of the proposals, the Board of
Managers of the Accounts (the "Board") has determined that approval of the
proposals is in the best interests of each Account's contract owners.
The Board recommends that you read the enclosed proxy materials carefully
and then vote FOR the proposals. To vote, you may use any of the following
methods:
o By Mail. Please complete, sign, date and return the proxy card(s) in the
enclosed postage-paid envelope.
o By Telephone. Call 1-800-690-6903 and follow the simple instructions.
Have your proxy card ready.
o By Internet. Go to www.proxyweb.com and follow the on-line instructions.
Have your proxy card ready.
For more information, please call TIC at 1-800-842-9368.
Respectfully,
The Travelers Insurance Company
We urge you to sign and return the proxy form(s) in the enclosed
postage-paid envelope.
Your Vote is Important!
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR
VARIABLE ANNUITIES
THE TRAVELERS MONEY MARKET ACCOUNT FOR
VARIABLE ANNUITIES
THE TRAVELERS QUALITY BOND ACCOUNT FOR
VARIABLE ANNUITIES
(Each an "Account" and, Collectively, the "Accounts")
One Cityplace
Hartford, Connecticut 06103
May 11, 2005
NOTICE OF SPECIAL MEETING OF VARIABLE ANNUITY
CONTRACT OWNERS
To Variable Annuity Contract Owners:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the variable annuity contract
owners (the "Contract Owners") of each Account 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. To consider and approve a new investment advisory agreement
between each Account and Travelers Asset Management International Company
LLC ("TAMIC").
ITEM 2. To consider and approve a proposal with respect to the future
operation of each Account whereby TAMIC may from time to time, to the
extent permitted by an exemption granted by the Securities and Exchange
Commission and subject to approval by the Board of Managers, enter into
new or amended agreements with subadvisers with respect to the Account
without obtaining Contract Owner approval of such agreements, and to
permit such subadvisers to manage the assets of the Account pursuant to
such subadvisory agreements.
ITEM 3. To elect a new member of the Board of Managers.
ITEM 4. To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
THE BOARD OF MANAGERS OF THE ACCOUNTS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
IN FAVOR OF ITEMS 1, 2 AND 3.
Contract Owners of record as of the close of business on April 15, 2005
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
Contract Owners are requested to execute and return promptly in the
enclosed envelope the accompanying proxy, which is being solicited by the Board
of Managers of each Account. 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 Meeting and voting in person.
By Order of the Board of Managers
/s/ Ernest J. Wright
Ernest J. Wright, Assistant Secretary
May 11, 2005
Hartford, Connecticut
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR
VARIABLE ANNUITIES ("ACCOUNT GIS")
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE
ANNUITIES ("ACCOUNT MM")
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE
ANNUITIES ("ACCOUNT QB")
(Each an "Account" and, Collectively, the "Accounts")
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
Managers (the "Board of Managers" or the "Managers") of the Accounts for use at
the joint special meeting of the variable annuity contract owners of the
Accounts ("Contract Owners") scheduled for June 24, 2005 at 9:00 a.m. (Eastern
time), and any adjournments thereof, at the offices of the Accounts at the
address set forth above on this Proxy Statement (the "Meeting"). At the
Meeting, Contract Owners of each Account will be asked to (i) consider and
approve a new investment advisory agreement between the Account and Travelers
Asset Management International Company LLC ("TAMIC"); (ii) consider and approve
a proposal (the "manager of managers proposal") with respect to the future
operation of the Account whereby TAMIC may from time to time, subject to
approval by the Board of Managers 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 Account without
obtaining Contract Owner approval of such subadvisory agreements, and to permit
such subadvisers to manage the assets of the Account pursuant to such
subadvisory agreements; and (iii) elect a new member of the Board of Managers
(together, the "Proposals"). Contract Owners of each Account will vote
separately as to each Proposal.
The variable annuity contracts are issued by The Travelers Insurance
Company ("TIC"), and are funded by the Accounts, each of which is a separate
account of TIC.
This Proxy Statement describes more fully the Proposals. Forms of the new
investment advisory agreements are included as Appendices A-1 through A-3 of
this Proxy Statement.
The Meeting will be held on June 24, 2005 at 9:00 a.m. (Eastern time) at
the Accounts' offices at One Cityplace, Hartford, Connecticut 06103. It is
expected that
this Proxy Statement will be mailed on or about May 16, 2005. Contract Owners
of record at the close of business on April 15, 2005 (the "Record Date") are
entitled to vote on the Proposals. At the Meeting, Contract Owners will
consider and approve or disapprove each Proposal.
The chart below lists the number of units of each Account (rounded to the
nearest full unit) that were outstanding as of the close of business on the
Record Date. Each unit of a Account is entitled to one vote, with proportionate
voting for fractional units.
Total Number of
Units Outstanding as
Name of Account of April 15, 2005
--------------- -----------------
Account GIS ............... 26,481,297
Account MM ................ 24,475,770
Account QB ................ 13,188,264
THE BOARD OF MANAGERS OF EACH ACCOUNT UNANIMOUSLY RECOMMENDS THAT VARIABLE
ANNUITY CONTRACT OWNERS VOTE "FOR" EACH PROPOSAL.
COPIES OF EACH ACCOUNT'S MOST RECENT ANNUAL AND SEMIANNUAL REPORTS ARE
AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY CALLING THE ACCOUNT (TOLL-FREE) AT
1-800-842-9368 OR BY WRITING TO TRAVELERS LIFE & ANNUITY, ANNUITY SERVICES, ONE
CITYPLACE, 3CP, HARTFORD, CT 06103.
The Proposals are related to the proposed sale of TIC 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").
Proposal 1 -- APPROVAL OF INVESTMENT ADVISORY AGREEMENT.
SUMMARY
TAMIC currently serves as investment adviser to each Account pursuant to a
separate investment advisory agreement between TAMIC and the Account (the
"Current Advisory Agreements"). For Account GIS, TAMIC has entered into a
subadvisory agreement (the "GIS Subadvisory Agreement") with The Travelers
Investment Management Company ("TIMCO"). As explained in more detail below,
Contract Owners are being asked to approve new investment advisory agreements
between each Account and TAMIC (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 TIC and
certain affiliates by Citigroup to MetLife (the "MetLife Transaction") for
$11.5
2
billion, subject to closing adjustments. The MetLife Transaction includes the
acquisition of TIC subsidiary TAMIC, the investment adviser to the Accounts, by
MetLife. Contract Owners are not being asked to approve the MetLife
Transaction. However, given that the Accounts' investment adviser will have a
new parent company (MetLife) and that under the Investment Company Act of 1940
(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 the GIS Subadvisory Agreement will terminate upon the
effective date of the sale of TIC. Thus, the New Advisory Agreements must be
submitted to a vote of the Contract Owners.
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.
With respect to the Accounts, MetLife has recommended and the Board of
Managers has approved the retention of Salomon Brothers Asset Management Inc.
("Salomon"), currently an affiliate of TAMIC, as a temporary subadviser for
those Accounts (QB and MM) that are now managed directly by TAMIC without a
subadviser, effective on or about the MetLife Closing Date. The portfolio
managers employed by Salomon are also currently employees of TAMIC and are the
current portfolio managers of these Accounts, so for these Accounts, there will
be no change in the day-to-day portfolio manager. Furthermore, MetLife may in
the future make or recommend to the Managers such additional changes to any
Accounts, including changes to the investment objectives, policies and
restrictions of the Accounts or merging one or more Accounts 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 certain
TIC and MetLife 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, for a period of
five years after the MetLife Closing Date and subject to the other terms and
conditions of the Investment
3
Products Agreement, certain TIC and MetLife insurance products will include
certain Citigroup-sponsored funds as investment options.
As reflected by Proposal 2, representatives of MetLife have recommended
that each Account 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 Contract Owners of each Account at the Meeting, new subadvisory
agreements for the Accounts will be approved only by the Board of the Account,
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 Accounts 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 Accounts 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 Accounts 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,
there would be no new agreements to approve.
4
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 Board of Managers,
the date on which it was last approved by Contract Owners, and the reason it
was last submitted for Contract Owner approval.
Date Last Approved Date Last Approved
Date of Current or Renewed by by Contract Owners and
Name of Account Advisory Agreement Board of Managers Reason for Submission
- --------------- ------------------ ----------------- ---------------------
Account GIS May 1, 1998, July 23, 2004 April 27, 1998 (in
as last amended connection with
October 31, 2003 TAMIC becoming
investment adviser
to the Account)
Account MM December 30, July 23, 2004 April 23, 1993 (in
1992, as last connection with a
amended change of control
October 31, 2003 of TAMIC)
Account QB December 30, July 23, 2004 April 23, 1993 (in
1992, as last connection with a
amended change of control
October 31, 2003 of TAMIC)
The key terms, including fees, of the Current Advisory Agreements are set
out in detail under the heading "The New Advisory Agreements" below.
The following table summarizes the advisory fees paid by each Account to
TAMIC for the fiscal year ended December 31, 2004.
Aggregate Advisory
Name of Account Fees Paid
--------------- ---------
Account GIS ............... $3,301,527
Account MM ................ $ 250,743
Account QB ................ $ 343,616
THE NEW ADVISORY AGREEMENTS
The New Advisory Agreements are the same in all material respects as the
Current Advisory Agreements, except that language will be added to the New
Advisory Agreements to make explicit the authority of TAMIC to hire and oversee
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 Accounts are attached to this Proxy Statement as Appendices A-1 through
A-3.
5
Under the New Advisory Agreements, TAMIC will continue to provide
investment advisory services to each Account, including the investment and
reinvestment of the Account's assets in accordance with the investment
objectives, policies and restrictions of the Account. The New Advisory
Agreements explicitly authorize TAMIC, subject to the approval of the Board of
Managers, to enter into agreements with other investment advisers to provide
investment advice or other services to the Account. Such 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
resolution of The Travelers Insurance Company's Board of Directors establishing
the Account, the Account's rules and regulations, any policies adopted by the
Managers, and the investment policies of the Account as disclosed in the
Account's registration statement on file with the SEC, as amended from time to
time.
As compensation for its services, TAMIC will be entitled to receive from
each Account fees calculated as a percentage of the Account's average daily net
assets. 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 Account is set forth below.
Advisory Fee Paid to TAMIC
Account (as a percentage of daily net assets)
------- -------------------------------------
Account GIS ....... 0.65% on the first $500 million; 0.55% of the
next $500 million; 0.50% of the next $500 million;
0.45% of the next $500 million; 0.40% over
$2 billion
Account QB ........ 0.3233%
Account MM ........ 0.3233%
Contingent upon receipt of Contract Owner approval, the New Advisory
Agreements will be effective upon the MetLife Closing, and will continue in
effect until August 31, 2005, before which the annual review of such Agreements
for renewal has been planned independently of the MetLife Transaction.
Thereafter, each New Advisory Agreement will continue in effect as to any
Account 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 Managers or (2) a vote of the holders of a majority of
the outstanding voting securities (as defined by the 1940 Act) of the Account
and (3) in either event by a majority of the Managers who are not "interested
persons," as defined in the 1940 Act, of TAMIC (the "Independent Managers").
6
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 Account's officers and its
Managers that are "interested persons" of the Account. Other expenses incurred
in the operation of a Account are generally paid by such Account.
The New Advisory Agreement for each Account provides that it may be
terminated by the Managers, a majority of Contract Owners of the Account, or
TAMIC (but not without the prior approval of a new investment advisory
agreement by the Contract Owners) at any time, without penalty, by giving the
other party 60 days' written notice.
TAMIC acts as investment adviser to other investment companies with
investment objectives similar to Account QB. Specifically, the Travelers
Managed Income Portfolio of the Travelers Series Fund Inc. and the Travelers
Quality Bond Portfolio of The Travelers Series Trust, which are also managed by
TAMIC, are similar in investment objectives to Account QB. 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 $281,558,903.
TAMIC receives an advisory fee of 0.3233% of the daily net assets of the
Travelers Quality Bond Portfolio of The Travelers Series Trust. As of December
31, 2004, the total assets in that Portfolio were $189,314,987.
MANAGERS' CONSIDERATIONS
In connection with making its determinations, the Board was provided with
information about MetLife and its purchase of TIC from Citigroup. At a
telephonic meeting on March 17, 2005 and in-person meetings on March 29 and 30,
2005, the Managers 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
Managers with certain written information on MetLife's business and products,
including the experience of MetLife's advisory subsidiaries in overseeing
subadvised mutual funds. The Managers also discussed the plans and anticipated
roles and responsibilities of certain TAMIC employees and officers after the
MetLife Transaction.
Among other things, the Managers considered:
- the ability of TAMIC to continue its oversight of both the investment
and compliance operations of the subadviser after the change in control;
7
- the intention of MetLife to integrate TIC and its affiliates, including
TAMIC, into MetLife's current businesses to create a single business
operation;
- anticipated changes to back office operations relating to the Accounts,
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 Agreements, except for
the inception date and the express authority for TAMIC to retain
subadvisers.
The Board of Managers was 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 Accounts that are
now managed directly by TAMIC without a subadviser, effective on or about the
MetLife Closing Date. They were told that the portfolio managers to be employed
by Salomon to manage the Accounts are also currently employees of TAMIC and are
the current portfolio managers of these Accounts, so for these Accounts, there
is expected to be no change in the day-to-day portfolio manager. The Board was
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 Accounts, 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
insurance contracts of TIC and its current affiliates and such contracts will
continue to include Citigroup-sponsored funds as investment options, as
discussed in more detail under "Summary" above.
The Board of Managers 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, the
information provided by MetLife, and MetLife's plans to conduct a formal search
for a subadviser for the Accounts for which Salomon would serve as temporary
subadviser, the Board considered the information provided to it sufficient for
its consideration of the New Advisory Agreements. Specifically, with respect to
the nature, extent and quality of the services provided by TAMIC and the
investment performance of the Accounts, the Board noted that the performance of
the Accounts had generally been good. As to the profits realized by TAMIC from
its relationship with the Accounts, the Board
8
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
Accounts grow and whether fee levels reflect any such economies of scale, the
Board noted that the investment advisory fee rates for Account GIS included
"breakpoints" that reduced the fees payable at higher asset levels, and noted
its intention to explore the possibility of instituting breakpoints for those
Accounts where they were not currently in place. The Board of Managers also
considered such additional factors it felt were relevant.
After carefully considering the information described above, the Board of
Managers of each Account, including the Independent Managers, unanimously voted
to approve the New Advisory Agreement for the Account and to recommend that the
Account's Contract Owners vote to approve the New Advisory Agreement for their
Account.
In the event that the Contract Owners of an Account have not approved the
New Advisory Agreement for their Account by the MetLife Closing Date, TAMIC
will enter into an interim advisory agreement for that Account 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 an
Account will be in substantially the form of the proposed New Advisory
Agreement for the Account but also will include certain provisions required by
Rule 15a-4. These provisions include a maximum term of 150 days, a provision
that the Managers or a majority of the Account's Contract Owners 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 Contract Owner 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 an Account has
not received the requisite Contract Owner approval for the New Advisory
Agreement within 150 days after the MetLife Closing Date, the Board of Managers
will consider other appropriate arrangements subject to approval in accordance
with the 1940 Act.
THE BOARD OF MANAGERS OF EACH ACCOUNT, INCLUDING ALL OF THE INDEPENDENT
MANAGERS, UNANIMOUSLY RECOMMENDS THAT CONTRACT OWNERS VOTE FOR APPROVAL OF THE
NEW ADVISORY AGREEMENT FOR SUCH ACCOUNT.
INVESTMENT ADVISER
Travelers Asset Management International Company LLC ("TAMIC")
TAMIC, a New York Limited Liability Company, serves as investment adviser
to each Account, as well as to certain other registered investment companies.
TAMIC also
9
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 TIC, which is an indirect wholly owned subsidiary of Citigroup. TAMIC's
principal offices are located at 242 Trumbull Street, Hartford, Connecticut,
06103. 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 399 Park Avenue
Director Investment Officer North New York, NY 10043
American Fixed Income, High
Yield and Emerging Markets --
Citigroup Asset Management
James C. Zelter Chief Investment Officer -- 390 Greenwich Street
Director Citigroup Global Investments New York, NY 10013
David A. Torchia Managing Director -- 399 Park Avenue
Director Citigroup Asset Management New York, NY 10043
David P. Marks Chief Investment Officer -- 242 Trumbull St
President Citigroup Insurance Investments Hartford, CT 06103
Brokerage
The policy of TAMIC (the "adviser"), in selecting brokers to execute
transactions in the Accounts' 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:
o the overall direct net economic result to the Account, involving both
price paid or received and any commissions and other cost paid;
o the efficiency with which the transaction is effected;
o the ability to effect the transaction at all where a large block is
involved;
o the availability of the broker to stand ready to execute potentially
difficult transactions in the future; and
o the financial strength and stability of the broker.
Such considerations are judgmental and are weighed by management 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 an Account for a
transaction may be greater than the
10
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, value or specific applications among the Accounts and other clients of
the adviser. Accordingly, the adviser or its other clients may indirectly
benefit from the availability of such information. This situation may create a
conflict of interest for the adviser. Similarly, an Account may indirectly
benefit from information made available as a result of transactions for other
clients of an adviser.
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 adviser's policies with respect to brokerage are and will be reviewed
by the Board of Managers 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.
Proposal 2. FUTURE SUBADVISORY AGREEMENTS WITHOUT
CONTRACT OWNER VOTE.
Each Account proposes, to the extent permitted by an exemption granted by
the SEC and subject to approval by the Account's Board of Managers, to permit
TAMIC to enter into new or amended agreements with any subadviser with respect
to the Account without obtaining Contract Owner approval of such agreements,
and to permit such subadvisers to manage the assets of the Account 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 directors 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 Account advised by
TAMIC. Under the SEC Exemption, TAMIC would be permitted, under specified
11
conditions, to enter into new and amended subadvisory agreements for the
management of an Account, 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 a change in control of the
subadviser or other event causing termination of the existing subadvisory
agreement, without obtaining the approval of the Account's shareholders (the
Contract Owners) of such new or amended subadvisory agreement. Such agreements
must nevertheless be approved by the Board of Managers, in accordance with the
requirements of the 1940 Act. One of the conditions of the SEC Exemption is
that within 90 days after the hiring of any new subadviser without Contract
Owner approval, the Account must provide to Contract Owners an information
statement setting forth substantially the information that would be required to
be contained in a proxy statement for a meeting of Contract Owners to vote on
the approval of the subadvisory agreement. Furthermore, the Account would still
require Contract Owner 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 significant difference in the conditions of the proposed new
Rule is that the name of each Account 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 Account. To the extent that the Rule as finally adopted has this or
other different conditions, TAMIC and the Accounts 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 Accounts are requesting Contract Owner approval of this Proposal for
several reasons. As described under Proposal 1, the Accounts can utilize an
adviser/ subadviser management structure, where TAMIC acts as each Account's
investment adviser, and delegating the day-to-day portfolio management to a
subadviser. (Currently TAMIC has retained a subadviser only for Account GIS,
but, as described above under Proposal 1, TAMIC is considering hiring a
subadviser, Salomon, for Account QB and Account MP.) Under such a structure,
the Account's subadviser would act in a capacity similar to that of the
portfolio manager in a more traditional structure that does not involve a
subadviser. Specifically, the Account's subadviser, like a portfolio manager in
a more traditional mutual fund advisory structure, manages the Account under
the oversight and supervision of the Account's adviser. If an Account were to
change subadvisers, TAMIC would continue in its role as adviser and would
continue to exercise oversight and supervision of the Account's investment
affairs as conducted by the new subadviser. Changing the Account's
12
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 Account's management structure, the shareholder
approval requirement under the 1940 Act may cause an Account's Contract Owners
to incur unnecessary expenses and could hinder the prompt implementation of
subadvisory changes that are in the best interest of the Contract Owners, such
as prompt removal of a subadviser if circumstances warrant such removal. The
Managers believe that without the ability to promptly employ or re-employ a
subadviser, investors' expectations may be frustrated and an Account and its
Contract Owners 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, an Account would need to
convene a Contract Owners' meeting, which invariably involves considerable
delay and expense. Where TAMIC, as adviser, has recommended replacement of a
subadviser, and the Managers have determined that such replacement is necessary
or appropriate, the Account could receive less than satisfactory subadvisory
services prior to the time that an agreement with a new subadviser is approved
by the Contract Owners. 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 Account), the Account 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 Contract Owners at
the Meeting, it is the present intention of MetLife and TAMIC to use the
authority granted by the exemption to retain the present subadviser of Account
GIS, and, as previously discussed, hire Salomon to be the subadviser for
Accounts QB and MM.
If the MetLife Transaction is not consummated, then TAMIC will not have
the authority to enter into new or amended agreements without Contract Owner
approval, since the SEC Exemption only applies 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
Contract Owner approval.
13
If the Contract Owners of an Account do not approve this Proposal, the
Board of Managers of the Account will consider such alternative actions as may
be in the best interests of the Account.
THE BOARD OF MANAGERS OF EACH ACCOUNT, INCLUDING ALL OF THE INDEPENDENT
MANAGERS, UNANIMOUSLY RECOMMENDS THAT THE CONTRACT OWNERS VOTE TO APPROVE THE
PROPOSED GRANT OF AUTHORITY TO PERMIT TAMIC TO ENTER INTO NEW OR AMENDED
AGREEMENTS WITH SUBADVISERS WITH RESPECT TO THE ACCOUNTS WITHOUT OBTAINING
CONTRACT OWNER APPROVAL OF SUCH AGREEMENTS, AND TO PERMIT SUCH SUBADVISERS TO
MANAGE THE ASSETS OF THE ACCOUNTS PURSUANT TO SUCH SUBADVISORY AGREEMENTS.
Proposal 3. ELECTION OF NEW MEMBER OF BOARD OF MANAGERS.
Ms. Elizabeth Forget, the President of Met Investors Advisory LLC, a
subsidiary of MetLife, has been nominated by the Board of Managers, pursuant to
a recommendation of the Nominating and Administration Committee of the Board,
to serve as a member of the Board of Managers of each Account, 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 Accounts. 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 member of the Board of
Managers or an officer of the Accounts.
For the year ended December 31, 2004, the Board of Managers met five
times. Each member of the Board attended at least seventy-five percent of the
Board meetings.
Contract Owners of the Account can send communications to the Board of
Managers by submitting them to the Board in care of the Secretary listed below,
using the address on the cover page of this Proxy Statement.
The following tables give information about each member of the Board of
Managers and the officers of the Accounts. As with Mr. Gerken, it is expected
that the Board of Managers of the Accounts will be replacing the current
officers with new officers affiliated with MetLife as part of the transactions
described above in Proposal 1.
14
OFFICERS AND INTERESTED MANAGERS
Number of Other
Portfolios Directorships
Term of in Account of Public
Position(s) Office and Complex Companies
Name Address Held with Length of Principal Occupation Overseen Held by
and Age Accounts Time Served During Last Five Years by Manager Manager
- ------- -------- ----------- ---------------------- ---------- -------
*R. Jay Gerken Chairman, Since 2002 Managing Director (1989 N/A N/A
399 Park Avenue President, to present) of Citigroup
New York, NY CEO and Global Markets Inc.;
Age 54 Manager Chairman, President and
CEO of Smith Barney
Account 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+; Chairman,
Chief Executive Officer
and Trustee
(2002-present), five
mutual funds sponsored
by The Travelers
Insurance Company.++
*Elizabeth Forget Nominee as New President (2000 to 66+++ None
260 Madison Avenue Manager present) of Met Investors
11th Floor Advisory LLC;
New York, NY 10016 Executive Vice President
Age 38 (2000 to present) and
Chief Marketing Officer
(2003 to present) of
MetLife Investors Group,
Inc; Senior Vice
President of Equitable
Distributors, Inc. and
Vice President of
Equitable Life Assurance
Society of the United
States (1996 to 2000).
15
Number of Other
Portfolios Directorships
Term of in Account of Public
Position(s) Office and Complex Companies
Name Address Held with Length of Principal Occupation Overseen Held by
and Age Accounts Time Served During Last Five Years by Manager Manager
- ------- -------- ----------- ---------------------- ---------- -------
Ernest J. Wright Assistant Since 2004 Vice President and N/A N/A
One Cityplace Secretary Secretary (1996-present),
Hartford, Assistant Secretary
Connecticut (1994-1996), Counsel
Age 65 (1987-present), The
Travelers Insurance
Company; Secretary
(1994 to 2004), Assistant
Secretary (2004 to
present), six Variable
Annuity Separate
Accounts of The
Travelers Insurance
Company+; Assistant
Secretary (2004-present),
five mutual funds
sponsored by The
Travelers Insurance
Company; Secretary
(1994-2004).++
Kathleen A. McGah Secretary Since 2004 Deputy General Counsel N/A N/A
One Cityplace (1999-present), Assistant
Hartford, Secretary (1995-present),
Connecticut The Travelers Insurance
Age 54 Company; Assistant
Secretary (1995 to 2004),
Secretary (2004 to
present), six Variable
Annuity Separate
Accounts of The
Travelers Insurance
Company+; Assistant
Secretary, (1995 to
2004); Secretary
(2002-present), five
mutual funds sponsored
by The Travelers
Insurance Company,
Assistant Secretary
(1995-2004);.++
Prior to January 1995,
Counsel, ITT Hartford
Life Insurance Company.
16
Number of Other
Portfolios Directorships
Term of in Account of Public
Position(s) Office and Complex Companies
Name Address Held with Length of Principal Occupation Overseen Held by
and Age Accounts Time Served During Last Five Years by Manager Manager
- ------- -------- ----------- ---------------------- ---------- -------
David A. Golino Principal Since 1998 Vice President and N/A N/A
One Cityplace Accounting Controller (1999-
Hartford, CT Officer present; The Travelers
Age 43 Insurance Company,
Second Vice President
(1996-1999); Principal
Accounting Officer (1998
to present); six Variable
Annuity Separate
Accounts of The
Travelers Insurance
Company.+
William D. Wilcox Chief Since 2004 Counsel and Chief N/A N/A
One Cityplace Compliance Compliance Officer
Hartford, CT Officer (1999-present); The
Age 40 Travelers Insurance
Company; Chief
AML Compliance
(2002-present), six
Variable Annuity
Separate Accounts of
The Travelers Insurance
Company,+ Chief
Compliance Officer
(2004-present); five
mutual funds sponsored
by The Travelers
Insurance Company.++
17
NON-INTERESTED MANAGERS
Number of Other
Portfolios Directorships
Term of Principal in Account of Public
Position(s) Office and Occupation Complex Companies
Name Address Held with Length of During Last Overseen Held by
and Age Accounts Time Served Five Years by Manager Manager
- ------- -------- ----------- ---------- ---------- -------
Robert E. McGill, III Manager Since 1974 Retired manufacturing 39+++ None
295 Hancock Street executive. Director
Williamstown, MA (1995-2000), Chemfab
Age 74 Corporation (specialty
materials manufacturer);
Director (1999-2001),
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+; Trustee
(1990-present), five
mutual funds sponsored
by The Travelers
Insurance Company.++
Lewis Mandell Manager Since 1990 Professor of Finance and 39+++ Director
Manager Managerial Economics, (2000-present),
160 Jacobs Hall University at Buffalo Delaware
Buffalo, NY since 1998. Dean, School North Corp.
Age 62 of Management (hospitality
(1998-2001), University business)
at Buffalo; Member,
Board of Managers
(1990-present), six
Variable Annuity
Separate Accounts of
The Travelers Insurance
Company+; Trustee
(1990-present), five
mutual funds sponsored
by The Travelers
Insurance Company.++
18
Number of Other
Portfolios Directorships
Term of Principal in Account of Public
Position(s) Office and Occupation Complex Companies
Name Address Held with Length of During Last Overseen Held by
and Age Accounts Time Served Five Years by Manager Manager
- ------- -------- ----------- ---------- ---------- -------
Frances M. Hawk, Manager Since 1991 Private Investor 39+++ None
CFA, CFP Manager (1997-present). Member,
108 Oxford Hill Lane Board of Managers
Downingtown, PA (1991-present), six
Age 57 Variable Annuity
Separate Accounts of
The Travelers Insurance
Company+; Trustee
(1991-present), five
mutual funds sponsored
by The Travelers
Insurance Company.++
- ----------------
* 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 TIC. Ms. Forget, if elected as a Manager, will be an
"interested person" by virtue of her position as President of Met Investors
Advisory LLC.
+ 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.
++ The five Mutual Funds are: Capital Appreciation Fund, Money Market
Portfolio, High Yield Bond Trust, Managed Assets Trust and The Travelers
Series Trust.
+++ Seven of these 39 portfolios have not yet commenced operations.
The Independent Managers 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 Manager. An Emeritus Manager is permitted
to attend meetings, but has no voting powers.
19
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 Managers, and the Committee monitors the
performance of legal counsel employed by the Accounts and the Independent
Managers.
The Nominating and Administration Committee will consider nominees
recommended by Contract Owners. Such recommendations should be submitted to the
Account in care of The Travelers Insurance Company, using the address on the
cover page of this 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 Contract Owner recommendations, recommendations for
candidates for Independent Manager may be made by any of the Managers or by
management of the Accounts or TIC. In evaluating any candidates for nomination
to the Board of Managers of the Account as Independent Managers, 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 B. It not available on any website.
The Audit Committee monitors the appointment, compensation and termination
of the Accounts' independent auditors. The Committee also monitors the overall
quality of the Accounts' financial reports and other financial information, the
independence and audit work of the Accounts' independent auditors and the
Accounts' financial reporting policies, practices and internal controls. For
the year ended December 31, 2004, the Audit Committee met two times.
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.
20
COMPENSATION
Members of the Board who are also officers or employees of Citigroup or
its subsidiaries (after the MetLife Closing Date, of MetLife or its
subsidiaries) are not entitled to any fee for their services to the Account.
Effective May 1, 2005, the Independent Managers receive an annual retainer of
$36,000 for service on the Boards of the five mutual funds sponsored by TIC and
the six Variable Annuity Separate Accounts (including the Accounts) established
by TIC. They also receive a fee of $3,000 for each in-person meeting of such
Boards attended and $750 for each telephonic meeting. The Chair of the Audit
Committee receives an additional annual fee of $5,000, the Chair of the
Nominating and Administration Committee receives an additional fee of $3,000,
and the lead Independent Manager will receive an additional fee of $10,000
(when an Independent Manager assumes the position of lead Manager). Other than
the chairs of the Committees, Managers do not receive any additional
compensation for their committee services. Board Members with 10 years of
service may agree to provide services as an emeritus manager at age 72. Upon
reaching 80 years of age, a Manager must elect status as a emeritus manager. An
emeritus manager 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 Manager, was paid $3,175 for the year
ended December 31, 2004.
COMPENSATION TABLE
Interested Managers
Pension or Retirement Total Compensation
Benefits Accrued From Account and
Name of Aggregate Compensation As Part of Account Complex
Person, Position From Each Account(1) Account Expenses Paid to Managers
- ---------------- -------------------- ---------------- ----------------
Elizabeth Forget ......... N/A N/A N/A
Chairman and Manager
Independent Managers
Pension or Retirement Total Compensation
Benefits Accrued From Account and
Name of Aggregate Compensation As Part of Account Complex
Person, Position From Each Account(1) Account Expenses Paid to Managers
- ---------------- -------------------- ---------------- ----------------
Robert E. McGill, III ..... $ 2,634.62 N/A $ 68,500(2)
Manager
Lewis Mandell ............. $ 1,923.08 N/A $ 50,000
Manager
Frances M. Hawk, .......... $ 2,096.15 N/A $ 54,500
CFA, CFP Manager
21
- ----------------
(1) No compensation was deferred for any Manager or Officer under a deferred
compensation plan.
(2) Mr. McGill received additional compensation for attending meetings of a
task force of the directors/managers of various Citigroup-sponsored
investment companies as a representative of the Independent Managers of the
Accounts.
The table below sets forth the dollar range of equity securities in the
Accounts beneficially owned by a Manager, and, on an aggregate basis, in all
registered investment companies overseen by a Manager 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 Managers in Family of
Manager Securities in the Accounts Investment Companies
- ------- -------------------------- --------------------
Elizabeth Forget ............. None None
Robert E. McGill, III ........ None None
Lewis Mandell ................ None None
Frances M. Hawk .............. None None
THE BOARD OF MANAGERS OF EACH ACCOUNT UNANIMOUSLY RECOMMENDS THAT THE
CONTRACT OWNERS VOTE TO ELECT THE NOMINEE AS A MEMBER OF THE BOARD OF MANAGERS.
VOTING INFORMATION
Contract Owners may vote (1) by mail: simply enclose the executed proxy
card in the postage-paid envelope found within the proxy package; (2) by
telephone; dial the toll-free number listed on the proxy card; you will need
the control number listed on the proxy card; or (3) by Internet: access the
website listed on the proxy card; you will need the control number located on
the proxy card. If the Account records votes by telephone or through the
Internet, it will use procedures reasonably designed to authenticate Contract
Owners' identities, to allow Contract Owners to vote units in accordance with
their instructions, and to confirm that their instructions have been properly
recorded. Proxies voted by telephone or through the Internet may be revoked at
any time before they are voted as described below.
Twenty percent of the outstanding units of an Account represented in
person or by proxy must be present at the Meeting to constitute a quorum. If a
quorum is not present at the Meeting, or if a quorum is present but, at the
Meeting, sufficient votes to approve the Proposals are not received, the
persons 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 units represented
22
at the Meeting in person or by proxy. Based on voting instructions received,
proxies will vote in favor of such adjournment those proxies that are in favor
of a Proposal, will vote against any adjournments those proxies that are
against the Proposal, and will abstain from voting with respect to any
adjournment those proxies that are marked to abstain in connection with the
Proposal. Abstentions will be counted as present for purposes of determining a
quorum, but will not be counted as voting with respect to those proposals from
which Contract Owners abstain.
Except for the election of the new member of the Board of Managers,
approval of a Proposal by an Account's Contract Owners 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 Account. Contract
Owners of record are entitled to one vote for each full unit owned, with a
fractional vote for each fractional unit. Under the Rules and Regulations for
each Account, the affirmative vote of a plurality of the units of the Account
present and entitled to vote is required to elect a Manager.
The Board has fixed April 15, 2005 as the Record Date for determining
Contract Owners entitled to receive notice of and to vote at the Meetings. To
be counted, TIC must receive an owner's properly executed proxy at the
Accounts' office by 5:00 p.m. Eastern time on June 23, 2005. Contract Owners
may revoke previously submitted proxies given to TIC by notifying TIC in
writing at any time before 5:00 p.m. (Eastern time) on June 23, 2005 or by
attending and voting in person at the Meetings. The expenses of soliciting the
proxy will be borne 50% by MetLife and 50% by Citigroup and/or its affiliates,
and not by the Accounts. The solicitation will be made primarily by mail, but
representatives of TIC and its affiliates may make telephone, electronic,
and/or in person communications to Contract Owners. Representatives of
Automatic Data Processing ("ADP"), a proxy services firm, may also conduct
solicitations of Contract Owners. The estimated cost of retaining ADP is
approximately $85,000. As noted above, such cost will not be borne by the
Accounts.
To the knowledge of TIC and the Accounts, no person owned beneficially
more than 5% of an Account as of the Record Date. The Managers and officers of
the Accounts beneficially owned in the aggregate less than 1% of each Account.
OTHER INFORMATION
Travelers Distribution LLC, One Cityplace, Hartford, Connecticut,
06103-3415, is the principal underwriter for each of the Accounts. TIC is the
administrator of each of the Accounts.
23
Independent Registered Public Accounting Firm
KPMG LLP ("KPMG") currently serves as the independent registered public
accounting firm for the Accounts. As a result of insurance services provided to
KPMG by MetLife and other business relationships, KPMG is not considered
independent of MetLife and will not be permitted to serve as the independent
registered public accounting firm for the Accounts after the MetLife
Transaction. The Board of Managers of each of the Accounts intends to select a
successor accounting firm in the near future.
KPMG has no direct or material indirect interest in an Account.
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 of Managers is needed for all audit and
permissible non-audit services rendered by KPMG to each Account and all
permissible non-audit services rendered by KPMG to TIC and any entity
controlling, controlled by or under common control with TIC that provides
ongoing services to an Account (each, a "Service Affiliate") if the services
relate directly to the operations and financial reporting of such Account.
Pre-approval is currently on an engagement-by-engagement basis.
Schedule A attached hereto sets forth for each Account, for each Account's
two most recent fiscal years, the fees billed by KPMG for (a) all audit and
non-audit services provided directly to the Account and (b) those non-audit
services provided to the Account's Service Affiliates that relate directly to
the Account's operations and financial reporting under the following
categories:
(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 not
required by regulators.
(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
Account by KPMG other than those reported under "Audit Fees,"
"Audit-Related Fees" and "Tax Fees."
24
Amounts billed by KPMG for services provided directly to the Accounts are
paid by TIC, not by the Accounts.
The Audit Committee has considered whether the provision by KPMG of
non-audit services to the Accounts' 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) was compatible with
maintaining the independence of KPMG as the Account's principal auditor.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
However, if any other matters come before the Meeting, it is each Board's
intention that proxies will vote on such matters in accordance with the
judgment of the proxy.
CONTRACT OWNER INQUIRIES
Contract Owner inquiries may be addressed to an Account in writing at the
address on the cover page of this Proxy Statement or by telephoning
1-800-842-9368.
* * *
Contract Owners who do not expect to be present at the Meeting are
requested to date and sign the enclosed proxies and return them in the enclosed
envelope. No postage is required if mailed in the United States.
25
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APPENDIX A-1
(FORM OF NEW INVESTMENT ADVISORY AGREEMENT
FOR ACCOUNT GIS)
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 Travelers Growth and Income Stock Account
for Variable Annuities (hereinafter "Account GIS"), a separate account of The
Travelers Insurance Company established by authority of a resolution of The
Travelers Insurance Company's Board of Directors on September 22, 1967,
pursuant to Public Act 529 of the 1967 Connecticut General Assembly.
WITNESSETH:
WHEREAS, Account GIS and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for Account GIS.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Account GIS hereby employs TAMIC to manage the investment and reinvestment
of the assets of Account GIS and to perform the other services herein set
forth, subject to the supervision of the Board of Managers of Account GIS
(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 Account GIS, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
Account GIS, affecting the economy generally and individual companies
or industries, the securities of which are included in Account GIS'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 Account GIS;
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;
27
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 Account GIS; and
f. vote proxies on securities held by the Account 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 Account and its unit
holders, which policies and procedures describe how TAMIC or its
delegee addresses material conflicts of interest between its interests
and those of the Account with respect to proxy voting. TAMIC shall
furnish the Account with such information reasonably requested by the
Account, 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 Account, and (2) for the proxy voting record for the
Account 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 Account GIS 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 the following:
Aggregate
Annual Net Asset
Management Fee Value of the Account
-------------- --------------------
0.65% of the first $ 500,000,000, plus
0.55% of the next $ 500,000,000, plus
0.50% of the next $ 500,000,000, plus
0.45% of the next $ 500,000,000, plus
0.40% of amounts over $ 2,000,000,000
The advisory fees will be deducted on each valuation date.
28
6. The services of TAMIC to Account GIS 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
Account GIS (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 Account GIS, 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 Managers or
by a vote of a majority of the outstanding voting securities of
Account GIS;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of Account GIS;
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 Managers 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 Account GIS.
8. 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.
THE TRAVELERS GROWTH AND
INCOME STOCK ACCOUNT FOR
VARIABLE ANNUITIES
By:
-----------------------------------
Chairman, Board of Managers
29
WITNESS:
- ----------------------------
Secretary, Board of Managers
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY LLC
By:
-----------------------------------
President
ATTEST: (Seal)
- ----------------------------
Corporate Secretary
30
APPENDIX A-2
(FORM OF NEW INVESTMENT ADVISORY AGREEMENT
FOR ACCOUNT QB)
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 Travelers Quality Bond Account for Variable
Annuities (hereinafter "Account QB"), a separate account of The Travelers
Insurance Company established by its President and Chief Executive Officer on
July 29, 1974, pursuant to a resolution of The Travelers Insurance Company's
Board of Directors on August 4, 1967, pursuant to Section 38-154a of the
Connecticut General Statutes.
WITNESSETH:
WHEREAS, Account QB and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for Account QB.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Account QB hereby employs TAMIC to manage the investment and reinvestment of
the assets of Account QB and to perform the other services herein set forth,
subject to the supervision of the Board of Managers of Account QB (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 Account QB, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
Account QB, affecting the economy generally and individual companies
or industries, the securities of which are included in Account QB'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 Account QB;
c. regularly furnish to the Board recommendations with respect to any
investment program for approval, modification or rejection by the
Board;
31
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 Account QB; and
f. vote proxies on securities held by the Account 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 Account and its unit
holders, which policies and procedures describe how TAMIC or its
delegee addresses material conflicts of interest between its interests
and those of the Account with respect to proxy voting. TAMIC shall
furnish the Account with such information reasonably requested by the
Account, 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 Account, and (2) for the proxy voting record for the
Account 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 Account QB 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 Account QB,
such fees to be deducted on each valuation date.
6. The services of TAMIC to Account QB 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
Account QB (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 Account QB, and shall be subject to
termination,
32
without the payment of any penalty, upon sixty days' written notice to
the investment adviser, by the Board of Managers or by a vote of a
majority of the outstanding voting securities of Account QB;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of Account QB;
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 Managers 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 Account QB.
8. 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.
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE
ANNUITIES
By:
-----------------------------------
Chairman, Board of Managers
WITNESS:
- ----------------------------
Secretary, Board of Managers
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY LLC
By:
-----------------------------------
President
33
ATTEST: (Seal)
- ----------------------------
Corporate Secretary
34
APPENDIX A-3
(FORM OF NEW INVESTMENT ADVISORY AGREEMENT
FOR ACCOUNT MM)
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 Travelers Money Market Account for Variable
Annuities (hereinafter "Account MM"), a separate account of The Travelers
Insurance Company established by its President and Chief Executive Officer on
December 29, 1981, pursuant to a resolution of The Travelers Insurance
Company's Board of Directors on August 4, 1967, pursuant to Section 38-154a of
the Connecticut General Statutes.
WITNESSETH:
WHEREAS, Account MM and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for Account MM.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Account MM hereby employs TAMIC to manage the investment and reinvestment of
the assets of Account MM and to perform the other services herein set forth,
subject to the supervision of the Board of Managers of Account MM (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 Account MM, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
Account MM, affecting the economy generally and individual companies
or industries, the securities of which are included in Account MM'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 Account MM;
c. regularly furnish to the Board recommendations with respect to any
investment program for approval, modification or rejection by the
Board;
35
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 Account MM; and
f. vote proxies on securities held by the Account 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 Account and its unit
holders, which policies and procedures describe how TAMIC or its
delegee addresses material conflicts of interest between its interests
and those of the Account with respect to proxy voting. TAMIC shall
furnish the Account with such information reasonably requested by the
Account, 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 Account, and (2) for the proxy voting record for the
Account 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 Account MM 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 Account MM,
such fees to be deducted on each valuation date.
6. The services of TAMIC to Account MM 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
Account MM (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 Account MM, and shall be subject to
termination,
36
without the payment of any penalty, upon sixty days' written notice to
the investment adviser, by the Board of Managers or by a vote of a
majority of the outstanding voting securities of Account MM;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of Account MM;
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 Managers 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 Account MM.
8. 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.
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE
ANNUITIES
By:
-----------------------------------
Chairman, Board of Managers
WITNESS:
- ----------------------------
Secretary, Board of Managers
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL COMPANY LLC
By:
-----------------------------------
President
37
ATTEST: (Seal)
- ----------------------------
Corporate Secretary
38
APPENDIX B
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
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 1940 Act. 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 director compensation and
shall recommend any appropriate changes to the non-interested and
independent trustees as a group.
(c) Committee Nominations and Functions
- ----------------
* "Trustee" shall refer to both trustees and managers.
39
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.
40
SCHEDULE A
Independent Registered Public Accounting Firm Fees
Audit fees billed by KPMG for services provided directly to each Account:
Account Year Ending Audit Fees
------- ----------- ----------
Account GIS ......... December 31, 2004 $19,833
December 31, 2003 $18,833
Account QB .......... December 31, 2004 $19,833
December 31, 2003 $18,833
Account MM .......... December 31, 2004 $19,833
December 31, 2003 $18,833
For each Account's last two fiscal years, no fees were billed by KPMG that
are required to be disclosed under the captions "Audit-Related Fees," "Tax
Fees" and "All Other Fees." Furthermore, for those two fiscal years, KPMG did
not bill any Service Affiliate of an Account for any fees for non-audit
services, including any fees for services that relate directly to the
operations and financial reporting of the Accounts.
41
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MSA
THE TRAVELERS INSURANCE COMPANY
---------------------------------------------------------------------
THREE EASY WAYS TO VOTE YOUR PROXY
Read the Proxy Statement and have the Proxy card at hand.
TELEPHONE: Call 1-800-690-6903 and follow the simple instructions.
INTERNET: Go to www.proxyweb.com and follow the on-line instructions.
MAIL: Vote, sign, date and return your proxy by mail.
If you vote by Telephone or Internet, do not mail your proxy.
---------------------------------------------------------------------
PROXY CARD FOR THE MEETING
TO BE HELD ON JUNE 24, 2005
The undersigned, revoking all proxies heretofore given, hereby appoints Kathleen
A. McGah and Ernest J. Wright, or either one of them, as Proxies, with full
power of substitution, to vote on behalf of the undersigned all units of the
above-referenced Account which the undersigned is entitled to vote at the
Special Meeting of Variable Annuity Contract Owners to be held at 9:00 a.m. on
June 24, 2005, at One Cityplace, Hartford, Connecticut, 06103, and at any
adjournment thereof, in the manner directed below with respect to the matters
described in the Proxy Statement for the Special Meeting, receipt of which is
hereby acknowledged, and in their discretion, upon such other matters as may
properly come before the Special Meeting or any adjournment thereof.
I realize that if I return this form without providing any instructions
regarding a proposal, my timely returning of this form will be deemed to be an
instruction to vote in favor of the proposal.
Date: _________________________
These voting instructions may be revoked prior to the
special meeting by notifying the secretary of the Account in
writing by 5:00 p.m. on June 23, 2005, or by attending and
voting in person at the meeting.
------------------------------------------------------------
------------------------------------------------------------
Signature(s) and title(s) (Sign in the Box)
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."
MSA - lp/gm
Please fill in box as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF MANAGERS. THE BOARD OF
MANAGERS RECOMMENDS A VOTE FOR THE PROPOSALS. THE UNITS REPRESENTED HEREBY WILL
BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
VARIABLE ANNUITY CONTRACT OWNER. IF NO DIRECTION IS MADE, THIS PROXY CARD WILL
BE VOTED FOR THE PROPOSALS.
1. To approve a new investment advisory agreement for the Account.
2. To approve a proposal to permit TAMIC to enter into new or amended
agreements with subadvisers without obtaining contract owner approval.
3. Election of New Member of the Board of Managers:
Elizabeth Forget has been nominated by the Board of Managers of the Account
to serve until her successor is elected and qualified.
FOR AGAINST ABSTAIN
0 0 0
0 0 0
FOR WITHHOLD
0 0
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
MSA - lp/gm