<PAGE> 1
Registration Statement No. 2-79359
811-3568
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 20
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 19
MANAGED ASSETS TRUST
--------------------
(Exact name of Registrant)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (203) 277-0111
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ERNEST J. WRIGHT
Secretary to the Board of Trustees
Managed Assets Trust
One Tower Square
Hartford, Connecticut 06183
---------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: ____________________
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b).
X on May 1, 1996 pursuant to paragraph (b).
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___ 60 days after filing pursuant to paragraph (a)(1).
___ on ___________ pursuant to paragraph (a)(1) of Rule 485.
___ 75 days after filing pursuant to paragraph (a)(2)
___ on ___________ pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
AN INDEFINITE NUMBER OF SHARES OF BENEFICIAL INTEREST OF THE REGISTRANT WERE
REGISTERED PURSUANT TO RULE 24f-2 OF THE INVESTMENT COMPANY ACT OF 1940. A
RULE 24f-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED DECEMBER 31, 1995 WAS
FILED ON FEBRUARY 29, 1996.
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MANAGED ASSETS TRUST
Cross-Reference Sheet pursuant to Rule 495 under the Securities Act of 1933
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Cover Page
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Fund Description; Investment
Objective and Policies
5. Management of the Fund Board of Trustees; Investment Advisers;
Fund Expenses; Additional Information
6. Capital Stock and Other Securities Fund Description; Dividends and Taxes;
Fund Shares; Pricing Shares
7. Purchase of Securities Being Offered Fund Shares
8. Redemption or Repurchase Share Redemption
9. Legal Proceedings Legal Proceedings
<CAPTION>
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
------------------------------------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions; Appendix
14. Management of the Registrant Trustees and Officers
15. Control Persons and Principal Additional Information
Holders of Securities
16. Investment Advisory and Investment Advisory Services; Additional
Other Services Information
17. Brokerage Allocation Brokerage
18. Capital Stock and Other Securities Declaration of Trust
19. Purchase, Redemption and Pricing Valuation of Securities
of Securities Being Offered
20. Tax Status Distributions and Tax Status
21. Underwriters Not Applicable
22. Calculation of Performance Data Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
MANAGED ASSETS TRUST
One Tower Square
Hartford, Connecticut 06183
Telephone 860-422-3985
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Managed Assets Trust (the "Fund") is a diversified open-end management
investment company (mutual fund) whose goal is high total investment return
through a fully managed investment policy. The Fund has a fully managed
investment policy and invests in common stocks, corporate bonds and money market
instruments.
Shares of the Fund are currently offered without a sales charge only to separate
accounts of The Travelers Insurance Company and The Travelers Life and Annuity
Company (the "Company" or "The Travelers"). The Fund serves as one of the
investment vehicles for certain variable annuity and variable life insurance
contracts issued by the Company. The term "shareholder" as used herein refers to
any insurance company separate account that may use shares of the Fund as an
investment vehicle now or in the future.
This Prospectus concisely sets forth the information about the Fund that you
should know before investing. Please read it and retain it for future reference.
Additional information about the Fund is contained in a Statement of Additional
Information ("SAI") dated May 1, 1996 which has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus. A copy may be obtained, without charge, by writing to The Travelers,
Annuity Services, One Tower Square, Hartford, Connecticut 06183-5030, or by
calling 860-422-3985.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR A VARIABLE
ANNUITY OR VARIABLE LIFE INSURANCE CONTRACT ISSUED BY THE TRAVELERS. BOTH THIS
PROSPECTUS AND THE CONTRACT PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR
FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
FINANCIAL HIGHLIGHTS.................................................................. 3
FUND DESCRIPTION...................................................................... 4
INVESTMENT OBJECTIVE AND POLICIES..................................................... 4
INVESTMENT RESTRICTIONS............................................................... 5
RISK FACTORS.......................................................................... 5
BOARD OF TRUSTEES..................................................................... 5
INVESTMENT ADVISERS................................................................... 6
TAMIC............................................................................... 6
Portfolio Manager................................................................ 6
TIMCO............................................................................... 6
Portfolio Manager................................................................ 6
SECURITIES TRANSACTIONS............................................................... 7
FUND EXPENSES......................................................................... 7
TRANSFER AGENT........................................................................ 7
FUND SHARES........................................................................... 7
PRICING SHARES........................................................................ 8
SHARE REDEMPTION...................................................................... 9
DIVIDENDS AND TAX STATUS.............................................................. 9
LEGAL PROCEEDINGS..................................................................... 9
ADDITIONAL INFORMATION................................................................ 9
EXHIBIT A............................................................................. 10
</TABLE>
MAT-2
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FINANCIAL HIGHLIGHTS
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MANAGED ASSETS TRUST
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
The following information on per share data for the six years ended December 31,
1995, has been audited by Coopers & Lybrand L.L.P, Independent Accountants. All
other periods presented have been audited by the Fund's prior auditors. Coopers
& Lybrand L.L.P.'s report on the per share data for each of the applicable years
in the period ended December 31, 1995 is contained in the SAI. Refer to the
cover of this Prospectus for information on obtaining a free copy of the SAI.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1995 1994 1993 1992 1991 1990+
<S> <C> <C> <C> <C> <C> <C>
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PER SHARE DATA
Net asset value, beginning of
year............................. $ 12.85 $ 14.21 $ 14.02 $ 14.78 $ 12.77 $ 13.03
Income from operations
Net investment income.............. 0.49 0.46 0.51 0.64 0.74 0.65
Net gains or losses on securities
(realized and unrealized)........ 2.83 (0.73) 0.72 0.01 1.91 (0.37)
-------- -------- -------- -------- -------- --------
Total from investment
operations..................... 3.32 (0.27) 1.23 0.65 2.65 0.28
Less distributions
Distributions from net investment
income and short-term realized
gains............................ (0.50) (0.67) (0.85) (1.04) (0.64) (0.54)
Distributions from long-term
realized gains................... (0.17) (0.42) (0.19) (0.37) -- --
-------- -------- -------- -------- -------- --------
Total distributions.............. (0.67) (1.09) (1.04) (1.41) (0.64) (0.54)
Net asset value, end of year....... $ 15.50 $ 12.85 $ 14.21 $ 14.02 $ 14.78 $ 12.77
======== ======== ======== ======== ======== ========
TOTAL RETURN*....................... 27.12% (2.24)% 9.33% 5.14% 21.70% 2.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(thousands)...................... $ 171,276 $ 140,887 $ 156,767 $ 148,971 $ 126,021 $ 92,464
Ratio of expenses to average net
assets........................... 0.58%** 0.61%** 0.56%** 0.56%** 0.56%** 0.59%**
Ratio of net investment income to
average net assets............... 3.49% 3.59% 3.65% 4.97% 5.49% 5.17%
Portfolio turnover rate............ 110% 97% 86% 112% 141% 123%
Average Commission Rate Paid****... .0490 -- -- -- -- --
<CAPTION>
DECEMBER 1,
YEAR ENDED DECEMBER 31, TO YEAR ENDED
--------------------------------------- DECEMBER 31, NOVEMBER 30,
1989 1988 1987 1986 1986
<S> <C> <C> <C> <C> <C>
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PER SHARE DATA
Net asset value, beginning of
year............................. $ 10.25 $ 9.89 $ 11.03 $ 12.07 $ 9.97
Income from operations
Net investment income.............. 0.52 0.48 0.40 0.04 0.42
Net gains or losses on securities
(realized and unrealized)........ 2.26 0.43 (0.16) (0.23) 2.13
-------- -------- -------- -------- --------
Total from investment
operations..................... 2.78 0.91 0.24 (0.19) 2.55
Less distributions
Distributions from net investment
income and short-term realized
gains............................ -- (0.55) (0.38) (0.32) (0.45)
Distributions from long-term
realized gains................... -- -- (1.00) (0.53) --
-------- -------- -------- -------- --------
Total distributions.............. -- (0.55) (1.38) (0.85) (0.45)
Net asset value, end of year....... $ 13.03 $ 10.25 $ 9.89 $ 11.03 $ 12.07
======== ======== ======== ======== ========
TOTAL RETURN*....................... 27.12% 9.18% 1.92% 19.05%*** 19.05%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(thousands)...................... $ 84,223 $ 115,111 $ 119,866 $ 72,791 $ 69,291
Ratio of expenses to average net
assets........................... 0.71% 0.66% 0.67% 0.78%** 0.78%
Ratio of net investment income to
average net assets............... 4.41% 4.55% 3.23% 4.07%*** 3.68%
Portfolio turnover rate............ 56% 105% 140% 3% 88%
Average Commission Rate Paid****... -- -- -- -- --
</TABLE>
* Total return is determined by dividing the increase (decrease) in value of a
share during the year, after reflecting the reinvestment of dividends
declared during the year, by the beginning of year share price. Shares in
Fund MAT are only sold to The Travelers separate accounts in connection with
the issuance of variable annuity and variable life insurance contracts. The
above return does not reflect the deduction of any contract charges or fees
assessed by The Travelers separate accounts.
** The ratios of expenses to average net assets for 1990 and later years
reflect an expense reimbursement by The Travelers in connection with the
voluntary expense limitations. Without the expense reimbursement, the ratios
of operating expenses to average net assets would have been 0.60%, 0.63%,
0.69% and 0.74% for the years ended December 31, 1993, 1992, 1991 and 1990
respectively. For the years ended December 31, 1994 and 1995, there were no
expense reimbursements by The Travelers in connection with the voluntary
expense limitations.
*** Annualized.
**** The Average Commission Rate Paid is required for funds that have over 10%
in equities for which commissions are paid. This information is required
for funds with fiscal year ends on or after September 30, 1996; earlier
compliance is allowed.
+ On May 1, 1990, TAMIC replaced Keystone Custodian Funds, Inc. as the
investment adviser for the Fund.
MAT-3
<PAGE> 7
FUND DESCRIPTION
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Managed Assets Trust (the "Fund") is registered with the SEC as a diversified
open-end management investment company, commonly known as a mutual fund. The
Fund was created under Massachusetts law as a Massachusetts business trust on
August 6, 1982.
INVESTMENT OBJECTIVE AND POLICIES
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The Fund's investment objective is to provide a high total investment return
through a fully managed investment policy. To do this, the Fund adjusts its
overall exposure to risk by spreading its investments among those providing
alternatives for capital growth, capital stability and income as market and
economic trend change. This fully managed investment policy makes use of equity,
debt, convertible and money market securities. The Fund expects that over longer
periods a larger portion of the Fund's portfolio will consist of equity
securities.
The Fund's investment philosophy is based on the belief that, as in the past,
the structure of the United States economy and its securities markets will
undergo continuous change. Thus, the fully managed approach puts maximum
emphasis on flexibility. Because of this flexibility, the Fund may have a high
rate of turnover in its portfolio securities and thus higher costs of securities
transactions and brokerage. Accordingly, the Fund would expect to have turnover
in the range of 100% to 300%. The Fund expects that the portfolio turnover rate
will be approximately 50% for debt securities, and 200% to 300% for equity
securities. A higher turnover rate should not be interpreted as a variation from
the stated investment policy. Portfolio turnover is expected to result when the
Fund makes a change in its investments from one investment sector (such as the
equity market) to another investment sector (such as the bond market), as well
as in response to redemptions when the Fund realizes capital gains, and in
response to market conditions. Increased cost to the Fund may result if the Fund
makes a change in the investment sector in which the greatest proportion of its
assets is invested at a time when subsequent market conditions are unfavorable.
The Fund may invest a limited portion of its assets in bonds rated lower than
Baa by Moody's Investors Service, Inc. (Moody's) or BBB by Standard & Poor's
Corporation (S&P) or which, if unrated, are deemed to be of comparable quality
by the Fund's investment adviser. The Fund may not purchase any debt securities
rated B or lower by either service or their equivalent. Bonds rated Baa by
Moody's are considered medium-grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal and principal
security appear adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well. Debt rated BBB by S&P is regarded as having
an adequate capacity to pay interest and repay principal. While it normally
exhibits adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories. Bonds
rated lower than Baa by Moody's or BBB by S&P, but above B by either service,
are judged to have speculative elements; their future cannot be considered as
well-assured. Often, the protection of interest and principal payments may be
very moderate. Uncertainty of position characterizes bonds in this class.
Travelers Asset Management International Corporation ("TAMIC") expects that
securities rated below Baa by Moody's or below BBB by S&P will be primarily
subordinated convertible securities of issuers whose senior debt is rated Baa or
higher by Moody's, BBB or higher by S&P or, in the absence of such ratings, are
deemed to be of comparable quality by TAMIC.
The Fund may invest in money market instruments which mature within one year of
their purchase, and which consist of U.S. government securities; instruments of
banks insured by the Federal Deposit Insurance Corporation which have assets of
at least $1 billion, including U.S. branches of foreign banks and foreign
branches of U.S. banks, such as certificates of deposit, demand and time
deposits
MAT-4
<PAGE> 8
and bankers' acceptances; prime commercial paper, including master demand notes;
and repurchase agreements secured by U.S. government securities.
For further information about the types of investments and investment techniques
available to the Fund, including the associated investment risks, see Exhibit A
to this Prospectus.
INVESTMENT RESTRICTIONS
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The Fund has adopted the following fundamental investment restrictions which may
not be changed without a vote of a majority of the outstanding voting securities
of the Fund, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Certain other fundamental restrictions are set forth in the
Statement of Additional Information. Unless otherwise stated, all references to
the Fund's assets are in terms of current market value.
The Fund will not: (1) invest more than 25% of its assets in the securities of a
single issuer; (2) borrow money, except that the Fund may borrow money from
banks for temporary or emergency purposes in amounts of up to 10% of its assets;
(3) pledge more than the lesser of the dollar amounts borrowed or 10% of its
assets; (4) invest more than 25% of its assets in the securities of issuers in
the same industry; and (5) invest more than 10% of its assets in repurchase
agreements maturing in more than seven days and other securities for which
market quotations are not readily available, including restricted securities. In
addition, a policy which may be changed without shareholder approval permits the
Fund to invest up to 25% of its assets in the securities of foreign issuers.
RISK FACTORS
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The Fund's net asset value will fluctuate in response to changes in economic
conditions, interest rates and the market's perception of the underlying
portfolio securities of the Fund. There can be no assurance that the Fund will
achieve its investment objective since there is uncertainty in every investment.
The investment experience of equity investments over time will tend to reflect
levels of stock market prices and dividend payouts. Both are affected by diverse
factors, including not only business conditions and investor confidence in the
economy, but current conditions in a particular industry or company. Equity
securities are subject to financial risks relating to the earning stability and
overall financial soundness of an issue. They are also subject to market risks
relating to the effect of general changes in the securities market on the price
of a security.
The yield on debt instruments over a period of time should reflect prevailing
interest rates, which depend on a number of factors, including government action
in the capital markets, government fiscal and monetary policy, needs of
businesses for capital goods for expansion, and investor expectations as to
future inflation. The yield on a particular debt instrument is also affected by
the risk that the issuer will be unable to pay principal and interest.
BOARD OF TRUSTEES
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Under Massachusetts law, the Fund's Board of Trustees has absolute and exclusive
control over the management and disposition of all assets of the Fund. Subject
to the provisions of the Declaration of Trust, the business and affairs of the
Fund shall be managed by the Trustees or other parties so designated by the
Trustees. Information relating to the Board of Trustees, including its members
and their compensation, is contained in the SAI.
MAT-5
<PAGE> 9
INVESTMENT ADVISERS
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TAMIC provides investment advice and, in general, supervises the management and
investment program of the Fund. The Travelers Investment Management Company
("TIMCO") provides sub-advisory services to the Fund with respect to the Fund's
common stock investments, subject to the supervision of the Board of Trustees
and TAMIC.
TAMIC
TAMIC is a registered investment adviser which has provided investment advisory
services since its incorporation in 1978. Under its Advisory Agreement with the
Fund, TAMIC is paid an amount equivalent on an annual basis to 0.50% of the
average daily net assets of the Fund. The fee is computed daily and paid weekly.
TAMIC is an indirect wholly owned subsidiary of Travelers Group Inc., a
financial services holding company, and its principal offices are located at One
Tower Square, Hartford, Connecticut 06183.
In addition to providing investment advice to the Fund, TAMIC acts as investment
adviser for other investment companies used to fund variable products issued by
the Company. TAMIC also provides investment advice to individual and pooled
pension and profit-sharing accounts, domestic insurance companies affiliated
with The Travelers, and nonaffiliated insurance companies.
PORTFOLIO MANAGER
The Fund's fixed income investments have been managed by David A. Tyson, Ph.D.
and CFA, since February 1994. Mr. Tyson is currently Senior Vice President and
the head of the Company's Portfolio Management Group. He directly manages The
Travelers Annuity, Life Surplus and Convertible portfolios. His previous
responsibilities have included managing The Travelers Derivatives, Mortgage-
Backed and Quantitative Investment Groups. Mr. Tyson joined The Travelers in
1985 and TAMIC in 1994. He previously spent seven years with the Equitable
Investment Management Corporation where he was responsible for quantitative
equity research and new product development.
TIMCO
TIMCO is employed by TAMIC as the Fund's sub-adviser with respect to the
management of the Fund's common stock investments. For its services under the
Sub-Advisory Agreement, TIMCO receives from TAMIC 50% of the investment advisory
fees earned by TAMIC. TIMCO, a registered investment adviser, has provided
investment advisory services since its incorporation in 1967. TIMCO is an
indirect wholly owned subsidiary of Travelers Group Inc. with principal offices
located at One Tower Square, Hartford, Connecticut 06183.
In addition to serving as sub-adviser to the Fund, TIMCO acts as investment
adviser for other investment companies used to fund variable products issued by
The Travelers and The Travelers Life and Annuity Company. TIMCO also provides
investment advice to individual and pooled pension and profit-sharing accounts,
and affiliated companies of The Travelers.
PORTFOLIO MANAGER
The Fund's common stock investments are managed by a team of TIMCO's investment
professionals. TIMCO uses a disciplined stock selection process to review a
broad universe of equity securities and identify those that appear most
attractive in terms of relative valuation and earnings momentum. A team of
experienced investment professionals selects specific holdings and manage the
portfolio according to specific diversification guidelines.
Effective December 30, 1994, Kent A. Kelley, CFA, became Chief Executive Officer
of TIMCO. Mr. Kelley is responsible for the day-to-day management of the Fund's
common stock investments and is responsible for directing the activities of
TIMCO's portfolio management team. Mr. Kelley was
MAT-6
<PAGE> 10
President of TIMCO from November 1992 to December 1994. He became responsible
for management of the Fund in November 1992. Prior to his appointment as
President, Mr. Kelley was the Executive Vice President in charge of the risk
management group in TIMCO, which managed index funds and other structured
investment strategies.
SECURITIES TRANSACTIONS
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Under policies established by the Board of Trustees, TAMIC and TIMCO will select
broker-dealers to execute transactions for the Fund, subject to the receipt of
best execution. When selecting broker-dealers to execute portfolio transactions
for the Fund, TAMIC and TIMCO may consider the number of Fund shares sold by
such broker-dealers. In addition, broker-dealers may from time to time be
affiliated with the Fund, TAMIC, TIMCO or their affiliates.
The Fund may pay higher commissions to broker-dealers that provide research
services. TAMIC and TIMCO may use these services in advising the Fund, as well
as in advising other clients for which they act as investment adviser.
FUND EXPENSES
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In addition to the investment advisory fees discussed above, other expenses of
the Fund include the charges and expenses of the transfer agent, the custodian,
the independent auditors, and any outside legal counsel employed by either the
Fund or the Board of Trustees; the compensation for the disinterested members of
the Board of Trustees; the costs of printing and mailing the Fund's
prospectuses, proxy solicitation materials, and annual, semiannual and periodic
reports; brokerage commissions, interest charges and taxes; and any
registration, filing and other fees payable to government agencies in connection
with the registration of the Fund and its shares under federal and state
securities laws. Additional, high portfolio turnover may involve greater
brokerage commissions and other transaction costs, which would be borne directly
by the Fund, as well as additional realized gains and/or losses to shareholders.
Pursuant to a Management Agreement dated May 1, 1996 between the Fund and The
Travelers Insurance Company, the Company has agreed to reimburse the Fund for
the amount by which the Fund's aggregate annual expenses, including investment
advisory fees but excluding brokerage commissions, interest charges and taxes,
exceed 1.25% of the Fund's average net assets for any fiscal year.
For the fiscal year ended December 31, 1995, the Fund paid .58% of its average
net assets in expenses.
TRANSFER AGENT
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The Travelers Insurance Company, One Tower Square, Hartford, Connecticut 06183,
serves as the Fund's transfer agent and dividend disbursing agent.
FUND SHARES
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The Fund currently issues one class of shares which participate equally in
dividends and distributions and have equal voting, liquidation and other rights.
When issued and paid for, the shares will be fully paid and nonassessable by the
Fund and will have no preference, conversion, exchange or preemptive rights.
MAT-7
<PAGE> 11
Shareholders are entitled to one vote for each full share owned and fractional
votes for fractional shares. Shares are redeemable, transferable and freely
assignable as collateral. There are no sinking fund provisions. (See the
accompanying separate account prospectus for a discussion of voting rights
applicable to purchasers of variable annuity and variable life insurance
contracts.)
Under Massachusetts law it is possible that a Fund shareholder may be held
personally liable for the Fund's obligations. However, the Fund's Declaration of
Trust provides that shareholders shall not be subject to any personal liability
for the Fund's obligations and provides indemnification from Fund assets for any
shareholder held personally liable for the Fund's obligations. Disclaimers of
such liability are included in each Fund agreement.
Shares of the Fund are currently sold only to insurance company separate
accounts in connection with variable annuity and variable life insurance
contracts issued by the Company. Shares of the Fund are not sold to the general
public. Fund shares are sold on a continuing basis, without a sales charge, at
the net asset value next computed after payment is made by the insurance company
to the Fund's custodian. However, the separate accounts to which shares are sold
may impose sales and other charges, as described in the appropriate contract
prospectus.
Although the Fund is not currently aware of any disadvantages to contract owners
of either variable annuity or variable life insurance contracts because the
Fund's shares are available with respect to both products, an irreconcilable
material conflict may conceivably arise between contract owners of different
separate accounts investing in the Fund due to differences in tax treatment,
management of the Fund's investments, or other considerations. The Fund's Board
of Trustees will monitor events in order to identify any material conflicts
between variable annuity contract owners and variable life insurance policy
owners, and will determine what action, if any, should be taken in the event of
such a conflict.
PRICING SHARES
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The net asset value of a Fund share is computed as of the close of trading on
each day on which the New York Stock Exchange ("Exchange") is open, except on
days when changes in the value of the Fund's securities do not affect the
current net asset value of its shares. The net asset value per share of the Fund
is arrived at by determining the value of the Fund's assets, subtracting its
liabilities, and dividing the result by the number of shares outstanding.
Current values for the Fund's portfolio securities are determined as follows:
Securities that are traded on an established exchange or the over-the-counter
National Market System (NMS) are valued on the basis of the last sales price on
the exchange where primarily traded or on the NMS prior to the time of the
valuation, provided that a sale has occurred and that this price reflects
current market value according to procedures established by the Board of
Trustees. Securities traded in the over-the-counter market, other than NMS, are
valued at the mean of the bid and asked prices at the time of valuation.
Short-term instruments with maturities of sixty days or less (including all
master demand notes) are valued at amortized cost (original purchase cost as
adjusted for amortization of premium or accretion of discount) which, when
combined with accrued interest or amortized discount, approximates market.
Short-term instruments with maturities of more than sixty days, for which market
quotations are readily available, are valued at current market value.
The following are valued at prices deemed in good faith to be fair under
procedures established by the Board of Trustees: (a) securities, including
restricted securities, for which complete quotations are not readily available;
(b) listed securities or those on NMS if, in the Fund's opinion, the last sales
price does not reflect a current market value or if no sale occurred; and (c)
other assets.
MAT-8
<PAGE> 12
SHARE REDEMPTION
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Fund shares are redeemed at the redemption value next determined after the Fund
receives a redemption request. The redemption value is the net asset value
adjusted for fractions of a cent and may be more or less than the shareholder's
cost depending upon changes in the value of the Fund's portfolio between
purchase and redemption.
The Fund computes the redemption value at the close of the Exchange at the end
of the day on which it has received all proper documentation from the
shareholder. Redemption proceeds are normally wired or mailed either the same or
the next business day, but in no event later than seven days thereafter.
The Fund may temporarily suspend the right to redeem its shares when (1) the
Exchange is closed, other than customary weekend and holiday closings; (2)
trading on the Exchange is restricted; (3) an emergency exists as determined by
the SEC so that disposal of the Fund's investments or determination of its net
asset value is not reasonably practicable; or (4) the SEC, for the protection of
shareholders, so orders.
DIVIDENDS AND TAX STATUS
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The Fund has qualified and intends to qualify in the future as a regulated
investment company under Subchapter M of the Internal Revenue Code. The Fund
qualifies if, among other things, it distributes to its shareholders at least
90% of its net investment income for each fiscal year.
Capital gains and dividends are distributed in cash or reinvested in additional
shares of the Fund, without a sales charge. Although purchasers of variable
contracts are not subject to federal income taxes on distributions by the Fund,
they may be subject to state and local taxes and should review the accompanying
contract prospectus for a discussion of the tax treatment applicable to
purchasers of variable annuity and variable life insurance contracts.
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
There are no pending material legal proceedings affecting the Fund.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Except as otherwise stated in this Prospectus or as required by law, the Fund
reserves the right to change the terms of the offer stated in this Prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
MAT-9
<PAGE> 13
EXHIBIT A
- --------------------------------------------------------------------------------
DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS AND
INVESTMENT TECHNIQUES AVAILABLE TO THE FUND
OBLIGATIONS OF FOREIGN BRANCHES OF UNITED STATES BANKS
The obligations of foreign branches of United States banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by government regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as sovereign risk). In addition, evidences of ownership of such securities
may be held outside the United States and the Fund may be subject to the risks
associated with the holding of such property overseas. Various provisions of
federal law governing domestic branches do not apply to foreign branches of
domestic banks.
OBLIGATIONS OF UNITED STATES BRANCHES OF FOREIGN BANKS
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a United States branch of a foreign bank than about
a domestic bank.
MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the investment of
fluctuating amounts by the Fund at varying rates of interest pursuant to direct
arrangements between the Fund as lender and the issuer as borrower. The Fund has
the right to increase the amount under the note at any time up to the full
amount provided by the note agreement, or to decrease the amount, and the
borrower may repay up to the full amount of the note without penalty. Notes
purchased by the Fund permit the Fund to demand payment of principal and accrued
interest at any time (on not more than seven days notice). Notes acquired by the
Fund may have maturities of more than one year, provided that (i) the Fund is
entitled to payment of principal and accrued interest upon not more than seven
days notice, and (ii) the rate of interest on such notes is adjusted
automatically at periodic intervals which normally will not exceed 31 days but
may extend up to one year. The notes will be deemed to have a maturity equal to
the longer of the period remaining to the next interest rate adjustment or the
demand notice period. Because these types of notes are direct lending
arrangements between the lender and the borrower, such instruments are not
normally traded and there is no secondary market for these notes, although they
are redeemable and thus repayable by the borrower at face value plus accrued
interest at any time. Accordingly, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. In
connection with master demand notes, TAMIC considers, under standards
established by the Board of Trustees, earning power, cash flow and other
liquidity ratios of the borrower and will monitor the ability of the borrower to
pay principal and interest on demand. These notes are not typically rated by
credit rating agencies. Unless rated, the Fund will invest in them only if the
issuer meets the criteria established for commercial paper.
REPURCHASE AGREEMENTS
Interim cash balances may be invested from time to time in repurchase agreements
with approved counterparties (i.e., national banks or reporting broker-dealers
meeting the Advisor's credit quality standards as presenting minimal risk of
default). All repurchase transactions must be collateralized by U.S. Government
securities with market value no less than 102% of the amount of the transaction,
including accrued interest. Repurchase transactions generally mature the next
business
MAT-10
<PAGE> 14
day but, in the event of a transaction of longer maturity, collateral will be
marked to market daily and, when required, additional cash or qualifying
collateral will be required from the counterparty.
In executing a repurchase agreement, a portfolio purchases eligible securities
subject to the seller's simultaneous agreement to repurchase them on a mutually
agreed upon date and at a mutually agreed upon price. The purchase and resale
prices are negotiated with the counterparty on the basis of current short-term
interest rates, which may be more or less than the rate on the securities
collateralizing the transaction. Physical delivery or, in the case of
"book-entry" securities, segregation in the counterparty's account at the
Federal Reserve for the benefit of the Portfolio is required to establish a
perfected claim to the collateral for the term of the agreement in the event the
counterparty fails to fulfill its obligation.
As the securities collateralizing a repurchase transaction are generally of
longer maturity than the term of the transaction, in the event of default by the
counterparty on its obligation, the Portfolio would bear the risks of delay,
adverse market fluctuation and transaction costs in disposing of the collateral.
FOREIGN SECURITIES
The Fund may invest in securities principally traded in securities markets
outside the United States. While investment in foreign securities is intended to
reduce risk by providing further diversification, such investments involve
sovereign risk in addition to the credit and market risks normally associated
with domestic securities. Foreign investments may be affected favorably or
unfavorably by changes in currency rates and exchange control regulations. There
may be less publicly available information about a foreign company than about a
U.S. company, and foreign companies may not be subject to accounting, auditing
and financial reporting standards and requirements comparable to those
applicable to U.S. companies. Securities of some foreign companies are less
liquid or more volatile than securities of U.S. companies, and foreign brokerage
commissions and custodian fees are generally higher than in the United States.
Investments in foreign securities may also be subject to other risks different
from those affecting U.S. investments, including political or economic
developments, expropriation or nationalization of assets, imposition of
withholding taxes on dividend or interest payments and currency blockage (which
would prevent cash from being brought back to the United States). These risks
are carefully considered by the investment adviser prior to the purchase of
these securities.
WHEN-ISSUED SECURITIES
The Fund may, from time to time, purchase new-issue Government or Agency
securities on a "when-issued" or "to-be-announced" ("TBA") basis ("when-issued
securities"). The prices of such securities will be fixed at the time the
commitment to purchase is made, and may be expressed in either dollar price or
yield maintenance terms. Delivery and payment may be at a future date beyond
customary settlement time. It is the customary practice of the Fund to make
when-issued or TBA purchases for settlement no more than 90 days beyond the
commitment date.
The commitment to purchase a when-issued security may be viewed as a senior
security, and will be marked to market and reflected in the Fund's net asset
value daily from the commitment date. While it is TAMIC's intention to take
physical delivery of these securities, offsetting transactions may be made prior
to settlement, if it is advantageous to do so. The Fund does not make payment or
begin to accrue interest on these securities until settlement date. In order to
invest its assets pending settlement, the Fund will normally invest in
short-term money market instruments and other securities maturing no later than
the scheduled settlement date.
The Fund does not intend to purchase when-issued securities for speculative or
"leverage" purposes. Consistent with Section 18 of the 1940 Act and the General
Policy Statement of the SEC thereunder, when the Fund commits to purchase a
when-issued security, it will identify and place in a segregated account
high-grade money market instruments and other liquid securities equal in value
to the purchase cost of the when-issued securities.
MAT-11
<PAGE> 15
TAMIC believes that purchasing when-issued securities in this manner will be
advantageous to the Fund. However, this practice does entail certain additional
risks, namely the default of the counterparty on its obligations to deliver the
security as scheduled. In this event, the Fund would experience a gain or loss
equal to the appreciation or depreciation in value from the commitment date.
TAMIC employs a rigorous credit quality procedure in determining the
counterparties with which it will deal in when-issued securities, and in some
circumstances, will require the counterparty to post cash or some other form of
security as margin to protect the value of its delivery obligation pending
settlement.
FUTURES CONTRACTS
The Fund may use exchange-traded financial futures contracts as a hedge to
protect against anticipated changes in interest rates or stock prices. Financial
futures contracts consist of stock index futures contracts and futures contracts
on debt securities ("interest rate futures"). A stock index futures contract is
a contractual obligation to buy or sell a specified index of stocks at a future
date for a fixed price. Unlike most other financial futures, stock index futures
require cash settlement on a daily basis. An interest rate futures contract is a
contract to buy or sell specified debt securities at a future time for a fixed
price.
Stock index futures may be used, to a limited extent, to hedge specific common
stocks with respect to market (systematic) risk (involving the market's
assessment of overall economic prospects) as distinguished from stock-specific
risk (involving the market's evaluation of the merits of the issuer of a
particular security). Gains and losses on futures contracts employed as hedges
for specific securities will normally be offset by losses or gains,
respectively, on the hedged security.
Hedging by use of interest rate futures seeks to establish, with more certainty
than would otherwise be possible, the effective rate of return on portfolio
securities. When hedging is successful, any depreciation in the value of
portfolio securities will substantially be offset by appreciation in the value
of the futures position. Conversely, any appreciation in the value of the
portfolio securities will substantially be offset by depreciation in the value
of the futures position. At no time will the Fund's transactions in such
financial futures be employed for speculative purposes.
When a futures contract is purchased, the Fund will set aside, in an
identifiable manner, an amount of cash and cash equivalents equal to the total
market value of the futures contract, less the amount of the initial margin.
Positions taken in the futures market are not normally held to maturity, but
instead are liquidated through offsetting transactions which may result in a
profit or a loss. Closing out an open futures contract sale or purchase is
effected by entering into an offsetting futures contract purchase or sale,
respectively, for the same aggregate amount of the stock index or security and
the same delivery date. If the offsetting purchase price is less than the
original sale price, the Fund realizes a gain; if it is more, the Fund realizes
a loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Fund realizes a gain; if less, a loss. While futures
positions taken by the Fund will usually be liquidated in this manner, the Fund
may instead make or take delivery of the underlying securities whenever it
appears economically advantageous for it to do so. In determining gain or loss,
transaction costs must be taken into account. There can be no assurance that the
Fund will be able to enter into an offsetting transaction with respect to a
particular contract at a particular time.
All stock index and interest rate futures contracts will be traded on exchanges
that are licensed and regulated by the Commodity Futures Trading Commission
("CFTC").
The Fund will not purchase or sell futures contracts for which the aggregate
initial margin exceeds five percent (5%) of the fair market value of its assets,
after taking into account unrealized profits and unrealized losses on any such
contracts it has entered into.
To ensure that its futures transactions meet CFTC standards, the Fund will enter
into futures contracts for hedging purposes only, i.e., for the purposes or with
the intent specified in CFTC regulations and
MAT-12
<PAGE> 16
interpretations, subject to the requirements of the SEC. The Fund will further
seek to assure that fluctuations in the price of any futures contracts that it
uses for hedging purposes will be substantially related to fluctuations in the
price of the securities held by it or which it expects to purchase, or for other
risk reduction strategies, though there can be no assurance the expected result
will always be achieved.
As evidence of its hedging intent, the Fund expects that on seventy-five percent
(75%) or more of the occasions on which it purchases a long futures contract, it
will effect the purchase of securities in the cash market or take delivery as it
closes out a futures position. In particular cases, however, when it is
economically advantageous, a long futures position may be terminated without the
corresponding purchase of securities.
SPECIAL RISKS RELATING TO FUTURES CONTRACTS
While certain futures contracts may be purchased and sold to reduce certain
risks, these transactions may entail other risks. Thus, while the Fund may
benefit from the use of such futures, unanticipated changes in stock price
movements or interest rates may result in a poorer overall performance for the
Fund than if it had not entered into such futures contracts. Moreover, in the
event of an imperfect correlation between the futures position and the portfolio
position which is intended to be protected, the desired protection may not be
obtained and the Fund may be exposed to risk of loss. TAMIC will attempt to
reduce this risk by engaging in futures transactions, to the extent possible,
where, in its judgment, there is a significant correlation between changes in
the prices of the futures contracts and the prices of any portfolio securities
sought to be hedged. Successful use of futures contracts for hedging purposes is
also subject to TAMIC's ability to predict correctly movements in the direction
of the market.
BUYING PUT AND CALL OPTIONS
The Fund may purchase put options on securities held, or on futures contracts
whose price volatility is expected to closely match that of securities held, as
a defensive measure to preserve shareholders' capital when market conditions
warrant. The Fund may purchase call options on specific securities, or on
futures contracts whose price volatility is expected to closely match that of
securities eligible for purchase by the Fund, in anticipation of or as a
substitute for the purchase of the securities themselves. These options may be
listed on a national exchange or executed "over-the-counter" with a
broker-dealer as the counterparty. While TIMCO anticipates that the majority of
option purchases and sales will be executed on a national exchange, put or call
options on specific securities or for non-standard terms are likely to be
executed directly with a broker-dealer when it is advantageous to do so. Option
contracts will be short-term in nature, generally less than nine months in
duration.
The Fund will pay a premium in exchange for the right to purchase (call) or sell
(put) a specific number of shares of an equity security or futures contract at a
specified price (the strike price) on or before the expiration date of the
option contract. In either case, the Fund's risk is limited to the option
premium paid.
The Fund may sell the put and call options prior to their expiration and thereby
realize a gain or loss. A call option will expire worthless if the price of the
related security is below the contract strike price at the time of expiration; a
put option will expire worthless if the price of the related security is above
the contract strike price at the time of expiration.
Put and call options will be employed for bona fide hedging purposes only.
Liquid securities sufficient to fulfill the call option delivery obligation will
be identified and segregated in an account; deliverable securities sufficient to
fulfill the put option obligation will be similarly identified and segregated.
In the case of put options on futures contracts, portfolio securities whose
price volatility is expected to match that of the underlying futures contract
will be identified and segregated.
MAT-13
<PAGE> 17
WRITING COVERED CALL OPTIONS
The Fund may write or sell covered call options. By writing a call option, the
Fund becomes obligated during the term of the option to deliver the securities
underlying the option upon payment of the exercise price.
The Fund may only write "covered" options. This means that as long as the Fund
is obligated as the writer of a call option, it will own the underlying
securities subject to the option or in the case of call options on U.S. Treasury
bills, the Fund might own substantially similar U.S. Treasury bills.
The principal reason for writing call options is to obtain, through a receipt of
premiums, a greater current return than would be realized on the underlying
securities alone. The Fund receives a premium from writing a call option which
it retains whether or not the option is exercised. By writing a call option, the
Fund might lose the potential for gain on the underlying security while the
option is open.
Options on some securities are relatively new and it is impossible to predict
the amount of trading interest that will exist in such options. There can be no
assurance that viable markets will develop or continue. The failure of such
markets to develop or continue could significantly impair the Fund's ability to
use such options to achieve its investment objectives.
COMMERCIAL PAPER RATINGS
The Fund's investments in commercial paper are limited to those rated A-1 by
Standard & Poor's Corporation or Prime-1 by Moody's Investors Service, Inc.
These ratings and other money market instruments are described as follows.
Commercial paper rated A-1 by S&P has the following characteristics: Liquidity
ratios are adequate to meet cash requirements. The issuer's long-term senior
debt is rated "A" or better although in some cases "BBB" credits may be allowed.
The issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist with
the issuer; and (8) recognition by the management of obligations which may be
present or which may arise as a result of public preparations to meet such
obligations. Relative strength or weakness of the above factors determines how
the issuer's commercial paper is rated within various categories.
UNITED STATES GOVERNMENT SECURITIES
Securities issued or guaranteed by the United States Government include a
variety of Treasury securities that differ only in their interest rates,
maturities and dates of issuance. Treasury bills have maturities of one year or
less; Treasury notes have maturities of one to ten years; and Treasury bonds
generally have maturities of greater than ten years at the date of issuance.
Securities issued or guaranteed by the United States Government or its agencies
or instrumentalities include direct obligations of the United States Treasury
and securities issued or guaranteed by the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Central Bank for Cooperatives, Federal Home Loan Banks,
Federal Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal
Land Banks, Maritime Administration, The
MAT-14
<PAGE> 18
Tennessee Valley Authority, District of Columbia Armory Board, Student Loan
Marketing Association and Federal National Mortgage Association.
Some obligations of United States Government agencies and instrumentalities,
such as Treasury bills and Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of the United States;
others, such as securities of Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the Treasury; still others, such as bonds
issued by the Federal National Mortgage Association, a private corporation, are
supported only by the credit of the instrumentality. Because the United States
Government is not obligated by law to provide support to an instrumentality
which it sponsors, the Fund will invest in the securities issued by such an
instrumentality only when TAMIC determines that the credit risk with respect to
the instrumentality does not make its securities unsuitable investments. United
States Government securities will not include international agencies or
instrumentalities in which the United States Government, its agencies or
instrumentalities participate, such as the World Bank, the Asian Development
Bank or the Inter-American Development Bank, or issues insured by the Federal
Deposit Insurance Corporation.
CERTIFICATES OF DEPOSITS
Certificates of deposit are receipts issued by a bank in exchange for the
deposit of funds. The issuer agrees to pay the amount deposited plus interest to
the bearer of the receipt on the date specified on the certificate. The
certificate can usually be traded in the secondary market prior to maturity.
Certificates of deposit will be limited to U.S. dollar-denominated certificates
of United States banks which have at least $1 billion in deposits as of the date
of their most recently published financial statements (including foreign
branches of U.S. banks, U.S. branches of foreign banks which are members of the
Federal Reserve System or the Federal Deposit Insurance Corporation, and savings
and loan associations which are insured by the Federal Deposit Insurance
Corporation).
The Fund will not acquire time deposits or obligations issued by the
International Bank for Reconstruction and Development, the Asian Development
Bank or the Inter-American Development Bank. Additionally, the Fund does not
currently intend to purchase such foreign securities (except to the extent that
certificates of deposit of foreign branches of U.S. banks may be deemed foreign
securities) or purchase certificates of deposit, bankers' acceptances or other
similar obligations issued by foreign banks.
BANKERS' ACCEPTANCES
Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by the bank which, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
Bankers' acceptances acquired by the Fund must have been accepted by U.S.
commercial banks, including foreign branches of U.S. commercial banks, having
total deposits at the time of purchase in excess of $1 billion and must be
payable in U.S. dollars.
MAT-15
<PAGE> 19
MANAGED ASSETS TRUST
PROSPECTUS
TIC Ed. 5-96
L-11172 Printed in U.S.A.
<PAGE> 20
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 21
STATEMENT OF ADDITIONAL INFORMATION
MANAGED ASSETS TRUST
MAY 1, 1996
This Statement of Additional Information ("SAI") is not a prospectus
but relates to, and should be read in conjunction with, the Fund's prospectus
dated May 1, 1996. A copy of the prospectus is available from The Travelers
Insurance Company, Annuity Services, One Tower Square, Hartford, Connecticut
06183-5030, or by calling 860-422-3985.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VALUATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT ADVISORY SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Subadviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
REDEMPTIONS IN KIND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
APPENDIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 22
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Managed Assets Trust (the "Fund") is
to provide a high total investment return. To do this, the Fund adjusts its
overall exposure to risk by spreading its investments among those providing
alternatives for capital growth, capital stability and income as market and
economic trends change.
INVESTMENT RESTRICTIONS
None of the restrictions enumerated in this paragraph may be changed
without a vote of a majority of the Fund's outstanding shares, as defined in
the Investment Company Act of 1940 (the "1940 Act"). The Fund will not:
(1) purchase any securities which are rated lower than BBB by S&P,
Baa by Moody's or, if unrated by such services, are, in TAMIC's
opinion, of equivalent quality, if as a result more than 10% of
the Fund's assets which are invested in debt securities would be
invested in such securities; or purchase any debt securities
rated B or lower by either service or their equivalent;
(2) purchase any securities (other than securities issued by the
United States Government, its agencies or instrumentalities or
securities which are backed by the full faith and credit of the
United States) of any issuer if as a result more than 5% of its
total assets would be invested in the securities of the issuer,
except that up to 25% of its total assets may be invested
without regard to this 5% limitation;
(3) invest in securities of a single issuer if, as a result, the
Fund owns more than 10% of the outstanding voting securities of
such issuer;
(4) borrow money, except from banks as a temporary measure in an
amount not to exceed 10% of its total assets to facilitate
redemptions or for emergency or extraordinary purposes, and any
such borrowings will be repaid before additional investments are
made;
(5) pledge assets, except to secure indebtedness permitted by
restriction (4) above and in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of the Fund's total
assets;
(6) underwrite securities of other issuers, except that the Fund may
purchase securities from the issuer thereof or others and
dispose of such securities in a manner consistent with its
investment objective and policies;
(7) purchase or sell real estate, except that the Fund may invest in
securities secured by real estate or interests therein or issued
by companies, including real estate investment trusts, which
invest in real estate or interests therein;
(8) purchase or sell commodities or commodity contracts, except
transactions involving financial futures contracts in order to
limit transaction and borrowing costs and for hedging purposes;
(9) invest for the purpose of control or management;
(10) purchase securities on margin, except that the Fund may obtain
such short term credits as may be necessary for the clearance of
purchases and sales of securities and place up to 5% of the
value of its net assets in total margin deposits for positions
in futures contracts;
(11) make short sales of securities or maintain short positions;
(12) make loans, except that the Fund may purchase or hold debt
obligations and repurchase agreements in a manner consistent
with its investment objective and restrictions;
2
<PAGE> 23
(13) purchase any security if as a result more than 25% of its total
assets would be invested in a single industry;
(14) purchase securities of other investment companies, except in the
open market and at customary brokerage rates and in no event
more than 3% of the voting securities of any investment company
or in connection with a merger, consolidation, purchase of
assets or similar transaction approved by the Fund's
shareholders;
(15) invest more than 10% of its total assets in "restricted
securities" which may not be publicly sold without registration
under the Securities Act of 1933 (the "1933 Act"). If and when
the Fund sells restricted securities, registration under the
1933 Act may be required. In determining securities subject to
the 10% restriction, the Fund will include, in addition to
restricted securities, other securities not having readily
available market quotations.
Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Trustees, provide that the Fund may not: (1) invest in
securities of foreign issuers if at the time of acquisition more than 25% of
its total assets, taken at market value, would be invested in such securities;
(2) purchase or sell interests in oil, gas or other mineral exploration or
development programs; (3) invest in warrants if at the time of acquisition more
than 5% of its total assets would be invested in warrants (for the purposes of
this restriction, warrants acquired by the Fund in units or attached to
securities will be deemed to be without value); (4) invest more than 5% of its
total assets in securities of companies having a record, together with
predecessors, of less than three years of continuous operation, and securities
of issuers that are not readily marketable; and (5) purchase or retain
securities of an issuer if, to the knowledge of the Fund, officers, Trustees or
Directors of the Fund or Travelers Asset Management International Corporation
(TAMIC), each owning beneficially more than 0.5% of the securities of such
issuer, own in the aggregate more than 5% of the securities of such issuer, or
such persons or management personnel of the Fund or TAMIC have a substantial
beneficial interest in the securities of such issuer. Portfolio securities of
the Fund may not be purchased from or sold or loaned to TAMIC or any affiliate
thereof or any of its Directors, officers or employees.
The Fund has undertaken to a state insurance authority that, so long
as the state authority requires and shares of the Fund are offered for sale to
fund variable life insurance policies in that state, the Fund will comply with
certain foreign security diversification guidelines. These guidelines provide
that (1) as the percentage of the Fund's net asset value invested in foreign
securities increases, a corresponding increase will be made in the number of
countries in whose securities the Fund invests; and (2) the Fund will invest no
more than 20% of its net asset value in securities of issuers located in any
one country (other than the United States). Notwithstanding the above, these
guidelines permit the Fund to invest any amount in securities of issuers
located in the United States, and an additional 15% of its net asset value in
securities of issuers located in Australia, Canada, France, Japan, the United
Kingdom or Germany. These guidelines require that American Depository Receipts
be treated as if they were foreign securities. This undertaking is not a
fundamental investment restriction or policy and may be changed without a vote
of shareholders.
VALUATION OF SECURITIES
Current value for the Fund's portfolio securities is determined as
described in the prospectus. However, the Fund believes that reliable market
quotations generally are not readily available for purposes of valuing fixed
income securities. As a result, depending on the particular securities owned
by the Fund, it is likely that most of the valuations for such securities will
be based upon their fair value determined under procedures which have been
approved by the Trustees. The Board of Trustees has authorized the use of a
pricing service to determine the fair value of its fixed income securities and
certain other securities. Securities for which market quotations are readily
available are valued on a consistent basis at that price quoted which, in the
opinion of the Trustees or the person designated by the Trustees to make the
determination, most nearly represents the market value of the particular
security. Any securities for which market quotations are not readily available
or other assets are valued on a consistent basis at fair value as determined in
good faith using methods prescribed by the Trustees.
3
<PAGE> 24
DISTRIBUTIONS AND TAXES
It is the Fund's intention to distribute dividends from net investment
income and all net realized capital gains annually in shares or, at the option
of the shareholder, in cash.
When the Fund makes a distribution, it intends to distribute only its
net capital gains and such income as has been predetermined to the best of the
Fund's ability to be taxable as ordinary income. Therefore, net investment
income distributions will not be made on the basis of distributable income as
computed on the Fund's books, but will be made on a federal taxation basis.
If the Fund qualifies as a regulated investment company, shareholders
will not be subject to federal income taxes on distributions by the Fund but
may be subject to state and local taxes. See the accompanying separate account
prospectus for a discussion of the tax treatment applicable to purchasers of
variable annuity and variable life insurance contracts.
TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
Name Present Position and Principal Occupation During Last Five Years
---- ----------------------------------------------------------------
<S> <C>
*Heath B. McLendon Managing Director (1993-present), Smith Barney Inc. ("Smith Barney");
Chairman and Member Chairman (1993-present), Smith Barney Strategy Advisors, Inc.;
388 Greenwich Street President (1994-present), Smith Barney Mutual Funds Management Inc.;
New York, New York Chairman and Director of forty-one investment companies associated with
Age 62 Smith Barney; Chairman, Board of Trustees, Drew University; Trustee,
The East New York Savings Bank; Advisory Director, First Empire State
Corporation; Chairman, Board of Managers, seven Variable Annuity
Separate Accounts of The Travelers Insurance Company+; Chairman, Board
of Trustees, five Mutual Funds sponsored by The Travelers Insurance
Company++; prior to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers Inc.
Knight Edwards Of Counsel (1988-present), Partner (1956-1988), Edwards & Angell,
Member Attorneys; Member, Advisory Board (1973-1994), thirty-one mutual funds
2700 Hospital Trust Tower sponsored by Keystone Group, Inc.; Member, Board of Managers, seven
Providence, Rhode Island Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Age 72 Trustee, five Mutual Funds sponsored by The Travelers Insurance
Company.++
Robert E. McGill, III Retired manufacturing executive. Director (1983-1995), Executive Vice
Member President (1989-1994) and Senior Vice President, Finance and
295 Hancock Street Administration (1983-1989), The Dexter Corporation (manufacturer of
Williamstown, Massachusetts specialty chemicals and materials); Vice Chairman (1990-1992), Director
Age 64 (1983-1995), Life Technologies, Inc. (life science/biotechnology
products); Director, (1994-present), The Connecticut Surety Corporation
(insurance); Director (1995-present), Calbiochem Novachem International
(life science/biotechnology products); Director (1995-present), Chemfab
Corporation (specialty materials manufacturer); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++
</TABLE>
4
<PAGE> 25
<TABLE>
<S> <C>
Lewis Mandell Dean, College of Business Administration (1995-present), Marquette
Member University; Professor of Finance (1980-1995) and Associate Dean
606 N. 13th Street (1993-1995), School of Business Administration, and Director, Center
Milwaukee, WI 53233 for Research and Development in Financial Services (1980-1995),
Age 53 University of Connecticut; Director (1992-present), GZA
Geoenvironmental Tech, Inc. (engineering services); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++
Frances M. Hawk Portfolio Manager (1992-present), HLM Management Company, Inc.
Member (investment management); Assistant Treasurer, Pensions and Benefits.
222 Berkeley Street Management (1989-1992), United Technologies Corporation (broad- based
Boston, Massachusetts designer and manufacturer of high technology products); Member, Board
Age 48 of Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++
Ernest J. Wright Assistant Secretary (1994-present), Counsel (1987-present), The
Secretary to the Board Travelers Insurance Company; Secretary, Board of Managers, seven
One Tower Square Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 55 Travelers Insurance Company.++
Kathleen A. McGah Assistant Secretary and Counsel (1995-present), The Travelers Insurance
Assistant Secretary to the Board Company; Assistant Secretary, Board of Managers, seven Variable Annuity
One Tower Square Separate Accounts of The Travelers Insurance Company+; Assistant
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 45 Travelers Insurance Company.++ Prior to January 1995, Counsel, ITT
Hartford Life Insurance Company.
Ian R. Stuart Vice President and Chief Financial Officer, The Travelers Insurance
Treasurer Company (1996-present); Vice President and Financial Officer, Financial
One Tower Square Services Department (1994-1995), Second Vice President and Financial
Hartford, Connecticut Officer, Financial Services Department (1991-1993), The Travelers
Age 39 Insurance Company; Senior Manager (1986-1991), Price Waterhouse;
Treasurer, Board of Trustees, five Mutual Funds sponsored by The
Travelers Insurance Company.++
</TABLE>
+ These seven 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, The Travelers Timed Growth and Income Stock
Account for Variable Annuities, The Travelers Timed Short-Term Bond
Account for Variable Annuities, The Travelers Timed Aggressive Stock
Account for Variable Annuities and The Travelers Timed Bond Account for
Variable Annuities.
++ These five Mutual Funds are: Capital Appreciation Fund, Cash Income
Trust, High Yield Bond Trust, Managed Assets Trust and The Travelers
Series Trust.
* Mr. McLendon is an "interested person" within the meaning of the 1940
Act by virtue of his position as Managing Director of Smith Barney Inc., an
indirect wholly owned subsidiary of Travelers Group Inc. and also owns shares
and options to purchase shares of Travelers Group Inc., the indirect parent of
The Travelers Insurance Company.
5
<PAGE> 26
Members of the Board of Trustees who are also officers or employees of
Travelers Group Inc. or its subsidiaries are not entitled to any fee. Members
of the Board of Trustees who are not affiliated as employees of Travelers Group
Inc. or its subsidiaries receive an aggregate retainer of $17,000 for service
on the Boards of the five Mutual Funds sponsored by The Travelers Insurance
Company and the seven Variable Annuity Separate Accounts established by The
Travelers Insurance Company. They also receive an aggregate fee of $2,000 for
each meeting of such Boards attended.
DECLARATION OF TRUST
The Fund is organized as a Massachusetts business trust. Pursuant to
certain decisions of the Supreme Judicial Court of Massachusetts, shareholders
of such a trust may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. However, even if the Fund were held
to be a partnership, the possibility of its shareholders incurring financial
loss for that reason appears remote because the Fund's Declaration of Trust
contains an express disclaimer of shareholder liability for obligations of the
Fund and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees,
and because the Declaration of Trust provides for indemnification out of Fund
property for any shareholder held personally liable for the obligations of the
Fund.
The Declaration of Trust provides that a Trustee shall be liable only
for his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, a Trustee
shall not be liable for the neglect or wrongdoing of any such person; provided,
however, that nothing in the Declaration of Trust shall protect a Trustee
against any liability for his willful misfeasance, bad faith, gross negligence
or the reckless disregard of his duties.
Shareholders first elected Trustees at a meeting held on April 23,
1984, and most recently elected Trustees on April 23, 1993. No further
meetings of shareholders for the purpose of electing Trustees will be held,
unless required by law, and unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees.
Except as set forth above, the Trustees shall continue to hold office
indefinitely, unless otherwise required by law and may appoint successor
Trustees. Trustees may voluntarily resign from office, or a Trustee may be
removed from office (1) at any time by two-thirds vote of the Trustees; (2) by
a majority vote of Trustees where any Trustee becomes mentally or physically
incapacitated; and (3) either by declaration in writing or at a meeting called
for such purpose by the holders of not less than two-thirds of the outstanding
shares or other voting interests of the Fund. The Trustees are required to
call a meeting for the purpose of considering the removal of a person serving
as trustee, if requested in writing to do so by the holders of not less than
10% of the outstanding shares or other voting interests of the Fund. The Fund
is required to assist in Shareholders' communications. In accordance with
current laws, insurance companies using the Fund as an underlying investment
option within their variable contract will request voting instructions from
contract owners participating in such contracts, and will vote shares of the
Fund in the same proportion as the voting instructions received.
Voting rights are not cumulative, so that the holders of more than 50%
of the shares voting on the election of Trustees can, if they choose to do so,
elect all of the Trustees of the Fund, in which event the holders of the
remaining shares will be unable to elect any person as a Trustee.
No amendment may be made to the Declaration of Trust without a "vote
of a majority of the outstanding voting securities" of the Fund (as defined in
the 1940 Act).
6
<PAGE> 27
INVESTMENT ADVISORY SERVICES
THE INVESTMENT ADVISER
Travelers Asset Management International Corporation (TAMIC), an
indirect wholly owned subsidiary of Travelers Group Inc., furnishes investment
management and advisory services to the Fund in accordance with the terms of an
Investment Advisory Agreement which was approved by shareholders on April 23,
1993.
As required by the 1940 Act, the Advisory Agreement will continue in
effect for a period more than two years from the date of its execution only so
long as its continuance is specifically approved at least annually (i) by a
vote of a majority of the Board of Trustees, or (ii) by a vote of a majority of
the outstanding voting securities of the Fund. In addition, and in either
event, the terms of the Advisory Agreement must be approved annually by a vote
of a majority of the Board of Trustees who are not parties to, or interested
persons of any party to, the Advisory Agreement, cast in person at a meeting
called for the purpose of voting on such approval and at which the Board of
Trustees is furnished such information as may be reasonably necessary to
evaluate the terms of the Advisory Agreement. The Advisory Agreement further
provides that it will terminate automatically upon assignment; may be amended
only with prior approval of a majority of the outstanding voting securities of
the Fund; may be terminated without the payment of any penalty at any time upon
sixty days' notice by the Board of Trustees or by a vote of a majority of the
outstanding voting securities of the Fund; and may not be terminated by TAMIC
without prior approval of a new investment advisory agreement by a vote of a
majority of the outstanding voting securities of the Fund.
Under the terms of the Advisory Agreement, TAMIC shall:
(1) obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
the Fund, affecting the economy generally and individual companies
or industries, the securities of which are included in the Fund's
portfolio or are under consideration for inclusion therein;
(2) be authorized to purchase supplemental research and other services
from brokers at an additional cost to the Fund;
(3) regularly furnish recommendations to the Board of Trustees with
respect to an investment program for approval, modification or
rejection by the Board of Trustees;
(4) take such steps as are necessary to implement the investment
program approved by the Board of Trustees; and
(5) regularly report to the Board of Trustees with respect to
implementation of the approved investment program and any other
activities in connection with the administration of the assets of
the Fund.
ADVISORY FEES
For furnishing investment management and advisory services to the
Fund, TAMIC is paid an amount equivalent on an annual basis to 0.50% of the
average daily net assets of the Fund. The fee is computed daily and paid
monthly. For the three years ended December 31, 1993, 1994 and 1995 the
advisory fees were $790,843, $738,883 and $776,392, respectively.
THE SUBADVISER
The Travelers Investment Management Company (TIMCO), an indirect
wholly owned subsidiary of Travelers Group Inc., serves as subadviser to the
Fund with respect to its common stock investments pursuant to the terms of a
Subadvisory Agreement between TAMIC and TIMCO. The Subadvisory Agreement,
which was approved by shareholders of the Fund at a meeting held on April 23,
1993, provides that TIMCO will receive from
7
<PAGE> 28
TAMIC a fee equal to 50% of the advisory fee earned by TAMIC for its
services as subadviser. For the fiscal years ended December 31, 1993, 1994 and
1995, TIMCO received $395,537, $369,442 and $388,196, respectively, in advisory
fees.
REDEMPTIONS IN KIND
If conditions arise that would make it undesirable for the Fund to pay
for all redemptions in cash, the Fund may authorize payment to be made in
portfolio securities or other property.
However, the Fund has obligated itself under the 1940 Act to redeem
for cash all shares presented for redemption by any one shareholder up to
$250,000, or 1% of the Fund's net assets if that is less, in any 90-day period.
Securities delivered in payment of redemptions would be valued at the same
value assigned to them in computing the net asset value per share.
Shareholders receiving such securities would incur brokerage costs when these
securities are sold.
BROKERAGE
Subject to approval of the Board of Trustees, it is the policy of
TAMIC and TIMCO, in executing transactions in portfolio securities, to seek
best execution of orders at the most favorable prices. The determination of
what may constitute best execution and price in the execution of a securities
transaction by a broker involves a number of considerations, including, without
limitation, the overall direct net economic result to the Fund, involving both
price paid or received and any commissions and other cost paid, the efficiency
with which the transaction is effected, the ability to effect the transaction
at all where a large block is involved, the availability of the broker to stand
ready to execute potentially difficult transactions in the future, and the
financial strength and stability of the broker. Such considerations are
judgmental and are weighed by management in determining the overall
reasonableness of brokerage commissions paid. Subject to the foregoing, a
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. Any such
research and other statistical and factual information provided by brokers,
TAMIC or TIMCO is considered to be in addition to and not in lieu of services
required to be performed by TAMIC under its Investment Advisory Agreement, or
by TIMCO under the Subadvisory Agreement with TAMIC. The cost, value and
specific application of such information are indeterminable and hence are not
practicably allocable among the Fund and other clients of TAMIC or TIMCO who
may indirectly benefit from the availability of such information. Similarly,
the Fund may indirectly benefit from information made available as a result of
transactions for such clients.
Purchases and sales of bonds and money market instruments will usually
be principal transactions and will normally be purchased directly from the
issuer or from the underwriter or market maker for the securities. There
usually will be no brokerage commissions paid for such purchases. Purchases
from the underwriters will include the underwriting commission or concession,
and purchases from dealers serving as market makers will include the spread
between the bid and asked prices. Where transactions are made in the
over-the-counter market, the Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable. Brokerage fees will be
incurred in connection with futures transactions, and the Fund will be required
to deposit and maintain funds with brokers as margin to guarantee performance
of future obligations.
TAMIC and TIMCO may follow a policy of considering the sale of shares
of the Fund a factor in the selection of broker-dealers to execute portfolio
transactions, subject to the requirements of best execution described above.
The policy of TAMIC and TIMCO with respect to brokerage is and will be reviewed
by the Board of Trustees periodically. Because of the possibility of further
regulatory developments affecting the securities exchanges and brokerage
practices generally, the foregoing practices may be changed, modified or
eliminated.
The total brokerage commissions paid by the Fund for the fiscal years
ended December 31, 1993, 1994 and 1995 were $330,394, $374,918 and $363,916,
respectively. For the fiscal year ended December 31, 1995, portfolio
8
<PAGE> 29
transactions in the amount of $189,807,637 were placed with certain brokers
because of research services, of which $234,089 was paid in commissions with
respect to such services. No formula was used in placing such transactions and
no specific amount of transactions was allocated for research services.
Commissions in the amount of $7,409, $11,000 and $6,250 were paid to Smith
Barney Inc., The Robinson Humphrey Company, Inc. and Shearson/American Express,
respectively, affiliates of TIMCO and TAMIC, which equals, for each, 2.04%,
3.02% and 1.72% of Managed Assets Trust's aggregate brokerage commissions paid
to such brokers during 1995. The percentage of the Managed Assets Trust's
aggregate dollar amount of transactions involving the payment of commissions
effected through Smith Barney, Robinson Humphrey and Shearson/American Express
was 2.19%, 3.47% and 1.98%, respectively.
ADDITIONAL INFORMATION
The Travelers Insurance Company acts as transfer agent and dividend
disbursing agent for the Fund. The Travelers Insurance Company is a stock
insurance company chartered in 1864 in Connecticut and continuously engaged in
the insurance business since that time. It is a wholly owned subsidiary of The
Travelers Insurance Group Inc., which is an indirect wholly owned subsidiary of
Travelers Group Inc., a financial services holding company. The Company's Home
Office is located at One Tower Square, Hartford, Connecticut 06183, telephone
number 860-422-3985. On April 1, 1996, The Travelers Insurance Company and an
affiliate owned 100% of the Fund's outstanding shares.
Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New
York, New York 11245, is the custodian of all securities and cash of the Fund.
Coopers & Lybrand L.L.P., independent accountants, 100 Pearl Street,
Hartford, Connecticut, are the independent auditors for the Fund. The services
provided to the Fund include primarily the examination of the Fund's financial
statements. The financial statements have been audited by Coopers & Lybrand
L.L.P., as indicated in their report thereon, and are included beginning on
page F-1 in reliance upon the authority of said firm as experts in accounting
and auditing.
Except as otherwise stated in its prospectus or as required by law,
the Fund reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or
change fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in the Fund's
prospectus, this SAI or any supplemental sales literature issued by the Fund,
and no person is entitled to rely on any information or representation not
contained therein.
The Fund's prospectus and this SAI omit certain information contained
in the Fund's registration statement filed with the Securities and Exchange
Commission which may be obtained from the Commission's principal office in
Washington, D.C. upon payment of the fee prescribed by the Rules and
Regulations promulgated by the Commission.
9
<PAGE> 30
APPENDIX
COMMON AND PREFERRED STOCK RATINGS
MOODY'S COMMON STOCK RATINGS
Moody's Investors Service, Inc. (Moody's) presents a concise statement
of the important characteristics of a company and an evaluation of the grade
(quality) of its common stock. Data presented includes: (a) capsule stock
information which reveals short and long term growth and yield afforded by the
indicated dividend, based on a recent price; (b) a long term price chart which
shows patterns of monthly stock price movements and monthly trading volumes;
(c) a breakdown of a company's capital account which aids in determining the
degree of conservatism or financial leverage in a company's balance sheet; (d)
interim earnings for the current year to date, plus three previous years; (e)
dividend information; (f) company background; (g) recent corporate
developments; (h) prospects for a company in the immediate future and the next
few years; and (I) a ten year comparative statistical analysis.
This information provides investors with information on what a company
does, how it has performed in the past, how it is performing currently and what
its future performance prospects appear to be.
These characteristics are then evaluated and result in a grading, or
indication of quality. The grade is based on an analysis of each company's
financial strength, stability of earnings and record of dividend payments.
Other considerations include conservativeness of capitalization, depth and
caliber of management, accounting practices, technological capabilities and
industry position. Evaluation is represented by the following grades:
(1) High Grade
(2) Investment Grade
(3) Medium Grade
(4) Speculative Grade
MOODY'S PREFERRED STOCK RATINGS
Preferred stock ratings and their definitions are as follows:
1. aaa: An issue which is rated "aaa" is considered to be a
top-quality preferred stock. This rating indicates good asset protection and
the least risk of dividend impairment within the universe of preferred stocks.
2. aa: An issue which is rated "aa" is considered a high-grade
preferred stock. This rating indicates that there is a reasonable assurance
that earnings and asset protection will remain relatively well maintained in
the foreseeable future.
3. a: An issue which is rated "a" is considered to be an
upper-medium grade preferred stock. While risks are judged to be somewhat
greater than in the "aaa" and "aa" classification, earnings and asset
protection are, nevertheless, expected to be maintained at adequate levels.
4. baa: An issue which is rated "baa" is considered to be a
medium-grade preferred stock, neither highly protected nor poorly secured.
Earnings and asset protection appear adequate at present but may be
questionable over any great length of time.
10
<PAGE> 31
5. ba: An issue which is rated "ba" is considered to have
speculative elements and its future cannot be considered well assured.
Earnings and asset protection may be very moderate and not well safeguarded
during adverse periods. Uncertainty of position characterizes preferred stocks
in this class.
6. b: An issue which is rated "b" generally lacks the
characteristics of a desirable investment. Assurance of dividend payments and
maintenance of other terms of the issue over any long period of time may be
small.
7. caa: An issue which is rated "caa" is likely to be in arrears on
dividend payments. This rating designation does not purport to indicate the
future status of payments.
8. ca: An issue which is rated "ca" is speculative in a high degree
and is likely to be in arrears on dividends with little likelihood of eventual
payments.
9. c: This is the lowest rated class of preferred or preference
stock. Issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification: the modifier 1 indicates that the security ranks in the higher
end of its generic rating category, the modifier 2 indicates a midrange
ranking, and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
CORPORATE BOND RATINGS
S&P CORPORATE BOND RATINGS
A Standard & Poor's Corporation (S&P) corporate bond rating is a
current assessment of the creditworthiness of an obligor, including obligors
outside the United States, with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees. Ratings of foreign obligors do not take into account currency
exchange and related uncertainties. The ratings are based on current
information furnished by the issuer or obtained by S&P from other sources it
considers reliable.
The ratings are based, in varying degrees, on the following
considerations:
a. Likelihood of default capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
b. Nature of and provisions of the obligation; and
c. Protection afforded by and relative position of the obligation in
the event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
PLUS (+) OR MINUS (-): To provide more detailed indications of credit
quality, ratings from "AA" to "A" may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Bond ratings are as follows:
1. AAA - Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
2. AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small degree.
11
<PAGE> 32
3. A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
4. BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Although it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
5. BB, B, CCC, CC and C - Debt rated BB, B, CCC, CC and C is
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation, and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
MOODY'S CORPORATE BOND RATINGS
Moody's ratings are as follows:
1. Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
not likely to impair the fundamentally strong position of such issues.
2. Aa - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
3. A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
4. Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
5. Ba - Bonds which are rated Ba are judged to have speculative
elements. Their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
6. B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a midrange ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
12
<PAGE> 33
FINANCIAL STATEMENTS
F-1
<PAGE> 34
MANAGED ASSETS TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $147,584,296) . . . . . . . . $169,888,218
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,886
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216,556
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812,584
Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,131,265
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,079,509
------------
LIABILITIES:
Payables:
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . 754,898
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . 11,684
Variation on futures margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,300
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,113
------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 803,995
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $171,275,514
============
NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $136,190,738
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 5,381,926
Accumulated net realized gains (losses) on investment security transactions . . . . . 7,398,928
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 22,303,922
------------
Total net assets (applicable to 11,045,728 shares outstanding at $15.50 per share) $171,275,514
============
</TABLE>
See Notes to Financial Statements
-5-
<PAGE> 35
MANAGED ASSETS TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,486,515
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,789,554
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . ------------ $ 6,276,069
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . 776,392
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 77,230
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 3,105
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 26,634
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 8,379
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 347
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,056
------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . 894,143
-----------
Net investment income . . . . . . . . . . . . . . . . . . . 5,381,926
-----------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 176,769,048
Cost of investment securities sold . . . . . . . . . . . . . . . 168,853,705
------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 7,915,343
Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . (1,295,855)
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 22,303,922
------------
Net change in unrealized gain (loss) for the year . . . . . 23,599,777
-----------
Net realized gain and change in unrealized gain (loss) . 31,515,120
-----------
Net increase in net assets resulting from operations . . . . . . . $36,897,046
===========
</TABLE>
See Notes to Financial Statements
-6-
<PAGE> 36
MANAGED ASSETS TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 5,381,926 $ 5,313,706
Net realized gain from investment security transactions . . . . . . . 7,915,343 1,907,694
Net change in unrealized gain (loss) on investment securities . . . . 23,599,777 (10,603,386)
------------ ------------
Net increase (decrease) in net assets resulting from operations . 36,897,046 (3,381,986)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income and net short-term realized gains from
investment security transactions . . . . . . . . . . . . . . . . . (5,441,569) (7,278,778)
Net long-term realized gains from investment security transactions . (1,783,880) (4,589,354)
------------ ------------
Total distributions to shareholders . . . . . . . . . . . . . . . (7,225,449) (11,868,132)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . 5,376,731 4,758,206
Dividend reinvestment . . . . . . . . . . . . . . . . . . . . . . . . 7,225,449 11,868,132
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . (11,885,171) (17,256,475)
------------ ------------
Net increase (decrease) in net assets resulting from capital share
transactions . . . . . . . . . . . . . . . . . . . . . . . . . 717,009 (630,137)
------------ ------------
Net increase (decrease) in net assets . . . . . . . . . . . . 30,388,606 (15,880,255)
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . 140,886,908 156,767,163
------------ ------------
End of year (including undistributed net investment income as follows:
December, 1995 $5,381,926 and December, 1994 $5,313,706) . . . . . $171,275,514 $140,886,908
============ ============
</TABLE>
See Notes to Financial Statements
-7-
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Managed Assets Trust ("Fund MA") is a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. Shares of Fund MA are currently
offered, without a sales charge, to separate accounts of The Travelers
Insurance Company ("The Travelers"), an indirect wholly owned subsidiary of
Travelers Group Inc., in connection with the issuance of certain variable
annuity and variable life insurance contracts.
The following is a summary of significant accounting policies consistently
followed by Fund MA in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of business
of the New York Stock Exchange on the last business day of the year; securities
traded on the over-the-counter market and listed securities with no reported
sales are valued at the mean between the last-reported bid and asked prices or
on the basis of quotations received from a reputable broker or other recognized
source.
When market quotations are not considered to be readily available for long-term
corporate bonds and notes, such investments are generally stated at fair value
on the basis of valuations furnished by a pricing service. These valuations
are determined for normal institutional-size trading units of such securities
using methods based on market transactions for comparable securities and
various relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities, for which
pricing services are not readily available are valued by management at prices
which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued by computing a market value based upon quotations from dealers
or issuers for securities of a similar type, quality and maturity.
FUTURES CONTRACTS. Fund MA may use stock index futures contracts, and may also
use interest rate futures contracts, as a substitute for the purchase or sale
of individual securities. When Fund MA enters into a futures contract, it
agrees to buy or sell a specified index of stocks or debt securities at a
future time for a fixed price, unless the contract is closed prior to
expiration. Fund MA is obligated to deposit with a broker an "initial margin"
equivalent to a percentage of the face, or notional value of the contract.
It is Fund MA's practice to hold cash and cash equivalents (including
short-term investments) in an amount at least equal to the notional value of
outstanding purchased futures contracts, less the initial margin. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by Fund MA are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statement of Investments. However, when Fund
MA holds open futures contracts, it assumes a market risk generally equivalent
to the underlying market risk of changes in the value of the specified indexes
or debt securities associated with the futures contract.
OPTIONS. Fund MA may purchase index or individual equity put or call options,
thereby obtaining the right to sell or buy a fixed number of shares of the
underlying asset at the stated price on or before the stated expiration date.
Fund MA may sell the options before expiration. Options held by Fund MA are
listed on either national securities exchanges or on over-the-counter markets,
and are short-term contracts with a duration of less than nine months. The
market value of the options will be the latest sale price at the close of the
New York Stock Exchange, or in the absence of such sale, the latest bid
quotation.
-8-
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS - CONTINUED
REPURCHASE AGREEMENTS. When Fund MA enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed-upon date and price), the repurchase price of the
securities will generally equal the amount paid by Fund MA plus a negotiated
interest amount. The seller under the repurchase agreement will be required to
provide to Fund MA securities (collateral) whose market value, including
accrued interest, will be at least equal to 102% of the repurchase price. Fund
MA monitors the value of collateral on a daily basis. Repurchase agreements
will be limited to transactions with national banks and reporting broker
dealers believed to present minimal credit risks. Fund MA's custodian will
take actual or constructive receipt of all securities underlying repurchase
agreements until such agreements expire.
TAXES. Fund MA has qualified, and intends to continue to qualify each year, as
a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended. As a regulated investment company, Fund MA is
relieved of any federal income tax liability by distributing all of its net
taxable investment income and net taxable capital gains, if any, to its
shareholders. Fund MA further intends to avoid excise tax liability by
distributing substantially all of its investment income. Therefore, no federal
income tax provision has been made by Fund MA in its financial statements.
OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Security transactions are accounted for on the trade date. Interest income is
recorded on the accrual basis and dividend income is recorded on the
ex-dividend date. Distributions to shareholders are recorded at the close of
business on the record date.
2. INVESTMENTS
Purchases and sales of investment securities excluding short-term investments
aggregated $128,222,186 and $123,694,704, respectively, for common stocks and
bonds; purchases and sales of direct and indirect U.S. goverment obligations
were $37,299,210 and $42,308,720, for the year ended December 31, 1995.
Realized gains and losses from security transactions are reported on an
identified-cost basis.
At December 31, 1995, Fund MA held 58 open S&P 500 Stock Index futures
contracts with a maturity date of March 15, 1996. The face value, or notional
value, of these contracts at December 31, 1995, amounted to $17,935,050. In
connection with these contracts, short-term investments with a par value of
$1,200,000 had been pledged as margin deposits.
Net realized losses resulting from futures contracts were $5,401,042 and
$471,650 for the years ended December 31, 1995 and 1994, respectively. These
losses are included in the net realized gain from investment security
transactions on both the Statement of Operations and the Statement of Changes
in Net Assets. The cash settlement for December 31, 1995 is shown on the
Statement of Assets and Liabilities as a payable for variation on futures
margin.
3. FUND CHARGES
Investment management and advisory fees are calculated daily at an annual rate
of 0.50% of Fund MA's average net assets. These fees are paid to Travelers
Asset Management International Corporation ("TAMIC"), an indirect wholly owned
subsidiary of Travelers Group Inc.
Pursuant to a sub-advisory agreement between The Travelers Investment
Management Company ("TIMCO"), an indirect wholly owned subsidiary of Travelers
Group Inc., and TAMIC, 50% of the investment management and advisory fees
earned by TAMIC are paid to TIMCO for investment management and advisory
services relating to the common stock investments of Fund MA.
The Travelers has agreed to reimburse Fund MA for the amount by which Fund MA's
aggregate annualized operating expenses, excluding brokerage commissions and
any interest charges and taxes, exceed 1.25% of Fund MA's average net assets.
Trustees and officers of Fund MA who are also officers and employees of
Travelers Group Inc., or its subsidiaries, receive no compensation directly
from Fund MA.
-9-
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of beneficial interest without par value. Transactions in shares of
Fund MA were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994
----------- ------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . 375,304 365,254
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . (871,567) (1,321,839)
Shares issued in reinvestment of distributions:
from net investment income and net short-term realized gains 433,799 542,808
from net long-term realized gains . . . . . . . . . . . . . 147,492 340,238
-------- ----------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,028 (73,539)
======== ==========
</TABLE>
As of December 31, 1995, all outstanding shares of beneficial interest were
owned by The Travelers Fund U for Variable Annuities and The Travelers Fund UL
for Variable Life Insurance, both of which are separate accounts of The
Travelers.
5. SUBSEQUENT EVENT
On January 23, 1996, in accordance with the Board of Trustees, a dividend was
declared with a distribution of net investment income and net short-term
realized gains of $0.78 per share and a distribution from net long-term
realized gains of $0.43 per share, payable on January 23, 1996, to shareholders
of record as of January 22, 1996. These distributions are not reflected in the
accompanying financial statements.
-10-
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. FINANCIAL HIGHLIGHTS*
(Selected data for a share outstanding throughout each year.)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
- ---------------
Net asset value, beginning of year . . . . . . . . $ 12.85 $ 14.21 $ 14.02 $ 14.78 $ 12.77
Income from operations
----------------------
Net investment income . . . . . . . . . . . . . 0.49 0.46 0.51 0.64 0.74
Net gains or losses on securities (realized and unrealized) 2.83 (0.73) 0.72 0.01 1.91
-------- -------- -------- -------- -------
Total from investment operations . . . . . . 3.32 (0.27) 1.23 0.65 2.65
Less distributions
------------------
Distributions from net investment income and
net short-term realized gains . . . . . . . (0.50) (0.67) (0.85) (1.04) (0.64)
Distributions from net long-term realized gains (0.17) (0.42) (0.19) (0.37) -
-------- -------- -------- -------- -------
Total distributions . . . . . . . . . . . . (0.67) (1.09) (1.04) (1.41) (0.64)
Net asset value, end of year . . . . . . . . . . . $ 15.50 $ 12.85 $ 14.21 $ 14.02 $ 14.78
======== ======== ======== ======== ========
TOTAL RETURN** 27.12 % (2.24) % 9.33 % 5.14 % 21.70 %
------------
RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of year (thousands) . . . . . . . $171,276 $140,887 $156,767 $148,971 $126,021
Ratio of expenses to average net assets*** . . . 0.58 % 0.61 % 0.56 % 0.56 % 0.56 %
Ratio of net investment income to average net assets 3.49 % 3.59 % 3.65 % 4.97 % 5.49 %
Portfolio turnover rate . . . . . . . . . . . . . 110 % 97 % 86 % 112 % 141 %
</TABLE>
* The information set forth in Note 6 replaces the data presented in
prior years as supplementary information.
** Total return is determined by dividing the increase (decrease) in
value of a share during the year, after reflecting the reinvestment of
dividends declared during the year, by the beginning of year share
price. As described in Note 1, shares in Fund MA are only sold to The
Travelers separate accounts in connection with the issuance of
variable annuity and variable life insurance contracts. The total
return does not reflect the deduction of any contract charges or fees
assessed by The Travelers separate accounts.
*** The ratios of expenses to average net assets for the years 1991-1993
reflects an expense reimbursement by The Travelers in connection with
voluntary expense limitations. Without the expense reimbursement, the
ratios of expenses to average net assets would have been 0.60%, 0.63%,
and 0.69% for the years ended December 31, 1993, 1992, and 1991,
respectively. For the years ended December 31, 1995 and 1994, there
were no expense reimbursements by The Travelers in connection with the
voluntary expense limitations described in Note 3.
-11-
<PAGE> 41
MANAGED ASSETS TRUST
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
COMMON STOCKS (60.7%)
AMUSEMENTS (0.8%)
Harrah's Entertainment, Inc. (A) 14,800 $ 358,900
Walt Disney Co. 17,200 1,014,800
-----------
1,373,700
-----------
BANKING (4.0%)
Banc One Corp. 17,172 648,243
Bank of Boston Corp. 2,600 120,250
Bank of New York Co., Inc. 4,200 204,750
BankAmerica Corp. 14,800 958,300
Barnett Banks, Inc. 7,300 430,700
Chase Manhattan Corp. 4,100 248,562
Chemical Banking Corp. 5,800 340,750
Citicorp 16,500 1,109,625
First Interstate Bancorp 1,800 245,700
First Union Corp. 4,000 222,500
Golden West Financial Corp. 5,700 314,925
Mellon Bank Corp. 2,900 155,875
NationsBank Corp. 14,200 988,675
Norwest Corp. 14,200 468,600
SunTrust Banks, Inc. 2,600 178,100
Wells Fargo & Co. 1,000 216,000
-----------
6,851,555
-----------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (8.8%)
Abbott Laboratories 22,800 951,900
Air Products & Chemicals, Inc. 10,700 564,425
American Home Products Corp. 6,700 649,900
Amgen (A) 12,100 717,681
Bristol Myers Squibb Co. 7,400 635,475
Cabot Corp. 2,900 156,237
Clorox Co. 5,500 393,937
Colgate-Palmolive Co. 3,200 224,800
Dow Chemical Co. 6,100 429,287
E.I. Dupont de Nemours & Co. 12,300 859,462
Eastman Chemical Company 6,300 394,537
Eli Lilly & Co. 11,800 663,750
International Flavors & Fragrances 8,400 403,200
Johnson & Johnson 14,700 1,258,687
Merck & Co., Inc. 27,300 1,794,975
Monsanto Co. 2,700 330,750
Morton International, Inc. 11,700 419,737
Pfizer, Inc. 20,100 1,266,300
Pharmacia & Upjohn, Inc. (A) 11,500 445,625
Procter & Gamble Co. 19,600 1,626,800
Schering-Plough Corp. 14,200 777,450
-----------
14,964,915
-----------
COMMUNICATION (6.2%)
Ameritech Corp. 16,100 949,900
AT&T Corp. 42,900 2,777,775
Bell Atlantic Corp. 9,900 662,062
Bellsouth Corp. 26,100 1,135,350
Capital Cities ABC, Inc. 3,600 444,150
GTE Corp. 18,800 827,200
ITT Industries, Inc. (A) 6,000 144,000
MCI Communications Corp. 13,200 345,675
NYNEX Corp. 14,300 772,200
Sprint Corp. 7,600 303,050
SBC Communications, Inc. 18,500 1,063,750
Tele-Communications, Inc. (A) 7,300 145,543
U.S. West, Inc. 4,100 146,575
U.S. West Media (A) 4,100 77,900
Viacom International, Inc. (A) 15,500 734,312
-----------
10,529,442
-----------
CONSTRUCTION (0.2%)
Pulte Corp. 8,500 $ 285,812
-----------
CONTRACTORS (0.2%)
Fluor Corp. 7,400 488,400
ELECTRICAL AND
ELECTRONIC MACHINERY (3.8%)
Alliance Semiconductor (A) 2,800 32,200
Amphenol Corp. (A) 21,000 509,250
Andrew Corp. (A) 10,200 393,975
Cypress Semiconductor (A) 27,400 349,350
General Electric Co. 37,500 2,700,000
Intel Corp. 16,000 909,000
LSI Logic Corp. (A) 2,900 94,975
Micron Technology 8,600 340,775
Motorola, Inc. 10,000 570,000
Tellabs, Inc. (A) 2,500 92,812
Texas Instruments, Inc. 3,900 201,825
Time Warner, Inc. 6,600 249,975
-----------
6,444,137
-----------
FINANCE (2.2%)
American Express Co. 11,100 459,262
Dean Witter Discover & Co. 9,800 460,600
Federal Home Loan Mortgage Corp. 4,200 350,700
Federal National Mortgage Assoc. 6,200 769,575
Green Tree Financial Corp. 16,600 437,825
Household International 7,000 413,875
Lehman Brothers Holding, Inc. 10,900 231,625
Merrill Lynch & Co., Inc. 9,600 489,600
Morgan Stanley Group, Inc. 1,800 145,125
-----------
3,758,187
-----------
FOOD (5.5%)
Anheuser-Busch Cos. 3,000 200,625
Campbell Soup Co. 4,700 282,000
Coca-Cola Co. 27,800 2,064,150
CONAGRA, Inc. 13,100 540,375
CPC International, Inc. 6,100 418,612
General Mills, Inc. 3,700 213,675
H.J. Heinz Co. 17,100 566,437
IBP, Inc. 3,500 176,750
Kellogg Co. 5,200 401,700
PepsiCo, Inc. 23,200 1,296,300
Philip Morris, Inc. 22,200 2,009,100
Ralston-Purina Group 7,100 442,862
Seagram Co. Ltd. 7,100 245,837
Unilever NV 3,100 436,325
-----------
9,294,748
-----------
INSURANCE (2.2%)
Aetna Life & Casualty Co. 2,400 166,200
Allstate Corp. 7,065 290,548
American International Group 13,450 1,244,125
Chubb Corp. 4,200 406,350
General Reinsurance Corp. 3,500 542,500
HealthCare COMPARE (A) 8,000 349,500
ITT Corp. (A) 6,000 318,000
ITT Hartford Group, Inc. (A) 6,000 290,250
United Healthcare Corp. 4,000 262,000
-----------
3,869,473
-----------
</TABLE>
-12-
<PAGE> 42
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ----------
<S> <C> <C>
LUMBER AND WOOD PRODUCTS (0.1%)
Georgia-Pacific Corp. 2,200 $ 150,975
----------
MACHINERY (3.6%)
Apple Computers, Inc. 2,500 79,531
Applied Materials (A) 11,100 436,368
Baker Hughes, Inc. 16,300 397,312
Black & Decker Corp. 8,100 285,525
Cabletron System, Inc. (A) 1,800 145,800
Caterpillar, Inc. 4,500 264,375
Cisco Systems, Inc. (A) 6,700 500,406
Compaq Computer Corp. (A) 3,100 148,800
Duriron, Inc. 3,400 78,625
Harnischfeger Industries Corp. 11,000 365,750
Hewlett Packard Co. 11,200 938,000
International Business Machines Corp. 10,300 945,025
Silicon Graphics, Inc. (A) 15,300 420,750
Sun Microsystems (A) 4,700 214,731
3Com Corp. (A) 10,900 508,894
Varity Corp. (A) 8,800 326,700
----------
6,056,592
----------
METAL PRODUCTS (1.2%)
Ball Corp. 8,700 239,250
Danaher Corp. 10,000 317,500
Gillette Co. 6,300 328,388
Inland Steel Industries, Inc. 7,700 193,463
Parker-Hannifin Corp. 10,300 352,775
Phelps Dodge Corp. 4,900 305,025
Reynolds Metals Co. 4,900 277,463
----------
2,013,864
----------
MINING (0.3%)
Freeport-McMoran Copper & Gold 6,300 177,188
Homestake Mining Co. 21,800 340,625
----------
517,813
----------
MISCELLANEOUS MANUFACTURING (2.2%)
Baxter International, Inc. 2,600 108,875
Eastman Kodak Co. 7,300 489,100
Emerson Electric Co. 9,100 743,925
Heart Tech., Inc. (A) 10,500 343,219
Honeywell, Inc. 9,500 461,938
Mattel, Inc. 14,400 442,800
Medtronic, Inc. 14,900 832,538
Xerox Corp. 2,400 328,800
----------
3,751,195
----------
OIL & GAS (0.3%)
Anadarko Petroleum 3,500 189,438
Schlumberger Ltd. 5,600 387,800
----------
577,238
----------
PAPER AND ALLIED PRODUCTS (0.6%)
Bowater, Inc. 5,800 205,900
Champion International Corp. 7,400 310,800
International Paper Co. 5,600 212,100
Kimberly Clark Corp. 2,574 212,999
----------
941,799
----------
PETROLEUM REFINING AND
RELATED INDUSTRIES (4.8%)
Amoco Corp. 14,800 1,063,750
Atlantic Richfield, Inc. 3,619 400,804
Chevron Corp. 14,200 745,500
Exxon Corp. 27,000 2,163,375
Mobil Corp. 11,900 1,332,800
Phillips Petroleum Co. 5,700 194,513
Royal Dutch Petroleum Co. 14,500 2,046,313
Texaco, Inc. 2,500 196,250
----------
8,143,305
----------
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ----------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (0.5%)
Gannett Co. 7,800 $ 478,725
New York Times Co. 12,500 370,313
----------
849,038
----------
RETAIL (3.5%)
Federated Department Stores, Inc. (A) 15,800 434,500
General Nutrition Cos., Inc. (A) 700 15,575
Home Depot, Inc. 18,500 885,688
J.C. Penney Co. 11,300 538,163
May Department Stores 12,700 536,575
McDonalds Corp. 14,000 631,750
Officemax, Inc. (A) 13,800 308,775
Price/Costco, Inc. (A) 22,800 350,550
Safeway, Inc. (A) 7,400 381,100
Tandy Corp. 7,200 298,800
The GAP, Inc. 3,300 138,600
Wal-Mart Stores, Inc. 39,200 877,100
Walgreen Co. 16,100 480,988
----------
5,878,164
----------
RUBBER AND PLASTIC PRODUCTS (0.4%)
Nike, Inc. 9,300 647,513
----------
SERVICES (1.7%)
Autodesk, Inc. 6,900 236,325
Columbia/HCA Healthcare Corp. 9,900 502,425
Computer Associates International 4,850 275,844
Microsoft (A) 12,300 1,080,094
Oracle Systems Corp. (A) 18,600 788,175
----------
2,882,863
----------
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.4%)
Minnesota Mining & Manufacturing Co. 9,400 622,750
----------
TRANSPORTATION (1.0%)
AMR, Inc. (A) 5,300 393,525
Conrail, Inc. 5,700 399,000
CSX Corp. 10,800 492,750
Norfolk Southern Corp. 6,200 492,125
----------
1,777,400
----------
TRANSPORTATION MANUFACTURING (2.8%)
Boeing Co. 11,900 932,663
Chrysler Corp. 10,600 586,975
Eaton Corp. 6,200 332,475
Ford Motor Co. 25,400 736,600
General Motors Corp. 15,500 819,563
Lockheed Martin Corp. 4,380 346,020
McDonnell Douglas Corp. 5,800 533,600
United Technologies Corp. 4,300 407,963
----------
4,695,859
----------
UTILITIES (2.9%)
Baltimore Gas & Electric Co. 17,100 487,350
Browning and Ferris Ind. 12,900 380,550
Duquesne Light Co. 12,600 387,450
Florida Power & Light Co. 13,000 602,875
Houston Industries 19,600 475,300
Pacific Enterprises 4,900 138,425
Panhandle Eastern Corp. 12,900 359,588
Public Service Enterprises Group 16,300 499,188
Southern Co. 27,900 687,038
Texas Utilities Co. 13,300 546,963
WMX Technologies, Inc. 11,000 328,625
----------
4,893,352
----------
</TABLE>
-13-
<PAGE> 43
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
WHOLESALE TRADE (0.5%)
Crane Co. 9,800 $ 361,375
Enron Corp. 14,000 533,750
------------
895,125
------------
TOTAL COMMON STOCKS
(COST $84,482,472) 103,155,214
------------
PREFERRED STOCKS (2.2%)
BANKING (0.6%)
Ahmanson (HF) & Co. 10,000 591,250
First Chicago Corp. 7,000 469,000
------------
1,060,250
------------
FINANCE (0.1%)
Merry Land & Investment, Inc. 8,000 230,000
------------
OIL & GAS (0.3%)
Occidental Petroleum Corp. 9,000 492,750
------------
PAPER AND ALLIED PRODUCTS (0.7%)
International Paper Co. 12,000 543,000
James River Corp. 12,000 556,500
------------
1,099,500
------------
RETAIL (0.2%)
TJX Cos., Inc. 7,000 313,250
------------
SERVICES (0.3%)
Corning Del. 10,000 503,750
------------
TOTAL PREFERRED STOCKS
(COST $3,281,078) 3,699,500
------------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
BONDS (18.5%)
BANKING (0.3%)
Great Western Financial Corp.,
6.375% Notes, 2000 $ 500,000 508,451
------------
CHEMICALS AND ALLIED PRODUCTS (2.2%)
Alza Corp.,
0.00% Debentures, 2014 1,400,000 572,250
McKesson Corp.,
4.50% Debentures, 2004 500,000 473,125
Procter & Gamble Co.,
9.36% Debentures, 2021 2,000,000 2,629,566
------------
3,674,941
------------
COMMUNICATION (2.5%)
Cox Communication, Inc.,
6.875% Notes, 2005 2,000,000 2,079,420
Tele-Communications, Inc.,
8.00% Notes, 2005 2,000,000 2,138,300
------------
4,217,720
------------
CREDIT CARD RECEIVABLES (0.6%)
Signet Credit Card
Master Trust 1993-4 B,
5.80% Pass Through, 1999 1,000,000 1,002,109
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
FINANCE (3.5%)
American Express Co.,
0.00% Bonds, 2000 $ 2,500,000 $ 1,871,875
Chrysler Auburn Hills Trust,
12.00% Notes, 2020 2,000,000 3,129,100
Rouse Co.,
5.75% Debentures, 2002 400,000 392,000
SAPPI BVI Financial Limited,
7.50% Debentures, 2002 500,000 472,500
------------
5,865,475
------------
FOOD (1.2%)
PepsiCo, Inc.,
0.00% Notes, 1999 2,500,000 2,062,500
------------
INSURANCE (1.0%)
Aegon NV,
4.75% Debentures, 2004 500,000 775,000
Equitable Cos., Inc.,
6.125% Debentures, 2024 500,000 565,000
USF&G Corp.,
0.00% Debentures, 2009 500,000 288,125
------------
1,628,125
------------
MINING (0.2%)
Inco Ltd.,
7.75% Debentures, 2016 300,000 320,250
------------
MISCELLANEOUS MANUFACTURING (0.9%)
Cooper Industries, Inc.,
7.05% Bonds, 2015 877,000 907,695
RPM, Inc,. Ohio,
0.00% Debentures, 2012 300,000 128,625
Trinova Corp.,
6.00% Debentures, 2002 500,000 497,500
------------
1,533,820
------------
OIL & GAS (0.3%)
Apache Corp.,
6.00% Debentures, 2002 500,000 567,500
------------
PETROLEUM REFINING AND RELATED
INDUSTRIES (0.3%)
Pennzoil Co.,
4.75% Bonds, 2003 500,000 504,375
------------
PHARMACEUTICAL AND
HEALTH CARE PRODUCTS (1.3%)
Becton Dickson & Co.,
8.80% Notes, 2001 2,000,000 2,255,730
------------
TRANSPORTATION MANUFACTURING (3.3%)
Arvin Industries, Inc.,
10.00% Debentures, 2000 1,000,000 1,128,503
Delta Airlines, Inc.,
9.25% Sinking Fund, 2007 (D) 955,121 1,062,878
Loral Corp.,
7.625% Notes, 2025 3,000,000 3,206,820
Scholastic Corp.,
5.00% Notes, 2005 200,000 228,000
------------
5,626,201
------------
</TABLE>
-14-
<PAGE> 44
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
UTILITIES (0.9%)
Niagara Mohawk Power Co.,
8.00% Bonds, 2004 $ 1,100,000 $ 1,067,963
Potomac Electric Power Co.,
5.00% Debentures, 2002 600,000 562,500
------------
1,630,463
------------
TOTAL BONDS
(COST $29,459,777) 31,397,660
------------
U.S. GOVERNMENT AGENCY
SECURITIES (4.5%)
Federal Home Loan Mortgage Corp.,
8.50% Pass Through, 2002 678,786 698,894
FNMA Pool,
8.50% Pass Through, 2005 151,255 157,778
FNMA Pool,
8.50% Pass Through, 2005 352,590 367,795
FNMA Pool,
7.50% Pass Through, 2025 3,494,680 3,584,231
GNMA Pool,
7.50% Pass Through, 2007 70,455 72,525
GNMA Pool,
7.50% Pass Through, 2007 379,501 390,649
GNMA Pool,
9.00% Pass Through, 2016 243,884 258,593
GNMA Pool,
9.00% Pass Through, 2019 284,490 301,648
GNMA Pool,
9.50% Pass Through, 2020 493,420 529,963
GNMA Pool,
9.50% Pass Through, 2020 246,861 265,145
GNMA Pool,
7.50% Pass Through, 2023 215,514 221,845
GNMA Pool,
7.50% Pass Through, 2025 85,357 87,864
GNMA Pool,
7.50% Pass Through, 2025 678,925 698,868
------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES
(COST $ 7,310,645) 7,635,798
------------
U.S. GOVERNMENT
SECURITIES (13.2%)
United States of America Treasury,
0.00% Bonds, 1997 5,550,000 5,045,228
United States of America Treasury,
0.00% Bonds, 2007 5,500,000 2,861,798
United States of America Treasury,
4.75% Notes, 1998 1,200,000 1,184,250
United States of America Treasury,
6.875% Bonds, 2025 5,400,000 6,093,554
United States of America Treasury,
6.875% Notes, 1999 3,000,000 3,152,808
United States of America Treasury,
7.875% Notes, 2004 3,600,000 4,170,369
------------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $21,560,600) 22,508,007
============
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (0.9%)
REPURCHASE AGREEMENTS (0.2%)
Merrill Lynch Government Securities,
Inc., 5.50% Repurchase Agreement
dated December 29, 1995, due
January 2, 1996, collateralized
by: United States of America
Treasury, $355,000,
5.625% due October 31, 1997 $ 353,000 $ 353,000
------------
U.S. GOVERNMENT SECURITIES (0.7%)
United States of America Treasury
5.50% due September 19, 1996(C) 1,200,000 1,139,039
------------
TOTAL SHORT-TERM
INVESTMENTS
(COST $1,489,724) 1,492,039
------------
<CAPTION>
NOTIONAL
VALUE
------------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 500 Stock Index,
Exp. March, 1996 $ 17,935,050
------------
TOTAL INVESTMENTS (100%)
(COST $147,584,296)(B)(E) $169,888,218
============
</TABLE>
-15-
<PAGE> 45
STATEMENT OF INVESTMENTS - CONTINUED
NOTES
(A) Non-income Producing Security.
(B) At December 31, 1995, net unrealized appreciation for all securities
was $22,303,922. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over cost of $24,057,252 and aggregate gross unrealized
depreciation for all securities in which there was an excess of cost
over market value of $1,753,330.
(C) Par value of $1,200,000 is pledged to cover margin deposits on futures
contracts.
(D) Management Priced Security.
(E) The cost of investments for federal income tax purposes amounted to
$148,342,273. Gross unrealized appreciation and depreciation of
investments, based on identified tax cost at December 31, 1995 were as
follows:
<TABLE>
<S> <C>
Gross unrealized appreciation....... $ 23,436,072
Gross unrealized depreciation....... (1,890,127)
------------
Net unrealized appreciation......... $ 21,545,945
============
</TABLE>
See Notes to Financial Statements
-16-
<PAGE> 46
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of Managed Assets Trust:
We have audited the accompanying statement of assets and liabilities of Managed
Assets Trust including the statement of investments as of December 31, 1995,
and the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Managed Assets Trust as of December 31, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 7, 1996
-17-
<PAGE> 47
MANAGED ASSETS TRUST
STATEMENT OF ADDITIONAL INFORMATION
L-11172S TIC Ed.5-96
Printed in U.S.A.
<PAGE> 48
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of Independent
Accountants are contained in the Statement of Additional Information.
The Registrant's financial statements include:
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the year ended December 31, 1995
Statement of Changes in Net Assets for the years ended December 31,
1995 and 1994
Statement of Investments as of December 31, 1995
Notes to Financial Statements
(b) Exhibits
1. Declaration of Trust.
2. By-Laws of Managed Assets Trust.
5(A). Investment Advisory Agreement between the Registrant and
Travelers Asset Management International Corporation.
5(B). Sub-Advisory Agreement between Travelers Asset Management
International Corporation and The Travelers Investment Management
Company.
8. Custody Agreement dated February 1, 1995 between the Registrant
and Chase Manhattan Bank, N.A., of Brooklyn, New York.
(Incorporated herein by reference to Exhibit 8 to Post-Effective
Amendment No. 18 to the Registration Statement on Form N-1A filed
on April 20, 1995.)
9. Transfer and Recordkeeping Agreement between the Registrant and
The Travelers Insurance Company
10. An Opinion and Consent of counsel as to the legality of the
securities registered by the Registrant. (Incorporated herein by
reference to the Registrant's most recent Form 24f -2 Notice
filed on February 29, 1996.)
11(A). Consent of Coopers & Lybrand L.L.P., Independent Accountants, to
the use of their name and opinion in Part A and Part B of this
Form N-1A and to the inclusion of their report.
11(B). Powers of Attorney authorizing Ernest J. Wright as signatory for
Heath B. McLendon, Knight Edwards, Robert E. McGill III, Lewis
Mandell, Frances M. Hawk and Ian R. Stuart.
27. Financial Data Schedule.
<PAGE> 49
Item 25. Persons Controlled By or Under Common Control With the Registrant
Not Applicable.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of February 16, 1996
-------------- -----------------------
<S> <C>
Shares of beneficial interest, Two (2)
without par value
</TABLE>
Item 27. Indemnification
Provisions for the indemnification of the Fund's Trustees and officers are
contained in the Fund's Declaration of Trust which is being filed with this
Registration Statement as Exhibit 1.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 50
Item 28. Business and Other Connections of Investment Adviser
Officers and Directors of Travelers Asset Management International Corporation
(TAMIC), the Fund's Investment Adviser, are set forth in the following table:
<TABLE>
<CAPTION>
Name Position with TAMIC Other Business
- ---- ------------------- --------------
<S> <C> <C>
Marc P. Weill Director, Chairman and Senior Vice President **
President
David A. Tyson Director and Senior Vice Senior Vice President *
President
David Amaral Vice President Assistant Director*
John R. Calcagni Vice President Second Vice President*
Gene Collins Vice President Vice President*
Phillip A. Duncan Vice President Second Vice President*
Kathyrn D. Karlic Vice President Vice President*
David R. Miller Vice President Vice President*
Joseph Mullally Vice President Vice President*
Emil J. Molinaro Vice President Vice President*
Jordan M. Stitzer Vice President Vice President
F. Denney Voss Vice President Senior Vice President*
Eddie Sanchez Assistant Vice President Assistant Director*
William H. White Treasurer Vice President and Treasurer *
Charles B. Chamberlain Assistant Treasurer Assistant Treasurer *
George C. Quaggin, Jr. Assistant Treasurer Assistant Treasurer *
John R. Britt Secretary Assistant Secretary *
Marla A. Berman Assistant Secretary Assistant Secretary**
Patricia A. Uzzel Compliance Officer Assistant Director*
Frank J. Fazzina Controller Director *
</TABLE>
* Positions are held with The Travelers Insurance Group Inc., One Tower
Square, Hartford, Connecticut 06183.
** Positions are held with Travelers Group Inc., 388 Greenwich Street, New
York, N.Y. 10013.
<PAGE> 51
Officers and Directors of The Travelers Investment Management Company (TIMCO),
the Fund's Sub-Adviser, are set forth in the following table:
<TABLE>
<CAPTION>
Name Position with TIMCO Other Business
- ---- ------------------- --------------
<S> <C> <C>
Jeffrey B. Lane Director and Chairman Vice Chairman
Smith Barney Inc.*
Kent A. Kelley Director and Chief** Not Applicable
Executive Officer
Sandip A. Bhagat Director and President** Not Applicable
Heath B. McLendon Director Managing Director
Smith Barney Inc.*
Jacob E. Hurwitz Senior Vice President** Not Applicable
Emil Molinaro Vice President Vice President
Travelers Group Inc.**
Daniel Willey Vice President ** Not Applicable
Gloria G. Williams Assistant Vice President** Not Applicable
James W. Churm Corporate Secretary Senior Vice President
Smith Barney Inc.*
Michael Day Treasurer Managing Director
Smith Barney Inc.*
</TABLE>
*Address: Smith Barney Inc., 388 Greenwich Street, New York, New York 10013
**Address: One Tower Square, Hartford, Connecticut 01683
<PAGE> 52
Item 29. Principal Underwriter
Not Applicable.
Item 30. Location of Accounts and Records
(1) The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(2) Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, New York
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes to provide to each person to whom
a prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, Managed Assets Trust, certifies that it
meets all of the requirements for effectiveness of this post-effective
amendment to this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and that it has duly caused this amendment to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hartford, State of Connecticut, on April 11,
1996.
MANAGED ASSETS TRUST
--------------------
(Registrant)
By: *HEATH B. McLENDON
------------------
Heath B. McLendon
Chairman, Board of Trustees
Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to this Registration Statement has been signed below by the following
persons in the capacities indicated on April 11, 1996.
<TABLE>
<S> <C>
*HEATH B. McLENDON Chairman of the Board
- ------------------
(Heath B. McLendon)
*KNIGHT EDWARDS Trustee
- ---------------------------------------
(Knight Edwards)
*ROBERT E. McGILL III Trustee
- ---------------------------------------
(Robert E. McGill III)
*LEWIS MANDELL Trustee
- ---------------------------------------
(Lewis Mandell)
*FRANCES M. HAWK Trustee
- ---------------------------------------
(Frances M. Hawk
*IAN R. STUART Treasurer and Chief Accounting Officer
- ---------------------------------------
(Ian R. Stuart)
*By: /s/ Ernest J. Wright
----------------------------------------------------
Ernest J. Wright, Attorney-in-Fact
Secretary, Board of Trustees
</TABLE>
<PAGE> 54
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
1. Declaration of Trust. Electronically
2. By-Laws of Managed Assets Trust. Electronically
5(A). Investment Advisory Agreement between the Electronically
Registrant and Travelers Asset Management
International Corporation.
5(B). Sub-Advisory Agreement between Travelers Electronically
Asset Management International Corporation and
The Travelers Investment Management Company.
8. Custody Agreement dated February 1, 1995 between
the Registrant and Chase Manhattan Bank, N.A., of
Brooklyn, New York. (Incorporated herein by reference
to Exhibit 8 to Post-Effective Amendment No. 18 to
the Registration Statement on Form N-1A filed on
April 20, 1995.)
9. Transfer and Recordkeeping Agreement between the Electronically
Registrant and The Travelers Insurance Company.
10. An Opinion and Consent of counsel as to the legality
of the securities registered by the Registrant.
(Incorporated herein by reference to the Registrant's
most recent Form 24f-2 Notice filed on February 29, 1996.)
11(A). Consent of Coopers & Lybrand L.L.P., Independent Electronically
Accountants, to the use of their name and opinion in
Part A and Part B of this Form N-1A and to the
inclusion of their report.
11(B). Powers of Attorney authorizing Ernest J. Wright as Electronically
signatory for Heath B. McLendon, Knight Edwards,
Robert E. McGill III, Lewis Mandell, Frances M. Hawk
and Ian R. Stuart..
27. Financial Data Schedule. Electronically
</TABLE>
<PAGE> 1
EXHIBIT 1
MANAGED ASSETS TRUST
DECLARATION OF TRUST
DECLARATION OF TRUST, made at Boston, Massachusetts, this 6th day of
August 1982 by George S. Bissell, Everett P. Pope and Peter K. Simonds
(hereinafter with their successors referred to as the "Trustees").
WHEREAS the Trustees have agreed to manage all property received by them
as Trustees in accordance with the provisions hereinafter set forth.
NOW THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the holders from
time to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as the "Managed Assets Trust"
and the Trustees shall conduct the business of this Trust under that name or
any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided
(a) The "Trust" refers to the Massachusetts business trust
established by this Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustee or Trustees of the Trust named
or elected in accordance with Article IV and where appropriate means a
majority or other portion of them acting in accordance with this
Declaration of Trust or the By-Laws of the Trust; and
(c) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to
time and includes where appropriate such fractions of a Share as the
Trustees may from time to time authorize as well as a whole Share;
<PAGE> 2
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time.
(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person" and "Principal Underwriter" and "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable) shall have the
meanings given them in the 1940 Act;
(g) "Net Asset Value Per Share" means the net asset value per share
of the Trust determined in the manner provided or authorized in Article
VI, Section 4;
(h) "Declaration of Trust" shall mean this Declaration of Trust as
amended or restated from time to time; and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to achieve the highest total investment return
consistent with prudent risk through a fully managed investment policy
utilizing equity, debt and convertible securities.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into an unlimited number of transferable
Shares, without par value, each of which shall represent an equal proportionate
interest in the Trust with each other Share, none having priority or preference
over another. The Trustees may from time to time divide or combine the
outstanding Shares in to a greater or lesser number without thereby changing
the proportionate beneficial interest in the Trust.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer agent
2
<PAGE> 3
or a similar agent. The Trustees may make such rules as they consider
appropriate for the transfer of Shares and similar matters. The record books
of the Trust as kept by the Trust or any transfer agent or similar agent, as
the case may be, shall be conclusive as to who are the holders of Shares and as
to the number of Shares held from time to time by each.
Section 3. Investments in the Trust. The Trustees shall accept
investments in the Trust from such persons and on such terms and, subject to
any requirements of law, for such consideration as the Trustees from time to
time authorize. After such acceptance, the number of Shares to represent the
contribution may in the Trustees' discretion be considered as outstanding and
the amount receivable by the Trustees on account of the contribution may be
treated as an asset of the Trust.
Section 4. No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 5. Limitation of Personal Liability. The Trustees shall have no
power to bind any for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription to any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust shall include a recitation limiting the obligation represented
thereby to the Trust and its assets (but the omission of such a recitation
shall not operate to bind any Shareholder).
ARTICLE IV
The Trustees
Section 1. Management of the Trust. Subject to the provisions of this
Declaration of Trust, the business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that they do
not reserve that right to the Shareholders; they may fill vacancies in or add
to their own number and may elect and remove such officers and appoint and
terminate such agents as they consider appropriate; they may appoint from their
own number and terminate any one or more
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committees; they may employ one or more custodians of the assets of the Trust
and may authorize such custodians to employ subcustodians and to deposit all or
any part of such assets in a system or systems for the central handling of
securities, retain a transfer agent or a Shareholder servicing agent, or both,
provide for the distribution of Shares by the Trust, through one or more
principal underwriters or otherwise, set record dates, and in general delegate
such authority as they consider desirable to any officers of the Trust and
committees of the Trustees and to any agent or employee, custodian or
underwriter.
Without limiting the foregoing, the Trustees in addition to all powers
granted by law shall have power and authority:
(a) to invest and reinvest cash, and to hold cash uninvested, without
in any wise being bound or limited by any present or future law or custom
in regard to investments by trustees;
(b) To sell, exchange, lend, pledge, mortgage, hypothe cate or lease
any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form; or in its
own name or in the name of a custodian or subcustodian or a nominee or
nominees or otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust;
(g) To join with other security holders in acting through a
committee, depository, voting Trustee or
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otherwise, and in that connection to deposit any security with, or
transfer any security to, any such committee, depository or Trustee, and
to delegate to them such power and authority with relation to any security
(whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depository or Trustee as the Trustees
shall deem proper;
(h) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust for any matter in controversy, including but not
limited to claims for taxes; and
(i) To borrow funds.
The Trustees shall not be required to obtain any court order to deal with
any assets of the Trust or take any other action hereunder.
The Trustees first named above (or their successors appointed hereunder)
shall serve until the election of Trustees at the first meeting of Shareholders
of the Trust.
Section 2. Election of Trustees. During the Trust s first fiscal year
subsequent to its initial public offering of Shares, the Shareholders shall
elect, at a meeting called by the initial Trustees of the Trust, the Trustees
of the Trust. The Shareholders of the Trust shall thereafter elect, at
Shareholder meetings called for the purpose in the manner provided herein,
Trustees to succeed those Trustees whose terms expired since the last such
meeting. If re-elected, a Trustee may succeed himself.
Section 3. Term of Office of Trustees. After election, each Trustee
shall hold office during the lifetime of this Trust, or until the election of
his or her successor at a meeting of Shareholders; except (a) that any Trustee
may resign his trust by written instrument signed by him and delivered to the
other Trustees which shall take effect upon such delivery or upon such later
date as is specified therein; (b) that any Trustee may be removed at any time
by written instrument signed by at least two-thirds of the number of Trustees
prior to such removal, specifying the date when such removal shall become
effective; (c) that any Trustee who requests in writing to be retired or who
has become mentally or physically incapacitated may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his or her retirement; and (d) a Trustee may be removed at any special meeting
of Shareholders of the Trust by a vote of two-thirds of the outstanding Shares.
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Section 4. Termination of Service and Appointment of Trustees. In case
of the death, resignation, retirement, removal or mental or physical incapacity
of any of the Trustees, or in case a vacancy shall, by reason of an increase in
number, or for any other reason, exist, the remaining Trustees shall fill such
vacancy by appointing for the remaining term of the predecessor Trustee such
other person as they in their discretion shall see fit. Such appointment shall
be effected by the signing of a written instrument by a majority of the
Trustees in office. Within three months of such appointment, the Trustees
shall cause notice of such appointment to be mailed to each Shareholder at his
address as recorded on the books of the Trustee. An appointment of a Trustee
may be made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that such appointment shall become effective only at or after
the effective date of such retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted this Trust,
the Trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he or she shall
be deemed a Trustee hereunder. Any appointment authorized by this Section 4 is
subject to the provisions of Section 16(a) of the an 1940 Act.
Section 5. Number of Trustees. The number of Trustees serving hereunder
at any time shall be determined by the Trustees themselves, but shall not be
less than three (3) nor more than fifteen (15).
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is physically or mentally incapacitated, the other
Trustees shall have all the powers hereunder and the certificate signed by a
majority of the other Trustees of such vacancy, absence or incapacity, shall be
conclusive, provided, however, that no vacancy which reduces the number of
Trustees below three (3) shall remain unfilled for a period longer than six
calendar months.
Section 6. Effect of Death, Resignation, etc. of a Trustee. The death,
resignation, retirement, removal, or mental or physical incapacity of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
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Section 7. Ownership of Assets of the Trust. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or by any successor
Trustees. All of the assets of the Trust shall at all times by considered as
vested in the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of partition or
possession thereof, but each Shareholder shall have a proportionate undivided
beneficial interest in the assets of the Trust.
Section 8. Payment of Expenses. The Trustees shall pay or cause to be
paid out of the principal or income of the Trust, or partly out of principal
and partly out of income, as they deem fair, all expenses, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including but not limited to the Trustees
compensation and such expenses and charges for the services of the Trust's
investment adviser or manager, auditor, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or
proper to incur.
Section 9. Investment Management and Other Services. Subject to a
favorable majority Shareholder Vote, the Trustees may enter into a contract
with any person or persons, including any firm, corporation, trust or
association in which any Trustee, Shareholder or officer of the Trust may be
interested, to act as investment advisers and/or managers of the Trust and to
provide such investment advice and or management as the Trustees may from time
to time consider appropriate (the "Adviser"). Any such contract may authorize
the Adviser to determine from time to time what securities shall be acquired,
held or disposed of by the Trust and what portion of assets of the Trust shall
be held uninvested and to take, on behalf of the Trust, actions which the
Adviser deems necessary to implement the investment policies of the Trust,
including the placement of all orders for the purchase, sale or loan of
portfolio securities for the Trust's account with brokers or dealers or others
selected by the Adviser and the giving of instructions to the custodian of the
Trust's assets as to deliveries of securities and payments of cash for the
account of the Trust.
Subject to a favorable majority Shareholder Vote, the Adviser may enter
into an agreement to retain at its own expense any person or persons, including
any firm, corporation, trust or association in which any Trustee, Shareholder
or officer of the Trust may be interested, to provide the Trust investment
advice and/or management and any person or persons so retained may be
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granted all authority which has been granted to the Adviser under the contract
which the Adviser entered in to pursuant to the preceding paragraph.
The Trustees may enter into a contract with any person or persons
including any firm, corporation, trust or association in which any Trustee,
Shareholder or officer of the Trust be interested, to act as principal
underwriter for the Shares.
ARTICLE V
Shareholders Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have power to vote (i)
for the election or removal of Trustees as provided in Article IV, Section 2,
(ii) with respect to any Adviser or person whom the Adviser may retain to
provide the Trust investment advice and/or management as provided in Article
IV, Section 9, (iii) with respect to any amendment of this Declaration of Trust
as provided in Article IX, Section 7, (iv) to the same extent as the
stockholders of a Massachusetts business corporation, as to whether or not a
court action, proceeding or claim should be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, and (v) with
respect to such additional matters relating to the Trust as may be required by
law, by this Declaration of Trust, or the By-Laws of the Trust or any
registration of the Trust with the Commission or any state, or as the Trustees
may consider desirable. Each whole Share shall be entitled to one vote as to
any matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the
proxy the Trust receives a specific written notice to the contrary from any one
of them. A proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or any By-Laws of the Trust
to be taken by Shareholders.
Section 2. Meetings. Meetings of Shareholders shall be held as specified
in Article IV, Sections 1 and 2 and in the By-Laws at the principal office of
the Trust or such other place as the Trustees may designate. Special meetings
of the Shareholders may be called by the Trustees or such other person or
persons as
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may be specified in the By-Laws and shall be called by the Trustees upon the
written request of Shareholders owning at least 25% of the outstanding Shares
entitled to vote. Shareholders shall be entitled to at least seven days' notice
of any meeting.
Section 3. Quorum and Required Vote. Except as otherwise provided by
law, to constitute a quorum for the transaction of business at a Shareholders'
meeting there must be present in person or by proxy, holders of one fourth of
the total number of Shares of the Trust then outstanding and eligible to vote
at the meeting, but any lesser number shall be sufficient for adjournment and
any adjourned session or sessions may be held within 90 days after the date set
for the original meeting without the necessity of further notice. Subject to
any applicable requirements of law, a majority of the Shares entitled to vote,
which were voted shall decide any questions and a plurality shall elect a
Trustee, except when a larger vote is required by any provision of this
Declaration of Trust, the By-Laws of the Trust, or any applicable provision of
law.
Section 4. Action by Written Consent. Any action required or permitted to
be taken at any meeting may be taken without a meeting, if a consent in
writing, setting forth such action is signed by all the Shareholders entitled
to vote on the subject matter thereof and such consent is filed with the
records of the Trust.
Section 5. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees may each year distribute to the
Shareholders of a Portfolio such interest income accrued on the assets of that
Portfolio and unrealized gains and losses on that Portfolio's assets as
determined by the Trustees or as they may authorize and as herein provided,
after providing for actual and accrued expenses and liabilities (including such
reserves as the Trustees may establish) of that Portfolio chargeable against
income determined in accordance with good accounting practices (Net Income).
The Trustees shall have full discretion to determine which items shall be
treated as income and which items as capital and their determination shall be
binding upon the Shareholders. Distributions of each year's Net Income may be
made in one or more payments, which shall be in Shares, in cash, or otherwise
and on a date or dates and as of a
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record date or dates determined by the Trustees. Each distribution pursuant to
this Section 1 shall be made ratably according to the number of Shares held by
the several Shareholders on the record date for such distribution.
Section 2. Redemptions. Upon offer by any Shareholder of all or part of
the Shares held by the Shareholder for redemption hereunder, in accordance with
such methods, upon such terms and subject to such conditions as the Trustees
may from time to time determine, the Trustees shall redeem the Shares so
offered by distributing to the Shareholder the Net Asset Value per Share
thereof next determined. The Trust shall have the right at its option and at
any time to redeem the Shares of any Shareholder for their Net Asset Value per
Share if the Shareholder owns Shares having an aggregate value or cost
(determined in such manner as the Trustees may from time to time prescribe) of
less than an amount determined from time to time by the Trustees. The right to
redemption or the date for payment may, however, be delayed or suspended by the
Trustees if there is an extraordinary closing or restriction of trading on the
New York Stock Exchange as determined under rules and regulations of the
Commission, or an emergency exists as a result of which it is not reasonably
practicable for the Trust to dispose of securities or fairly to determine the
value of its net assets, or as the Commission may permit. The completion of
such distribution on redemption of Shares shall constitute a full discharge of
the Trust and Trustees with respect to such Shares, and the Trustees may
require that any certificate or certificates issued by the Trust to evidence
the ownership of the Shares shall be surrendered to the Trustees for
cancellation or notation. Shares so redeemed shall be cancelled or held by the
Trust for reissue, as the Trustees may from time to time determine.
Section 3. Payment in Kind. Subject to any generally applicable
limitation imposed by the Trustees, any distribution on redemption may, if
authorized by the Trustees, be made wholly or partly in kind, instead of in
cash. Such distribution in kind shall be made by distributing investments
constituting, in the opinion of the Trustees, a fair representation of the
various types of securities then held in the Trust (but not necessarily
including a portion of each particular investment) and in each case having an
aggregate value equal to the amount of cash instead of which such distribution
in kind is made.
Section 4. Determination of Net Asset Value per Share. The Net Asset
Value per Share shall be computed as of the close of trading on the New York
Stock Exchange on each day on which such Exchange is open by determining the
value of all the Trust's investments, adding any other assets of the Trust,
subtracting
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all liabilities of the Trust and dividing the result by the number of Shares
outstanding.
Current value for portfolio securities shall be determined as follows.
Securities that are traded on an established exchange shall be valued on the
basis of the last sales price on the exchange where primarily traded prior to
the time of the valuation. Securities traded in the over-the-counter market
and for which complete quotations are readily available shall be valued at the
mean of the bid and asked prices at the time of valuation. Subject to
instructions of the Board of Trustees, the Trust shall value the following at
prices deemed in good faith to be fair: (1) securities (including restricted
securities) for which complete quotations are not readily available, (2) listed
securities if in the Trust s opinion the last sales price does not reflect a
current market value or if no sale occurred, and (3) other assets. The fair
value for listed securities will normally be the mean between the closing bid
and asked prices on the exchange or primary market, where available.
Short-term money market instruments having a maturity of sixty days or less
shall be valued at original cost plus either accrued interest or amortized
discount.
Expenses and liabilities of the Trust shall be accrued each day. The
manner of determining the Net Asset Value per Share may from time to time be
altered if necessary or desirable in the Trustees' judgment to conform to any
other method prescribed or permitted by any applicable law or regulation.
The Net Asset value per Share may be computed as of such other times as
the Trustees may determine and in such event the Net Asset Value per Share may,
but need not, be determined by adjusting the Net Asset Value per Share last
determined pursuant to the preceding paragraph in such manner (based upon
changes in selected security prices determined by the Trustees to be relevant
to the portfolio or in averages or in other standard and readily ascertainable
market data since such close) as is deemed adequate to reflect a fair
approximate estimate of the probable change in Net Asset Value per Share which
has occurred since such last determination.
In determination of Net Asset Value per Share, liabilities may include
such reserves for taxes, estimated accrued expenses and contingencies as the
Trustees or their designates may in their sole discretion deem fair and
reasonable under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the Trustees shall
otherwise determine. Dividends payable by the Trust shall be deducted as at
the time of but immediately prior to the
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determination of Net Asset Value per Share on the record date therefor, or as
the Trustees shall otherwise determine.
Determination of Net Asset Value per Share so made in good faith and
pursuant to the provisions of the 1940 Act shall be binding on all parties
concerned.
Section 5. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VI, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the Net
Asset Value per Share of the Trust's Shares or Net Income, or the declaration
and payment of dividends and distributions as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act, or
any rule or regulation thereunder, including any rule or regulation adopted
pursuant to Section 22 of the 1940 Act by the Commission or any securities
association registered under the Securities Exchange Act of 1934, or any order
of exemption issued by said Commission, all as in effect now or as hereafter
amended or modified.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Section 2. Limitation of Liability. Provided they have exercised
reasonable care in their selection, the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any officer, agent,
employee or Adviser or principal of the Trust nor shall any Trustee be
responsible for the act or omission of any other Trustee, but nothing herein
contained shall protect any Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Every note, bond, contract, instrument, certificate, share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in their or his capacity
as Trustees or Trustee, and such Trustees or Trustee shall not be personally
liable thereon.
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ARTICLE VIII
Indemnification
Section 1. Trustees, Officers, etc. The Trust shall indemnify each of
its Trustees and officers and any persons who serve at the Trust's request as
directors, officers or Trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to, amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees reasonably incurred by any such person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such person may be or may have been involved as a
party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer or director, except with respect to any matter as to
which such Covered Person shall have been finally adjudicated in any such
action, suit or other proceeding not to have acted in good faith in the
reasonable belief that such Covered Person's action was in the best interests
of the Trust and except that no person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered Person shall
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
office. Expenses, including counsel fees so incurred by any Covered Person (but
excluding amounts paid in satisfaction of judgments, in compromise or as fines
or penalties), may be paid from time to time by the Trust in advance of the
final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person, secured by an appropriate
deposit or a surety bond approved by independent legal counsel for the Trust,
to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article.
Except as otherwise provided by law, the Trust shall have power to
purchase and maintain insurance on behalf of a Covered Person against any
liability asserted against him and incurred by him in his capacity as a Covered
Person, or arising out of his status as such, whether or not the Trust would
have the power to indemnify him against the liability under the provisions of
this section.
Section 2. Compromise Payment. As to any matter disposed of by a
compromise payment by any Covered Person referred to in Section 1 above,
pursuant to a consent decree or otherwise, no
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such indemnification either for such payment or for any other expenses shall be
provided unless such compromise shall be approved as in the best interests of
the Trust, after notice that it involved such indemnification, (a) by a
disinterested majority of the Trustees then in office; or (b) by a majority of
the disinterested Trustees then in office; or (c) by any disinterested person
or persons to whom the question may be referred by the Trustees, provided that
in the case of approval pursuant to clause (b) or (c) there has been obtained
an opinion in writing of independent legal counsel to the effect that such
Covered Person appears to have acted in good faith in the reasonable belief
that his action was in the best interests of the Trust and that such
indemnification would not protect such person against any liability to the
Trust to which such person would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of office; or (d) by vote of Shareholders holding a
majority of the Shares entitled to vote thereon, exclusive of any Shares
beneficially owned by any interested Covered Person. Approval by the Trustees
pursuant to clause (a) or (b) or any disinterested person or persons pursuant
to clause (c) of this Section shall not prevent the recovery from any Covered
Person of any amount paid to such person in accordance with either of such
clauses as indemnification if such person is subsequently adjudicated by a
court of competent jurisdiction not to have acted in good faith in the
reasonable belief that such person's action was in the best interests of the
Trust or to have been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of office.
Section 3. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive or affect any other rights to which any
such Covered Person may be entitled. As used in this Article VIII, the term
"Covered Person" shall include such person's heirs, executors and
administrators, an "interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending, and a
"disinterested person" is a person against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending. Nothing contained in this Article
shall affect any rights to indemnification to which personnel of the Trust
other than Trustees and officers or other persons may be entitled by contract
or otherwise under law.
Section 4. Shareholders. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by
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reason of his being or having been a Shareholder and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the Trust to be held harmless
from and indemnified against all loss and expense arising from such liability.
ARTICLE IX
Miscellaneous
Section 1. Trust Not a Partnership. It is hereby expressly declared that
a trust and not a partnership is created hereby. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally either the Trust's Trustees or officers or any Shareholders.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim, and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which such Trustee
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder in good
faith and with reasonable care under the circumstances then prevailing, shall
be binding upon everyone interested. Subject to the provisions of Section 1 of
this Article IX, a Trustee shall be liable for his own willful defaults, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and subject
to the provisions of said Section 1 shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if
a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made
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or to be made by the Trustees pursuant hereto or to see to the application of
any payments made or property transferred to the Trust or upon its order.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but subject
to the provisions of paragraphs (b), (c) and (d) of this Section 4.
(b) The Trustees, with the approval of the holders of at least
two-thirds of the outstanding Shares, may by unanimous action, merge,
consolidate, or sell and convey the assets of the Trust including its
goodwill to another trust or corporation organized under the laws of any
state of the United States, which is a diversified open-end management
investment company as defined in the 1940 Act, for an adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of the
Trust and which may include shares of beneficial interest or stock of such
trust or corporation. Upon making provision for the payment of all such
liabilities, by such assumption or otherwise, the Trustees shall
distribute the net proceeds of the transaction ratably among the holders
of the Shares of the Trust then outstanding.
(c) Subject to a Majority Shareholder Vote, the Trustees may at any
time sell and convert into money all the assets of the Trust. Upon making
provision for the payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust, the Trustees shall
distribute the remaining assets of the Trust ratably among the holders of
the outstanding Shares.
(d) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in paragraphs (b) and (c), the Trust
shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest
of all parties shall be canceled and discharged.
Section 5. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each Declaration of Trust supplemental hereto or
Amendment hereof shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each such
Supplemental Declaration of Trust or Amendment shall be filed by the Trust with
the Massachusetts Secretary of State and the Boston City Clerk, as well as any
other governmental office where
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such filing may from time to time be required. Anyone dealing with the Trust
may rely on a certificate by an officer of the Trust as to whether or not any
Supplemental Declarations of Trust or Amendments have been made, and as to any
matters in connection with the trust hereunder; and, with the same effect as if
it were the original, may rely on a copy certified by an officer of the Trust
to be a copy of this instrument or of any such Supplemental Declaration of
Trust or Amendment. In this instrument or in any such Amendment or
Supplemental Declaration of Trust, references to this instrument, and all
expressions such as "herein," "hereof," and "hereunder," shall be deemed to
refer to this instrument as amended or affected by any such Supplemental
Declaration of Trust or Amendment. Headings are placed herein for convenience
of reference only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 6. Applicable Law. The Trust set forth in this instrument is
made in the Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of such
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a Trust.
Section 7. Amendments. This Declaration of Trust may be altered or
amended at any time by a Supplemental Declaration of Trust or an Amendment
signed by a majority of the Trustees when authorized so to do by vote of
Shareholders holding a majority of the Shares entitled to vote or by any larger
vote which may be required by applicable law in any particular case except that
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote. Copies of the Supplemental Declaration of
Trust or Amendment shall be filed as specified in Section 5 of this Article IX.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston, Massachusetts, for themselves and their assigns,
as of the day and year first above written.
-------------------------
George S. Bissell
-------------------------
Everett P. Pope
-------------------------
Peter K. Simonds
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss August 6, 1982
Then personally appeared the above-named George S. Bissell, Everett P.
Pope and Peter K. Simonds and acknowledged the foregoing instrument to be their
free act and deed, before me,
/s/Lurie Anne Alexander
Notary Public
My Commission Expires: November 25, 1988
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<PAGE> 19
MANAGED ASSETS TRUST
FIRST SUPPLEMENTAL DECLARATION OF TRUST
Dated March 17, 1983
FIRST SUPPLEMENTAL DECLARATION OF TRUST, made March 17, 1983 by Everett P.
Pope, Peter K. Simonds and George S. Bissell (hereinafter with their successors
referred to as the "Trustees") as Trustees of MANAGED ASSETS TRUST, a
Massachusetts business trust established under a Declaration of Trust dated
August 6, 1982 (the "Declaration").
WHEREAS, Article IX, Section 7 of the Declaration provides that if
authorized by vote of a majority of other percentage of the shares as there
specified, a majority of the Trustees may alter or amend the Declaration by
signing a Declaration of Trust Supplemental thereto; and
WHEREAS, the Trustees and the holder of the Shares have duly authorized
further amendment of the Declaration as provided in this First Supplemental
Declaration of Trust so as to amend and restate those provisions of the
Declaration as described below;
NOW, THEREFORE, certain provisions of the Declaration are amended and
restated to read as follows:
1. The Title of Article IV is amended by inserting "Dividends,"
prior to "Distributions and Redemptions".
2. Article VI, Section 1 is amended by deleting the entire
section and insert as new Article VI, Section 1:
"Section 1. Dividends and Distributions. The Trustees may each year
distribute to the Shareholders of a Portfolio such net investment income earned
on the assets of that Portfolio and net capital gains realized on that
Portfolio's assets as determined by the Trustees or as they may authorize and
as herein provided. The Trustees shall have full discretion to determine which
items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Dividends and
distributions may be made in one or more payments, which shall be in Shares, in
cash, or otherwise and on a date or dates and as of a record date or dates
determined by the Trustees. Each dividend and distribution pursuant to this
Section 1 shall be made ratably according to the number of Shares held by the
several Shareholders on the record date for such dividend or distribution."
3. The second sentence of Article IV, Section 2 shall be
amended by (a) deleting the words "and until the next meeting of
shareholders;", appearing in the second line, and
<PAGE> 20
inserting in their place the following words "or until the election of his
or her successor at a meeting of shareholders,", and by (b) relettering
subsections (c) and (d) as subsections (d) and (e), respectively, and
inserting the following new subsection (c) after subsection (b) and prior
to new subsection (d); "(c) that no Trustee may continue to serve after he
or she has passed his or her seventieth birthday;".
IN WITNESS WHEREOF, the undersigned majority of all of the Trustees of the
Trust have caused these presents to be executed as of the 17th day of March,
1983.
/s/Everett P. Pope /s/ Peter K. Simonds
/s/George S. Bissell
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<PAGE> 21
MANAGED ASSETS TRUST
DECLARATION OF TRUST
AMENDMENT EFFECTIVE APRIL 23, 1993
VOTED: That Article IV, Section 3, Term of Office of Trustees, be amended to
delete reference to retirement age and to read as follows
Section 3. Term of Office of Trustees. After election, each Trustee
shall hold office during the lifetime of this Trust, or until the election of
his or her successor at a meeting of Shareholders; except (a) that any Trustee
may resign his or her trust by written instrument signed by him or her and
delivered to the other Trustees which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has become mentally or physically incapacitated may be retired
by written instrument signed by a majority of the other Trustees, specifying
the date of his or her retirement; and (d) that a Trustee may be removed at any
special meeting of Shareholders of the Trust by a vote of two-thirds of the
outstanding Shares.
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<PAGE> 1
EXHIBIT 2
MANAGED ASSETS TRUST
BY-LAWS
ARTICLE 1.
Declaration of Trust and Principal Office
1.1 Declaration of Trust. These By-laws are adopted pursuant to and are
subject to the terms of the Declaration of Trust dated August 6, 1982 (the
"Declaration of Trust") of Managed Assets Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall be
located in Hartford, Connecticut.
ARTICLE 2.
Meetings of Shareholders
2.1 Meeting. The meeting of Shareholders specified in Article V, Section 2 of
the Declaration of Trust shall be held for the purpose of electing Trustees and
for such other purposes as may be prescribed by law, by the Declaration of
Trust or hereby or as may be specified by the Trustees. If the meeting is not
held, a special meeting may be held in lieu thereof or may be called by
Trustees as provided in Article V, Section 2 of the Declaration of Trust and
any business transacted or election held at the special meeting shall have the
same effect as if transacted or election held at the meeting.
2.2 Special Meetings. Special meetings may be called by the Trustees and
shall be called by the Trustees upon the written request of Shareholders owning
at least one quarter of the outstanding Shares entitled to vote. Every such
request shall state the purpose of the meeting and shall be delivered at the
principal office of the Trust addressed to the Trustees of the Trust, and in
case the Trustees shall refuse or fail, for fourteen (14) days after the
request shall have been so delivered, to call such special meeting to be held
within sixty (60) days after the delivery of the request, the same may be
called by the person or persons signing such request or by any three of them.
<PAGE> 2
2.3 Business to be Transacted. At any meeting or special meeting of
Shareholders, no business shall be transacted other than such as is referred to
in the notice of the meeting.
2.4 Notice. A written notice of each meeting of the Shareholders, specifying
the time, place and purposes thereof, shall be given as hereinafter provided by
the Secretary of the Trust or any Assistant Secretary or by a person or persons
designated by either of them, to each Shareholder who is entitled to vote
(including Sundays and holidays) before such meeting. Notice of a meeting need
not be given to any Shareholder if a written waiver of notice, executed by the
Shareholder or his attorney thereunto duly authorized before or after the
meeting, is filed with the records of the meeting, or to any Shareholder who
attends the meeting either in person or by proxy without protesting, prior
thereto or at its commencement, the lack of notice to such Shareholder. Every
notice to any Shareholder required or provided for herein may be given to him
personally or by mailing it to him prepaid, addressed to him at his address
specified in the records of the Trustee or any transfer or Shareholder
servicing agent. Notice shall be deemed to have been given at the time when it
is so mailed. In respect of any Share held jointly by several persons notice
so given to any one of them shall be sufficient notice to all of them. Any
notice so sent to the address of any Shareholder shall be deemed to have been
duly sent in respect of any such Share whether held by him solely or jointly
with others, notwithstanding he be then deceased or be bankrupt or insolvent or
legally incompetent, and whether or not the Trustees or any person sending such
notice have knowledge of his death, bankruptcy or insolvency or legal
incompetence, until some other person or persons shall be registered as
holders. The certificate of the person or persons giving such notice shall be
sufficient evidence thereof, and shall protect all persons acting in good faith
in reliance on such certificate.
2.5 Voting. Shares may be voted in person by the Shareholder or by proxy in
form reasonably acceptable to the Secretary or any transfer or shareholder
servicing agent. If the holder of any Share is a minor or a person of unsound
mind, or subject to guardianship or to the legal control of any other person as
regards the charge or management of such Share, he may vote by his guardian or
such other person appointed or having such control, and such vote may be given
in person or by proxy.
2.6 Record Dates. For the purpose of determining the Shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than
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<PAGE> 3
seventy-five (75) days before the date of any meeting of Shareholders or the
date for the payment of any dividend or of any other distribution, as the
record date for determining the Shareholders having the right to notice of and
to vote at such meeting and any adjournment thereof or the right to receive
such dividend or distribution, and in such case only Shareholders of record on
such record date shall have such right, notwithstanding any transfer of Shares
on the books of the Trust after the record date; or without fixing such record
date the Trustees may for any of such purposes close the register or transfer
books for all or any part of such period.
ARTICLE 3.
Meetings of Trustees
3.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time
to time determine, provided that notice of the first regular meeting following
any such determination shall be given to absent Trustees.
3.2 Special Meetings. Special meetings of the trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman, the President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Secretary or an Assistant
Secretary or by the officer or one of the Trustees calling the meeting.
3.3 Notice. It shall be sufficient notice to a Trustee of a special meeting
to send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to him at his usual or last
known business or residence address or to give notice to him in person or by
telephone at least twenty-four hours before the meeting. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
before or after the meeting, is filed with the records of the meeting, or to
any Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.
3.4 Quorum. At any meeting of the Trustees a majority of the Trustees then in
office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present and the meeting may be held as adjourned without further notice.
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<PAGE> 4
3.5 Action by Vote. When a quorum is present at any meeting, a majority of
the Trustees present may take any action, except when a larger vote is required
by the Declaration of Trust or any applicable law.
3.6 Participation by Conference Telephone. The Trustees may participate in a
meeting of the Trustees by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
3.7 Action by Writing. The Trustees may act without a meeting and the action
of a majority of the Trustees then in office evidenced by a writing signed by
such a majority shall be valid and binding as the action of the Trustees.
ARTICLE 4.
Officers
4.1 Election. The President, the Treasurer and the Secretary shall be elected
annually by the Trustees and shall serve until their successors are elected and
qualified or until their earlier death, resignation or removal. Other
officers, if any, including if desired a Chairman of the Board and a
Controller, may be elected or appointed by the Trustees at said meeting or at
any other time. Vacancies in any office may be filled at any time.
4.2 Tenure. Each officer and each agent shall hold office at the pleasure of
the Trustees.
4.3 Powers. Subject to law and to the other provisions of these By-Laws, each
officer shall have, in addition to any duties and powers set forth herein and
in the Declaration of Trust, such duties and powers as are commonly incident to
the office occupied by him as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
4.4 Chairman; President. Unless the Trustees otherwise provide, the Chairman
or, if there is none or in his absence, the President shall preside at all
meetings of Shareholders and of the Trust. The Chairman shall be the chief
executive officer.
4.5 Treasurer. The Treasurer shall be the chief financial officer of the
Trust. In the absence of the Treasurer, or if there is then no person serving
in such office, the Controller of the Trust shall be the chief financial
officer of the Trust. He
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shall, subject to the provisions of the Declaration of Trust and subject to any
arrangement made by the Trustees with a bank or other trust company or
organization as custodian, be in charge of valuable papers, books of account
and accounting records, and shall have such other duties and powers as may be
designated from time to time by the Trustees or by the President.
4.6 Secretary. The Secretary shall record all proceedings of the Shareholders
and Trustees in books to be kept therefor, which books shall be kept at the
principal office of the Trust. In the absence of the Secretary, an Assistant
Secretary, or if there be none of if he is absent, a Temporary Secretary chosen
by the Shareholders or the Trustees, as the case may be, shall record the
proceedings in the aforesaid books.
4.7 Resignation and Removals. Any Trustee or officer may resign at any time
by written instrument signed by him and deposited with the Trustees by
delivering such resignation to the President or the Secretary or to a meeting
of the Trustees. Such resignation shall be effective upon receipt unless
specified to be effective at some other time. The Trustees may remove any
officer elected by them with or without cause by vote of a majority of the
Trustees then in office. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee or officer resigning and no officer
removed shall have any right to compensation for any period following his
resignation or removal, or any right to damages on account of such removal.
ARTICLE 5.
Committees
5.1 General. The Trustees may appoint from their number an executive
committee of not less than three to serve during their pleasure. The executive
committee may, when the Trustees are not in session at a meeting, exercise such
of the powers and authority of the Trustees as may be conferred from time to
time by the Trustee. Rules governing the actions of the executive committee may
be adopted by the Trustees from time to time as they deem appropriate.
The Trustees may appoint from their number such other committees from time to
time as they deem appropriate. The number composing such committees, the
powers and authority conferred upon such committees and the rules governing the
actions of such committees shall be determined by the Trustees at their
discretion.
5.2 Quorum; Voting. A majority of the members of any committee of the
Trustees shall constitute a quorum for the transaction of
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<PAGE> 6
business, and any action of such a committee may be taken at a meeting by a
vote of a majority of the members present (a quorum being present) or evidenced
by one or more writings singed by such a majority.
Members of a committee may participate in a meeting of such committee by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
ARTICLE 6.
Fiscal Year and Seal
6.1 Fiscal Year. The fiscal year of the Trust shall end on the last day of
December in each year.
6.2 Seal. The seal of the Trust shall consist of a flat-faced die with the
name of the Trust and 1982 cut or engraved thereon.
ARTICLE 7.
Provisions Relating to the Conduct of the Trust's Business
7.1 Dealings with Affiliates. The Trust shall not purchase or retain
securities issued by an issuer if one or more of the holders of the securities
of such issuer or one or more of the officers or directors of such issuer is an
officer or Trustee of the trust or an officer or director of any other
organization, association or corporation which is an investment adviser, as
defined in the Investment Company Act of 1940, to the Trust {"investment
adviser"), and if to the knowledge of the Trust one or more of such officers or
Trustees of the Trust or officers or directors of any investment adviser owns
beneficially more than one half of one percent of the shares or securities of
such issuer and such officers, Trustees and directors owning more than one half
of one percent of such shares or securities together own beneficially more than
five percent of such outstanding shares or securities. Each Trustee and
officer of the Trust and each director and officer of any investment adviser
shall give notice to the Secretary of the Trust of the identity of all issuers
of which such officer, Trustee or director owns as much as one half of one
percent of the outstanding securities, and the Trust shall not be charged with
the knowledge of such holdings in the absence of receiving such notice if the
Trust has requested such information not less often than quarterly.
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<PAGE> 7
Subject to the provisions of the preceding paragraph, no officer or Trustee of
the Trust or officer or director of any investment adviser shall deal for or on
behalf of the Trust with himself as principal or agent, or with any
partnership, association or corporation in which he has a material financial
interest; provided that the foregoing provisions shall not prevent (a) officers
and Trustees of the Trust or officers and directors of any investment adviser
from buying, holding or selling shares in the Trust, or from being partners,
officers or directors of or financially interested in any investment adviser or
in any corporation, firm or association which may at any time have an
underwriting contract with the Trust; (b) purchases of investments for the
portfolio of the Trust or sales of investments owned by the Trust through a
securities dealer who is, or one or more of whose partners, stockholders,
officers or directors is, an officer or Trustee of the Trust or an officer or
director of any investment adviser or firm which has an underwriting contract
with the Trust, if such transactions are handled in the capacity of broker only
and commissions charged to the Trust do not exceed customary brokerage charges
for such services; (c) employment of legal counsel, registrar, transfer agent,
dividend disbursing agent or custodian who is, or has a partner, stockholder,
officer or director who is, an officer or Trustee of the Trust or an officer or
director of any investment adviser, if only customary fees are charged for
services to the Trust; (d) sharing statistical, research and management
expenses, including office hire and services, with any other company in which
an officer or Trustee of the Trust or an officer or director of any investment
adviser is an officer, trustee, or director or financially interested.
7.2 Limitation on Certain Loans. The Trust shall make no loans to any
officer, Trustee or employee of the Trust or to any investment adviser or their
respective officers, directors or partners or employees.
7.3 Limitation on Dealing in Securities of the Trust. Neither any
organization, association or corporation which may at any time have an
exclusive distributor's contract with the Trust (the "distributor"), nor any
investment adviser to the Trust, nor any officer or Trustee of the Trust nor
any officer or director of the distributor or any investment adviser shall take
long or short positions in securities issued by the Trust, provided, however,
that:
(a) the distributor may place orders for securities issued by the
Trust equivalent to orders received by the distributor;
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<PAGE> 8
(b) there shall be no limitation on the purchase of securities issued
by the Trust by any Shareholder acting in such capacity;
(c) any officer or Trustee of the Trust or officer or director of the
distributor or any investment adviser may at any time, or from time to
time, purchase from the Trust or from the distributor securities
issued by the Trust at the price available to the public or to such
officer, Trustee or director in accordance with the effective
prospectus at the moment of such purchase or, to the extent that such
person is a securityholder, at the price available to securityholders
of the Trust generally at the moment of such purchase, no such
purchase to be in contravention of any applicable state or federal
requirement;
(d) prior to the public offering of securities issued by the Trust,
the distributor or any investment adviser may at any time, or from
time to time, purchase securities issued by the Trust.
7.4 Custodian. All securities and cash owned by the Trust shall be maintained
in the custody of one or more banks or trust companies having (according to
their last published reports) not less than two million dollars ($2,000,000)
aggregate capital, surplus and undivided profits (which banks or trust
companies are hereinafter referred to as a "custodian").
The Trust shall upon the resignation or inability to serve of a custodian or
upon change of the custodian:
(a) in the case of such resignation or inability to serve, use its
best efforts to obtain a successor custodian;
(b) require that the cash and securities owned by the Trust be
delivered directly to the successor custodian; and,
(c) in the event that no successor custodian can be found, summit to
the Shareholders, before permitting delivery of the cash and
securities owned by the Trust otherwise than to a successor custodian,
the question whether or not the Trust shall be liquidated or shall
function without a custodian.
Notwithstanding the foregoing, but subject to such rules, regulations and
orders, if any, as the Securities and Exchange Commission may adopt, the Trust
may, or may permit the custodian to, deposit all or any part of the securities
owned by the Trust in a system for the central handling of securities
established by a national securities exchange or national securities
association registered with said Commission under the Securities Exchange Act
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of 1934, or such other person as may be permitted by said Commission, pursuant
to which system all securities of any particular class or series of any issue
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry, without physical delivery of such securities.
7.5 Limitations on Investments. The Trust shall not purchase for its
portfolio the securities of any issuer if immediately after such purchase and
as a result thereof more than five percent (5%) of its total assets valued at
their current market value would be invested in the securities of any one
issuer, except that up to twenty-five percent (25%) of its total assets valued
in the manner set forth above may be invested without regard to this
limitation.
The Trust shall not purchase for its portfolio the securities of any issuer if
as a result of such purchase the Trust would thereupon hold more than ten
percent (10%) of the outstanding voting securities (as that term is defined
Section 2(a)(42) of the Investment Company Act of 1940) of any issuer. The
provisions of this paragraph and the preceding paragraph shall not apply to
obligations issued or guaranteed by the government of the United States of
America or to obligations of any corporation organized under a general act of
Congress if such corporation is an instrumentality of the United States.
The Trust shall not purchase for its portfolio the securities of companies
which have a record of less than three years' continuous operation is as a
result of such of such purchase the Trust's total investment in such companies,
valued at their current market value, would thereupon amount to more than five
percent (5%) of the Trust's total assets, valued in the same manner. Such
period of three years may include the operation of any predecessor company or
companies, partnership or individual enterprise, if the company whose
securities are taken as an investment for funds of the Trust has come into
existence as a result of a merger, consolidation, reorganization or the
purchase of substantially all of the assets of such predecessor company or
companies, partnership or individual enterprise.
The Trust shall not purchase securities on margin, except such short-term
credits as are necessary for the clearance of transactions and except in
connection with transactions involving financial futures in order to limit
transaction and borrowing costs and for hedging purposes.
7.6 Limitation on Borrowings. The Trust may from time to time borrow money
from banks as a temporary measure to facilitate redemptions or for
extraordinary or emergency purposes, but only
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in amount not to exceed ten per cent (10%) of its total assets valued at their
current market value.
7.7 Limitation on Pledges and Short Sales The Trust shall not pledge,
mortgage or hypothecate more than fifteen percent of its total assets valued at
their current market value, and any pledge, mortgage or hypothecation shall be
made only to secure borrowings permitted by Section 7.6 hereof.
The Trust shall not make short sales of securities or maintain a short position
for the account of the Trust unless at all times when a short position is open,
the Trust owns an equal amount of such securities or of securities which
without the payment of further consideration are convertible into or
exchangeable for securities of the same issue as, and equal in amount to, the
securities sold short.
7.8 Reports to Shareholders: Distributions from Realized Gains. The Trust
shall send to each Shareholder of record at least semi-annually a statement of
the condition of the Trust and of the results of its operations, containing all
information required by applicable laws or regulations. Whenever the Trust
pays distri-butions from realized gains, such fact shall be clearly revealed to
the Shareholders and the basis of calculation shall be set forth.
7.9 Underwriting Contract. The Trustees may at any time and from time to time
enter into a contract or contracts providing for the sale of Shares of the
Trust. Such contract shall contain a provision that the offering price of the
Shares shall not exceed Net Asset Value per Share (determined as set forth in
the Declaration of Trust) plus, if the Trustees so determine, a sales charge
not to exceed nine per cent (9%) of the offering price. Any such contract may
contain such terms and conditions, not inconsistent herewith and with
applicable laws and regulations, as may be prescribed in the Declaration of
Trust or these By-Laws, or as the Trustees may in their discretion determine.
7.10 Dividends and Distributions. The Chairman, President or Treasurer of the
Fund are each authorized to declare and authorize the payment of dividends and
distributions of the Fund and to report such payments to the Board of Trustees.
ARTICLE 8.
Amendments
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8.1 Amendment by Trustees or Shareholders. These By-Laws may be altered,
amended or repealed at any time by vote of the Shareholders. These By-Laws may
also be altered, amended or repealed by vote of the Trustees, except with
respect to any provision which by law, the Declaration of Trust or these
By-laws requires action by the Shareholders. Such action by the Shareholders is
hereby declared necessary to amend, alter or repeal this Section 8.1 so as to
increase the power of the Trustees or reduce the power of the Shareholders to
amend, alter or repeal these By-Laws.
8.2 Further Amendment by the Shareholders. Any By-law so altered, amended or
repealed by the Trustees may be further altered or reinstated by the
Shareholders.
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EXHIBIT 5(A)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of this 30th day of December,
1992, between Travelers Asset Management International Corporation, a New York
general business corporation (hereinafter "TAMIC") and Managed Assets Trust
(hereinafter the "Trust"), a Massachusetts business trust established in
Massachusetts by a Declaration of Trust dated March 12, 1982, as amended and/or
restated from time to time (the "Declaration of Trust").
WITNESSETH:
WHEREAS, the Trust and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for the Trust.
NOW, THEREFORE, in consideration of the promise and the mutual
agreements herein contained, the parties hereto agree as follows:
1. The Trust hereby employs TAMIC to manage the investment and reinvestment
of the assets of the Trust and to perform the other services herein set
forth, subject to the supervision of the Board of Trustees of the Trust
(hereinafter the "Board") for the period and on the terms herein set
forth. TAMIC hereby accepts such employment and agrees during such
period, at its own expense, to render the services and to assume the
obligations herein set forth for the compensation herein provided.
2. In carrying out these obligations to manage the investment and
reinvestment of the assets of the Trust, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
the Trust, affecting the economy generally and individual
companies or industries, the securities of which are included in
the Trust's portfolio or are under consideration for inclusion
therein;
b. be authorized to purchase supplemental research and other
services from brokers at additional cost to the Trust;
c. regularly furnish to the Board recommendations with respect to
any investment program for approval, modification or rejection by
the Board;
d. take such steps as are necessary to implement the investment
program approved by the Board; and
e. regularly report to the Board with respect to implementation of
the approved investment program and any other activities in
connection with the administration of the assets of the Trust.
3. Any investment program undertaken by TAMIC pursuant to this Agreement
and any other activities undertaken by TAMIC on behalf of the Trust
shall at all times be subject to any directives of the Board or any duly
constituted committee thereof acting pursuant to like authority.
<PAGE> 2
4. For the services rendered hereunder, TAMIC will receive an amount
equivalent on an annual basis to 0.50% of the average daily net assets
of the Trust, such fees to be deducted on each valuation date.
5. The services of TAMIC to the Trust hereunder are not to be deemed
exclusive and TAMIC shall be free to render similar services to others
so long as its services hereunder are not impaired or interfered with
thereby.
6. If approved by a vote of a majority of the outstanding voting securities
of the Trust (as defined in the Investment Company Act of 1940), this
Investment Advisory Agreement:
a. may not be terminated by TAMIC, without the prior approval of a
new Investment Advisory Agreement by a vote of a majority of the
outstanding voting securities of the Trust, and shall be subject
to termination, without the payment of any penalty, upon sixty
days' written notice to the investment adviser, by the Board or
by a vote of a majority of the outstanding voting securities of
the Trust;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of the Trust;
c. shall automatically terminate upon assignment by either party;
and
d. shall continue in effect for a period of more than two years from
the date of its execution, only so long as such continuance is
specifically approved (i) at least annually by a vote of a
majority of the Board who are not parties to, or interested
persons of any party to, such agreement, cast in person at a
meeting called for the purpose of voting on such approval and at
which the Board has been furnished such information as may be
reasonably necessary to evaluate the terms of said agreement, or
(ii) by a vote of a majority of the outstanding voting securities
of the Trust.
7. This Agreement is made on behalf of the Trust by an officer or Trustee
of the Trust, not individually, but solely as an officer or Trustee
under the Declaration of Trust, and the obligations under this Agreement
are not binding upon, nor shall resort be had to the private property
of, any of the Trustees, shareholders, officers, employees or agents of
the Trust personally, but shall bind only the Trust's property.
8. TAMIC agrees that it shall furnish to the California Commissioner of
Insurance any information or reports concerning the Trust as the
Commissioner, in the performance of his or her duties, may request.
9. TAMIC hereby acknowledges that all books and records relating to the
services provided to the Trust hereunder are the property of the Trust
and subject to its control; provided, however, that during the term of
the Agreement, the Trust shall not exercise such control so as to
interfere with the performance of TAMIC's duties hereunder.
<PAGE> 3
10. 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.
MANAGED ASSETS TRUST
By:/s/ Robert E. Crispin
Chairman, Board of Trustees
WITNESS:
/s/Thomas A. Klee
Secretary, Board of Trustees
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL CORPORATION
By:/s/ Eliot P. Williams
President
ATTEST: (Seal)
/s/ Harry E. Meyer
Corporate Secretary
<PAGE> 1
EXHIBIT 5(B)
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT made as of this 30th day of December, 1992,
between Travelers Asset Management International Corporation, a New York
general business corporation (hereinafter "TAMIC") and The Travelers Investment
Management Company, a Connecticut general business corporation (hereinafter
"TIMCO").
WITNESSETH:
WHEREAS, TAMIC has entered into an Investment Advisory Agreement with
Managed Assets Trust, a Massachusetts business trust (hereinafter the "Trust")
pursuant to which TAMIC provides investment management and advisory services to
the Trust; and
WHEREAS, TAMIC and TIMCO wish to enter into an agreement setting forth
the terms upon which TIMCO will perform certain services for TAMIC.
NOW, THEREFORE, in consideration of the promise and the mutual
agreements herein contained, the parties hereto agree as follows:
1. TIMCO shall direct the common stock investments of the Trust in
accordance with the investment objectives, policies and limitations of
the Trust as provided in the Trust's prospectus or other governing
instruments. TIMCO 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 common stock portfolio of the Trust, TIMCO shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
the Trust, affecting the economy generally and individual
companies or industries, the securities of which are included in
the Trust's portfolio or are under consideration for inclusion
therein;
b. be authorized to purchase supplemental research and other
services from brokers at additional cost to the Trust;
c. regularly furnish to the Board of Trustees of the Trust
(hereinafter the "Board") and to TAMIC recommendations with
respect to any investment program for approval, modification or
rejection by the Board or TAMIC;
d. take such steps as are necessary to implement the investment
program approved by the Board or TAMIC; and
e. regularly report to the Board and TAMIC with respect to
implementation of the approved investment program and any other
activities in connection with the administration of the assets of
the Trust.
<PAGE> 2
3. Any investment program undertaken by TIMCO pursuant to this Agreement
and any other activities undertaken by TIMCO on behalf of the Trust
shall at all times be subject to any directives of TAMIC and the Board
or any duly constituted committee thereof acting pursuant to like
authority.
4. For the services rendered hereunder, TAMIC will receive from TAMIC, on a
monthly basis, fifty percent (50%) of the advisory fee that TAMIC has
earned from the Trust during the previous month.
5. The services of TIMCO to TAMIC hereunder are not to be deemed exclusive
and TIMCO shall be free to render similar services to others so long as
its services hereunder are not impaired or interfered with thereby.
6. If approved by a vote of a majority of the outstanding voting securities
of the Trust (as defined in the Investment Company Act of 1940), this
Sub-Advisory Agreement:
a. shall be subject to termination, without the payment of any
penalty, upon sixty days' written notice, by (i) TIMCO or TAMIC,
(ii) by the Board, or (iii) by a vote of a majority of the
outstanding voting securities of the Trust;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of the Trust;
c. shall automatically terminate upon assignment by either party;
and
d. shall continue in effect for a period of more than two years from
the date of its execution, only so long as such continuance is
specifically approved (i) at least annually by a vote of a
majority of the Board who are not parties to, or interested
persons of any party to, such agreement, cast in person at a
meeting called for the purpose of voting on such approval and at
which the Board has been furnished such information as may be
reasonably necessary to evaluate the terms of said agreement, or
(ii) by a vote of a majority of the outstanding voting securities
of the Trust.
7. TIMCO agrees that it shall furnish to the California Commissioner of
Insurance any information or reports concerning the Trust as the
Commissioner, in the performance of his or her duties, may request.
8. TIMCO hereby acknowledges that all books and records relating to the
services provided to the Trust hereunder are the property of the Trust
and subject to its control; provided, however, that during the term of
the Agreement, the Trust shall not exercise such control so as to
interfere with the performance of TIMCO's duties hereunder.
9. This Sub-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.
<PAGE> 3
10. Unless otherwise specified herein, all notices, instructions, directives
or other information required to be provided under this Agreement shall
be in writing.
IN WITNESS WHEREOF, the parties hereto have caused this Sub-Advisory
Agreement to be signed by their respective officials thereunto duly authorized
and their seals to be affixed as of the day and year first above written.
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL CORPORATION
By:/s/ Eliot P. Williams
President
ATTEST: (Seal)
/s/ Harry E. Meyer
Corporate Secretary
THE TRAVELERS INVESTMENT
MANAGEMENT COMPANY
By:/s/Kent A. Kelley
President
ATTEST: (Seal)
/s/Thomas A. Klee
Corporate Secretary
<PAGE> 1
EXHIBIT 9
TRANSFER AND RECORDKEEPING AGREEMENT
AGREEMENT made as of the 1st day of July, 1991 by and between Managed
Assets Trust, a business trust organized and existing under the laws of
Massachusetts, (hereinafter called the "Trust") and The Travelers Insurance
Company, a Connecticut stock insurance company, (hereinafter called "The
Travelers") both parties having their principal place of business at One Tower
Square, Hartford, Connecticut 01683.
WITNESSETH THAT
WHEREAS, the Trust desires The Travelers to perform certain services for
the Trust and The Travelers is willing to perform such services.
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
each party, for itself and not jointly, agrees as follows:
1. SERVICES - The Travelers shall perform for the Trust the services set
forth in Exhibit A which is attached hereto and made a part hereof. Such
services shall be performed at no charge to the Trust. The Travelers shall
perform such other services in addition to those set forth in Exhibit A hereto
as the Trust shall request in writing. Any of the services to be performed
hereunder, and the manner in which such services are to be performed, shall be
changed only pursuant to a written agreement sinned by the parties hereto.
The Travelers will undertake no activity which, in its judgment, will
adversely affect the performance of its obligations to the Trust under this
Agreement.
2. EFFECTIVE DATE - This Agreement shall become effective as of the date set
forth above.
3. TERM - This Agreement shall be in effect until terminated in accordance
with Section 14 hereof.
4. STANDARD OF CARE - The Travelers shall at all times use its best efforts
and act in good faith and without negligence in performing all services
pursuant to this Agreement. The Travelers shall indemnify and hold harmless
the Trust against any losses, claims, damages, judgments, liabilities or
expenses (including reasonable counsel fees and expenses) resulting from any
action taken by The Travelers that does not meet the standard of care described
in this Section 4.
5. UNCONTROLLABLE EVENTS - The Travelers shall not be liable for damage, loss
of data, delays or errors occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or military authority,
national emergencies, fire, flood or catastrophe, acts of God, insurrection,
war, riots, or failure of transportation, communication or power supply.
<PAGE> 2
However, The Travelers shall keep in a separate and safe place additional
copies of all records required to be maintained pursuant to this Agreement or
additional tapes or discs necessary to reproduce all such records. The
Travelers shall use reasonable care to minimize the likelihood of all damage,
loss of data, delays and errors resulting from an uncontrollable event, and
should such damage, loss of data, delays or errors occur, The Travelers shall
use its best efforts to mitigate the effects of such occurrence.
Representatives of the Trust shall be entitled to inspect The Travelers
premises and operating capabilities within reasonable business hours and upon
reasonable notice to The Travelers.
6. INDEMNIFICATION - The Trust shall indemnify and hold The Travelers, its
employees and agents harmless against any losses, claims, damages, judgments,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from (1) transactions which occurred prior to the date The Travelers
began serving as Transfer Agent to the Trust; (2) action taken or permitted by
The Travelers in good faith with due care and without negligence in reliance
upon instructions received from the Trust in accordance with Section 7 hereof
or with respect to the Trust upon the opinion of counsel for the Trust, as to
anything arising in connection with its performance under this Agreement; or
(3) any act done or suffered by The Travelers with respect to the Trust in good
faith with due care and without negligence in connection with its performance
under this Agreement in reliance upon any instruction, order, stock certificate
or other instrument reasonably believed by it to be genuine and to bear the
genuine signature of any person or persons authorized to sign, countersign, or
execute same, and which complies with any governing documents provided to The
Travelers by the Trust and with all applicable requirements of the Trust's
current prospectus and statement of additional information, this Agreement and
instructions (it being specifically agreed that for the purpose of this
indemnification if any instruction received by The Travelers in accordance with
Section 7 hereof differs from the requirements set forth in the current
prospectus or statement of additional information then, with regard to that
difference, The Travelers need only comply with such instruction and not the
current prospectus or statement of additional information).
7. INSTRUCTIONS - The Travelers shall comply with all instructions issued by
the Trust in the form prescribed below which are permitted or required under
Exhibit A attached hereto. Whenever The Travelers takes action hereunder
pursuant to instructions of the Trust, The Travelers shall be entitled to rely
upon such instructions only when such instructions are signed by the President
or Treasurer of the Trust or by an individual designated in writing by the
President or Treasurer as a person authorized to give instructions hereunder.
The Trust may waive the requirement that all instructions be in writing, if
such waiver defines the occurrences not requiring written instruction,
indicates the persons authorized to give such non-written instructions, and is
signed by one of the persons pursuant to the immediately preceding sentence of
this Section 7. In the event The Travelers obtains the Trust's written waiver,
it may rely on non-written instructions received pursuant thereto.
8. CONFIDENTIALITY - The Travelers agrees to treat all records and other
information relative to the Trust and the Trust's shareholders confidentially,
and The Travelers on behalf of itself and its employees agrees to keep
confidential all such information, except, after prior notification to and
approval by the Trust, which approval shall not be unreasonably withheld and
2
<PAGE> 3
may not be withheld where The Travelers may be exposed to civil or criminal
contempt proceedings, when requested to divulge such information by duly
constituted authorities or when so requested by a shareholder of the Trust
seeking information about his own or an appropriately related account.
9. REPORTS - The Travelers will furnish to the Trust and to properly
authorized auditors, examiners, investment companies, dealers, salesmen,
insurance companies, transfer agents, registrars, investors and others
designated by the Trust in writing, such reports at such times as are
prescribed for each service in Exhibit A attached hereto.
In addition, The Travelers will furnish to the California Commissioner of
Insurance any information or reports in connection with the services provided
by The Travelers to the Trust which the Commissioner, in the performance of his
or her duties, may reasonably request.
10. RIGHT OF OWNERSHIP - The Travelers agrees that all records and other data
received, computed, developed, used and/or stored pursuant to this Agreement
are the exclusive property of the Trust and that all such records and other
data will be furnished without additional charge to the Trust in available
machine readable data form immediately upon termination of this Agreement with
respect to such Trust for any reason whatsoever. Furthermore, upon the Trust's
request at any time or times while this Agreement is in effect, The Travelers
shall deliver to such Trust at the Trust's expense, any or all of the data and
records held by The Travelers pursuant to this Agreement, in the form as
requested by the Trust. On the effective date of termination of this Agreement
with respect to the Trust or, if later, on the date the Trust ceases to use The
Travelers services, The Travelers will promptly return to the Trust any and all
records and other data belonging to the Trust, free of any claim or retention
of rights by The Travelers.
11. REDEMPTION OF SHARES - The parties hereto agree that The Travelers shall
process liquidations, redemptions or repurchases of shares of the Trust, as the
agent for the Trust, in the manner as described in the then current prospectus
and statement of additional information for the Trust. Notwithstanding the
foregoing, The Travelers shall be liable for any losses, damages, claims or
expenses resulting from The Traveler's failure to obtain the appropriate
signature guarantee with regard to any redemption or transfer processed by The
Travelers even if the current prospectus or statement of additional information
authorizes The Travelers to waive the requirement of a signature guarantee
unless The Travelers is authorized in writing by an appropriate party to waive
such a requirement.
12. SUBCONTRACTING - The Travelers may, with the prior written consent of the
Trust, subcontract with one or more of its affiliates or other persons to
perform all or part of its obligations hereunder, provided, however, that,
notwithstanding any such subcontract, The Travelers shall be fully responsible
to the Trust hereunder.
13. ASSIGNMENT - This Agreement and the rights and duties hereunder shall not
be assignable by The Travelers or the Trust hereto except by the specific
written consent of the other party.
3
<PAGE> 4
14. TERMINATION - This Agreement may be terminated on such date of which The
Travelers has given the Trust not less than 180 days prior written notice or of
which the Trust has given The Travelers not less than 90 days prior written
notice. Upon such termination, The Travelers will use its best efforts to
cooperate and assist in accomplishing a timely, efficient and accurate
conversion to the person or firm which will provide the services described
hereunder. This Agreement may be terminated by any Trust without the payment
of any penalty, forfeiture, compulsory buyout amount or performance of any
other obligation which could deter termination.
This Agreement may be terminated after written notice to The Travelers by
the Trust if there is material breach or violation of this Agreement of if The
Travelers fails to perform any of its obligations under this Agreement and the
failure continues for more than thirty (30) days after the Trust gives notice
of the failure to The Travelers or bankruptcy or insolvency proceedings of any
nature are instituted by or against The Travelers.
15. NOTICE - Any notice shall by sufficiently given when sent by registered or
certified mail to any party at the address of such party set forth above or at
such other address as such party may from time to time specify in writing to
the other party.
16. SECTION HEADINGS - Section headings are included for convenience only and
are not to be used to construe or interpret this Agreement.
17. INTERPRETIVE PROVISIONS - In connection with the operation of this
Agreement, The Travelers and the Trust may agree from time to time on such
provisions interpretive of or in addition to the provisions of this Agreement
as may in their combined opinion be consistent with the general tenor of this
Agreement, Furthermore, The Travelers and the Trust may agree to add to, delete
from or change the services set forth with respect to the Trust in Exhibit A of
the Agreement. Each such interpretive or additional provision, and each
addition, deletion or change is to be signed by all parties affected and
annexed hereto, and no such provision, addition, deletion or change shall
contravene any applicable federal or state law or regulation and no such
provision, addition, deletion or change shall be deemed to be an amendment of
any provision of this Agreement with the exception of Exhibit A hereto.
19. GOVERNING LAW - The Agreement shall be governed by and its provisions
shall be construed in accordance with the laws of the State of Connecticut.
20. MASSACHUSETTS BUSINESS TRUST - The Trust is a Massachusetts business trust
established under a Declaration of Trust. The obligations of the Trust are not
personally binding upon, nor shall recourse by had against the private property
of, any of the Trustees, shareholders, officers, employees or agents of the
Trusts, but only the property of the Trust shall be bound.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE TRAVELERS INSURANCE COMPANY
By: /s/Robert E. Evans
ATTEST: (Seal)
/s/George Caspar
Corporate Secretary
MANAGED ASSETS TRUST
By /s/ Richard J. Shima
WITNESS:
/s/Thomas A. Klee
Secretary, Board of Trustees
5
<PAGE> 6
EXHIBIT A - SERVICES
The offices of The Travelers shall be open to perform the services
pursuant to this Agreement on all days when the Trust is open to transact
business.
The services under this Agreement will include, by way of illustration but
not limitation:
1. Establishing, maintaining, safeguarding and reporting on shareholder
account information and account histories, (including registration,
name and address recorded in generally accepted form, dealer,
representative, branch, and territory information, mailing address,
distribution address, various codes and specific information.)
2. Recording and controlling shares outstanding in certificate
("issued") and non certificate ("issued") form.
3. Maintaining a record for each certificate issued to include
certificate number, account number, issued date, number of shares,
cancelled date, or stop date, where appropriate.
4. Reconciling the number of outstanding shares of each Trust, on a
daily basis with the Trust and the Trust's custodian, promptly
correcting any differences noted.
5. Establishing and maintaining a trade file on behalf of each Trust
based on trade information furnished to the transfer agent by the
Trust or its distributors.
6. Passing upon the adequacy of documents properly endorsed and
guaranteed submitted by or on behalf of a shareholder to transfer
ownership or redeem shares.
7. Transferring ownership of shares upon the books of the Trust.
8. Redeeming shares.
9. Preparing and promptly mailing account statements to the shareholder
or such other authorized address.
10. Checking surrendered certificates for stop transfer instructions.
11. Cancelling certificates surrendered.
12. Balancing outstanding shares of record with the custodian prior to
each distribution and calculating and paying or reinvesting
distributions to shareholders of record and to open trade receivable
and free stock.
6
<PAGE> 7
13. Processing exchanges of shares of one Trust for another.
14. Reporting to the Trust and its custodian daily the capital stock
activities and dollar amount of transactions.
15. Promptly answering inquiries from shareholders, dealers, Trust
personnel, and others as requested in accordance with the terms of
this Agreement as to account matters, referring policy or investment
matters to the Trust.
16. Maintaining tax information for each account, deducting amounts where
required and furnishing to the Trust, its shareholders, dealers and,
when appropriate, regulatory bodies, the necessary tax information
all in compliance with the various applicable laws.
17. Calculating and processing Trust mergers or stock dividends, as
directed by the Trust.
18. Maintaining all Trust records as outlined in the record and tape
retention schedule delivered by the Trust.
19. Reconciling all investment, distribution and redemption accounts
20. Making available to the Trust and its distributors at their
locations, CRTs which will provide immediate electronic access to
computerized records maintained for the Trust.
21. Providing space and such technical expertise as may be required to
enable the Trust and its properly authorized auditors, examiners and
others designated by the Trust in writing to properly understand and
examine all books, records, computer files, microfilm and other items
maintained pursuant to this Agreement, and to assist as required in
such examination.
22. Assigning a single account number to each shareholder regardless of
the number of Trusts or Portfolios owned for which the Trust or one
of its affiliates is the trustee, investment adviser or manager
(except as instructed otherwise.)
7
<PAGE> 8
The Transfer Agent will produce reports as required by the Trust including
but not limited to the following:
Shareholder Account Confirmation As required
Transaction journals Daily
Record date position control Daily
Daily and (monthly) cash proof Daily
Daily (monthly) share proof Daily
Daily master control Daily
Account information reports When requested
(Monthly) Cumulative transaction Monthly
Shareholder master list When requested
Dividend account check reconciliation As required
8
<PAGE> 1
EXHIBIT 11(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 20 of
this Registration Statement on Form N-1A of our report dated February 7, 1996,
on our audits of the financial statements and financial highlights of Managed
Assets Trust. We also consent to the reference to our Firm as experts in
accounting and auditing under the caption "Additional Information" in the
Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 11, 1996
<PAGE> 1
EXHIBIT 11(B)
MANAGED ASSETS TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Heath B. McLendon of Summit, New Jersey, Chairman of the
Board of Trustees of Managed Assets Trust, do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH,
Assistant Secretary of said Trust, either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements of said Trust on Form N-1A or other applicable form
under the Securities Act of 1933 for the registration of shares of Beneficial
Interest of Managed Assets Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day of July,
1995.
/s/ Heath B. McLendon
Chairman of the Board of Trustees
Managed Assets Trust
<PAGE> 2
MANAGED ASSETS TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Knight Edwards of Providence, Rhode Island, a member of the
Board of Trustees of Managed Assets Trust, do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH,
Assistant Secretary of said Trust, either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements of said Trust on Form N-1A or other applicable form
under the Securities Act of 1933 for the registration of shares of Beneficial
Interest of Managed Assets Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day of July,
1995.
/s/ Knight Edwards
Member of the Board of Trustees
Managed Assets Trust
<PAGE> 3
MANAGED ASSETS TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert E. McGill, III of Williamstown, Massachusetts, a
member of the Board of Trustees of Managed Assets Trust, do hereby make,
constitute and appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN
A. McGAH, Assistant Secretary of said Trust, either one of them acting alone,
my true and lawful attorney-in-fact, for me, and in my name, place and stead,
to sign registration statements of said Trust on Form N-1A or other applicable
form under the Securities Act of 1933 for the registration of shares of
Beneficial Interest of Managed Assets Trust and to sign any and all amendments,
including post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day of July,
1995.
/s/ Robert E. McGill
Member of the Board of Trustees
Managed Assets Trust
<PAGE> 4
MANAGED ASSETS TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Lewis Mandell of Shorewood, Wisconsin, a member of the Board
of Trustees of Managed Assets Trust, do hereby make, constitute and appoint
ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH, Assistant
Secretary of said Trust, either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements of said Trust on Form N-1A or other applicable form under the
Securities Act of 1933 for the registration of shares of Beneficial Interest of
Managed Assets Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day of July,
1995.
/s/ Lewis Mandell
Member of the Board of Trustees
Managed Assets Trust
<PAGE> 5
MANAGED ASSETS TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Frances M. Hawk of Sherborn, Massachusetts, a member of the
Board of Trustees of Managed Assets Trust, do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH,
Assistant Secretary of said Trust, either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements of said Trust on Form N-1A or other applicable form
under the Securities Act of 1933 for the registration of shares of Beneficial
Interest of Managed Assets Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day of July,
1995.
/s/ Frances M. Hawk
Member of the Board of Trustees
Managed Assets Trust
<PAGE> 6
MANAGED ASSETS TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Ian R. Stuart of East Hampton, Connecticut, Treasurer of
Trustees of Managed Assets Trust, do hereby make, constitute and appoint ERNEST
J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH, Assistant Secretary
of said Trust, either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements of said Trust on Form N-1A or other applicable form under the
Securities Act of 1933 for the registration of shares of Beneficial Interest
of Managed Assets Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 31st day of July,
1995.
/s/ Ian R. Stuart
Treasurer, Managed Assets Trust
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 147,584,296
<INVESTMENTS-AT-VALUE> 169,888,218
<RECEIVABLES> 2,160,405
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 30,886
<TOTAL-ASSETS> 172,079,509
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</TABLE>
