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Registration Statement No. 33-43628
811-6465
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 13
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13
THE TRAVELERS SERIES TRUST
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(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
The Travelers Series Trust
One Tower Square
Hartford, Connecticut 06183
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(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):
X immediately upon filing pursuant to paragraph (b).
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on _______, 1995 pursuant to paragraph (b).
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60 days after filing pursuant to paragraph (a)(1).
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on __________ pursuant to paragraph (a)(1) of Rule 485.
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75 days after filing pursuant to paragraph (a)(2).
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on __________ pursuant to paragraph (a)(2) of Rule 485.
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If appropriate, check the following box:
X 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 27, 1996.
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THE TRAVELERS SERIES TRUST
Cross-Reference Sheet pursuant to Rule 495 under the Securities Act of 1933
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ITEM
NO. CAPTION IN PROSPECTUS
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1. Cover Page Cover Page
2. Synopsis Cover Page
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; The Travelers Series Trust;
Investment Objectives and Policies
5. Management of the Fund Board of Trustees; Investment Advisers;
Securities Transactions; Fund Expenses;
Additional Information
6. Capital Stock and Other Securities The Travelers Series Trust; Dividends
and Tax Status; Shares of the Series
Trust; Pricing Shares
7. Purchase of Securities Being Offered Shares of the Series Trust
8. Redemption or Repurchase Share Redemption
9. Legal Proceedings Legal Proceedings
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CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
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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
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 Declaration of Trust
Securities
19. Purchase, Redemption and Pricing Valuation of Securities
of Securities Being Offered
20. Tax Status Distributions and Taxes
21. Underwriters Not Applicable
22. Calculation of Performance Data Not Applicable
23. Financial Statements Financial Statements
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE 860-422-3985
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The Travelers Series Trust (the "Series Trust") is a diversified open-end
management investment company (mutual fund) which consists of multiple series of
shares (the "Portfolios"), each with its own investment objective and policies.
The Portfolios of the Series Trust described herein are the U.S. Government
Securities Portfolio, the Social Awareness Stock Portfolio and the Utilities
Portfolio.
Shares of the Portfolios are currently offered without a sales charge to
separate accounts of The Travelers Insurance Company and The Travelers Life and
Annuity Company (collectively, "the Company" or "The Travelers"). The Portfolios
serve as investment vehicles for variable annuity and variable life insurance
contracts issued by the Company. All Portfolios described herein may not be
available under all variable contracts. The term "shareholder" as used herein
refers to any insurance company separate account that may use shares of the
Portfolios as investment vehicles now or in the future.
This Prospectus concisely sets forth the information about the Series Trust and
applicable Portfolios that you should know before investing. Please read it and
retain it for future reference. Additional information about the Series Trust
and the Portfolios is contained in a Statement of Additional Information ("SAI")
dated April 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 APRIL 3, 1996.
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THIS PAGE INTENTIONALLY LEFT BLANK.
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TABLE OF CONTENTS
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FINANCIAL HIGHLIGHTS -- U.S. Government Securities Portfolio.......................... 4
FINANCIAL HIGHLIGHTS -- Social Awareness Stock Portfolio.............................. 5
FINANCIAL HIGHLIGHTS -- Utilities Portfolio........................................... 6
THE TRAVELERS SERIES TRUST............................................................ 7
U.S. GOVERNMENT SECURITIES PORTFOLIO.................................................. 7
Investment Objective and Policies................................................... 7
Investment Restrictions............................................................. 8
Risk Factors........................................................................ 8
SOCIAL AWARENESS STOCK PORTFOLIO...................................................... 8
Investment Objective and Policies................................................... 8
Investment Restrictions............................................................. 9
Risk Factors........................................................................ 10
UTILITIES PORTFOLIO................................................................... 10
Investment Objective and Policies................................................... 10
Investment Restrictions............................................................. 11
Risk Factors and Special Considerations............................................. 11
BOARD OF TRUSTEES..................................................................... 12
INVESTMENT ADVISERS................................................................... 13
TAMIC............................................................................... 13
Portfolio Manager -- U.S. Government Securities Portfolio........................... 13
Advisory Fees -- U.S. Government Securities Portfolio............................... 13
SBMFM............................................................................... 13
Portfolio Manager -- Social Awareness Stock Portfolio............................... 13
Advisory Fees -- Social Awareness Stock Portfolio................................... 14
Portfolio Manager -- Utilities Portfolio............................................ 14
Advisory Fees -- Utilities Portfolio................................................ 14
SECURITIES TRANSACTIONS............................................................... 14
FUND EXPENSES......................................................................... 15
TRANSFER AGENT........................................................................ 15
SHARES OF THE SERIES TRUST............................................................ 15
PRICING SHARES........................................................................ 16
SHARE REDEMPTION...................................................................... 16
DIVIDENDS AND TAX STATUS.............................................................. 17
LEGAL PROCEEDINGS..................................................................... 17
ADDITIONAL INFORMATION................................................................ 17
EXHIBIT A............................................................................. 18
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FINANCIAL HIGHLIGHTS
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THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the U.S. Government Securities
Portfolio for each of the three years in the period ended December 31, 1995 and
the period January 24, 1992 (date operations commenced) to December 31, 1992 has
been audited by Coopers & Lybrand L.L.P., Independent Accountants. Their report
on the per share data for each of the periods 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.
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JANUARY 24,*
YEAR ENDED DECEMBER 31, TO
-------------------------------- DECEMBER 31,
1995 1994 1993 1992
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PER SHARE DATA
Net asset value, beginning of period................. $ 10.58 $ 11.63 $ 10.79 $10.00
Income from operations
Net investment income................................ 0.65 0.60 0.57 0.53
Net gains on securities (realized and unrealized).... 1.80 (1.23) 0.44 0.26
-------- -------- -------- ------------
Total from investment operations................... 2.45 (0.63) 1.01 0.79
Less distributions
Distributions from net investment income and short-
term realized gains................................ (0.60) (0.39) (0.17) --
Distributions from long-term realized gains.......... -- (0.03) -- --
-------- -------- -------- ------------
Total distributions................................ $ (0.60) $ (0.42) $ (0.17) --
Net asset value, end of period....................... $ 12.43 $ 10.58 $ 11.63 $10.79
======= ======= ======= ===========
TOTAL RETURN**......................................... $ 24.42% (5.64)% 9.48% 7.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)................ $ 28,192 $ 24,522 $ 25,520 $9,017
Ratio of expenses to average net assets+............. 0.56% 0.71% 0.58% 0.38%***
Ratio of net income to average net assets............ 5.80% 5.56% 5.04% 4.72%***
Portfolio turnover rate.............................. 214% 16% 51% 25%
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a share during the period, after
reflecting the reinvestment of dividends declared during the period, by the beginning of period share price.
Shares in the U.S. Government Securities Portfolio are only sold to The Travelers separate accounts in
connection with the issuance of variable annuity and variable life insurance contracts. Total return does not
reflect the deduction of any contract charges or fees assessed by The Travelers separate accounts. For the
periods less than one year, total returns are not annualized.
*** Annualized.
+ The ratio of expenses to average net assets reflects an expense reimbursement by The Travelers in connection
with voluntary expense limitations. Without the expense reimbursement, the ratio of operating expenses to
average net assets would have been 0.77% and 0.72% for the year ended December 31, 1993 and the period ended
December 31, 1992, 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.
</TABLE>
SERIES-4
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FINANCIAL HIGHLIGHTS
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THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the Social Awareness Stock
Portfolio for each of the three years in the period ended December 31, 1995 and
the period May 1, 1992 (date operations commenced) to December 31, 1992 has been
audited by Coopers & Lybrand L.L.P., Independent Accountants. Their report on
the per share data for each of the periods 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.
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MAY 1,*
TO
YEAR ENDED DECEMBER 31, DECEMBER
--------------------------------------- 31,
1995 1994 1993 1992
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PER SHARE DATA
Net asset value, beginning of period.............. $ 11.05 $11.64 $ 10.95 $ 10.00
Income from operations
Net investment income............................. 0.12 0.16 0.17 0.16
Net gains on securities (realized and
unrealized)..................................... 3.47 (0.45) 0.65 0.79
------- ------------ ------------ -----------
Total from investment operations................ 3.59 (0.29) 0.82 0.95
Less distributions
Distributions from net investment income and
short-term realized gains....................... (0.14) (0.24) (0.13) --
Distributions from long-term realized gains....... (0.18) (0.06) -- --
------- ------------ ------------ -----------
Total distributions............................. (0.32) (0.30) (0.13) --
Net asset value, end of period.................... $ 14.32 $11.05 $ 11.64 $ 10.95
====== =========== ====== ===========
TOTAL RETURN**...................................... 33.37% (2.69)% 7.55% 9.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)............. $ 7,055 $3,879 $ 3,361 $ 1,394
Ratio of expenses to average net assets #......... 1.25% 1.25% 1.05% 0.71%***
Ratio of net income to average net assets......... 0.99% 1.43% 1.50% 2.22%***
Portfolio turnover rate........................... 73% 137% %60 56%
Average Commission Rate Paid****.................. .0540 -- -- --
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a share during the period, after
reflecting the reinvestment of dividends declared during the period, by the beginning of period share price.
Shares in the Social Awareness Stock Portfolio are only sold to The Travelers separate accounts in connection
with the issuance of variable annuity contracts. Total return does not reflect the deduction of any contract
charges or fees assessed by The Travelers separate accounts. For the periods less than one year, total
returns are not annualized.
*** 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.
# The ratio of expenses to average net assets reflects an expense reimbursement by The Travelers in connection
with voluntary expense limitations. Without the expense reimbursement, the ratio of operating expenses to
average net assets would have been 1.75%, 3.34%, 3.73% and 2.19% for the years ended December 31, 1995, 1994,
1993 and the period ended December 31, 1992, respectively.
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FINANCIAL HIGHLIGHTS
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THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the Utilities Portfolio for the
year ended December 31, 1995 and the period February 4, 1994 (date operations
commenced) to December 31, 1994 has been audited by Coopers & Lybrand L.L.P.,
Independent Accountants. Their report on the per share data for 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.
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FEBRUARY 4*
TO
DECEMBER 31,
1995 1994
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PER SHARE DATA:
Net asset value, beginning of period...................................... $ 10.17 $10.00
Income from operations
Net investment income..................................................... 0.48 0.35
Net losses on securities (realized and unrealized)........................ 2.44 (0.18)
-------- ------------
Total from investment operations........................................ 2.92 0.17
Less distributions
Distributions from net investment income and short-term
realized gains.......................................................... (0.24) --
-------- ------------
Total distributions..................................................... (0.24) --
Net asset value, end of period............................................ $ 12.85 $10.17
======= ===========
TOTAL RETURN**.............................................................. 29.29% 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)..................................... $ 15,340 $5,757
Ratio of expenses to average net assets***................................ 1.25% 1.25%#
Ratio of net investment income to average net assets...................... 4.29% 3.86%#
Portfolio turnover rate................................................... 25% 32%
Average Commission Rate Paid****.......................................... .0590 --
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a share during the period, after
reflecting the reinvestment of dividends declared during the period, by the beginning of period share price.
Shares in the Utilities Portfolio 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
contract charges or fees assessed by The Travelers separate accounts. For periods less than one year, total
returns are not annualized.
*** The ratio of expenses to average net assets reflects an expense reimbursement by The Travelers in connection
with the voluntary expense limitations. Without the expense reimbursement, the ratio of operating expenses to
average net assets would have been 1.27% and 3.49% annualized for the year ended December 31, 1995 and the
period ended December 31, 1994, respectively.
**** 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.
# Annualized.
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SERIES-6
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THE TRAVELERS SERIES TRUST
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The Travelers Series Trust (the "Series Trust") is registered with the SEC as an
open-end management investment company. The Series Trust is organized as a
business trust under the laws of the Commonwealth of Massachusetts. An Agreement
and Declaration of Trust dated October 11, 1991 (the "Declaration of Trust")
authorizes the shares of the Series Trust to be divided into two or more series
related to separate portfolios of investments, and further allows the Board of
Trustees to establish additional portfolios at any time.
The Series Trust is currently divided into six series (the "Portfolios") (with
seven Portfolios to be added by June 1996), each with its own investment
objective and policies, all of which are diversified portfolios under the
Investment Company Act of 1940, as amended ("1940 Act").
U.S. GOVERNMENT SECURITIES PORTFOLIO
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INVESTMENT OBJECTIVE AND POLICIES
The U.S. Government Securities Portfolio's investment objective is to seek the
highest credit quality, current income and total return. To achieve this
objective, the U.S. Government Securities Portfolio invests primarily in direct
obligations of the United States, obligations of its instrumentalities supported
by its full faith and credit, and obligations issued or guaranteed by federal
agencies which are independent corporations sponsored by the United States and
which are subject to its general supervision, but which are not supported by the
full faith and credit of the United States. The Portfolio may, from time to
time, purchase new-issue or government or agency securities on a "when-issued"
or "to-be-announced" basis.
When market conditions warrant, the U.S. Government Securities Portfolio may
adopt a defensive position by investing in money market instruments. Such
instruments, which must mature within one year of their purchase, consist of
U.S. Government securities; certificates of deposit, demand and time deposits
and bankers' acceptances of banks which are members of the Federal Deposit
Insurance Corporation and which have assets of at least $1 billion, including
U.S. branches of foreign banks and foreign branches of U.S. banks; prime
commercial paper, including master demand notes; and repurchase agreements
secured by U.S. Government securities. The investments of the U.S. Government
Securities Portfolio in commercial paper are limited to those rated A-1 by
Standard & Poor's Corporation and Prime-1 by Moody's Investors Service, Inc.
(For a description of these rating systems, see the Appendix to the SAI.)
Direct obligations of the United States include Treasury Bills which are issued
on a discount basis with a maturity of one year or less, Treasury Notes which
have maturities at issuance of between one and ten years, and Treasury Bonds
which have maturities at issuance of greater than ten years. Instrumentalities
of the United States whose debt obligations are backed by its full faith and
credit include: Government National Mortgage Association, Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, General Services Administration, Maritime
Administration, District of Columbia Armory Board, Farm Credit System, Financial
Assistance Corporation, Federal Financing Bank and Washington Metropolitan Area
Transit Authority. Federal agencies include: Farm Credit System, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage
Association and Student Loan Marketing Association.
The U.S. Government Securities Portfolio may write covered call options on
securities which it owns. Such an option on an underlying security would
obligate the Portfolio to sell, and give the purchaser of the option the right
to buy, that security at a stated exercise price at any time until a stated
expiration date of the option. The Portfolio may also purchase put and call
options for bona fide hedging purposes.
SERIES-7
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The U.S. Government Securities Portfolio may use exchange-traded futures
contracts as a hedge to protect against changes in interest rates.
A detailed discussion of certain types of investments and investment techniques
utilized by the U.S. Government Securities Portfolio is included in Exhibit A to
this Prospectus.
INVESTMENT RESTRICTIONS
The U.S. Government Securities Portfolio has adopted the following fundamental
investment restrictions which may not be changed without a vote of a majority of
the Portfolio's outstanding voting securities, as defined in the 1940 Act. These
restrictions and certain other fundamental investment restrictions are fully set
forth in the SAI. Unless otherwise noted, all references to the Portfolio's
assets are in terms of current market value. The U.S. Government Securities
Portfolio will not: (1) invest more than 5% of its assets in the securities of
any one issuer (exclusive of securities issued or guaranteed by the United
States government, its agencies or instrumentalities, for which there is no
limit); (2) borrow money, except to facilitate redemptions or borrow money for
temporary or emergency purposes and then only from banks and in amounts of up to
10% of its gross assets computed at cost; assets pledged to secure borrowings
shall be no more than the lesser of the amount borrowed or 10% of the
Portfolio's gross assets computed at cost; (3) invest more than 25% of its
assets in the securities of issuers in any single industry (exclusive of
securities of the United States, its agencies or instrumentalities, for which
there is no limit); and (4) make margin purchases or short sales of securities,
except for short-term credits which are necessary for the clearance of
transactions, and to place not more than 5% of its net asset value in total
margin deposits for positions in futures contracts.
RISK FACTORS
U.S. Government securities are considered among the safest of fixed-income
investments. As a result, however, their yields are generally lower than the
yields available from corporate debt securities. The value of the Portfolio's
securities will fluctuate based on market conditions and interest rates.
Interest rates 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.
An increase in interest rates will generally reduce the value of debt
securities, and conversely a decline in interest rates will generally increase
the value of debt securities.
SOCIAL AWARENESS STOCK PORTFOLIO
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Social Awareness Stock Portfolio (the "Social
Awareness Portfolio") is long-term capital appreciation and retention of net
investment income. The Portfolio seeks to fulfill this objective by selecting
investments, primarily common stocks, that meet certain social criteria, based
on analysis of data supplied by various research services. This principal
objective does not preclude the realization of short-term gains when conditions
suggest the long-term goal is accomplished by such short-term transactions.
The assets of the Social Awareness Portfolio generally will be invested in a
portfolio of equity securities, primarily common stocks, diversified across
industries and companies. However, when it is determined that investments of
other types may be advantageous for defensive purposes or for temporary
investment of cash flows, investments may be made in bonds, notes or other
evidence of indebtedness, issued publicly or placed privately, deemed to be of
suitable credit quality, including obligations of the United States government.
The Social Awareness Portfolio utilizes certain social criteria to define
acceptable investment vehicles for the Portfolio. Companies will not meet the
social criteria established for the Portfolio if a
SERIES-8
<PAGE> 12
significant portion of their revenues, as determined by Smith Barney Mutual
Fund Management, Inc. ("SBMFM"), are derived from: (a) the production of
tobacco, tobacco products, alcohol, or military defense systems; or (b) the
provision of military defense related services, or (c) gambling services. These
investment restrictions are not fundamental and may be changed without
shareholder approval.
Based upon SBMFM's analysis of information supplied by research services, the
Social Awareness Portfolio will not invest in the securities of a company if
SBMFM determines that the company fails to meet the social criteria outlined
above. SBMFM will review the available universe of common stocks on a quarterly
basis, and will determine which securities are acceptable investments for assets
of the Portfolio. From those deemed acceptable, SBMFM will select securities for
the Portfolio, seeking companies which appear attractive based upon quantitative
and/or qualitative analysis.
If a company fails a social criteria restriction after the Social Awareness
Portfolio has purchased its common stock, or should the Portfolio inadvertently
acquire a security which is not an acceptable investment, SBMFM will eliminate
the securities of such company from the Social Awareness Portfolio's portfolio
in an orderly manner within a reasonable period of time.
The Social Awareness Portfolio may use exchange-traded financial futures
contracts as a hedge to protect against changes in stock prices or interest
rates. The use of stock futures contracts by the Portfolio is intended primarily
to limit transaction and borrowing costs. The Social Awareness Portfolio may
also purchase and sell interest rate futures to hedge against changes in
interest rates that might otherwise have an adverse effect on the value of the
Portfolio's securities. The Portfolio may also write covered call options on
securities which it owns, and may purchase index or individual equity call or
put options. When market conditions warrant, the Social Awareness Portfolio may
adopt a defensive position to preserve shareholders' capital by investing in
money market instruments. Such instruments, which must mature within one year of
their purchase, consist of U.S. government securities; instruments of banks
which are members of the Federal Deposit Insurance Corporation and have assets
of at least $1 billion, such as certificates of deposit, demand and time
deposits and bankers' acceptances; prime commercial paper, including master
demand notes; and repurchase agreements secured by U.S. government securities.
INVESTMENT RESTRICTIONS
In addition to the social criteria listed above, the Social Awareness Portfolio
has adopted the following fundamental investment restrictions which may not be
changed without a vote of a majority of the Portfolio's outstanding voting
securities, as defined in the 1940 Act. These restrictions and certain other
fundamental investment restrictions are fully set forth in the SAI. Unless
otherwise noted, all references to the Portfolio's assets are in terms of
current market value. The Social Awareness Portfolio will not (1) invest more
than 5% of its assets in the securities of any one issuer, except obligations of
the U.S. government and its instrumentalities; (2) borrow money, except for
extraordinary or emergency purposes, including meeting redemptions or settling
securities transactions and then only from banks and in amounts of up to 10% of
its total assets; the Portfolio will not purchase securities while borrowings
exceed 5% of its total assets, except to honor prior commitments; (3) purchase
interests in real estate, except as may be represented by securities for which
there is an established market; (4) make loans, except through the acquisition
of a portion of a privately placed issue of bonds, debentures or other evidences
of indebtedness of a type customarily purchased by institutional investors; (5)
acquire more than 10% of the voting securities of any one issuer; (6) make
purchases on margin, except for short-term credits which are necessary for the
clearance of transactions, and for the placement of not more than 5% of its net
asset value in total margin deposits for positions in futures contracts; and (7)
invest more than 5% of its assets in restricted securities.
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RISK FACTORS
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. The yield
on a common stock is not contractually determined. 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.
UTILITIES PORTFOLIO
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INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of the Utilities Portfolio (the "Portfolio") is
to provide current income. Long-term capital appreciation is a secondary
objective. The Portfolio's investment objectives may be changed only with the
approval of a majority of the Portfolio's outstanding shares. There can be no
assurance that the Portfolio will achieve its investment objectives.
The Portfolio seeks to achieve its objectives by investing in equity and debt
securities of companies in the utility industries. For purposes of this
Prospectus, the utility industries are deemed to be comprised of companies
principally engaged in the manufacture, production, generation, transmission and
sale of electric and gas energy and companies principally engaged in the
communications field, including entities such as telephone, telegraph,
satellite, microwave and other companies regulated by governmental agencies as
utilities that provide communication facilities for the public benefit, but not
including those in public broadcasting. For purposes of this prospectus,
"principally engaged" means that at least 50% of a company's assets, gross
income or net profits results from utility operations or the company is
regulated as a utility by a government agency or authority. The Portfolio will
invest primarily in utility equity and debt securities that have a high expected
rate of return, as determined by the investment adviser. Under normal market
conditions, the Portfolio will invest at least 65% of its assets in such
securities. The Portfolio may invest up to 35% of its assets in equity and debt
securities of non-utility companies believed to afford a reasonable opportunity
for achieving the Portfolio's investment objectives. When the investment adviser
believes that market conditions warrant, the Portfolio may adopt a temporary
defensive posture and may invest, without limit, in debt securities (whether or
not they are utility securities) such as rated or unrated bonds, debentures and
commercial paper, U.S. government securities and money market instruments. The
Portfolio may invest up to 10% of its assets in securities rated BB or B by
Standard & Poor's Corporation ("S&P") or Ba or B by Moody's Investors Service,
Inc. ("Moody's") whenever the investment adviser believes that the incremental
yield on such securities is advantageous to the Portfolio in comparison to the
additional risk involved (such lower-rated securities are commonly known as
"junk bonds"). The yields on lower-rated fixed-income securities generally are
higher than the yields available on higher-rated securities. However,
investments in lower-rated securities may be subject to greater market
fluctuations and greater risks of loss of income or principal (including the
possibility of default by, or bankruptcy of, the issuers of such securities)
than higher-rated securities. Lower-rated securities also may have speculative
characteristics. In addition, the Portfolio may enter into repurchase
agreements. (For a description of the rating systems identified above, see the
Appendix to the SAI.)
The Utilities Portfolio has the ability to engage in a number of specialized
investment strategies and techniques designed to enable the Portfolio to achieve
its investment objectives. Included among these strategies are lending its
portfolio securities, selling securities "short against the box," writing
covered call and secured put options, as well as purchasing options on
securities, purchasing and selling interest rate futures contracts, options on
futures contracts, stock index put and call options and stock index futures
contracts, each of which are discussed in Exhibit A to this Prospectus.
SERIES-10
<PAGE> 14
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may not be
changed without a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in the 1940 Act. The Utilities Portfolio will not:
1. purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the Portfolio's
total assets would be invested in the securities of the issuer, except
that up to 25% of the value of the Portfolio's total assets may be
invested without regard to this 5% limitation;
2. purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in U.S.
government securities;
3. purchase securities on margin, except that the Portfolio may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or
related options will not be deemed to be a purchase of securities on
margin by the Portfolio;
4. make short sales of securities or maintain a short position, except to
the extent of 5% of the Portfolio's net assets and except that the
Portfolio may engage in such activities without limit if, at all times
when a short position is open, the Portfolio owns an equal amount of the
securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issuer
as, and at least equal in amount to, the securities sold short;
5. borrow money, including reverse repurchase agreements, except that the
Portfolio may borrow from banks for temporary or emergency (not
leveraging) purposes including the meeting of redemption requests that
might otherwise require the untimely disposition of securities, in an
amount not exceeding 20% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of the Portfolio's total
assets, the Portfolio will not make any additional investments;
6. pledge, hypothecate, mortgage or otherwise encumber more than 10% of the
value of the Portfolio's total assets as security for any indebtedness.
For purposes of this restriction (a) the deposit of assets in escrow in
connection with the writing of covered put or call options and the
purchase of securities on a when-issued or delayed-delivery basis and
(b) collateral arrangements with respect to (i) the purchase and sale of
stock options, options on foreign currencies and options on stock
indexes and (ii) initial or variation margin for futures contracts will
not be deemed to be pledges of the Portfolio's assets;
7. invest in commodities, except that the Portfolio may purchase or write
futures contracts and options on futures contracts as described in this
Prospectus;
8. make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into repurchase
agreements; and
9. concentrate in any industry, except that the Portfolio will concentrate
in excess of 25% of its assets in the securities of companies within the
utility industries.
In addition, the Portfolio will not purchase restricted securities, illiquid
securities (such as repurchase agreements with maturities in excess of seven
days) or other securities that are not readily marketable if more than 10% of
the total assets of the Portfolio would be invested in such securities.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investment in the Utilities Portfolio may involve above-average risk of loss
because of, among other things, the Portfolio's use of strategies and techniques
that may be considered to be speculative. The
SERIES-11
<PAGE> 15
strategy followed by the Portfolio and certain of the strategies and techniques
used by the Portfolio depend on forecasts made by Greenwich Street Advisors that
may or may not prove to be correct.
Because the Portfolio concentrates its investments in one sector, its portfolio
may be subject to greater risk and market fluctuations than a portfolio of
securities representing a broader range of investment alternatives. The
Portfolio is particularly subject to risks that are inherent to the utility
industries that make up this sector, including difficulty in obtaining an
adequate return on invested capital, difficulty in financing large construction
programs during an inflationary period, restriction on operations and increased
cost and delays attributable to environmental consideration and regulation,
difficulty in raising capital in adequate amounts on reasonable terms in periods
of high inflation and unsettled capital markets, increased costs and reduced
availability of certain types of fuel, occasional reduced availability and high
costs of natural gas for resale, the effects of energy conservation, the effects
of a national energy policy and lengthy delays and greatly increased costs and
other problems associated with the design, construction, licensing, regulation
and operation of nuclear facilities for electric generation, including, among
other considerations, the problems associated with the use of radioactive
materials and disposal of radioactive wastes. There are substantial differences
between the regulatory practices and policies of various jurisdictions, and any
given regulatory agency may make major shifts in policy from time to time. There
is no assurance that regulatory authorities will grant rate increases in the
future or that such increases will be adequate to permit the payment of
dividends on common stocks. Additionally, existing and possible future
regulatory legislation may make it even more difficult for these utilities to
obtain adequate relief. Certain of the issuers of securities held by the
Portfolio may own or operate nuclear generating facilities. Governmental
authorities may from time to time review existing policies, and impose
additional requirements governing the licensing, construction and operation of
nuclear power plants.
Each of the risks referred to above could adversely affect the ability and
inclination of public utilities to declare or pay dividends and the ability of
holders of common stock to realize any value from the assets of the issuer upon
liquidation or bankruptcy. All of the utilities which are issuers of the
securities held by the Portfolio have been experiencing one or more of these
problems in varying degrees. Moreover, price disparities within selected utility
groups and discrepancies in relation to averages and indices have occurred
frequently for reasons not directly related to the general movements or price
trends of utility common stocks. Causes of these discrepancies include changes
in the overall demand for and supply of various securities (including the
potentially depressing effect of new stock offerings), and changes in investment
objectives, market expectations or cash requirements of other purchasers and
sellers of securities.
BOARD OF TRUSTEES
- --------------------------------------------------------------------------------
Under Massachusetts law, the Series Trust's Board of Trustees has absolute and
exclusive control over the management and disposition of all assets of the
Series Trust. Subject to the provisions of the Declaration of Trust, the
business and affairs of the Series Trust 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.
Additionally, the Board of Trustees annually selects an independent public
accountant, reviews the terms of the management and investment advisory
agreements, recommends any changes in the fundamental investment policies, and
takes any other actions necessary in connection with the operation and
management of the Series Trust.
SERIES-12
<PAGE> 16
INVESTMENT ADVISERS
- --------------------------------------------------------------------------------
As described above, the Board of Trustees monitors the activities of those
entities which provide investment advisory services to the Portfolios. Travelers
Asset Management International Corporation (TAMIC) and Smith Barney Mutual Funds
Management Inc. (SBMFM) (collectively, the "investment advisers") provide
investment advice and, in general, supervise the management and investment
programs of the Portfolios of the Series Trust.
TAMIC
TAMIC is a registered investment adviser which has provided investment advisory
services since its incorporation in 1978. 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 serving as the investment adviser for the U.S. Government
Securities Portfolio, TAMIC acts as investment adviser for other investment
companies used to fund variable products issued by The Travelers and The
Travelers Life and Annuity Company; as well as for individual and pooled pension
and profit-sharing accounts and for offshore insurance companies affiliated with
The Travelers.
PORTFOLIO MANAGER -- U.S. GOVERNMENT SECURITIES PORTFOLIO
The U.S. Government Securities Portfolio has been managed by Joseph M. Mullally
since mid-1995. Mr. Mullally is a 1989 graduate of the Massachusetts Institute
of Technology with a degree in Economics and minor in Mathematics. While at MIT
he worked three years as a research assistant at the Sloan School and the
Harvard Business School. Areas of research included interest rate expectations,
foreign exchange rate expectations and causality among price volatility, volume
and investor expectations. Prior to joining The Travelers, he spend six years at
CS First Boston. He was the Corporate Fixed Income Strategist, Chief Fixed
Income Strategist and Global Product Manager for Government Securities. He has
worked extensively with mortgages, corporates, treasuries, and other investment
grade securities. He also worked in the Portfolio Strategy Group for several
years, focusing on constructing portfolios to outperform benchmark indices.
ADVISORY FEES -- U.S. GOVERNMENT SECURITIES PORTFOLIO
Under its Advisory Agreement with the U.S. Government Securities Portfolio,
TAMIC is paid an amount equivalent to 0.3233%, on an annual basis, of the
average daily net assets of the Portfolio. The fee is computed daily and paid
weekly.
SBMFM
SBMFM is located at 388 Greenwich Street, New York, New York and has been in the
investment counseling business since 1968. SBMFM renders investment advice to a
wide variety of individual, institutional and investment company clients with
aggregate assets under management in excess of $54 billion. SBMFM is a wholly
owned subsidiary of Travelers Group Inc.
SBMFM manages the day-to-day operations of the Social Awareness Stock Portfolio
and the Utilities Portfolio pursuant to Investment Advisory Agreements entered
into by the Series Trust on behalf of the Portfolios. Under the Advisory
Agreements, SBMFM is responsible for furnishing or causing to be furnished to
the Portfolios advice and assistance with respect to the acquisition, holding or
disposal of securities and recommendations with respect to other aspects and
affairs of the Portfolios.
PORTFOLIO MANAGER -- SOCIAL AWARENESS STOCK PORTFOLIO
The Social Awareness Portfolio is managed by a team of investment professionals
from Greenwich Street Advisors, a division of SBMFM. Robert J. Brady is a
Managing Director and portfolio manager for Greenwich Street Advisors and also
a Chartered Financial Analyst. Mr. Brady is also a Chartered Financial Analyst.
SERIES-13
<PAGE> 17
Mr. Brady has been with Smith Barney and its predecessor firms since 1976. Gene
H. Martino is Vice President and portfolio manager for Greenwich Street
Advisors. He has been involved with investment management for more than fifteen
years. Mr. Martino has been with Smith Barney and its predecessor firms since
1986. Previous positions also include portfolio management at Chase Manhattan
Bank and the Bankers Trust Company.
ADVISORY FEES -- SOCIAL AWARENESS STOCK PORTFOLIO
Under its Advisory Agreement with the Social Awareness Stock Portfolio, SBMFM is
paid an amount equivalent on an annual basis to the advisory fee schedule set
forth in the table below. The fee is computed daily and paid weekly.
<TABLE>
<CAPTION>
ANNUAL AGGREGATE NET ASSET
MANAGEMENT FEE VALUE OF THE FUND
--------------- --------------------
<S> <C> <C> <C>
0.65% of the first $ 50,000,000, plus
0.55% of the next $ 50,000,000, plus
0.45% of the next $100,000,000, plus
0.40% of amounts over $200,000,000
</TABLE>
PORTFOLIO MANAGER -- UTILITIES PORTFOLIO
The Utilities Portfolio is managed by a team of investment professionals from
Greenwich Street Advisors, a division of SBMFM. Jack S. Levande is a Managing
Director and Portfolio Manager for Greenwich Street Advisors. Prior to joining
Greenwich Street Advisors in 1987, Mr. Levande worked at E.F. Hutton as Product
Manager for convertible securities. In addition to managing the Utilities
Portfolio, Mr. Levande also manages the SB Convertible Bond Fund and serves as a
member of the Greenwich Street Advisors Investment Policy Committee. George
Mueller is a Senior Vice President of Taxable Fixed-Income Management at
Greenwich Street Advisors, specializing in corporate bond portfolios. Prior to
joining the firm in 1985, he was a Portfolio Manager for pension and charitable
foundation accounts at Chase Manhattan Bank. In addition to his responsibilities
associated with the Utilities Portfolio, Mr. Mueller is the Portfolio Manager
for the SB Investment Grade Bond Fund, and serves as a member of the Greenwich
Street Advisors Investment Policy Committee.
ADVISORY FEES -- UTILITIES PORTFOLIO
For the services provided under the Advisory Agreement with the Utilities
Portfolio, the Portfolio pays SBMFM a management fee equivalent on an annual
basis to 0.65% of its average daily net assets. The fee is calculated daily and
paid monthly.
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Under policies established by the Board of Trustees, the investment advisers
select broker-dealers to execute transactions subject to the receipt of best
execution. When selecting broker-dealers to execute portfolio transactions for
the Portfolios, the investment advisers may consider the number of Portfolio
shares sold by such broker-dealers. In addition, broker-dealers may from time to
time be affiliated with the Series Trust, the investment advisers or their
affiliates.
The Portfolios may pay higher commissions to broker-dealers that provide
research services. The investment advisers may use these services in advising
the Portfolios, as well as in advising their other clients.
SERIES-14
<PAGE> 18
FUND EXPENSES
- --------------------------------------------------------------------------------
In addition to the investment advisory fees discussed above, other expenses of
the Series Trust and the Portfolios include the charges and expenses of the
transfer agent, the custodian, the independent auditors, and any outside legal
counsel employed by either the Series Trust or the Board of Trustees; the
compensation for the unaffiliated members of the Board of Trustees; the costs of
printing and mailing the Series Trust's prospectus, 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 Series Trust
and its shares under federal and state securities laws. Additional high
portfolio turnover may involve greater brokerage commissions and other
transaction costs, which will be borne directly by the Portfolios, as well as
additional gains and/or losses to shareholders.
Pursuant to Management Agreements dated May 1, 1996 between the Series Trust and
The Travelers Insurance Company and between the Series Trust and The Travelers
Life and Annuity Company, each Company agreed to reimburse the Series Trust for
the amount by which each Portfolio's aggregate annual expenses, including
investment advisory fees but excluding brokerage commissions, interest charges
and taxes, exceed 1.25% of each Portfolio's average net assets for any fiscal
year.
For the fiscal year ended December 31, 1995, the U.S. Government Securities
Portfolio, the Social Awareness Stock Portfolio and the Utilities Portfolio paid
.56%, 1.25% and 1.25%, respectively, of their average net assets in expenses.
For the Social Awareness Stock Portfolio and the Utilities Portfolio, these
expenses would have been 1.75% and 1.27%, respectively, of the Portfolios'
average net assets if the Company had not paid for any of their expenses. For
the U.S. Government Securities Portfolio, there was no expense reimbursement for
the fiscal year ended December 31, 1995.
TRANSFER AGENT
- --------------------------------------------------------------------------------
The Travelers Insurance Company, One Tower Square, Hartford, Connecticut 06183,
serves as the Series Trust's transfer agent and dividend disbursing agent.
SHARES OF THE SERIES TRUST
- --------------------------------------------------------------------------------
The Series Trust currently issues one class of shares divided into multiple
series. Under the Declaration of Trust, the Board of Trustees is authorized to
create new series of shares without the necessity of a vote of shareholders of
the Series Trust. All shares of each series of the Series Trust have equal
voting, dividend and liquidation rights. When issued and paid for, the shares
will be fully paid and nonassessable by the Series Trust and will have no
preference, conversion, exchange or preemptive rights.
Shareholders are entitled to one vote for each full share owned and fractional
votes for fractional shares. Shares of each series are entitled to vote
separately to approve investment advisory agreements or changes in fundamental
investment restrictions, but shares of all series vote together in the election
of Trustees and the selection of accountants. 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 shareholder of any series may be
held personally liable for a Portfolio's obligations. However, the Series
Trust's Declaration of Trust provides that shareholders shall not be subject to
any personal liability for the Series Trust's obligations and provides
indemnification from Series Trust assets for any shareholder held personally
liable for the
SERIES-15
<PAGE> 19
Series Trust's obligations. Disclaimers of such liability are included in each
agreement entered into by the Series Trust or its Portfolios.
Shares of the Series Trust are currently sold only to insurance company separate
accounts in connection with variable annuity and variable life insurance
contracts issued by the Company and The Travelers Life and Annuity Company.
Shares are not sold to the general public. Shares of the Series Trust 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 Series Trust'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 Series Trust is not currently aware of any disadvantages to
contract owners of either variable annuity or variable life insurance contracts
because the Series Trust'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 Series Trust due to
differences in tax treatment, management of the Trust's investments, or other
considerations. The Series Trust'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
- --------------------------------------------------------------------------------
The net asset value of a Portfolio share is computed as of the close of trading
on each day on which the New York Stock Exchange is open for trading, except on
days when changes in the value of the Portfolio's securities do not affect the
current net asset value of its shares. The net asset value per share is arrived
at by determining the value of the Portfolio's assets, subtracting its
liabilities, and dividing the result by the number of shares outstanding.
The Portfolios value short-term money market instruments with maturities of
sixty days or less at amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount) which, when combined with
accrued interest approximates market. All other investments are valued at market
value, or where market quotations are not readily available, at fair value as
determined in good faith by the Series Trust's Board of Trustees.
SHARE REDEMPTION
- --------------------------------------------------------------------------------
Portfolio shares are redeemed at the redemption value next determined after the
Portfolios receive 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 Portfolio's
securities between purchase and redemption.
The Portfolio computes the redemption value at the close of the New York Stock
Exchange ("Exchange") at the end of the day on which they have 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 Series Trust or the Portfolio may temporarily suspend the right to redeem
their 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 Portfolio's investments
or determination of its net asset value is not reasonably practicable; or (4)
the SEC, for the protection of shareholders, so orders.
SERIES-16
<PAGE> 20
DIVIDENDS AND TAX STATUS
- --------------------------------------------------------------------------------
The Series Trust and its Portfolios have qualified and intend to qualify in the
future as a regulated investment company under Subchapter M of the Internal
Revenue Code, as amended. A Portfolio qualifies if, among other things, it
distributes to its shareholders at least 90% of its investment company taxable
income during each fiscal year.
Capital gains and dividends are distributed in cash or reinvested in additional
shares of a Portfolio without a sales charge. Although purchasers of variable
contracts are not currently subject to federal income taxes on distributions
made by the Portfolios, 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 Series Trust or
the Portfolios.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Except as otherwise stated in this Prospectus or as required by law, the Series
Trust 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.
SERIES-17
<PAGE> 21
EXHIBIT A
- --------------------------------------------------------------------------------
DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS AND
INVESTMENT TECHNIQUES AVAILABLE TO THE PORTFOLIOS
The following types of investments and investment techniques are available to
each of the Portfolios unless otherwise specifically indicated. Please refer to
the investment objective and policies of each Portfolio for a list of available
investments.
VARIABLE AMOUNT MASTER DEMAND NOTES
Variable amount master demand notes are unsecured obligations that permit the
investment of fluctuating amounts by a Portfolio at varying rates of interest
pursuant to direct arrangements between the Portfolio as lender and the issuer
as borrower. Master demand notes permit daily fluctuations in the interest rate
and daily changes in the amounts borrowed. A Portfolio 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. Because these types of notes are direct
lending arrangements between the lender and the borrower, it is not generally
contemplated that such instruments will be 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, a
Portfolio's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. In connection with master demand note
arrangements, the investment advisers consider earning power, cash flow and
other liquidity ratios of the issuer. These notes, as such, are not typically
rated by credit rating agencies. Unless they are so rated, the Portfolios will
invest in them only if, at the time of an investment, the issuer meets the
criteria set forth for all other commercial paper. Pursuant to procedures
established by the investment advisers, such notes are treated as instruments
maturing in one day and valued at their par value. The investment advisers
intend to continuously monitor factors related to the ability of the borrower to
pay principal and interest on demand.
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 investment 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 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.
SERIES-18
<PAGE> 22
WHEN-ISSUED SECURITIES
The U.S. Government Securities Portfolio 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 Portfolio 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 Portfolio's net
asset value daily from the commitment date. While it is the investment adviser'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 Portfolio
does not make payment or begin to accrue interest on these securities until
settlement date. In order to invest its assets pending settlement, the Portfolio
will normally invest in short-term money market instruments and other securities
maturing no later than the scheduled settlement date.
The Portfolio 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 Portfolio 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.
The investment adviser believes that purchasing securities in this manner will
be advantageous to the Portfolio. 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 Portfolio would experience
a gain or loss equal to the appreciation or depreciation in value from the
commitment date. The investment adviser employs rigorous credit quality
procedures 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.
CERTIFICATES OF DEPOSIT
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 FDIC).
The Portfolios 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 Portfolios do 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
SERIES-19
<PAGE> 23
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 Portfolios 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.
FUTURES CONTRACTS
The Portfolios may use exchange-traded financial futures contracts as a hedge to
protect against 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"). An interest rate futures contract is a
contract to buy or sell specified debt securities at a future time for a fixed
price. 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.
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 Portfolios' transactions in such
financial futures be employed for speculative purposes.
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.
When a futures contract is purchased, the Portfolios 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. The
Portfolios will not purchase or sell futures contracts for which the aggregate
initial margin exceeds five percent (5%) of the fair market value of their
respective assets, after taking into account unrealized profits and unrealized
losses on any such contracts they have entered into.
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 debt security and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if less, a loss. While futures
positions taken by the Portfolios will usually be liquidated in this manner, the
Portfolios may instead make or take delivery of the underlying securities
whenever it appears economically advantageous for them to do so. In determining
gain or loss, transaction costs must be taken into account. There can be no
assurance that the Portfolios will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time.
All interest rate and stock index futures contracts will be traded on exchanges
that are licensed and regulated by the Commodity Futures Trading Commission
("CFTC"). To ensure that its futures transactions meet CFTC standards, the
Portfolios will enter into futures contracts for hedging purposes only, i.e.,
for the purposes or with the intent specified in CFTC regulations and
interpretations, subject to the requirements of the SEC. The Portfolios will
further seek to assure that
SERIES-20
<PAGE> 24
fluctuations in the price of any futures contracts that they use for hedging
purposes will be substantially related to fluctuations in the price of the
securities which they hold or which they expect 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 Portfolios expect that on seventy-five
percent (75%) or more of the occasions on which they purchase a long futures
contract, they will effect the purchase of securities in the cash market or take
delivery as they close 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 Portfolios may
benefit from the use of such futures, changes in interest rates or stock price
movements may result in a poorer overall performance for the Portfolios than if
they 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 Portfolios may be exposed to risk of loss. The investment advisers will
attempt to reduce this risk by engaging in futures transactions, to the extent
possible, where, in their 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.
In addition to the possibility that there may be a less than perfect correlation
between movements in the futures contracts and securities in the portfolio being
hedged, the prices of futures contracts may not correlate perfectly with
movements in the underlying security due to certain market distortions. First,
rather than meeting variation margin deposit requirements should a futures
contract value move adversely, investors may close future contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, since margin requirements in the futures
market are less onerous than in the securities market, the futures market may
attract more speculators than the securities market. Increased participation by
speculators may cause temporary price distortions. Due to the possibility of
such price distortion, and also because of the imperfect correlation discussed
above, even a correct forecast of general market trends by the investment
advisers may not result in a successful hedging transaction in the futures
market over a short time period.
Successful use of futures contracts for hedging purposes is also subject to the
investment advisers' ability to predict correctly movements in the direction of
the market. However, the investment advisers believe that over time the value of
the investments of the Portfolios will tend to move in the same direction as the
market indices which are intended to correlate to the price movements of the
portfolio securities sought to be hedged.
WRITING COVERED CALL OPTIONS
The Portfolios may write (i.e., sell) covered call options. By writing a call
option, a Portfolio becomes obligated during the term of the option to deliver
the securities underlying the option upon payment of the exercise price.
The Portfolios may only write "covered" options. This means that as long as a
Portfolio 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, a Portfolio 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 Portfolios receive a premium from writing a call option
which they retain whether or not the option is exercised. By writing a call
option, a Portfolio might lose the potential for gain on the underlying security
while the option is open.
SERIES-21
<PAGE> 25
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 a Portfolio's ability
to use such options to achieve its investment objectives.
BUYING PUT AND CALL OPTIONS
The Portfolios 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 Portfolios 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 Portfolios, 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 the
investment advisers anticipate 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 Portfolios will pay a premium in exchange for the right to purchase (call)
or sell (put) a specific par value of a fixed income or 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, a Portfolio's risk is
limited to the option premium paid.
The Portfolios 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.
SHORT SALES AGAINST THE BOX
The Utilities Portfolio may make short sales (except to the extent of 5% of the
Portfolio's net assets) if at all times when a position is open, the Portfolio
owns the stock or owns preferred stock or debt securities convertible or
exchangeable without payment of further consideration for, securities of the
same issue as the securities sold short. Short sales of this kind are referred
to as "against the box." Short sales against the box are used to defer
recognition of capital gains or losses.
Possible losses from short sales differ from losses that could be incurred from
a purchase of a security, because losses from short sales may be unlimited,
whereas losses from purchases can equal only the total amount invested.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES
The sale of securities that are not publicly traded is typically restricted
under the federal securities laws. As a result, the Utilities Portfolio may be
forced to sell these securities at less than fair market value or may not be
able to sell them when the investment adviser believes it is desirable to do so.
The Portfolio's investments in illiquid securities are subject to the risk that
should the Portfolio desire to sell any of these securities when a ready buyer
is not available at a price that the Portfolio deems representative of their
value, the value of the Portfolio's net assets could be adversely affected. The
Portfolio currently limits its investments in such securities to 10% of the
Portfolio's assets.
SERIES-22
<PAGE> 26
FOREIGN SECURITIES AND AMERICAN DEPOSITORY RECEIPTS
The Utilities Portfolio may purchase foreign securities or American Depository
Receipts ("ADRs"). ADRs are U.S. dollar-denominated receipts issued generally by
domestic banks representing the deposit with the bank of a security of a foreign
issuer. ADRs are publicly traded on exchanges or over the counter in the United
States.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio transactions,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. Additionally, dividends payable on foreign
securities may be subject to foreign taxes withheld prior to distribution.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Changes in
foreign exchange rates will affect the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar. Many of the
foreign securities held by the Portfolio will not be registered with, nor will
the issuers thereof be subject to the reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about the
securities and the foreign company or government issuing them than is available
about a domestic company of government entity. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment positions.
LENDING PORTFOLIO SECURITIES
The U.S. Government Securities Portfolio and the Utilities Portfolio are
authorized to lend their portfolio securities to brokers, dealers and other
financial organizations. The Portfolios' loan of securities will be
collateralized by cash, letters of credit or U.S. government securities that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities. By lending its securities, the Portfolio seeks to
generate income by continuing to receive interest on the loaned securities, by
investing the cash collateral in shortterm instruments or by obtaining yield in
the form of interest paid by the borrower when U.S. government securities are
used as collateral.
The risk associated with lending portfolio securities, as with other extensions
of credit, consists of possible loss of rights in the collateral should the
borrower fail financially.
SERIES-23
<PAGE> 27
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
TIC Ed. 4-96
L-11788-U Printed in U.S.A.
<PAGE> 28
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE 860-422-3985
- --------------------------------------------------------------------------------
The Travelers Series Trust (the "Series Trust") is a diversified open-end
management investment company (mutual fund) which consists of multiple series of
shares (the "Portfolios"), each with its own investment objective and policies.
The Portfolios of the Series Trust described herein are the U.S. Government
Securities Portfolio, the Utilities Portfolio, and the Zero Coupon Bond Fund
Portfolios (Series 1998, 2000 and 2005).
Shares of the Portfolios are currently offered without a sales charge to
separate accounts of The Travelers Insurance Company and The Travelers Life and
Annuity Company (collectively, "the Company" or "The Travelers"). The Portfolios
serve as investment vehicles for variable annuity and variable life insurance
contracts issued by the Company. All Portfolios described herein may not be
available under all variable contracts. The term "shareholder" as used herein
refers to any insurance company separate account that may use shares of the
Portfolios as investment vehicles now or in the future.
This Prospectus concisely sets forth the information about the Series Trust and
applicable Portfolios that you should know before investing. Please read it and
retain it for future reference. Additional information about the Series Trust
and the Portfolios is contained in a Statement of Additional Information ("SAI")
dated April 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 APRIL 3, 1996.
<PAGE> 29
TABLE OF CONTENTS
<TABLE>
<S> <C>
FINANCIAL HIGHLIGHTS -- U.S. Government Securities Portfolio.......................... 3
FINANCIAL HIGHLIGHTS -- Utilities Portfolio........................................... 4
FINANCIAL HIGHLIGHTS -- Zero Coupon Bond Fund Portfolios
(Series 1998, 2000, 2005)........................................................... 5
THE TRAVELERS SERIES TRUST............................................................ 6
U.S. GOVERNMENT SECURITIES PORTFOLIO.................................................. 6
Investment Objective and Policies................................................... 6
Investment Restrictions............................................................. 7
Risk Factors........................................................................ 7
UTILITIES PORTFOLIO................................................................... 7
Investment Objective and Policies................................................... 7
Investment Restrictions............................................................. 8
Risk Factors and Special Considerations............................................. 9
ZERO COUPON BOND FUND PORTFOLIOS (Series 1998, 2000, 2005)............................ 10
Investment Objective and Policies................................................... 10
Investment Restrictions............................................................. 10
Risk Factors and Special Considerations Relating to Maturity........................ 11
Tax Considerations.................................................................. 12
BOARD OF TRUSTEES..................................................................... 13
INVESTMENT ADVISERS................................................................... 13
TAMIC............................................................................... 13
Portfolio Managers -- U.S. Government Securities Portfolio;
Zero Coupon Bond Fund Portfolios................................................. 13
Advisory Fees -- U.S. Government Securities Portfolio;
Zero Coupon Bond Fund Portfolios................................................. 14
SBMFM............................................................................... 14
Portfolio Manager -- Utilities Portfolio............................................ 14
Advisory Fees -- Utilities Portfolio................................................ 14
SECURITIES TRANSACTIONS............................................................... 14
FUND EXPENSES......................................................................... 15
TRANSFER AGENT........................................................................ 15
SHARES OF THE SERIES TRUST............................................................ 15
PRICING SHARES........................................................................ 16
SHARE REDEMPTION...................................................................... 16
DIVIDENDS AND TAX STATUS.............................................................. 17
LEGAL PROCEEDINGS..................................................................... 17
ADDITIONAL INFORMATION................................................................ 17
EXHIBIT A............................................................................. 18
</TABLE>
SERIES-2
<PAGE> 30
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the U.S. Government Securities
Portfolio for each of the three years in the period ended December 31, 1995 and
the period January 24, 1992 (date operations commenced) to December 31, 1992 has
been audited by Coopers & Lybrand L.L.P., Independent Accountants. Their report
on the per share data for each of the periods 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>
JANUARY 24,*
YEAR ENDED DECEMBER 31, TO
-------------------------------- DECEMBER 31,
1995 1994 1993 1992
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning of period................ $ 10.58 $ 11.63 $ 10.79 $10.00
Income from operations
Net investment income............................... 0.65 0.60 0.57 0.53
Net gains on securities (realized and unrealized)... 1.80 (1.23) 0.44 0.26
-------- -------- -------- ------------
Total from investment operations.................. 2.45 (0.63) 1.01 0.79
Less distributions
Distributions from net investment income and
short-term realized gains......................... (0.60) (0.39) (0.17) --
Distributions from long-term realized gains......... -- (0.03) -- --
-------- -------- -------- ------------
Total distributions............................... $ (0.60) $ (0.42) $ (0.17) --
Net asset value, end of period...................... $ 12.43 $ 10.58 $ 11.63 $10.79
======= ======= ======= ===========
TOTAL RETURN**........................................ $ 24.42% (5.64)% 9.48% 7.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)............... $ 28,192 $ 24,522 $ 25,520 $9,017
Ratio of expenses to average net assets+............ 0.56% 0.71% 0.58% 0.38%***
Ratio of net income to average net assets........... 5.80% 5.56% 5.04% 4.72%***
Portfolio turnover rate............................. 214% 16% 51% 25%
</TABLE>
<TABLE>
<C> <S>
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a share during the period, after
reflecting the reinvestment of dividends declared during the period, by the beginning of period share price.
Shares in the U.S. Government Securities Portfolio are only sold to The Travelers separate accounts in
connection with the issuance of variable annuity and variable life insurance contracts. Total return does not
reflect the deduction of any contract charges or fees assessed by The Travelers separate accounts. For the
periods less than one year, total returns are not annualized.
*** Annualized.
+ The ratio of expenses to average net assets reflects an expense reimbursement by The Travelers in connection
with voluntary expense limitations. Without the expense reimbursement, the ratio of operating expenses to
average net assets would have been 0.77% and 0.72% for the year ended December 31, 1993 and the period ended
December 31, 1992, 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.
</TABLE>
SERIES-3
<PAGE> 31
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the Utilities Portfolio for the
year ended December 31, 1995 and the period February 4, 1994 (date operations
commenced) to December 31, 1994 has been audited by Coopers & Lybrand L.L.P.,
Independent Accountants. Their report on the per share data for each of the
periods 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>
FEBRUARY 4,*
TO
DECEMBER 31,
1995 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period......................................... $ 10.17 $10.00
Income from operations
Net investment income........................................................ 0.48 0.35
Net losses on securities (realized and unrealized)........................... 2.44 (0.18)
-------- ------------
Total from investment operations........................................... 2.92 0.17
Less distributions
Distributions from net investment income and short-term realized gains....... (0.24) --
-------- ------------
Total distributions........................................................ (0.24) --
Net asset value, end of period............................................... $ 12.85 $10.17
======= ===========
TOTAL RETURN**................................................................. 29.29% 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)........................................ $ 15,340 $5,757
Ratio of expenses to average net assets***................................... 1.25% 1.25%#
Ratio of net investment income to average net assets......................... 4.29% 3.86%#
Portfolio turnover rate...................................................... 25% 32%
Average Commission Rate Paid****............................................. .0590 --
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a share during the period, after
reflecting the reinvestment of dividends declared during the period, by the beginning of period share price.
Shares in the Utilities Portfolio 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
contract charges or fees assessed by The Travelers separate accounts. For periods less than one year, total
returns are not annualized.
*** The ratio of expenses to average net assets reflects an expense reimbursement by The Travelers in connection
with the voluntary expense limitations. Without the expense reimbursement, the ratio of operating expenses to
average net assets would have been 1.27% and 3.49% annualized for the year ended December 31, 1995 and the
period ended December 31, 1994, respectively.
**** 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.
# Annualized.
</TABLE>
SERIES-4
<PAGE> 32
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIOS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the Zero Coupon Bond Fund
Portfolios (Series 1998, 2000, 2005) for the period October 11, 1995 (date
operations commenced) to December 31, 1995 has been audited by Coopers & Lybrand
L.L.P., Independent Accountants. Their report on the per share data for 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>
OCTOBER 11* TO DECEMBER 31, 1995
-----------------------------------------
SERIES 1998 SERIES 2000 SERIES 2005
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning of period............................. $ 10.00 $ 10.00 $ 10.00
Income from operations
Net investment income............................................ 0.12 0.13 0.13
Net losses on securities (realized and unrealized)............... 0.13 0.18 0.35
----------- ----------- -----------
Total from investment operations............................... 0.25 0.31 0.48
Net asset value, end of period................................... $ 10.25 $ 10.31 $ 10.48
========= ========= =========
TOTAL RETURN**..................................................... 2.50% 3.10% 4.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)............................ $ 1,024 $ 1,029 $ 1,050
Ratio of expenses to average net assets***....................... 0.15%# 0.15%# 0.15%#
Ratio of net investment income to average net assets............. 5.55%# 5.61%# 5.89%#
Portfolio turnover rate.......................................... 20% 34% 23%
</TABLE>
<TABLE>
<C> <S>
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a share during the period, after
reflecting the reinvestment of dividends declared during the period, by the beginning of period share price.
Shares of the three Zero Coupon Bond Fund Portfolios are only sold to The Travelers separate accounts in
connection with the issuance of variable life insurance contracts. The total return does not reflect contract
charges or fees assessed by The Travelers separate accounts. For periods less than one year, total returns are
not annualized.
*** The ratio of expenses to average net assets reflects an expense reimbursement by The Travelers in connection
with the voluntary expense limitations. Without the expense reimbursements, the ratios of operating expenses
to average net assets would have been, on an annualized basis, 6.51%, 6.51%, and 6.48% for Series 1998, 2000
and 2005, respectively.
# Annualized.
</TABLE>
SERIES-5
<PAGE> 33
THE TRAVELERS SERIES TRUST
- --------------------------------------------------------------------------------
The Travelers Series Trust (the "Series Trust") is registered with the SEC as an
open-end management investment company. The Series Trust is organized as a
business trust under the laws of the Commonwealth of Massachusetts. An Agreement
and Declaration of Trust dated October 11, 1991 (the "Declaration of Trust")
authorizes the shares of the Series Trust to be divided into two or more series
related to separate portfolios of investments, and further allows the Board of
Trustees to establish additional portfolios at any time.
The Series Trust is currently divided into six series (the "Portfolios") (with
seven Portfolios to be added by June 1996), each with its own investment
objective and policies, all of which are diversified portfolios under the
Investment Company Act of 1940, as amended ("1940 Act").
U.S. GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The U.S. Government Securities Portfolio's investment objective is to seek the
highest credit quality, current income and total return. To achieve this
objective, the U.S. Government Securities Portfolio invests primarily in direct
obligations of the United States, obligations of its instrumentalities supported
by its full faith and credit, and obligations issued or guaranteed by federal
agencies which are independent corporations sponsored by the United States and
which are subject to its general supervision, but which are not supported by the
full faith and credit of the United States. The Portfolio may, from time to
time, purchase new-issue or government or agency securities on a "when-issued"
or "to-be-announced" basis.
When market conditions warrant, the U.S. Government Securities Portfolio may
adopt a defensive position by investing in money market instruments. Such
instruments, which must mature within one year of their purchase, consist of
U.S. Government securities; certificates of deposit, demand and time deposits
and bankers' acceptances of banks which are members of the Federal Deposit
Insurance Corporation and which have assets of at least $1 billion, including
U.S. branches of foreign banks and foreign branches of U.S. banks; prime
commercial paper, including master demand notes; and repurchase agreements
secured by U.S. Government securities. The investments of the U.S. Government
Securities Portfolio in commercial paper are limited to those rated A-1 by
Standard & Poor's Corporation and Prime-1 by Moody's Investors Service, Inc.
(For a description of these rating systems, see the Appendix to the SAI.)
Direct obligations of the United States include Treasury Bills which are issued
on a discount basis with a maturity of one year or less, Treasury Notes which
have maturities at issuance of between one and ten years, and Treasury Bonds
which have maturities at issuance of greater than ten years. Instrumentalities
of the United States whose debt obligations are backed by its full faith and
credit include: Government National Mortgage Association, Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, General Services Administration, Maritime
Administration, District of Columbia Armory Board, Farm Credit System, Financial
Assistance Corporation, Federal Financing Bank and Washington Metropolitan Area
Transit Authority. Federal agencies include: Farm Credit System, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage
Association and Student Loan Marketing Association.
The U.S. Government Securities Portfolio may write covered call options on
securities which it owns. Such an option on an underlying security would
obligate the Portfolio to sell, and give the purchaser of the option the right
to buy, that security at a stated exercise price at any time until a stated
expiration date of the option. The Portfolio may also purchase put and call
options for bona fide hedging purposes.
SERIES-6
<PAGE> 34
The U.S. Government Securities Portfolio may use exchange-traded futures
contracts as a hedge to protect against changes in interest rates.
A detailed discussion of certain types of investments and investment techniques
utilized by the U.S. Government Securities Portfolio is included in Exhibit A to
this Prospectus.
INVESTMENT RESTRICTIONS
The U.S. Government Securities Portfolio has adopted the following fundamental
investment restrictions which may not be changed without a vote of a majority of
the Portfolio's outstanding voting securities, as defined in the 1940 Act. These
restrictions and certain other fundamental investment restrictions are fully set
forth in the SAI. Unless otherwise noted, all references to the Portfolio's
assets are in terms of current market value. The U.S. Government Securities
Portfolio will not: (1) invest more than 5% of its assets in the securities of
any one issuer (exclusive of securities issued or guaranteed by the United
States government, its agencies or instrumentalities, for which there is no
limit); (2) borrow money, except to facilitate redemptions or borrow money for
temporary or emergency purposes and then only from banks and in amounts of up to
10% of its gross assets computed at cost; assets pledged to secure borrowings
shall be no more than the lesser of the amount borrowed or 10% of the
Portfolio's gross assets computed at cost; (3) invest more than 25% of its
assets in the securities of issuers in any single industry (exclusive of
securities of the United States, its agencies or instrumentalities, for which
there is no limit); and (4) make margin purchases or short sales of securities,
except for short-term credits which are necessary for the clearance of
transactions, and to place not more than 5% of its net asset value in total
margin deposits for positions in futures contracts.
RISK FACTORS
U.S. Government securities are considered among the safest of fixed-income
investments. As a result, however, their yields are generally lower than the
yields available from corporate debt securities. The value of the Portfolio's
securities will fluctuate based on market conditions and interest rates.
Interest rates 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.
An increase in interest rates will generally reduce the value of debt
securities, and conversely a decline in interest rates will generally increase
the value of debt securities.
UTILITIES PORTFOLIO
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INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of the Utilities Portfolio (the "Portfolio") is
to provide current income. Long-term capital appreciation is a secondary
objective. The Portfolio's investment objectives may be changed only with the
approval of a majority of the Portfolio's outstanding shares. There can be no
assurance that the Portfolio will achieve its investment objectives.
The Portfolio seeks to achieve its objectives by investing in equity and debt
securities of companies in the utility industries. For purposes of this
Prospectus, the utility industries are deemed to be comprised of companies
principally engaged in the manufacture, production, generation, transmission and
sale of electric and gas energy and companies principally engaged in the
communications field, including entities such as telephone, telegraph,
satellite, microwave and other companies regulated by governmental agencies as
utilities that provide communication facilities for the public benefit, but not
including those in public broadcasting. For purposes of this prospectus,
"principally engaged" means that at least 50% of a company's assets, gross
income or net profits results from utility operations or the company is
regulated as a utility by a government agency or authority. The Portfolio will
invest primarily in utility equity and debt securities that have a high expected
rate of
SERIES-7
<PAGE> 35
return, as determined by the investment adviser. Under normal market conditions,
the Portfolio will invest at least 65% of its assets in such securities. The
Portfolio may invest up to 35% of its assets in equity and debt securities of
non-utility companies believed to afford a reasonable opportunity for achieving
the Portfolio's investment objectives. When the investment adviser believes that
market conditions warrant, the Portfolio may adopt a temporary defensive posture
and may invest, without limit, in debt securities (whether or not they are
utility securities) such as rated or unrated bonds, debentures and commercial
paper, U.S. government securities and money market instruments. The Portfolio
may invest up to 10% of its assets in securities rated BB or B by Standard &
Poor's Corporation ("S&P") or Ba or B by Moody's Investors Service, Inc.
("Moody's") whenever the investment adviser believes that the incremental yield
on such securities is advantageous to the Portfolio in comparison to the
additional risk involved (such lower-rated securities are commonly known as
"junk bonds"). The yields on lower-rated fixed-income securities generally are
higher than the yields available on higher-rated securities. However,
investments in lower-rated securities may be subject to greater market
fluctuations and greater risks of loss of income or principal (including the
possibility of default by, or bankruptcy of, the issuers of such securities)
than higher-rated securities. Lower-rated securities also may have speculative
characteristics. In addition, the Portfolio may enter into repurchase
agreements. (For a description of the rating systems identified above, see the
Appendix to the SAI.)
The Utilities Portfolio has the ability to engage in a number of specialized
investment strategies and techniques designed to enable the Portfolio to achieve
its investment objectives. Included among these strategies are lending its
portfolio securities, selling securities "short against the box," writing
covered call and secured put options, as well as purchasing options on
securities, purchasing and selling interest rate futures contracts, options on
futures contracts, stock index put and call options and stock index futures
contracts, each of which are discussed in Exhibit A to this Prospectus.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may not be
changed without a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in the 1940 Act. The Utilities Portfolio will not:
1. purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the Portfolio's
total assets would be invested in the securities of the issuer, except
that up to 25% of the value of the Portfolio's total assets may be
invested without regard to this 5% limitation;
2. purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in U.S.
government securities;
3. purchase securities on margin, except that the Portfolio may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or
related options will not be deemed to be a purchase of securities on
margin by the Portfolio;
4. make short sales of securities or maintain a short position, except to
the extent of 5% of the Portfolio's net assets and except that the
Portfolio may engage in such activities without limit if, at all times
when a short position is open, the Portfolio owns an equal amount of the
securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issuer
as, and at least equal in amount to, the securities sold short;
5. borrow money, including reverse repurchase agreements, except that the
Portfolio may borrow from banks for temporary or emergency (not
leveraging) purposes including the meeting of redemption requests that
might otherwise require the untimely disposition of securities, in an
amount not exceeding 20% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount
SERIES-8
<PAGE> 36
borrowed) at the time the borrowing is made. Whenever borrowings exceed
5% of the value of the Portfolio's total assets, the Portfolio will not
make any additional investments;
6. pledge, hypothecate, mortgage or otherwise encumber more than 10% of the
value of the Portfolio's total assets as security for any indebtedness.
For purposes of this restriction (a) the deposit of assets in escrow in
connection with the writing of covered put or call options and the
purchase of securities on a when-issued or delayed-delivery basis and
(b) collateral arrangements with respect to (i) the purchase and sale of
stock options, options on foreign currencies and options on stock
indexes and (ii) initial or variation margin for futures contracts will
not be deemed to be pledges of the Portfolio's assets;
7. invest in commodities, except that the Portfolio may purchase or write
futures contracts and options on futures contracts as described in this
Prospectus;
8. make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into repurchase
agreements; and
9. concentrate in any industry, except that the Portfolio will concentrate
in excess of 25% of its assets in the securities of companies within the
utility industries.
In addition, the Portfolio will not purchase restricted securities, illiquid
securities (such as repurchase agreements with maturities in excess of seven
days) or other securities that are not readily marketable if more than 10% of
the total assets of the Portfolio would be invested in such securities.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investment in the Utilities Portfolio may involve above-average risk of loss
because of, among other things, the Portfolio's use of strategies and techniques
that may be considered to be speculative. The strategy followed by the Portfolio
and certain of the strategies and techniques used by the Portfolio depend on
forecasts made by Greenwich Street Advisors that may or may not prove to be
correct.
Because the Portfolio concentrates its investments in one sector, its portfolio
may be subject to greater risk and market fluctuations than a portfolio of
securities representing a broader range of investment alternatives. The
Portfolio is particularly subject to risks that are inherent to the utility
industries that make up this sector, including difficulty in obtaining an
adequate return on invested capital, difficulty in financing large construction
programs during an inflationary period, restriction on operations and increased
cost and delays attributable to environmental consideration and regulation,
difficulty in raising capital in adequate amounts on reasonable terms in periods
of high inflation and unsettled capital markets, increased costs and reduced
availability of certain types of fuel, occasional reduced availability and high
costs of natural gas for resale, the effects of energy conservation, the effects
of a national energy policy and lengthy delays and greatly increased costs and
other problems associated with the design, construction, licensing, regulation
and operation of nuclear facilities for electric generation, including, among
other considerations, the problems associated with the use of radioactive
materials and disposal of radioactive wastes. There are substantial differences
between the regulatory practices and policies of various jurisdictions, and any
given regulatory agency may make major shifts in policy from time to time. There
is no assurance that regulatory authorities will grant rate increases in the
future or that such increases will be adequate to permit the payment of
dividends on common stocks. Additionally, existing and possible future
regulatory legislation may make it even more difficult for these utilities to
obtain adequate relief. Certain of the issuers of securities held by the
Portfolio may own or operate nuclear generating facilities. Governmental
authorities may from time to time review existing policies, and impose
additional requirements governing the licensing, construction and operation of
nuclear power plants.
Each of the risks referred to above could adversely affect the ability and
inclination of public utilities to declare or pay dividends and the ability of
holders of common stock to realize any value from the assets of the issuer upon
liquidation or bankruptcy. All of the utilities which are issuers of the
securities held by the Portfolio have been experiencing one or more of these
problems in varying
SERIES-9
<PAGE> 37
degrees. Moreover, price disparities within selected utility groups and
discrepancies in relation to averages and indices have occurred frequently for
reasons not directly related to the general movements or price trends of utility
common stocks. Causes of these discrepancies include changes in the overall
demand for and supply of various securities (including the potentially
depressing effect of new stock offerings), and changes in investment objectives,
market expectations or cash requirements of other purchasers and sellers of
securities.
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
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INVESTMENT OBJECTIVE AND POLICIES
The objective of each of the three Zero Coupon Bond Portfolios is to provide as
high an investment return as is consistent with the preservation of capital.
Each Portfolio's investment objective may be changed only with the approval of a
majority of the Portfolio's outstanding shares. There can be no assurance that a
Portfolio will achieve its investment objective.
Each Portfolio seeks to return a reasonably assured targeted dollar amount,
predictable at the time of investment, on a specific target date in the future
by investing in primarily zero coupon securities that pay no cash income but are
acquired by the Portfolio at substantial discounts from their values at
maturity. The Zero Coupon Bond Portfolios may not be appropriate for contract
owners who do not plan to allocate their premiums to the Portfolios for the
long-term or until maturity.
Under normal circumstances, each Zero Coupon Bond Portfolio will invest at least
65% of its net assets in "Stripped Securities," a term used collectively for
Stripped Treasury Securities, Stripped Government Securities, Stripped Corporate
Securities and Stripped Eurodollar Obligations and other stripped securities,
all described in Exhibit A to this prospectus.
The remaining 35% of each Zero Coupon Bond Portfolio's assets may be invested in
non-zero coupon securities such as common stock and other equity securities,
bonds and other debt securities, and money market instruments.
Each Zero Coupon Bond Portfolio may invest up to 25% of its assets in securities
of foreign issuers. Investments in Stripped Eurodollar Obligations where
delivery takes place outside the U.S. will be made in compliance with any
applicable U.S. and foreign currency restrictions, tax laws and laws limiting
the amount and types of foreign investments. Stripped Eurodollar Obligations
involve special risks associated with investment in foreign securities related
to market, currency, economic, political, and other factors.
To provide income for expenses, redemption payments, and cash dividends, up to
20% of each Portfolio's assets may be invested in money market instruments.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may not be
changed without a vote of majority of the outstanding voting securities of each
Zero Coupon Bond Portfolio, as defined in the 1940 Act. Each of the Zero Coupon
Bond Portfolios will not:
(1) purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the Portfolio's
total assets would be invested in the securities of the issuer, except
that up to 25% of the value of the Portfolio's total assets may be
invested without regard to this 5% limitation;
(2) purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in U.S.
government securities;
SERIES-10
<PAGE> 38
(3) purchase securities on margin, except that each Portfolio may obtain
any short-term credits necessary for the clearance of purchases and
sales of securities. For purposes of this restriction, the deposit or
payment of initial or variation margin in connection with futures
contracts or related options will not be deemed to be a purchase of
securities on margin by a Portfolio;
(4) make short sales of securities or maintain a short position, except to
the extent of 5% of each Portfolio's net assets and except that a
Portfolio may engage in such activities without limit if, at all times
when a short position is open, the Portfolio owns an equal amount of
the securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issuer
as, and at least equal in amount to, the securities sold short;
(5) borrow money, including reverse repurchase agreements, except that each
Portfolio may borrow from banks for temporary or emergency (not
leveraging) purposes including the meeting of redemption requests that
might otherwise require the untimely disposition of securities, in an
amount not exceeding 20% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of a Portfolio's total
assets, the Portfolio will not make any additional investments;
(6) pledge, hypothecate, mortgage or otherwise encumber more than 10% of
the value of a Portfolio's total assets as security for any
indebtedness. For purposes of this restriction (a) the deposit of
assets in escrow in connection with the writing of covered put or call
options and the purchase of securities on a when-issued or
delayed-delivery basis and (b) collateral arrangements with respect to
(i) the purchase and sale of stock options, options on foreign
currencies and options on stock indexes and (ii) initial or variation
margin for futures contracts will not be deemed to be pledges of a
Portfolio's assets;
(7) invest in commodities, except that each Portfolio may purchase or write
futures contracts and options on futures contracts as described in this
Prospectus;
(8) make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into
repurchase agreements; and
(9) concentrate in any industry.
In addition, the Portfolios will not purchase restricted securities, illiquid
securities (such as repurchase agreements with maturities in excess of seven
days) or other securities that are not readily marketable if more than 10% of
the total assets of a Portfolio would be invested in such securities.
RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING TO MATURITY
Various levels of risk are involved with each Zero Coupon Bond Portfolio. The
risks inherent in investing in any of the Portfolios are that their net asset
value will fluctuate in response to changes in economic conditions, interest
rates and the market's perception of the underlying securities of the
Portfolios.
Stripped securities investments, like other investments in debt securities, are
subject to certain risks, including credit and market risks. To the extent that
the Portfolios invest in Stripped Securities other than Stripped Treasury
Securities, such investments will be rated at least A by one or more nationally
recognized statistical rating agencies. Such securities are regarded as having
an adequate capacity to pay principal and interest but with greater
vulnerability to adverse economic conditions and have some speculative
characteristics. The Zero Coupon Bond Portfolios will also attempt to minimize
the impact of individual credit risks by diversifying their portfolio
investments.
Stripped Securities do not make any periodic payments of interest prior to
maturity and the stripping of the interest coupons causes the Stripped
Securities to be offered at a substantial or "deep"
SERIES-11
<PAGE> 39
discount from their face amounts. The market value of Stripped Securities and,
therefore, of the shares of the Zero Coupon Bond Portfolios, will fluctuate with
changes in interest rates and other factors and may be subject to greater
fluctuations in response to changing interest rates than would a fund consisting
of debt obligations of comparable maturities that pay interest currently. The
amount of fluctuation increases with a longer period of maturity.
Special Considerations Relating to Maturity: The Series Trust currently offers
three separate Zero Coupon Bond Portfolios, each maturing on the third Friday of
December of its specific maturity year (the "Target Date"): 1998, 2000, and
2005. On each Portfolio's Target Date, the Portfolio will be converted to cash
and an investor may invest in another of the Contract's Funds. If an investor
does not complete an instruction form directing what should be done with
liquidation proceeds, the proceeds will be automatically invested in the Smith
Barney Money Market Portfolio or Cash Income Trust, as applicable, and the
Policyholder will be notified of such event.
Because each Portfolio will be primarily invested in zero coupon securities,
investors whose premiums are invested in shares held to maturity, including
those obtained through reinvestment of dividends and distributions, will
experience a return consisting primarily of the amortization of discount on the
underlying securities in the Portfolio. However, the net asset value of a
Portfolio's shares increases or decreases with changes in the market value of
that Portfolio's investments, which tends to vary inversely with changes in
prevailing interest rates. If shares of a Zero Coupon Bond Portfolio are
redeemed prior to the maturity of the Portfolio, an investor may experience a
significantly different investment return than was anticipated at the time of
purchase.
The Portfolio's investment adviser will attempt to maintain the average duration
of each Portfolio to within twelve months of the Portfolio's Target Date.
Duration is a measure of the length of an investment which takes into account,
through present value analysis, the timing and amount of any interest payments
as well as the amount of the principal repayment. Duration is commonly used by
professional managers to help identify and control reinvestment risk. Since each
Portfolio will not be invested entirely in zero coupon securities maturing on
the Target Date, there will be some reinvestment risk with respect to those
other investments. By balancing investments with slightly longer and shorter
durations, the investment adviser believes it can maintain a Portfolio's average
duration within twelve months of the Portfolio's Target Date and thereby reduce
its reinvestment risk. Because they do not pay interest, zero coupon securities
tend to be subject to greater fluctuation of market value in response to changes
in interest rates than interest-paying securities of similar maturities.
Investors can expect more appreciation from a Zero Coupon Bond Portfolio during
periods of declining interest rates than from interest-paying securities of
similar maturity. Conversely, when interest rates rise, a Zero Coupon Bond
Portfolio will normally decline more in price than interest-paying securities of
similar maturity. Price fluctuations are expected to be greatest in the longer-
maturity Funds and are expected to diminish as a Portfolio approaches its
maturity date. Interest rates can change suddenly and unpredictably.
In addition, due to securities maturing prior to the termination of the Zero
Coupon Bond Portfolio, a risk that the proceeds from the sale of such securities
will not be reinvested at the same interest rate which was available at the time
of the contract owner's purchase may exist. As an example, in a falling interest
rate environment, proceeds for securities that mature prior to the termination
date of a Zero Coupon Bond Portfolio will be reinvested at a lower rate.
Similarly, in a rising interest environment, the proceeds will be invested at a
higher interest rate.
TAX CONSIDERATIONS
Under the federal income tax law, a portion of the difference between the
purchase price of the zero coupon securities and their face value ("original
issue discount") is considered to be income to the Zero Coupon Bond Portfolios
each year, even though such Portfolio will not receive cash payments
representing the discount from these securities. This original issue discount
will comprise a part of the net taxable investment income of such Portfolio
which must be "distributed" to the insurance company shareholders each year,
whether or not such distributions are paid in cash. To the extent
SERIES-12
<PAGE> 40
such distributions are paid in cash, the Portfolio may have to generate the
required cash from interest earned on non-zero coupon securities such as
corporate bonds or possibly from the disposition of zero coupon securities.
BOARD OF TRUSTEES
- --------------------------------------------------------------------------------
Under Massachusetts law, the Series Trust's Board of Trustees has absolute and
exclusive control over the management and disposition of all assets of the
Series Trust. Subject to the provisions of the Declaration of Trust, the
business and affairs of the Series Trust 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.
Additionally, the Board of Trustees annually selects an independent public
accountant, reviews the terms of the management and investment advisory
agreements, recommends any changes in the fundamental investment policies, and
takes any other actions necessary in connection with the operation and
management of the Series Trust.
INVESTMENT ADVISERS
- --------------------------------------------------------------------------------
As described above, the Board of Trustees monitors the activities of those
entities which provide investment advisory services to the Portfolios. Travelers
Asset Management International Corporation (TAMIC) and Smith Barney Mutual Funds
Management Inc. (SBMFM) (collectively, the "investment advisers") provide
investment advice and, in general, supervise the management and investment
programs of the Portfolios of the Series Trust.
TAMIC
TAMIC is a registered investment adviser which has provided investment advisory
services since its incorporation in 1978. 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 serving as the investment adviser for the U.S. Government
Securities Portfolio, TAMIC acts as investment adviser for other investment
companies used to fund variable products issued by The Travelers and The
Travelers Life and Annuity Company; as well as for individual and pooled pension
and profit-sharing accounts and for offshore insurance companies affiliated with
The Travelers.
PORTFOLIO MANAGERS -- U.S. GOVERNMENT SECURITIES PORTFOLIO;
ZERO COUPON BOND FUND PORTFOLIOS
The U.S. Government Securities Portfolio has been managed by Joseph M. Mullally
since mid-1995. Mr. Mullally is a 1989 graduate of the Massachusetts Institute
of Technology with a degree in Economics and minor in Mathematics. While at MIT
he worked three years as a research assistant at the Sloan School and the
Harvard Business School. Areas of research included interest rate expectations,
foreign exchange rate expectations and causality among price volatility, volume
and investor expectations. Prior to joining The Travelers, he spend six years at
CS First Boston. He was the Corporate Fixed Income Strategist, Chief Fixed
Income Strategist and Global Product Manager for Government Securities. He has
worked extensively with mortgages, corporates, treasuries, and other investment
grade securities. He also worked in the Portfolio Strategy Group for several
years, focusing on constructing portfolios to outperform benchmark indices.
The Zero Coupon Bond Fund Portfolios are managed by David A. Tyson, Ph.D. and
CFA. 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
SERIES-13
<PAGE> 41
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.
ADVISORY FEES -- U.S. GOVERNMENT SECURITIES PORTFOLIO;
ZERO COUPON BOND FUND PORTFOLIOS
Under its Advisory Agreement with the U.S. Government Securities Portfolio,
TAMIC is paid an amount equivalent to 0.3233%, on an annual basis, of the
average daily net assets of the Portfolio. Under its Advisory Agreement with the
Zero Coupon Bond Portfolios, TAMIC is paid an amount equivalent on an annual
basis to .10% of the average daily net assets of each Portfolio. The fees are
computed daily and paid weekly. The Travelers has decided to voluntarily
reimburse the Zero Coupon Bond Fund Portfolios for any expenses above 0.15%
(includes the .10% management fee to TAMIC, but excludes brokerage commissions
and interest charges).
SBMFM
SBMFM is located at 388 Greenwich Street, New York, New York and has been in the
investment counseling business since 1968. SBMFM renders investment advice to a
wide variety of individual, institutional and investment company clients with
aggregate assets under management in excess of $54 billion. SBMFM is a wholly
owned subsidiary of Travelers Group Inc.
SBMFM manages the day-to-day operations of the Utilities Portfolio pursuant to
an Investment Advisory Agreement entered into by the Series Trust on behalf of
the Portfolio. Under the Advisory Agreement, SBMFM is responsible for furnishing
or causing to be furnished to the Portfolio advice and assistance with respect
to the acquisition, holding or disposal of securities and recommendations with
respect to other aspects and affairs of the Portfolio.
PORTFOLIO MANAGER -- UTILITIES PORTFOLIO
The Utilities Portfolio is managed by a team of investment professionals from
Greenwich Street Advisors, a division of SBMFM. Jack S. Levande is a Managing
Director and Portfolio Manager for Greenwich Street Advisors. Prior to joining
Greenwich Street Advisors in 1987, Mr. Levande worked at E.F. Hutton as Product
Manager for convertible securities. In addition to managing the Utilities
Portfolio, Mr. Levande also manages the SB Convertible Bond Fund and serves as a
member of the Greenwich Street Advisors Investment Policy Committee. George
Mueller is a Senior Vice President of Taxable Fixed-Income Management at
Greenwich Street Advisors, specializing in corporate bond portfolios. Prior to
joining the firm in 1985, he was a Portfolio Manager for pension and charitable
foundation accounts at Chase Manhattan Bank. In addition to his responsibilities
associated with the Utilities Portfolio, Mr. Mueller is the Portfolio Manager
for the SB Investment Grade Bond Fund, and serves as a member of the Greenwich
Street Advisors Investment Policy Committee.
ADVISORY FEES -- UTILITIES PORTFOLIO
For the services provided under the Advisory Agreement with the Utilities
Portfolio, the Portfolio pays SBMFM a management fee equivalent on an annual
basis to 0.65% of its average daily net assets. The fee is calculated daily and
paid monthly.
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Under policies established by the Board of Trustees, the investment advisers
select broker-dealers to execute transactions subject to the receipt of best
execution. When selecting broker-dealers to execute portfolio transactions for
the Portfolios, the investment advisers may consider the number of
SERIES-14
<PAGE> 42
Portfolio shares sold by such broker-dealers. In addition, broker-dealers may
from time to time be affiliated with the Series Trust, the investment advisers
or their affiliates.
The Portfolios may pay higher commissions to broker-dealers that provide
research services. The investment advisers may use these services in advising
the Portfolios, as well as in advising their other clients.
FUND EXPENSES
- --------------------------------------------------------------------------------
In addition to the investment advisory fees discussed above, other expenses of
the Series Trust and the Portfolios include the charges and expenses of the
transfer agent, the custodian, the independent auditors, and any outside legal
counsel employed by either the Series Trust or the Board of Trustees; the
compensation for the unaffiliated members of the Board of Trustees; the costs of
printing and mailing the Series Trust's prospectus, 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 Series Trust
and its shares under federal and state securities laws. Additional high
portfolio turnover may involve greater brokerage commissions and other
transaction costs, which will be borne directly by the Portfolios, as well as
additional gains and/or losses to shareholders.
Pursuant to Management Agreements dated May 1, 1996 between the Series Trust and
The Travelers Insurance Company and between the Series Trust and The Travelers
Life and Annuity Company, each Company agreed to reimburse the Series Trust for
the amount by which each Portfolio's aggregate annual expenses, including
investment advisory fees but excluding brokerage commissions, interest charges
and taxes, exceed 1.25% of each Portfolio's average net assets for any fiscal
year.
For the fiscal year ended December 31, 1995, the U.S. Government Securities
Portfolio, and the Utilities Portfolio paid .56% and 1.25%, respectively, of
their average net assets in expenses. For the Utilities Portfolio, these
expenses would have been 1.27% of the Portfolio's average net assets if the
Company had not paid for any of its expenses. For the U.S. Government Securities
Portfolio, there was no expense reimbursement for the fiscal year ended December
31, 1995.
The three Zero Coupon Bond Fund Portfolios began operating on October 11, 1995.
Series 1998 paid .15%, Series 2000 paid .15% and Series 2005 paid .15% of their
average assets in expenses. These expenses would have been, on an annualized
basis, 6.51%, 6.51% and 6.48%, respectively, of the Portfolios' average net
assets if the Company had not paid for any of their expenses.
TRANSFER AGENT
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The Travelers Insurance Company, One Tower Square, Hartford, Connecticut 06183,
serves as the Series Trust's transfer agent and dividend disbursing agent.
SHARES OF THE SERIES TRUST
- --------------------------------------------------------------------------------
The Series Trust currently issues one class of shares divided into multiple
series. Under the Declaration of Trust, the Board of Trustees is authorized to
create new series of shares without the necessity of a vote of shareholders of
the Series Trust. All shares of each series of the Series Trust have equal
voting, dividend and liquidation rights. When issued and paid for, the shares
will be fully paid and nonassessable by the Series Trust and will have no
preference, conversion, exchange or preemptive rights.
SERIES-15
<PAGE> 43
Shareholders are entitled to one vote for each full share owned and fractional
votes for fractional shares. Shares of each series are entitled to vote
separately to approve investment advisory agreements or changes in fundamental
investment restrictions, but shares of all series vote together in the election
of Trustees and the selection of accountants. 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 shareholder of any series may be
held personally liable for a Portfolio's obligations. However, the Series
Trust's Declaration of Trust provides that shareholders shall not be subject to
any personal liability for the Series Trust's obligations and provides
indemnification from Series Trust assets for any shareholder held personally
liable for the Series Trust's obligations. Disclaimers of such liability are
included in each agreement entered into by the Series Trust or its Portfolios.
Shares of the Series Trust are currently sold only to insurance company separate
accounts in connection with variable annuity and variable life insurance
contracts issued by the Company and The Travelers Life and Annuity Company.
Shares are not sold to the general public. Shares of the Series Trust 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 Series Trust'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 Series Trust is not currently aware of any disadvantages to
contract owners of either variable annuity or variable life insurance contracts
because the Series Trust'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 Series Trust due to
differences in tax treatment, management of the Trust's investments, or other
considerations. The Series Trust'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
- --------------------------------------------------------------------------------
The net asset value of a Portfolio share is computed as of the close of trading
on each day on which the New York Stock Exchange is open for trading, except on
days when changes in the value of the Portfolio's securities do not affect the
current net asset value of its shares. The net asset value per share is arrived
at by determining the value of the Portfolio's assets, subtracting its
liabilities, and dividing the result by the number of shares outstanding.
The Portfolios value short-term money market instruments with maturities of
sixty days or less at amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount) which, when combined with
accrued interest approximates market. All other investments are valued at market
value, or where market quotations are not readily available, at fair value as
determined in good faith by the Series Trust's Board of Trustees.
SHARE REDEMPTION
- --------------------------------------------------------------------------------
Portfolio shares are redeemed at the redemption value next determined after the
Portfolios receive 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 Portfolio's
securities between purchase and redemption.
SERIES-16
<PAGE> 44
The Portfolio computes the redemption value at the close of the New York Stock
Exchange ("Exchange") at the end of the day on which they have 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 Series Trust or the Portfolio may temporarily suspend the right to redeem
their 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 Portfolio'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
- --------------------------------------------------------------------------------
The Series Trust and its Portfolios have qualified and intend to qualify in the
future as a regulated investment company under Subchapter M of the Internal
Revenue Code, as amended. A Portfolio qualifies if, among other things, it
distributes to its shareholders at least 90% of its investment company taxable
income during each fiscal year.
Capital gains and dividends are distributed in cash or reinvested in additional
shares of a Portfolio without a sales charge. Although purchasers of variable
contracts are not currently subject to federal income taxes on distributions
made by the Portfolios, 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 Series Trust or
the Portfolios.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Except as otherwise stated in this Prospectus or as required by law, the Series
Trust 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.
SERIES-17
<PAGE> 45
EXHIBIT A
- --------------------------------------------------------------------------------
DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS AND
INVESTMENT TECHNIQUES AVAILABLE TO THE PORTFOLIOS
The following types of investments and investment techniques are available to
each of the Portfolios unless otherwise specifically indicated. Please refer to
the investment objective and policies of each Portfolio for a list of available
investments.
VARIABLE AMOUNT MASTER DEMAND NOTES
Variable amount master demand notes are unsecured obligations that permit the
investment of fluctuating amounts by a Portfolio at varying rates of interest
pursuant to direct arrangements between the Portfolio as lender and the issuer
as borrower. Master demand notes permit daily fluctuations in the interest rate
and daily changes in the amounts borrowed. A Portfolio 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. Because these types of notes are direct
lending arrangements between the lender and the borrower, it is not generally
contemplated that such instruments will be 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, a
Portfolio's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. In connection with master demand note
arrangements, the investment advisers consider earning power, cash flow and
other liquidity ratios of the issuer. These notes, as such, are not typically
rated by credit rating agencies. Unless they are so rated, the Portfolios will
invest in them only if, at the time of an investment, the issuer meets the
criteria set forth for all other commercial paper. Pursuant to procedures
established by the investment advisers, such notes are treated as instruments
maturing in one day and valued at their par value. The investment advisers
intend to continuously monitor factors related to the ability of the borrower to
pay principal and interest on demand.
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 investment 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 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.
SERIES-18
<PAGE> 46
WHEN-ISSUED SECURITIES
The U.S. Government Securities Portfolio 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 Portfolio 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 Portfolio's net
asset value daily from the commitment date. While it is the investment adviser'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 Portfolio
does not make payment or begin to accrue interest on these securities until
settlement date. In order to invest its assets pending settlement, the Portfolio
will normally invest in short-term money market instruments and other securities
maturing no later than the scheduled settlement date.
The Portfolio 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 Portfolio 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.
The investment adviser believes that purchasing securities in this manner will
be advantageous to the Portfolio. 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 Portfolio would experience
a gain or loss equal to the appreciation or depreciation in value from the
commitment date. The investment adviser employs rigorous credit quality
procedures 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.
CERTIFICATES OF DEPOSIT
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 FDIC).
The Portfolios 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 Portfolios do 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
SERIES-19
<PAGE> 47
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 Portfolios 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.
FUTURES CONTRACTS
The Portfolios may use exchange-traded financial futures contracts as a hedge to
protect against 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"). An interest rate futures contract is a
contract to buy or sell specified debt securities at a future time for a fixed
price. 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.
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 Portfolios' transactions in such
financial futures be employed for speculative purposes.
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.
When a futures contract is purchased, the Portfolios 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. The
Portfolios will not purchase or sell futures contracts for which the aggregate
initial margin exceeds five percent (5%) of the fair market value of their
respective assets, after taking into account unrealized profits and unrealized
losses on any such contracts they have entered into.
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 debt security and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if less, a loss. While futures
positions taken by the Portfolios will usually be liquidated in this manner, the
Portfolios may instead make or take delivery of the underlying securities
whenever it appears economically advantageous for them to do so. In determining
gain or loss, transaction costs must be taken into account. There can be no
assurance that the Portfolios will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time.
All interest rate and stock index futures contracts will be traded on exchanges
that are licensed and regulated by the Commodity Futures Trading Commission
("CFTC"). To ensure that its futures transactions meet CFTC standards, the
Portfolios will enter into futures contracts for hedging purposes only, i.e.,
for the purposes or with the intent specified in CFTC regulations and
interpretations, subject to the requirements of the SEC. The Portfolios will
further seek to assure that
SERIES-20
<PAGE> 48
fluctuations in the price of any futures contracts that they use for hedging
purposes will be substantially related to fluctuations in the price of the
securities which they hold or which they expect 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 Portfolios expect that on seventy-five
percent (75%) or more of the occasions on which they purchase a long futures
contract, they will effect the purchase of securities in the cash market or take
delivery as they close 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 Portfolios may
benefit from the use of such futures, changes in interest rates or stock price
movements may result in a poorer overall performance for the Portfolios than if
they 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 Portfolios may be exposed to risk of loss. The investment advisers will
attempt to reduce this risk by engaging in futures transactions, to the extent
possible, where, in their 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.
In addition to the possibility that there may be a less than perfect correlation
between movements in the futures contracts and securities in the portfolio being
hedged, the prices of futures contracts may not correlate perfectly with
movements in the underlying security due to certain market distortions. First,
rather than meeting variation margin deposit requirements should a futures
contract value move adversely, investors may close future contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, since margin requirements in the futures
market are less onerous than in the securities market, the futures market may
attract more speculators than the securities market. Increased participation by
speculators may cause temporary price distortions. Due to the possibility of
such price distortion, and also because of the imperfect correlation discussed
above, even a correct forecast of general market trends by the investment
advisers may not result in a successful hedging transaction in the futures
market over a short time period.
Successful use of futures contracts for hedging purposes is also subject to the
investment advisers' ability to predict correctly movements in the direction of
the market. However, the investment advisers believe that over time the value of
the investments of the Portfolios will tend to move in the same direction as the
market indices which are intended to correlate to the price movements of the
portfolio securities sought to be hedged.
WRITING COVERED CALL OPTIONS
The Portfolios may write (i.e., sell) covered call options. By writing a call
option, a Portfolio becomes obligated during the term of the option to deliver
the securities underlying the option upon payment of the exercise price.
The Portfolios may only write "covered" options. This means that as long as a
Portfolio 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, a Portfolio 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 Portfolios receive a premium from writing a call option
which they retain whether or not the option is exercised. By writing a call
option, a Portfolio might lose the potential for gain on the underlying security
while the option is open.
SERIES-21
<PAGE> 49
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 a Portfolio's ability
to use such options to achieve its investment objectives.
BUYING PUT AND CALL OPTIONS
The Portfolios 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 Portfolios 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 Portfolios, 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 the
investment advisers anticipate 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 Portfolios will pay a premium in exchange for the right to purchase (call)
or sell (put) a specific par value of a fixed income or 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, a Portfolio's risk is
limited to the option premium paid.
The Portfolios 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.
SHORT SALES AGAINST THE BOX
The Utilities Portfolio may make short sales (except to the extent of 5% of the
Portfolio's net assets) if at all times when a position is open, the Portfolio
owns the stock or owns preferred stock or debt securities convertible or
exchangeable without payment of further consideration for, securities of the
same issue as the securities sold short. Short sales of this kind are referred
to as "against the box." Short sales against the box are used to defer
recognition of capital gains or losses.
Possible losses from short sales differ from losses that could be incurred from
a purchase of a security, because losses from short sales may be unlimited,
whereas losses from purchases can equal only the total amount invested.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES
The sale of securities that are not publicly traded is typically restricted
under the federal securities laws. As a result, the Utilities Portfolio may be
forced to sell these securities at less than fair market value or may not be
able to sell them when the investment adviser believes it is desirable to do so.
The Portfolio's investments in illiquid securities are subject to the risk that
should the Portfolio desire to sell any of these securities when a ready buyer
is not available at a price that the Portfolio deems representative of their
value, the value of the Portfolio's net assets could be adversely affected. The
Portfolio currently limits its investments in such securities to 10% of the
Portfolio's assets.
SERIES-22
<PAGE> 50
FOREIGN SECURITIES AND AMERICAN DEPOSITORY RECEIPTS
The Utilities Portfolio may purchase foreign securities or American Depository
Receipts ("ADRs"). ADRs are U.S. dollar-denominated receipts issued generally by
domestic banks representing the deposit with the bank of a security of a foreign
issuer. ADRs are publicly traded on exchanges or over the counter in the United
States.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio transactions,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. Additionally, dividends payable on foreign
securities may be subject to foreign taxes withheld prior to distribution.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Changes in
foreign exchange rates will affect the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar. Many of the
foreign securities held by the Portfolio will not be registered with, nor will
the issuers thereof be subject to the reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about the
securities and the foreign company or government issuing them than is available
about a domestic company of government entity. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment positions.
LENDING PORTFOLIO SECURITIES
The U.S. Government Securities Portfolio and the Utilities Portfolio are
authorized to lend their portfolio securities to brokers, dealers and other
financial organizations. The Portfolios' loan of securities will be
collateralized by cash, letters of credit or U.S. government securities that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities. By lending its securities, the Portfolio seeks to
generate income by continuing to receive interest on the loaned securities, by
investing the cash collateral in shortterm instruments or by obtaining yield in
the form of interest paid by the borrower when U.S. government securities are
used as collateral.
The risk associated with lending portfolio securities, as with other extensions
of credit, consists of possible loss of rights in the collateral should the
borrower fail financially.
STRIPPED SECURITIES
Under normal circumstances, each Zero Coupon Bond Portfolio will invest at least
65% of its net assets in "Stripped Securities," a term used collectively for
Stripped Treasury Securities, Stripped Government Securities, Stripped Corporate
Securities and Stripped Eurodollar Obligations and other stripped securities,
all described below. The Stripped Securities in which each Portfolio will invest
consist of:
(1) debt obligations issued by the U.S. Treasury that have been stripped of
their unmatured interest coupons; interest coupons that have been
stripped from debt obligations issued by the U.S. Treasury; and
receipts and certificates for stripped debt obligations and stripped
coupons, including U.S. government trust certificates (collectively,
"Stripped Treasury Securities") (but currently not anticipated to be in
excess of 55% of the Funds' assets);
(2) other zero coupon securities issued by the U.S. government and its
agencies and instrumentalities, by a variety of tax-exempt issuers such
as state and local governments and their agencies and instrumentalities
and by "mixed-ownership government corporations" (collectively,
"Stripped Government Securities");
SERIES-23
<PAGE> 51
(3) zero coupon securities issued by domestic corporations which consist of
corporate debt obligations without interest coupons, and, if available,
interest coupons that have been stripped from corporate debt
obligations, and receipts and certificates for such stripped debt
obligations and stripped coupons (collectively, "Stripped Corporate
Securities");
(4) zero coupon securities issued by certain entities which consist of
stripped debt obligations and stripped coupons of asset-backed
securities, which zero coupon-type securities may exist today or may be
developed in the future. These securities may be illiquid and are
subject to the 10% limitation for such restricted securities, as
described under Investment Restrictions.
(5) stripped Eurodollar obligations, which are debt securities denominated
in U.S. dollars that are issued by foreign issuers, often subsidiaries
of domestic corporations ("Stripped Eurodollar Obligations").
SERIES-24
<PAGE> 52
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
TIC Ed. 4-96
L-11788-L Printed in U.S.A.
<PAGE> 53
SUPPLEMENT DATED OCTOBER 3, 1995
TO PROSPECTUS DATED MAY 1, 1995
- --------------------------------------------------------------------------------
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
- --------------------------------------------------------------------------------
The following information supplements the Prospectus dated May 1, 1995 for The
Travelers Series Trust and its portfolios.
USE WITH VARIABLE LIFE INSURANCE CONTRACTS
Effective October 3, 1995, shares of the three Zero Coupon Bond Fund Portfolios
of The Travelers Series Trust (the "Series Trust") are also offered to The
Travelers Fund UL for Variable Life Insurance and The Travelers Variable Life
Insurance Separate Account Three, separate accounts of The Travelers Insurance
Company ("Travelers Insurance"), which serve as investment vehicles for variable
life insurance contracts ("Contracts") issued by Travelers Insurance. In
addition, the three Zero Coupon Bond Fund Portfolios (also called "Zero Coupon
Bond Portfolios," "Portfolios" or "Funds") are also offered to The Travelers
Variable Life Insurance Separate Account One, which serves as an investment
vehicle for variable life insurance contracts issued by The Travelers Life and
Annuity Company.
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
Effective October 3, 1995, the Zero Coupon Bond Portfolios were added as the
fourth, fifth and sixth series of shares under the Series Trust. Information
relating to the new Portfolios, their investment objectives, policies and
investment risks, as well as the investment adviser, are provided below.
INVESTMENT OBJECTIVE AND POLICIES
The objective of each of the three Zero Coupon Bond Portfolios is to provide as
high an investment return as is consistent with the preservation of capital.
Each Portfolio's investment objective may be changed only with the approval of a
majority of the Portfolio's outstanding shares. There can be no assurance that a
Portfolio will achieve its investment objective.
Each Portfolio seeks to return a reasonably assured targeted dollar amount,
predictable at the time of investment, on a specific target date in the future
by investing in primarily zero coupon securities that pay no cash income but are
acquired by the Portfolio at substantial discounts from their value at maturity.
The Zero Coupon Bond Portfolios may not be appropriate for contract owners who
do not plan to have their premiums invested in shares of the Portfolios for the
long-term or until maturity.
INVESTMENT SECURITIES, STRATEGIES AND TECHNIQUES
Under normal circumstances, each Zero Coupon Bond Portfolio will invest at least
65% of its net assets in "Stripped Securities," a term used collectively for
Stripped Treasury Securities, Stripped Government Securities, Stripped Corporate
Securities and Stripped Eurodollar Obligations and other stripped securities,
all described below. The Stripped Securities in which each Portfolio will invest
consist of:
1) debt obligations issued by the U.S. Treasury that have been stripped of
their unmatured interest coupons, interest coupons that have been stripped
from debt obligations issued by the U.S. Treasury, and receipts and
certificates for stripped debt obligations and stripped coupons, including
U.S. government trust certificates (collectively, "Stripped Treasury
Securities") (but currently not anticipated to be in excess of 55% of the
Funds' assets);
<PAGE> 54
2) other zero coupon securities issued by the U.S. government and its agencies
and instrumentalities, by a variety of tax-exempt issuers such as state and
local governments and their agencies and instrumentalities and by
"mixed-ownership government corporations" (collectively, "Stripped
Government Securities");
3) zero coupon securities issued by domestic corporations which consist of
corporate debt obligations without interest coupons, and, if available,
interest coupons that have been stripped from corporate debt obligations,
and receipts and certificates for such stripped debt obligations and
stripped coupons (collectively, "Stripped Corporate Securities");
4) zero coupon securities issued by certain entities which consist of stripped
debt obligations and stripped coupons of asset-backed securities, which
zero coupon-type securities may exist today or may be developed in the
future. These securities may be illiquid and are subject to the 10%
limitation for such restricted securities, as described on page 4.
5) stripped Eurodollar obligations, which are debt securities denominated in
U.S. dollars that are issued by foreign issuers, often subsidiaries of
domestic corporations ("Stripped Eurodollar Obligations").
As to the remaining 35% of each Zero Coupon Bond Portfolio, the assets may be
invested in non-zero coupon securities such as common stock and other equity
securities, bonds and other debt securities, and money market instruments.
Foreign Portfolio Investments. Each Zero Coupon Bond Portfolio may invest up to
25% of its assets in securities of foreign issuers. Investments in Stripped
Eurodollar Obligations where delivery takes place outside the U.S. will be made
in compliance with any applicable U.S. and foreign currency restrictions and
other tax laws and laws limiting the amount and types of foreign investments.
Stripped Eurodollar Obligations involve special risks associated with investment
in foreign securities related to market, currency, economic, political, and
other factors.
General Risk Factors. Various levels of risk are involved with each Zero Coupon
Bond Portfolio. The risks inherent in investing in any of the Portfolios are
that their net asset value will fluctuate in response to changes in economic
conditions, interest rates and the market's perception of the underlying
securities of the Portfolios.
Risks of Investing in Stripped Securities. Stripped securities investments, like
other investments in debt securities, are subject to certain risks, including
credit and market risks. To the extent that the Portfolios invest in Stripped
Securities other than Stripped Treasury Securities, such investments will be
rated at least A by one or more nationally recognized statistical rating
agencies. Such securities are regarded as having an adequate capacity to pay
principal and interest but with greater vulnerability to adverse economic
conditions and have some speculative characteristics. The Zero Coupon Bond
Portfolios will also attempt to minimize the impact of individual credit risks
by diversifying their portfolio investments.
Stripped Securities do not make any periodic payments of interest prior to
maturity and the stripping of the interest coupons causes the Stripped
Securities to be offered at a substantial or "deep" discount from their face
amounts. The market value of Stripped Securities and, therefore, of the shares
of the Zero Coupon Bond Portfolios, will fluctuate with changes in interest
rates and other factors and may be subject to greater fluctuations in response
to changing interest rates than would a fund consisting of debt obligations of
comparable maturities that pay interest currently. The amount of fluctuation
increases with a longer period of maturity.
Special Consideration Relating to Maturity. The Series Trust currently offers
three separate Zero Coupon Bond Portfolios, each maturing on the third Friday of
December of its specific maturity year (the "Target Date"): 1998, 2000, and
2005. On each Portfolio's Target Date, the Portfolio will be converted to cash
and an investor may invest in another of the Contract's Funds. If an investor
does not complete an instruction form directing what should be done with
liquidation proceeds, the proceeds will be automatically invested in the Smith
Barney Money Market Portfolio or Cash Income Trust, as applicable, and the
Policyholder will be notified of such event.
Because each Portfolio will be primarily invested in zero coupon securities,
investors whose premiums are invested in shares held to maturity, including
those obtained through reinvestment of dividends and distributions, will
experience a return consisting primarily of the amortization of discount on the
underlying securities in the Portfolio. However, the net asset value of a
Portfolio's shares increases or decreases with changes in the market value of
that Portfolio's investments, which tends to vary inversely with changes in
prevailing interest rates. If shares of a Zero Coupon Bond Portfolio are
redeemed prior to the maturity of the Portfolio, an investor may experience a
significantly different investment return than was anticipated at the time of
purchase.
The Portfolio's investment adviser will attempt to maintain the average duration
of each Portfolio to within twelve months of the Portfolio's Target Date.
Duration is a measure of the length of an investment which takes into account,
through present value analysis, the timing and amount of any interest payments
as well as the amount of the principal repayment. Duration is commonly used by
professional managers to help identify and control reinvestment risk. Since each
Portfolio will not be invested entirely in zero coupon
2
<PAGE> 55
securities maturing on the Target Date, there will be some reinvestment risk
with respect to those other investments. By balancing investments with slightly
longer and shorter durations, the investment adviser believes it can maintain a
Portfolio's average duration within twelve months of the Portfolio's Target Date
and thereby reduce its reinvestment risk. Because they do not pay interest, zero
coupon securities tend to be subject to greater fluctuation of market value in
response to changes in interest rates than interest-paying securities of similar
maturities. Investors can expect more appreciation from a Zero Coupon Bond
Portfolio during periods of declining interest rates than from interest-paying
securities of similar maturity. Conversely, when interest rates rise, a Zero
Coupon Bond Portfolio will normally decline more in price than interest-paying
securities of similar maturity. Price fluctuations are expected to be greatest
in the longer-maturity Funds and are expected to diminish as a Portfolio
approaches its maturity date. Interest rates can change suddenly and
unpredictably.
In addition, due to securities maturing prior to the termination of the Zero
Coupon Bond Portfolio, a risk that the proceeds from the sale of such securities
will not be reinvested at the same interest rate which was available at the time
of the contract owner's purchase may exist. As an example, in a falling interest
rate environment, proceeds for securities that mature prior to the termination
date of a Zero Coupon Bond Portfolio will be reinvested at a lower rate.
Similarly, in a rising interest environment, the proceeds will be invested at a
higher interest rate.
Tax Considerations. Under the federal income tax law, a portion of the
difference between the purchase price of the zero coupon securities and their
face value ("original issue discount") is considered to be income to the Zero
Coupon Bond Portfolios each year, even though such Portfolio will not receive
cash payments representing the discount from these securities. This original
issue discount will comprise a part of the net taxable investment income of such
Portfolio which must be "distributed" to the insurance company shareholders each
year, whether or not such distributions are paid in cash. To the extent such
distributions are paid in cash, the Portfolio may have to generate the required
cash from interest earned on non-zero coupon securities such as corporate bonds
or possibly from the disposition of zero coupon securities.
Other Investment Policies. To provide income for expenses, redemption payments,
and cash dividends, up to 20% of each Portfolio's assets may be invested in
money market instruments.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may not be
changed without a vote of majority of the outstanding voting securities of each
Zero Coupon Bond Portfolio, as defined in the Investment Company Act of 1940, as
amended. Each of the Zero Coupon Bond Portfolios will not:
1) purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the Portfolio's
total assets would be invested in the securities of the issuer, except that
up to 25% of the value of the Portfolio's total assets may be invested
without regard to this 5% limitation;
2) purchase more than 10% of the voting securities of any one issuer, provided
that this limitation shall not apply to investments in U.S. government
securities;
3) purchase securities on margin, except that each Portfolio may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or related
options will not be deemed to be a purchase of securities on margin by a
Portfolio;
4) make short sales of securities or maintain a short position, except to the
extent of 5% of each Portfolio's net assets and except that a Portfolio may
engage in such activities without limit if, at all times when a short
position is open, the Portfolio owns an equal amount of the securities or
securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issuer as, and at least equal in
amount to, the securities sold short;
5) borrow money, including reverse repurchase agreements, except that each
Portfolio may borrow from banks for temporary or emergency (not leveraging)
purposes including the meeting of redemption requests that might otherwise
require the untimely disposition of securities, in an amount not exceeding
20% of the value of the Portfolio's total assets (including the amount
borrowed) valued at market less liabilities (not including the amount
borrowed) at the time the borrowing is made. Whenever borrowings exceed 5%
of the value of a Portfolio's total assets, the Portfolio will not make any
additional investments;
6) pledge, hypothecate, mortgage or otherwise encumber more than 10% of the
value of a Portfolio's total assets as security for any indebtedness. For
purposes of this restriction (a) the deposit of assets in escrow in
connection with the writing of covered put or call options and the purchase
of securities on a when-issued or delayed-delivery basis and (b) collateral
arrangements with respect
3
<PAGE> 56
to (i) the purchase and sale of stock options, options on foreign
currencies and options on stock indexes and (ii) initial or variation
margin for futures contracts will not be deemed to be pledges of a
Portfolio's assets;
7) invest in commodities, except that each Portfolio may purchase or write
futures contracts and options on futures contracts as described in this
Prospectus;
8) make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into repurchase
agreements; and
9) concentrate in any industry.
In addition, the Portfolios will not purchase restricted securities, illiquid
securities (such as repurchase agreements with maturities in excess of seven
days) or other securities that are not readily marketable if more than 10% of
the total assets of a Portfolio would be invested in such securities.
The Portfolios have undertaken to a state insurance authority that so long as
the state authority requires and shares of the Portfolios are offered for sale
to fund variable life insurance policies in that state, the Portfolios will
comply with certain foreign security diversification guidelines. These
guidelines provide that (1) as the percentage of each Portfolio's net asset
value invested in foreign securities increases, a corresponding increase will be
made in the number of countries in whose securities the Portfolio invests; and
(2) each Portfolio will invest no more than 20% of its net asset value in the
securities of issuers located in any one country (other than the United States).
Notwithstanding the above, the guidelines permit the Portfolios to invest any
amount in the securities of issuers located in the United States, and to invest
an additional 15% of its net asset value in the securities of issuers located in
Australia, Canada, France, Japan, and United Kingdom or Germany. The guidelines
also 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.
INVESTMENT ADVISER
TAMIC is a wholly owned subsidiary of Travelers Group Inc. and is located at One
Tower Square, Hartford, Connecticut 06183. In addition to serving as the
investment adviser for the Zero Coupon Bond Fund Portfolios, TAMIC also acts as
investment adviser for: The Travelers Timed Bond Account for Variable Annuities,
The Travelers Money Market Account for Variable Annuities, The Travelers Quality
Bond Account for Variable Annuities, Cash Income Trust, High Yield Bond Trust,
U.S. Government Securities Portfolio, and Managed Assets Trust, which serve as
the funding media for certain variable annuity and variable life insurance
contract offered by Travelers Insurance, and the American Odyssey
Intermediate-Term Bond Fund, an insurance-related mutual fund for variable
contracts offered by non-Travelers insurance companies as well as for individual
and pooled pension and profit-sharing accounts.
Under its Advisory Agreement with the Zero Coupon Bond Portfolios, TAMIC is paid
an amount equivalent on an annual basis to .10% of the average daily net assets
of each Portfolio. The fee is computed daily and paid weekly. Travelers
Insurance has decided to voluntarily reimburse the Portfolios for any expenses
above 0.15% (includes the .10% management fee to TAMIC, but excludes brokerage
commissions and interest charges).
PORTFOLIO MANAGER
The Portfolios are managed by David A. Tyson, Ph.D. and CFA. 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 Travelers Insurance 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.
4
<PAGE> 57
- --------------------------------------------------------------------------------
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
- --------------------------------------------------------------------------------
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE 1-800-842-0125
The Travelers Series Trust (the "Series Trust") is a diversified open-end
management investment company (mutual fund) which currently consists of three
separate series of shares (the "Portfolios"), each with its own investment
objective and policies. The three Portfolios of the Series Trust are the U.S.
Government Securities Portfolio, the Social Awareness Stock Portfolio and the
Utilities Portfolio.
Shares of the Portfolios are currently offered without a sales charge to
The Travelers Fund U for Variable Annuities ("Fund U") and The Travelers Fund UL
for Variable Life Insurance ("Fund UL"), separate accounts of The Travelers
Insurance Company ("the Company" or "Travelers Insurance"). The Portfolios serve
as investment vehicles for variable annuity and variable life insurance
contracts issued by the Company. Funds U and UL invest in shares of the
Portfolios in accordance with allocation instructions received from owners of
the variable annuity and variable life insurance contracts. Such allocation
rights are described further in the accompanying prospectuses for Funds U and
UL. The rights of Funds U and UL as shareholders should be distinguished from
the rights of owners of the variable annuity and variable life insurance
contracts. The term "shareholder" as used herein refers to Fund U and Fund UL or
to any other insurance company separate account that may use shares of the
Portfolios as investment vehicles in the future.
This Prospectus concisely sets forth the information about the Series Trust
and the Portfolios that you should know before investing. Please read it and
retain it for future reference. Additional information about the Series Trust
and the Portfolios is contained in a Statement of Additional Information dated
May 1, 1995 which has been filed with the Securities and Exchange Commission and
is incorporated by reference into this Prospectus. A copy may be obtained,
without charge, by writing to Travelers Insurance, Annuity Services 5 SHS, One
Tower Square, Hartford, Connecticut 06183-5030, or by calling 1-800-842-0125.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE VARIABLE
ANNUITY OR VARIABLE LIFE INSURANCE CONTRACTS ISSUED BY TRAVELERS
INSURANCE AND ITS SEPARATE ACCOUNTS. 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, 1995.
<PAGE> 58
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS--U.S. Government Securities Portfolio ................ 3
FINANCIAL HIGHLIGHTS--Social Awareness Stock Portfolio .................... 4
FINANCIAL HIGHLIGHTS--Utilities Portfolio ................................. 5
SUMMARY ................................................................... 6
THE TRAVELERS SERIES TRUST ................................................ 6
U.S. GOVERNMENT SECURITIES PORTFOLIO ...................................... 7
SOCIAL AWARENESS STOCK PORTFOLIO .......................................... 8
UTILITIES PORTFOLIO ....................................................... 9
BOARD OF TRUSTEES ......................................................... 11
INVESTMENT ADVISERS ....................................................... 11
TAMIC ................................................................. 12
Advisory Fees ......................................................... 12
Portfolio Manager ..................................................... 12
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC .................................. 12
Advisory Fees ......................................................... 12
Portfolio Manager ..................................................... 12
Advisory Fees ......................................................... 13
Portfolio Manager ..................................................... 13
SECURITIES TRANSACTIONS ................................................... 13
PORTFOLIO TURNOVER ........................................................ 13
FUND EXPENSES ............................................................. 13
TRANSFER AGENT ............................................................ 14
SHARES OF THE SERIES TRUST ................................................ 14
HOW TO BUY SHARES ......................................................... 14
PRICING SHARES ............................................................ 14
HOW TO REDEEM SHARES ...................................................... 15
DIVIDENDS AND TAX STATUS .................................................. 15
LEGAL PROCEEDINGS ......................................................... 15
ADDITIONAL INFORMATION .................................................... 15
EXHIBIT A ................................................................. 16
</TABLE>
SERIES-2
<PAGE> 59
FINANCIAL HIGHLIGHTS
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the U.S. Government Securities
Portfolio for each of the two years in the period ended December 31, 1994 and
the period January 24, 1992 (date operations commenced) to December 31,1992 has
been audited by Coopers & Lybrand L.L.P., Independent Accountants. Their report
on the per share data for each of the periods ended December 31, 1994 is
contained in the 1994 Annual Report to Shareholders. The Annual Report, which
contains additional performance information, is incorporated by reference into
the Statement of Additional Information. A copy of the Annual Report can be
obtained without charge by writing to or calling the Company at the address and
telephone number listed on the cover of this Prospectus. The following
information should be read in conjunction with the financial statements
contained in the 1994 Annual Report.
<TABLE>
<CAPTION>
JANUARY 24,*
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
---------------------- ------------
PER SHARE DATA 1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period..................................... $ 11.63 $ 10.79 $ 10.00
Income from operations
Net investment income .................................................. 0.60 0.57 0.53
Net gains on securities (realized and unrealized) ...................... (1.23) 0.44 0.26
------- ------- -------
Total from investment operations ..................................... (0.63) 1.01 0.79
Less distributions
Distributions from net investment income and short-term realized gains.. (0.39) (0.17) --
Distributions from long-term realized gains ............................ (0.03) -- --
------- ------- -------
Total distributions .................................................. $ (0.42) $ (0.17) --
Net asset value, end of period ......................................... $ 10.58 $ 11.63 $ 10.79
======= ======= =======
TOTAL RETURN ** (5.64)% 9.48% 7.90%***
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)................................... $ 24,522 $ 25,520 $ 9,017
Ratio of expenses to average net assets + .............................. 0.71% 0.58% 0.38%***
Ratio of net income to average net assets .............................. 5.56% 5.04% 4.72%***
Portfolio turnover rate ................................................ 16% 51% 25%
</TABLE>
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a
share during the period, after reflecting the reinvestment of dividends
declared during the period, by the beginning of period share price. Shares
in the U.S. Government Securities Portfolio are only sold to Travelers
Insurance separate accounts in connection with the issuance of variable
annuity and variable life insurance contracts. Total return does not reflect
the deduction of any contract charges or fees assessed by Travelers
Insurance separate accounts. For the periods less than one year, total
returns are not annualized.
*** Annualized.
+ The ratio of expenses to average net assets reflects an expense
reimbursement by Travelers Insurance in connection with voluntary expense
limitations. Without the expense reimbursement, the ratio of operating
expenses to average net assets would have been 0.77% and 0.72% for the year
ended December 31, 1993 and the period ended December 31, 1992,
respectively. For the year ended December 31, 1994, there was no expense
reimbursement by Travelers Insurance in connection with the voluntary
expense limitations.
SERIES-3
<PAGE> 60
FINANCIAL HIGHLIGHTS
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following information on per share data for the Social Awareness Stock
Portfolio for each of the two years in the period ended December 31, 1994 and
the period January 24, 1992 (date operations commenced) to December 31, 1992 has
been audited by Coopers & Lybrand L.L.P., Independent Accountants. Their report
on the per share data for each of the periods ended December 31, 1994 is
contained in the 1994 Annual Report to Shareholders. The Annual Report, which
contains additional performance information, is incorporated by reference into
the Statement of Additional Information. A copy of the Annual Report can be
obtained without charge by writing to or calling the Company at the address and
telephone number listed on the cover of this Prospectus. The following
information should be read in conjunction with the financial statements
contained in the 1994 Annual Report.
<TABLE>
<CAPTION>
MAY 1,*
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
---------------------- ------------
PER SHARE DATA 1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period ................................... $ 11.64 $ 10.95 $ 10.00
Income from operations
Net investment income .................................................. 0.16 0.17 0.16
Net gains on securities (realized and unrealized) ...................... (0.45) 0.65 0.79
------- ------- -------
Total from investment operations ..................................... (0.29) 0.82 0.95
Less distributions
Distributions from net investment income and short-term realized gains.. (0.24) (0.13) --
Distributions from long-term realized gains............................. (0.06) -- --
------- ------- -------
Total distributions .................................................. (0.30) (0.13) --
Net asset value, end of period ......................................... $ 11.05 $ 11.64 $ 10.95
======= ======= =======
TOTAL RETURN** (2.69)% 7.55% 9.50%***
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands) .................................. $ 3,879 $ 3,361 $ 1,394
Ratio of expenses to average net assets + .............................. 1.25% 1.05% 0.71%***
Ratio of net income to average net assets .............................. 1.43% 1.50% 2.22%***
Portfolio turnover rate ................................................ 137% 60% 56%
</TABLE>
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a
share during the period, after reflecting the reinvestment of dividends
declared during the period, by the beginning of period share price. Shares
in the Social Awareness Stock Portfolio are only sold to Travelers Insurance
separate accounts in connection with the issuance of variable annuity
contracts. Total return does not reflect the deduction of any contract
charges or fees assessed by Travelers Insurance separate accounts. For the
periods less than one year, total returns are not annualized.
*** Annualized.
+ The ratio of expenses to average net assets reflects an expense
reimbursement by Travelers Insurance in connection with voluntary expense
limitations. Without the expense reimbursement, the ratio of operating
expenses to average net assets would have been 3.34%, 3.73% and 2.19% for
the years ended December 31, 1994, 1993 and the period ended December 31,
1992, respectively.
SERIES-4
<PAGE> 61
FINANCIAL HIGHLIGHTS
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
Per Share Data for a share outstanding throughout each period
The following information on per share data for the Utilities Portfolio for the
period February 4, 1994 (date operations commenced) to December 31, 1994 has
been audited by Coopers & Lybrand L.L.P., Independent Accountants. Their report
on the per share data for the period ended December 31, 1994 is contained in the
1994 Annual Report to Shareholders. The Annual Report, which contains additional
performance information, is incorporated by reference into the Statement of
Additional Information. A copy of the Annual Report can be obtained without
charge by writing to or calling the Company at the address and telephone number
listed on the cover of this Prospectus. The following information should be read
in conjunction with the financial statements contained in the 1994 Annual
Report.
<TABLE>
<CAPTION>
FEBRUARY 4*
TO
DECEMBER 31,
------------
1994
-------
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period ...................... $ 10.00
Income from operations
Net investment income ................................... 0.35
Net losses on securities (realized and unrealized) ...... (0.18)
-------
Total from investment operations .................... 0.17
Net asset value, end of period .......................... $ 10.17
=======
TOTAL RETURN** 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands).................... $ 5,757
Ratio of expenses to average net assets*** .............. 1.25%#
Ratio of net investment income to average net assets..... 3.86%#
Portfolio turnover rate ................................. 32%
</TABLE>
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of a
share during the period, after reflecting the reinvestment of dividends
declared during the period, by the beginning of period share price. Shares
in the Utilities Portfolio are only sold to Travelers Insurance separate
accounts in connection with the issuance of variable annuity contracts. The
total return does not reflect contract charges or fees assessed by Travelers
Insurance separate accounts. For periods less than one year, total returns
are not annualized.
*** The ratio of expenses to average net assets reflects an expense
reimbursement by Travelers Insurance in connection with the voluntary
expense limitations. Without the expense reimbursement, the ratio of
operating expenses to average net assets would have been 3.49% annualized.
# Annualized.
SERIES-5
<PAGE> 62
SUMMARY
The Travelers Series Trust (the "Series Trust") is registered with the
Securities and Exchange Commission as an open-end management investment company.
The Series Trust is organized as a business trust under the laws of the
Commonwealth of Massachusetts. An Agreement and Declaration of Trust dated
October 11, 1991 (the "Declaration of Trust") authorizes the shares of the
Series Trust to be divided into two or more series related to separate
portfolios of investments, and further allows the Board of Trustees to establish
additional portfolios at any time.
The Series Trust is currently divided into three series (the "Portfolios"),
each with its own investment objective and policies. The three Portfolios of the
Series Trust are currently the U.S. Government Securities Portfolio, the Social
Awareness Stock Portfolio and the Utilities Portfolio, all of which are
diversified portfolios under the Investment Company Act of 1940.
INVESTMENT OBJECTIVES
The basic investment objectives of each of the Portfolios of the Series
Trust are as follows:
U.S. GOVERNMENT SECURITIES PORTFOLIO--highest credit quality, current
income and total return.
SOCIAL AWARENESS STOCK PORTFOLIO--long-term capital appreciation and
retention of net investment income through the selection of investments,
primarily common stocks, which meet the social criteria established for the
Portfolio.
UTILITIES PORTFOLIO--current income through investment in equity and debt
securities of companies in the utilities industry.
RISK FACTORS
Various levels of risk are involved with each Portfolio. The general risks
inherent in investing in any of the Portfolios are that their net asset value
will fluctuate in response to changes in economic conditions, interest rates and
the market's perception of the underlying securities of the Portfolios. Please
refer to the "Risk Factors" section of each Portfolio's investment description
for a more detailed discussion of specific risks associated with investing in
that Portfolio.
INVESTMENT ADVISERS
Travelers Asset Management International Corporation ("TAMIC") furnishes
investment management and advisory services to the U.S. Government Securities
Portfolio, and receives a fee equivalent to 0.3233%, on an annual basis, of the
average net assets of the U.S. Government Securities Portfolio. Greenwich Street
Advisors, a division of Smith Barney Mutual Funds Management Inc. ("SBMFM")
serves as the investment adviser to the Social Awareness Stock Portfolio and
receives a variable fee beginning at a maximum 0.65%, on an annual basis, of the
average daily net assets of the Social Awareness Stock Portfolio (these fees
decrease as assets increase). SBMFM also serves as investment adviser to the
Utilities Portfolio and receives a fee equivalent to 0.65%, on an annual basis,
of the average net assets of the Utilities Portfolio. Prior to December 30,
1994, Travelers Investment Management Company ("TIMCO") furnished investment
management and advisory services to the Social Awareness Stock Portfolio and
received a variable fee beginning at a maximum 0.65%, on an annual basis, of the
average daily net assets of the Social Awareness Stock Portfolio. TAMIC, SBMFM
and TIMCO are indirect wholly owned subsidiaries of Travelers Group Inc.
THE TRAVELERS SERIES TRUST
The Travelers Series Trust (the "Series Trust") is registered with the
Securities and Exchange Commission as an open-end management investment company.
The Series Trust was organized as a business trust under the laws of the
Commonwealth of Massachusetts pursuant to an Agreement and Declaration of Trust
dated October 11, 1991 (the "Declaration of Trust"). The Declaration of Trust
authorizes the shares of the Series Trust to be divided into two or more series
related to separate portfolios of investments, and further allows the Board of
Trustees to establish additional portfolios at any time.
The Series Trust is currently divided into three series (the "Portfolios"),
each with its own investment objective and policies. These three Portfolios are
the U.S. Government Securities Portfolio, the Social Awareness Stock Portfolio
and the Utilities Portfolio, all of which are diversified portfolios under the
Investment Company Act of 1940.
SERIES-6
<PAGE> 63
U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The U.S. Government Securities Portfolio's investment objective is the
selection of investments from the point of view of an investor concerned
primarily with highest credit quality, current income and total return. To
achieve this objective, the U.S. Government Securities Portfolio invests
primarily in direct obligations of the United States, obligations of its
instrumentalities supported by its full faith and credit, and obligations issued
or guaranteed by federal agencies which are independent corporations sponsored
by the United States and which are subject to its general supervision, but which
are not supported by the full faith and credit of the United States. The
Portfolio may, from time to time, purchase new-issue or government or agency
securities on a "when-issued" or "to-be-announced" basis.
When market conditions warrant, the U.S. Government Securities Portfolio
may adopt a defensive position to preserve shareholders' capital by investing in
money market instruments. Such instruments, which must mature within one year of
their purchase, consist of U.S. Government securities; certificates of deposit,
demand and time deposits and bankers' acceptances of banks which are members of
the Federal Deposit Insurance Corporation and which have assets of at least $1
billion, including U.S. branches of foreign banks and foreign branches of U.S.
banks; prime commercial paper, including master demand notes; and repurchase
agreements secured by U.S. Government securities. The investments of the U.S.
Government Securities Portfolio in commercial paper are limited to those rated
A-1 by Standard & Poor's Corporation and Prime-1 by Moody's Investors Service,
Inc. (For a description of these rating systems, see the Appendix to the
Statement of Additional Information.)
Direct obligations of the United States include Treasury Bills which are
issued on a discount basis with a maturity of one year or less, Treasury Notes
which have maturities at issuance of between one and ten years, and Treasury
Bonds which have maturities at issuance of greater than ten years.
Instrumentalities of the United States whose debt obligations are backed by its
full faith and credit include: Government National Mortgage Association, Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of the
United States, Small Business Administration, General Services Administration,
Maritime Administration, District of Columbia Armory Board, Farm Credit System,
Financial Assistance Corporation, Federal Financing Bank and Washington
Metropolitan Area Transit Authority. Federal agencies include: Farm Credit
System, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association and Student Loan Marketing Association.
The U.S. Government Securities Portfolio may write covered call options on
securities which it owns. Such an option on an underlying security would
obligate the Portfolio to sell, and give the purchaser of the option the right
to buy, that security at a stated exercise price at any time until a stated
expiration date of the option. The Portfolio may also purchase put and call
options for bona fide hedging purposes.
The U.S. Government Securities Portfolio may use exchange-traded futures
contracts as a hedge to protect against changes in interest rates.
A detailed discussion of certain types of investments and investment
techniques utilized by the U.S. Government Securities Portfolio is included in
Exhibit A to this Prospectus.
INVESTMENT RESTRICTIONS
The U.S. Government Securities Portfolio has adopted the following
fundamental investment restrictions which may not be changed without a vote of a
majority of the Portfolio's outstanding voting securities, as defined in the
Investment Company Act of 1940, as amended. These restrictions and certain other
fundamental investment restrictions are fully set forth in the Statement of
Additional Information. Unless otherwise noted, all references to the
Portfolio's assets are in terms of current market value. The U.S. Government
Securities Portfolio will not: (1) invest more than 5% of its assets in the
securities of any one issuer (exclusive of securities of the United States
government, its agencies or instrumentalities, for which there is no limit); (2)
borrow money, except to facilitate redemptions or borrow money for temporary or
emergency purposes and then only from banks and in amounts of up to 10% of its
gross assets computed at cost; assets pledged to secure borrowings shall be no
more than the lesser of the amount borrowed or 10% of the Portfolio's gross
assets computed at cost; (3) invest more than 25% of its assets in the
securities of issuers in any single industry (exclusive of securities of the
United States, its agencies or instrumentalities, for which there is no limit);
and (4) make margin purchases or short sales of securities, except for
short-term credits which are necessary for the clearance of transactions, and to
place not more than 5% of its net asset value in total margin deposits for
positions in futures contracts.
SERIES-7
<PAGE> 64
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 the securities of issuers located in any
one country (other than the United States). Notwithstanding the above, the
guidelines permit the Fund to invest any amount in the securities of issuers
located in the United States, and to invest an additional 15% of its net asset
value in the securities of issuers located in Australia, Canada, France, Japan,
the United Kingdom or Germany. The guidelines also 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.
RISKS
U.S. Government securities are considered among the safest of fixed-income
investments. As a result, however, their yields are generally lower than the
yields available from corporate debt securities. The value of the portfolio
securities of the Portfolio will fluctuate based on market conditions and
interest rates. Interest rates 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. An increase in interest rates will generally reduce the
value of debt securities, and conversely a decline in interest rates will
generally increase the value of debt securities.
SOCIAL AWARENESS STOCK PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Social Awareness Stock Portfolio (the
"Social Awareness Portfolio") is long-term capital appreciation and retention of
net investment income. The Portfolio seeks to fulfill this objective by
selecting investments, primarily common stocks, that meet certain social
criteria, based on analysis of data supplied by various research services. This
principal objective does not preclude the realization of short-term gains when
conditions suggest the long-term goal is accomplished by such short-term
transactions.
The assets of the Social Awareness Portfolio generally will be invested in
a portfolio of equity securities, primarily common stocks, diversified across
industries and companies. However, when it is determined that investments of
other types may be advantageous for defensive purposes or for temporary
investment of cash flows, investments may be made in bonds, notes or other
evidence of indebtedness, issued publicly or placed privately, deemed to be of
suitable credit quality, including obligations of the United States government.
The Social Awareness Portfolio utilizes certain social criteria to define a
universe of common stocks that are acceptable investment vehicles for the
Portfolio. Companies will not meet the social criteria established for the
Portfolio if a significant portion of their revenues, as determined by SBMFM,
are derived from: (a) the production of tobacco, tobacco products, alcohol, or
military defense systems; or (b) the provision of military defense related
services, or gambling services. These investment restrictions are not
fundamental and may be changed without shareholder approval.
Based upon SBMFM's analysis of information supplied by research services,
the Social Awareness Portfolio will not invest in the securities of a company if
SBMFM determines that the company fails to meet the social criteria outlined
above. SBMFM will review the available universe of common stocks on a quarterly
basis, and will determine which securities are acceptable investments for assets
of the Portfolio. SBMFM will select securities for the Portfolio from the
universe of appropriate investments, seeking companies which appear attractive
based upon quantitative and/or qualitative analysis.
If a company fails a social criteria restriction after the Social Awareness
Portfolio has purchased its common stock, or should the Portfolio inadvertently
acquire a security which is not an acceptable investment, SBMFM will eliminate
the securities of such company from the Social Awareness Portfolio's portfolio
in an orderly manner within a reasonable period of time.
The Social Awareness Portfolio may use exchange-traded financial futures
contracts as a hedge to protect against changes in stock prices or interest
rates. The use of stock futures contracts by the Portfolio is intended primarily
to limit transaction and borrowing costs. The Social Awareness Portfolio may
also purchase and sell interest rate futures to hedge against changes in
interest rates that might otherwise have an adverse effect on the value of the
Portfolio's securities. The Portfolio may also write covered call options on
securities which it owns, and may purchase index or individual equity
SERIES-8
<PAGE> 65
call or put options. When market conditions warrant, the Social Awareness
Portfolio may adopt a defensive position to preserve shareholders' capital by
investing in money market instruments. Such instruments, which must mature
within one year of their purchase, consist of U.S. government securities;
instruments of banks which are members of the Federal Deposit Insurance
Corporation and have assets of at least $1 billion, such as certificates of
deposit, demand and time deposits and bankers' acceptances; prime commercial
paper, including master demand notes; and repurchase agreements secured by U.S.
government securities.
INVESTMENT RESTRICTIONS
In addition to the social criteria listed above, the Social Awareness Stock
Portfolio has adopted the following fundamental investment restrictions which
may not be changed without a vote of a majority of the Portfolio's outstanding
voting securities, as defined in the Investment Company Act of 1940, as amended.
These restrictions and certain other fundamental investment restrictions are
fully set forth in the Statement of Additional Information. Unless otherwise
noted, all references to the Portfolio's assets are in terms of current market
value. The Social Awareness Stock Portfolio will not (1) invest more than 5% of
its assets in the securities of any one issuer, except obligations of the United
States government and its instrumentalities; (2) borrow money, except for
extraordinary or emergency purposes, including meeting redemptions or settling
securities transactions and then only from banks and in amounts of up to 10% of
its total assets; the Portfolio will not purchase securities while borrowings
exceed 5% of its total assets, except to honor prior commitments; (3) purchase
interests in real estate, except as may be represented by securities for which
there is an established market; (4) make loans, except through the acquisition
of a portion of a privately placed issue of bonds, debentures or other evidences
of indebtedness of a type customarily purchased by institutional investors; (5)
acquire more than 10% of the voting securities of any one issuer; (6) make
purchases on margin, except for short-term credits which are necessary for the
clearance of transactions, and for the placement of not more than 5% of its net
asset value in total margin deposits for positions in futures contracts; and (7)
invest more than 5% of its assets in restricted securities.
RISKS
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. The
yield on a common stock is not contractually determined. 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.
UTILITIES PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of the Utilities Portfolio (the
"Portfolio") is to provide current income. Long-term capital appreciation is a
secondary objective. The Portfolio's investment objectives may be changed only
with the approval of a majority of the Portfolio's outstanding shares. There can
be no assurance that the Portfolio will achieve its investment objectives.
The Portfolio seeks to achieve its objectives by investing in equity and
debt securities of companies in the utility industries. For purposes of this
Prospectus, the utility industries are deemed to be comprised of companies
principally engaged (that is, at least 50% of a company's assets, gross income
or net profits results from utility operations or the company is regulated as a
utility by a government agency or authority) in the manufacture, production,
generation, transmission and sale of electric and gas energy and companies
principally engaged in the communications field, including entities such as
telephone, telegraph, satellite, microwave and other companies regulated by
governmental agencies as utilities that provide communication facilities for the
public benefit, but not including those in public broadcasting. The Portfolio
will invest primarily in utility equity and debt securities that have a high
expected rate of return, as determined by the investment adviser. Under normal
market conditions, the Portfolio will invest at least 65% of its assets in such
securities. The Portfolio may invest up to 35% of its assets in equity and debt
securities of non-utility companies believed to afford a reasonable opportunity
for achieving the Portfolio's investment objectives. When the investment adviser
believes that market conditions warrant, the Portfolio may adopt a temporary
defensive posture and may invest, without limit, in debt securities (whether or
not they are utility securities) such as rated or unrated bonds, debentures and
commercial paper, United States government securities and money market
instruments. The Portfolio may invest up to 10% of its assets in securities
rated BB or B by Standard & Poor's Corporation ("S&P") or Ba or B by
SERIES-9
<PAGE> 66
Moody's Investors Service, Inc. ("Moody's") whenever the investment adviser
believes that the incremental yield on such securities is advantageous to the
Portfolio in comparison to the additional risk involved (such lower-rated
securities are commonly known as "junk bonds"). The yields on lower-rated
fixed-income securities generally are higher than the yields available on
higher-rated securities. However, investments in lower-rated securities may be
subject to greater market fluctuations and greater risks of loss of income or
principal (including the possibility of default by, or bankruptcy of, the
issuers of such securities) than higher-rated securities. Lower-rated securities
also may have speculative characteristics. In addition, the Portfolio may enter
into repurchase agreements. (For a description of the rating systems identified
above, see the Appendix to the Statement of Additional Information.)
The Utilities Portfolio has the ability to engage in a number of
specialized investment strategies and techniques designed to enable the
Portfolio to achieve its investment objectives. Included among these strategies
are lending its portfolio securities, selling securities "short against the
box," writing covered call and secured put options, as well as purchasing
options on securities, purchasing and selling interest rate futures contracts,
options on futures contracts, stock index put and call options and stock index
futures contracts, each of which are discussed in Exhibit A to this Prospectus.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may not be
changed without a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in the Investment Company Act of 1940, as amended. The
Utilities Portfolio will not:
1. purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the Portfolio's total
assets would be invested in the securities of the issuer, except that up to 25%
of the value of the Portfolio's total assets may be invested without regard to
this 5% limitation;
2. purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in U.S. government
securities;
3. purchase securities on margin, except that the Portfolio may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with futures contracts or related options will
not be deemed to be a purchase of securities on margin by the Portfolio;
4. make short sales of securities or maintain a short position, except to
the extent of 5% of the Portfolio's net assets and except that the Portfolio may
engage in such activities without limit if, at all times when a short position
is open, the Portfolio owns an equal amount of the securities or securities
convertible into or exchangeable, without payment of any further consideration,
for securities of the same issuer as, and at least equal in amount to, the
securities sold short;
5. borrow money, including reverse repurchase agreements, except that the
Portfolio may borrow from banks for temporary or emergency (not leveraging)
purposes including the meeting of redemption requests that might otherwise
require the untimely disposition of securities, in an amount not exceeding 20%
of the value of the Portfolio's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount borrowed) at the
time the borrowing is made. Whenever borrowings exceed 5% of the value of the
Portfolio's total assets, the Portfolio will not make any additional
investments;
6. pledge, hypothecate, mortgage or otherwise encumber more than 10% of the
value of the Portfolio's total assets as security for any indebtedness. For
purposes of this restriction (a) the deposit of assets in escrow in connection
with the writing of covered put or call options and the purchase of securities
on a when-issued or delayed-delivery basis and (b) collateral arrangements with
respect to (i) the purchase and sale of stock options, options on foreign
currencies and options on stock indexes and (ii) initial or variation margin for
futures contracts will not be deemed to be pledges of the Portfolio's assets;
7. invest in commodities, except that the Portfolio may purchase or write
futures contracts and options on futures contracts as described in this
Prospectus;
8. make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into repurchase
agreements; and
9. concentrate in any industry, except that the Portfolio will concentrate
in excess of 25% of its assets in the securities of companies within the utility
industries.
In addition, the Portfolio will not purchase restricted securities,
illiquid securities (such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily marketable if more than 10%
of the total assets of the Portfolio would be invested in such securities.
SERIES-10
<PAGE> 67
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 the securities of issuers located in any
one country (other than the United States). Notwithstanding the above, the
guidelines permit the Fund to invest any amount in the securities of issuers
located in the United States, and to invest an additional 15% of its net asset
value in the securities of issuers located in Australia, Canada, France, Japan,
the United Kingdom or Germany. The guidelines also 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.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investment in the Utilities Portfolio may involve above-average risk of
loss because of, among other things, the Portfolio's use of strategies and
techniques that may be considered to be speculative. The strategy followed by
the Portfolio and certain of the strategies and techniques used by the Portfolio
depend on forecasts made by Greenwich Street Advisors that may or may not prove
to be correct.
Because the Portfolio concentrates its investments in one sector, its
portfolio may be subject to greater risk and market fluctuations than a
portfolio of securities representing a broader range of investment alternatives.
The Portfolio is particularly subject to risks that are inherent to the utility
industries that make up this sector, including difficulty in obtaining an
adequate return on invested capital, difficulty in financing large construction
programs during an inflationary period, restriction on operations and increased
cost and delays attributable to environmental consideration and regulation,
difficulty in raising capital in adequate amounts on reasonable terms in periods
of high inflation and unsettled capital markets, increased costs and reduced
availability of certain types of fuel, occasional reduced availability and high
costs of natural gas for resale, the effects of energy conservation, the effects
of a national energy policy and lengthy delays and greatly increased costs and
other problems associated with the design, construction, licensing, regulation
and operation of nuclear facilities for electric generation, including, among
other considerations, the problems associated with the use of radioactive
materials and disposal of radioactive wastes. There are substantial differences
between the regulatory practices and policies of various jurisdictions, and any
given regulatory agency may make major shifts in policy from time to time. There
is no assurance that regulatory authorities will grant rate increases in the
future or that such increases will be adequate to permit the payment of
dividends on common stocks. Additionally, existing and possible future
regulatory legislation may make it even more difficult for these utilities to
obtain adequate relief. Certain of the issuers of securities held by the
Portfolio may own or operate nuclear generating facilities. Governmental
authorities may from time to time review existing policies, and impose
additional requirements governing the licensing, construction and operation of
nuclear power plants.
Each of the risks referred to above could adversely affect the ability and
inclination of public utilities to declare or pay dividends and the ability of
holders of common stock to realize any value from the assets of the issuer upon
liquidation or bankruptcy. All of the utilities which are issuers of the
securities held by the Portfolio have been experiencing one or more of these
problems in varying degrees. Moreover, price disparities within selected utility
groups and discrepancies in relation to averages and indices have occurred
frequently for reasons not directly related to the general movements or price
trends of utility common stocks. Causes of these discrepancies include changes
in the overall demand for and supply of various securities (including the
potentially depressing effect of new stock offerings), and changes in investment
objectives, market expectations or cash requirements of other purchasers and
sellers of securities.
BOARD OF TRUSTEES
Under Massachusetts law, the Series Trust's Board of Trustees has absolute
and exclusive control over the management and disposition of all assets of the
Series Trust. Subject to the provisions of the Declaration of Trust, the
business and affairs of the Series Trust 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
Statement of Additional Information.
INVESTMENT ADVISERS
As described above, the Board of Trustees monitors the activities of those
entities which provide investment advisory services to the Portfolios. Travelers
Asset Management International Corporation (TAMIC) and Smith Barney Mutual
SERIES-11
<PAGE> 68
Funds Management Inc. (SBMFM) (collectively, the "investment advisers") provide
investment advice and, in general, supervise the management and investment
program of the U.S. Government Securities Portfolio, and the Social Awareness
Stock Portfolio and Utilities Portfolio, respectively.
TAMIC
TAMIC is a registered investment adviser which has provided investment
advisory services since its incorporation in 1978. TAMIC is an indirect wholly
owned subsidiary of Travelers Group Inc., and its principal offices are located
at One Tower Square, Hartford, Connecticut 06183. In addition to serving as the
investment adviser for the U.S. Government Securities Portfolio, TAMIC also acts
as investment adviser for other investment companies used to fund variable
products, including The Travelers Timed Bond Account for Variable Annuities, The
Travelers Money Market Account for Variable Annuities, The Travelers Quality
Bond Account for Variable Annuities, Cash Income Trust, High Yield Bond Trust
and Managed Assets Trust; as well as for individual and pooled pension and
profit-sharing accounts and for offshore insurance companies affiliated with
Travelers Insurance.
ADVISORY FEES
Under its Advisory Agreement with the U.S. Government Securities Portfolio,
TAMIC is paid an amount equivalent to 0.3233%, on an annual basis, of the
average daily net assets of the Portfolio. The fee is computed daily and paid
weekly.
PORTFOLIO MANAGER
The U.S. Government Securities Portfolio has been managed by Frank D.
Campbell, CFA, since February 1994. Mr. Campbell is a Second Vice President in
the Portfolio Management Division of the Company's Securities Department. Mr.
Campbell joined the Company in 1976. For the past six years, he has managed
investment portfolios backing various insurance company products, and is
currently responsible for managing the portfolios backing guaranteed investment
contracts and general account pension products. Mr. Campbell is also the
portfolio manager for Travelers Quality Bond Account, Timed Bond Account, and
the American Odyssey Intermediate-Term Bond Fund. He currently serves on the
Interest Rate Forecasting Committee and provides economic input to the
Securities Department's investment process.
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Smith Barney Mutual Funds Management Inc. manages the day-to-day operations
of the Social Awareness Stock Portfolio pursuant to an Investment Advisory
Agreement entered into by the Series Trust on behalf of the Portfolios. Under
the Advisory Agreements, SBMFM is responsible for furnishing or causing to be
furnished to the Portfolios advice and assistance with respect to the
acquisition, holding or disposal of securities and recommendations with respect
to other aspects and affairs of the Portfolios.
SBMFM is located at 388 Greenwich Street, New York, New York and has been
in the investment counseling business since 1968. SBMFM renders investment
advice to a wide variety of individual, institutional and investment company
clients with aggregate assets under management in excess of $54 billion. SBMFM
is a wholly owned subsidiary of Travelers Group.
ADVISORY FEES
Under its Advisory Agreement with the Social Awareness Stock Portfolio,
SBMFM is paid an amount equivalent on an annual basis to the advisory fee
schedule set forth in the table below. The fee is computed daily and paid
weekly.
<TABLE>
<CAPTION>
AGGREGATE NET ASSET
ANNUAL MANAGEMENT FEE VALUE OF THE FUND
--------------------- -------------------
<S> <C> <C>
0.65% of the first $ 50,000,000, plus
0.55% of the next $ 50,000,000, plus
0.45% of the next $ 100,000,000, plus
0.40% of amounts over $ 200,000,000
</TABLE>
PORTFOLIO MANAGER
The Social Awareness Stock Portfolio is managed by a team of investment
professionals from Greenwich Street Advisors, a division of SBMFM. Greenwich
Street Advisors 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 group of experienced
investment professionals work as a team to select specific holdings and manage
the
SERIES-12
<PAGE> 69
portfolio according to specific diversification guidelines. Douglas E. Salvati
is a Director of Greenwich Street Advisors and Senior Portfolio Manager for
Socially Responsible Investments. He is a member of the Social Investment Forum.
Prior to joining the Firm in 1987, Mr. Salvati performed investment analysis for
Carroll McEntee & McGinley Securities, and investment analysis and portfolio
management for First Fidelity Bank where he began his investment career in 1980.
His education includes a B.S. in Business Management from West Virginia
University and M.B.A. in Finance from Seton Hall University.
Smith Barney Mutual Funds Management Inc. also manages the day-to-day
operations of the Utilities Portfolio pursuant to an Investment Advisory
Agreement entered into by the Series Trust on behalf of the Portfolio.
ADVISORY FEES
For the services provided under the Advisory Agreement, the Portfolio pays
SBMFM a management fee equivalent on an annual basis to 0.65% of the Utilities
Portfolio's average daily net assets. The fee is calculated daily and paid
monthly.
PORTFOLIO MANAGER
The Utilities Portfolio is managed by a team of investment professionals
from Greenwich Street Advisors, a division of SBMFM. Jack S. Levande is a
Managing Director and Portfolio Manager for Greenwich Street Advisors. Prior to
joining Greenwich Street Advisors in 1987, Mr. Levande worked at E.F. Hutton as
Product Manager for convertible securities. In addition to managing the
Utilities Portfolio, Mr. Levande also manages the SB Convertible Bond Fund and
serves as a member of the Greenwich Street Advisors Investment Policy Committee.
George Mueller is a Senior Vice President of Taxable Fixed-Income Management at
Greenwich Street Advisors, specializing in corporate bond portfolios. Prior to
joining the firm in 1985, he was a Portfolio Manager for pension and charitable
foundation accounts at Chase Manhattan Bank. In addition to his responsibilities
associated with the Utilities Portfolio, Mr. Mueller is the Portfolio Manager
for the SB Investment Grade Bond Fund, and serves as a member of the Greenwich
Street Advisors Investment Policy Committee.
SECURITIES TRANSACTIONS
Under policies established by the Board of Trustees, the investment
advisers select broker-dealers to execute transactions subject to the receipt of
best execution. When selecting broker-dealers to execute portfolio transactions
for the Portfolios, the investment advisers may follow a policy of considering
as a factor the number of shares of a Portfolio sold by such broker-dealers. In
addition, broker-dealers may from time to time be affiliated with the Series
Trust, the investment advisers or their affiliates.
The Portfolios may pay higher commissions to broker-dealers which provide
research services. The investment advisers may use these services in advising
the Portfolios, as well as in advising their other clients.
PORTFOLIO TURNOVER
The portfolio turnover rates for the U.S. Government Securities Portfolio
for the period ended December 31, 1992 and for the year ended December 31, 1993
and 1994 were 25%, 51% and 16%, respectively. The portfolio turnover rates for
the Social Awareness Stock Portfolio for the period ended December 31, 1992 and
for the years ended December 31, 1993 and 1994 were 56%, 60% and 137%,
respectively. The portfolio turnover rate for the Utilities Portfolio for the
period ended December 31, 1994 was 32%. High portfolio turnover may involve
correspondingly greater brokerage commissions and other transaction costs, which
will be borne directly by the Portfolios, as well as additional gains and/or
losses to shareholders.
FUND EXPENSES
In addition to the investment advisory fees discussed above, the other
principal expenses of the Series Trust and the Portfolios include the charges
and expenses of the transfer agent, the custodian, the independent auditors, and
any outside legal counsel employed by either the Series Trust or the Board of
Trustees; the compensation for the unaffiliated members of the Board of
Trustees; the costs of printing and mailing the Series Trust's prospectus, 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
Series Trust and its shares under federal and state securities laws.
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Pursuant to a Management Agreement dated May 1, 1993 between the Series
Trust and the Company, the Company agreed to reimburse the Series Trust for the
amount by which each Portfolio's aggregate annual expenses, including investment
advisory fees but excluding brokerage commissions, interest charges and taxes,
exceed 1.25% of each Portfolio's average net assets for any fiscal year.
For the fiscal year ended December 31, 1994, the U.S. Government Securities
Portfolio, the Social Awareness Stock Portfolio and the Utilities Portfolio paid
.71%, 1.25% and 1.25%, respectively, of their average net assets in expenses.
For the Social Awareness Stock Portfolio and the Utilities Portfolio, these
expenses would have been 3.34% and 3.49% (annualized), respectively, of the
Portfolios' average net assets if the Company had not paid for any of their
expenses.
TRANSFER AGENT
Travelers Insurance, One Tower Square, Hartford, Connecticut 06183, serves
as the Series Trust's transfer agent and dividend disbursing agent.
SHARES OF THE SERIES TRUST
The Series Trust currently issues one class of shares divided into three
separate series. Under the Declaration of Trust, the Board of Trustees is
authorized to create new series of shares without the necessity of a vote of
shareholders of the Series Trust. All shares of each series of the Series Trust
have equal voting, dividend and liquidation rights. When issued and paid for,
the shares will be fully paid and nonassessable by the Series Trust and will
have no preference, conversion, exchange or preemptive rights.
Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares. Shares of each series are entitled to
vote separately to approve investment advisory agreements or changes in
fundamental investment restrictions, but shares of all series vote together in
the election of Trustees and the selection of accountants. 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 shareholder of any series
may be held personally liable for a Portfolio's obligations. However, the Series
Trust's Declaration of Trust provides that shareholders shall not be subject to
any personal liability for the Series Trust's obligations and provides
indemnification from Series Trust assets for any shareholder held personally
liable for the Series Trust's obligations. Disclaimers of such liability are
included in each agreement entered into by the Series Trust or its Portfolios.
HOW TO BUY SHARES
Shares of the Series Trust are currently sold only to The Travelers Fund U
for Variable Annuities and to The Travelers Fund UL for Variable Life Insurance
in connection with variable annuity and variable life insurance contracts issued
by the Company. Shares are not sold to the general public. Shares of the Series
Trust 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 Series
Trust'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 Series Trust is not currently aware of any disadvantages to
contract owners of either variable annuity or variable life insurance contracts
because the Series Trust'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 Series Trust due to
differences in tax treatment, management of the Trust's investments, or other
considerations. The Series Trust'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
The net asset value of a Portfolio share is computed as of the close of
trading on each day on which the New York Stock Exchange is open for trading,
except on days when changes in the value of the Portfolio's securities do not
affect the current net asset value of its shares. The New York Stock Exchange is
currently closed on weekends, New Year's Day,
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Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share is arrived at
by determining the value of the Portfolio's assets, subtracting its liabilities,
and dividing the result by the number of shares outstanding.
The Portfolios value short-term money market instruments with maturities of
sixty days or less at amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount) which, when combined with
accrued interest approximates market. All other investments are valued at market
value, or where market quotations are not readily available, at fair value as
determined in good faith by the Series Trust's Board of Trustees.
HOW TO REDEEM SHARES
Shareholders may redeem all full and fractional shares of the Series Trust
on any business day. Redemptions are effected at the per share net asset value
next determined after receipt by the Portfolio of a proper 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 Portfolio's securities between purchase and redemption.
The Portfolio computes the redemption value at the close of the New York
Stock Exchange at the end of the day on which they have 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 Series Trust or the Portfolio may temporarily suspend the right to
redeem their shares when: (1) the New York Stock 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 Securities and Exchange
Commission so that disposal of the Portfolio's investments or determination of
its net asset value is not reasonably practicable; or (4) the Securities and
Exchange Commission, for the protection of shareholders, so orders.
DIVIDENDS AND TAX STATUS
The Series Trust and its Portfolios have qualified and intend to qualify in
the future as a regulated investment company under Subchapter M of the Internal
Revenue Code, as amended. A Portfolio qualifies if, among other things, it
distributes to its shareholders at least 90% of its investment company taxable
income during each fiscal year.
Capital gains and dividends are distributed in cash or reinvested in
additional shares of a Portfolio without a sales charge. Although purchasers of
variable contracts are not currently subject to federal income taxes on
distributions made by the Portfolios, 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 Series Trust
or the Portfolios.
ADDITIONAL INFORMATION
Except as otherwise stated in this Prospectus or as required by law, the
Series Trust 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.
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EXHIBIT A
DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS AND
INVESTMENT TECHNIQUES AVAILABLE TO THE PORTFOLIOS
The following types of investments and investment techniques are available
to each of the Portfolios unless otherwise specifically indicated. Please refer
to the investment objective and policies of each Portfolio for a list of
available investments.
VARIABLE AMOUNT MASTER DEMAND NOTES
Variable amount master demand notes are unsecured obligations that permit
the investment of fluctuating amounts by a Portfolio at varying rates of
interest pursuant to direct arrangements between the Portfolio as lender and the
issuer as borrower. Master demand notes permit daily fluctuations in the
interest rate and daily changes in the amounts borrowed. A Portfolio 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. Because these types of
notes are direct lending arrangements between the lender and the borrower, it is
not generally contemplated that such instruments will be 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, a Portfolio's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. In connection with master
demand note arrangements, the investment advisers consider earning power, cash
flow and other liquidity ratios of the issuer. These notes, as such, are not
typically rated by credit rating agencies. Unless they are so rated, the
Portfolios will invest in them only if, at the time of an investment, the issuer
meets the criteria set forth for all other commercial paper. Pursuant to
procedures established by the investment advisers, such notes are treated as
instruments maturing in one day and valued at their par value. The investment
advisers intend to continuously monitor factors related to the ability of the
borrower to pay principal and interest on demand.
REPURCHASE AGREEMENTS
Interim cash balances may be invested from time to time in repurchase
agreements with approved counterparties. Approved counterparties are limited to
national banks or reporting broker-dealers meeting the investment 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 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.
WHEN-ISSUED SECURITIES
The U.S. Government Securities Portfolio 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 Portfolio 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 Portfolio's net
asset value daily from the commitment date. While it is the investment adviser's
intention to take physical delivery of these securities, offsetting transactions
may be made prior to settlement,
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if it is advantageous to do so. The Portfolio does not make payment or begin to
accrue interest on these securities until settlement date. In order to invest
its assets pending settlement, the Portfolio will normally invest in short-term
money market instruments and other securities maturing no later than the
scheduled settlement date.
The Portfolio does not intend to purchase when-issued securities for
speculative or "leverage" purposes. Consistent with Section 18 of the Investment
Company Act of 1940 and the General Policy Statement of the SEC thereunder, when
the Portfolio 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.
The investment adviser believes that purchasing securities in this manner
will be advantageous to the Portfolio. 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 Portfolio
would endure a loss (gain) equal to the price appreciation (depreciation) in
value from the commitment date. The investment adviser employs rigorous credit
quality procedures 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.
CERTIFICATES OF DEPOSIT
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 FDIC).
The Portfolios 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 Portfolios do 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 Portfolios 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.
FUTURES CONTRACTS
The Portfolios may use exchange-traded financial futures contracts as a
hedge to protect against 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"). An interest rate futures contract
is a contract to buy or sell specified debt securities at a future time for a
fixed price. 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.
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 Portfolios' transactions in such
financial futures be employed for speculative purposes.
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
SERIES-17
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contracts employed as hedges for specific securities will normally be offset by
losses or gains, respectively, on the hedged security.
When a futures contract is purchased, the Portfolios 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. The
Portfolios will not purchase or sell futures contracts for which the aggregate
initial margin exceeds five percent (5%) of the fair market value of their
respective assets, after taking into account unrealized profits and unrealized
losses on any such contracts they have entered into.
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 debt security and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if less, a loss. While futures
positions taken by the Portfolios will usually be liquidated in this manner, the
Portfolios may instead make or take delivery of the underlying securities
whenever it appears economically advantageous for them to do so. In determining
gain or loss, transaction costs must be taken into account. There can be no
assurance that the Portfolios will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time.
All interest rate and stock index futures contracts will be traded on
exchanges that are licensed and regulated by the Commodity Futures Trading
Commission ("CFTC"). To ensure that its futures transactions meet CFTC
standards, the Portfolios will enter into futures contracts for hedging purposes
only, i.e., for the purposes or with the intent specified in CFTC regulations
and interpretations, subject to the requirements of the SEC. The Portfolios will
further seek to assure that fluctuations in the price of any futures contracts
that they use for hedging purposes will be substantially related to fluctuations
in the price of the securities which they hold or which they expect 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 Portfolios expect that on
seventy-five percent (75%) or more of the occasions on which they purchase a
long futures contract, they will effect the purchase of securities in the cash
market or take delivery as they close 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 Portfolios may
benefit from the use of such futures, changes in interest rates or stock price
movements may result in a poorer overall performance for the Portfolios than if
they 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 Portfolios may be exposed to risk of loss. The investment advisers will
attempt to reduce this risk by engaging in futures transactions, to the extent
possible, where, in their 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.
In addition to the possibility that there may be a less than perfect
correlation between movements in the futures contracts and securities in the
portfolio being hedged, the prices of futures contracts may not correlate
perfectly with movements in the underlying security due to certain market
distortions. First, rather than meeting variation margin deposit requirements
should a futures contract value move adversely, investors may close future
contracts through offsetting transactions which could distort the normal
relationship between the index and futures markets. Second, since margin
requirements in the futures market are less onerous than in the securities
market, the futures market may attract more speculators than the securities
market. Increased participation by speculators may cause temporary price
distortions. Due to the possibility of such price distortion, and also because
of the imperfect correlation discussed above, even a correct forecast of general
market trends by the investment advisers may not result in a successful hedging
transaction in the futures market over a short time period.
Successful use of futures contracts for hedging purposes is also subject to
the investment advisers' ability to predict correctly movements in the direction
of the market. However, the investment advisers believe that over time the value
of the investments of the Portfolios will tend to move in the same direction as
the market indices which are intended to correlate to the price movements of the
portfolio securities sought to be hedged.
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WRITING COVERED CALL OPTIONS
The Portfolios may write (i.e., sell) covered call options. By writing a
call option, a Portfolio becomes obligated during the term of the option to
deliver the securities underlying the option upon payment of the exercise price.
The Portfolios may only write "covered" options. This means that as long as
a Portfolio 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, a Portfolio 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 Portfolios receive a premium from writing a
call option which they retain whether or not the option is exercised. By writing
a call option, a Portfolio 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 a Portfolio's
ability to use such options to achieve its investment objectives.
BUYING PUT AND CALL OPTIONS
The Portfolios 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 Portfolios 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 Portfolios, 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 the
investment advisers anticipate 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 Portfolios will pay a premium in exchange for the right to purchase
(call) or sell (put) a specific par value of a fixed income or 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, a Portfolio's risk is
limited to the option premium paid.
The Portfolios 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.
SHORT SALES AGAINST THE BOX
The Utilities Portfolio may make short sales (except to the extent of 5% of
the Portfolio's net assets) if at all times when a position is open, the
Portfolio owns the stock or owns preferred stock or debt securities convertible
or exchangeable without payment of further consideration for, securities of the
same issue as the securities sold short. Short sales of this kind are referred
to as "against the box." Short sales against the box are used to defer
recognition of capital gains or losses.
Possible losses from short sales differ from losses that could be incurred
from a purchase of a security, because losses from short sales may be unlimited,
whereas losses from purchases can equal only the total amount invested.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES
The sale of securities that are not publicly traded is typically restricted
under the federal securities laws. As a result, the Utilities Portfolio may be
forced to sell these securities at less than fair market value or may not be
able to sell them when the investment adviser believes it is desirable to do so.
The Portfolio's investments in illiquid securities are subject to the risk that
should the Portfolio desire to sell any of these securities when a ready buyer
is not available at a price that
SERIES-19
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the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely affected. The Portfolio currently limits its
investments in such securities to 10% of the Portfolio's assets.
FOREIGN SECURITIES AND AMERICAN DEPOSITARY RECEIPTS
The Utilities Portfolio may purchase foreign securities or American
Depositary Receipts ("ADRs"). ADRs are U.S. dollar-denominated receipts issued
generally by domestic banks representing the deposit with the bank of a security
of a foreign issuer. ADRs are publicly traded on exchanges or over the counter
in the United States.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio transactions,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. Additionally, dividends payable on foreign
securities may be subject to foreign taxes withheld prior to distribution.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Changes in
foreign exchange rates will affect the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar. Many of the
foreign securities held by the Portfolio will not be registered with, nor will
the issuers thereof be subject to the reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about the
securities and the foreign company or government issuing them than is available
about a domestic company of government entity. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment positions.
LENDING PORTFOLIO SECURITIES
The U.S. Government Securities Portfolio and the Utilities Portfolio are
authorized to lend their portfolio securities to brokers, dealers and other
financial organizations. The Portfolios' loan of securities will be
collateralized by cash, letters of credit or U.S. government securities that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities. By lending its securities, the Portfolio seeks to
generate income by continuing to receive interest on the loaned securities, by
investing the cash collateral in short-term instruments or by obtaining yield in
the form of interest paid by the borrower when U.S. government securities are
used as collateral.
The risk associated with lending portfolio securities, as with other
extensions of credit, consists of possible loss of rights in the collateral
should the borrower fail financially.
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<PAGE> 80
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
TIC Ed. 5-95
L-11788 Printed in U.S.A.
<PAGE> 81
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 82
STATEMENT OF ADDITIONAL INFORMATION
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
APRIL 1, 1996
This Statement of Additional Information ("SAI") is not a prospectus
but relates to, and should be read in conjunction with, the Trust's prospectus
dated April 1, 1996. A copy of the Prospectus is available from the office of
the Series Trust at The Travelers Insurance Company, Annuity Services, One
Tower Square, Hartford, Connecticut 06183-5030 or by calling 860-422-3985.
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
THE TRAVELERS SERIES TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S. GOVERNMENT SECURITIES PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SOCIAL AWARENESS STOCK PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . 2
Social Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
UTILITIES PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ZERO COUPON BOND FUND PORTFOLIOS (Series 1998, 2000, 2005) . . . . . . . . . . . . . . . 6
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Securities, Strategies and Techniques . . . . . . . . . . . . . . . . . . 6
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
VALUATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
INVESTMENT ADVISORY SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
TAMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SBMFM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Advisory Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REDEMPTIONS IN KIND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 83
THE TRAVELERS SERIES TRUST
The Travelers Series Trust (the "Series Trust") is registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company, and is organized as a business trust under the laws of the
Commonwealth of Massachusetts. An Agreement and Declaration of Trust dated
October 11, 1991 (the "Declaration of Trust") authorizes the shares of the
Series Trust to be divided into two or more series related to separate
portfolios of investments, and further allows the Board of Trustees to
establish additional portfolios at any time.
The Series Trust is currently divided into six series (the
"Portfolios") (with seven Portfolios to be added by June 1996) each with its
own investment objective and policies, each of which are diversified portfolios
under the Investment Company Act of 1940 (the "1940 Act").
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 to invest an additional 15% of its net asset
value in securities of issuers located in Australia, Canada, France, Japan, the
United Kingdom or Germany. The guidelines also 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.
U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the U.S. Government Securities Portfolio
is the selection of investments from the point of view of an investor concerned
primarily with highest credit quality, current income and total return. To
achieve this objective, the Portfolio invests primarily in direct obligations
of the United States Government, in obligations of its instrumentalities
supported by its full faith and credit, and in obligations issued or guaranteed
by Federal Agencies which are independent corporations sponsored by the United
States and which are subject to its general supervisory oversight, but which do
not carry the full faith and credit obligations of the United States.
INVESTMENT RESTRICTIONS
None of the restrictions enumerated in this paragraph may be changed
without a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in the 1940 Act. The U.S. Government Securities
Portfolio will not:
(1) invest more than 5% of its total assets, computed at market
value, in the securities of any one issuer (exclusive of
securities issued or guaranteed by the United States Government,
its agencies or instrumentalities, for which there is no limit);
(2) invest in more than 10% of any class of securities of any one
issuer;
(3) borrow money, except to facilitate redemptions or for emergency
or extraordinary purposes and then only from banks and in amounts
of up to 10% of its gross assets computed at cost; while
outstanding according to the 1940 Act, a borrowing may not exceed
one-third of the value of the net assets, including the amount
borrowed; the Portfolio has no intention of attempting to
increase its net income
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<PAGE> 84
by borrowing and all borrowings will be repaid before additional
investments are made; assets pledged to secure borrowings shall
be no more than the lesser of the amount borrowed or 10% of the
gross assets computed at cost;
(4) underwrite securities, except that the Portfolio may purchase
securities from issuers thereof or others and dispose of such
securities in a manner consistent with its other investment
policies; in the is position of restricted securities, the
Portfolio may be deemed to be an underwriter, as defined in the
Securities Act of 1933;
(5) purchase real estate or interests in real estate, except through
the purchase of securities of a type commonly purchased by
financial institutions which do not include direct interest in
real estate or mortgages, or commodities or commodity contracts,
except transactions involving financial futures in order to limit
transactions and borrowing costs and for hedging purposes;
(6) invest for the primary purpose of control or management;
(7) make margin purchases or short sales of securities, except for
short-term credits which are necessary for the clearance of
transactions, and to place not more than 5% of its net asset
value in total margin deposits for positions in futures
contracts;
(8) make loans, except that the Portfolio may purchase money market
securities, enter into repurchase agreements, buy publicly and
privately distributed debt securities and lend limited amounts of
its portfolio securities to broker/dealers; all such investments
must be consistent with the investment objective and policies;
(9) invest more than 25% of its total assets in the securities of
issuers in any single industry (other than securities issued by
the United States Government, its agencies or instrumentalities);
or
(10) 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; when
consistent with its investment objectives, the Portfolio may
purchase securities of brokers, dealers, underwriters or
investment advisers.
SOCIAL AWARENESS STOCK PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Social Awareness Stock Portfolio is
long-term capital appreciation and retention of net investment income. The
Portfolio seeks to fulfill this objective by selecting investments, primarily
common stocks, that Smith Barney Mutual Fund Management, Inc. ("SBMFM")
determines meet certain social criteria, based on analysis of data. It is up
to the discretion of the investment adviser to determine the source for the
data. This principal objective does not preclude the realization of short-term
gains when conditions suggest the long-term goal is accomplished by such
short-term transactions.
The assets of the Social Awareness Portfolio generally will be
invested in a portfolio of equity securities, primarily common stocks,
diversified across industries and companies. However, when it is determined
that investments of other types may be advantageous for defensive purposes or
for temporary investment of cash flows, investments may be made in bonds, notes
or other evidence of indebtedness, issued publicly or placed privately, deemed
to be of suitable credit quality, including obligations of the United States
Government.
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<PAGE> 85
SOCIAL CRITERIA
The Social Awareness Stock Portfolio utilizes certain social criteria
to define a universe of common stocks that are acceptable investment vehicles
for the Portfolio. Companies will not meet the social criteria established for
the Portfolio if a significant portion of their revenues, as determined by
SBMFM, are derived from (a) the production of tobacco, tobacco products,
alcohol, or military defense systems; or (b) the provision of military defense
related services, or gambling services. These investment restrictions are not
fundamental and may be changed without shareholder approval.
If a company fails a social criteria restriction after the Social
Awareness Portfolio has purchased its common stock or should the Portfolio
inadvertently acquire a security which is not an acceptable investment, SBMFM
will eliminate the securities of such company from the Social Awareness
Portfolio's portfolio in an orderly manner within a reasonable period of time.
INVESTMENT RESTRICTIONS
The investment restrictions set forth in Items 1 through 9 below are
fundamental and may not be changed without a vote of a majority of the
outstanding voting securities of the Portfolio, as defined in the 1940 Act.
Items 10 through 13 may be changed by a vote of the Board of Trustees.
The Social Awareness Stock Portfolio will not:
(1) invest more than 5% of its total assets in securities of any one
issuer, except obligations of the United States Government and
its instrumentalities;
(2) borrow money, except that the right is reserved to borrow from
banks for emergency purposes, provided that such borrowings will
not exceed 5% of the value of the assets of the Portfolio and
that immediately after the borrowing, and at all times
thereafter, and while any such borrowing is unrepaid, there will
be asset coverage of at least 300% for all borrowings of the
Portfolio;
(3) underwrite securities of other issuers, except that the Portfolio
could be deemed an underwriter when engaged in the sale of
restricted securities (see item 13);
(4) purchase interests in real estate, except as may be represented
by securities for which there is an established market;
(5) purchase commodities or commodity contracts, except transactions
involving financial futures in order to limit transaction and
borrowing costs and for hedging purposes;
(6) make loans, except through the acquisition of a portion of
privately placed issue of bonds, debentures or other evidences of
indebtedness of a type customarily purchased by institutional
investors (see item 13);
(7) invest in the securities of a company for the purpose of
exercising management or control;
(8) acquire more than 10% of the voting securities of any one issuer
(it is the present practice of the Portfolio not to exceed 5% of
the voting securities of any one issuer);
(9) issue senior securities;
(10) make short sales of securities;
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<PAGE> 86
(11) make purchases on margins, except for short-term credits which
are necessary for the clearance of transactions, and to place not
more than 5% of its net asset value in total margin deposits for
positions in futures contracts;
(12) invest in securities of other investment companies, except as
part of a plan of merger, consolidation or acquisition of assets;
or
(13) invest more than 5% of the value of the assets of the Portfolio
in restricted securities (securities which may not be publicly
offered without registration under the Securities Act of 1933).
Changes in the investments of the Portfolio may be made from time to
time to take into account changes in the outlook for particular industries or
companies. The Portfolio's investments will not, however, be concentrated in
any one industry; that is, no more than twenty-five percent (25%) of the value
of its assets will be invested in any one industry. While the Portfolio may
occasionally invest in foreign securities, it is not anticipated that such
investments will, at any time, account for more than ten percent (10%) of its
investment portfolio.
The assets of the Portfolio will be kept fully invested except that
(a) sufficient cash may be kept on hand reasonably to provide for variable
annuity contract obligations, and (b) reasonable amounts of cash, United States
Government or other liquid securities, such as short-term bills and notes, may
be held for limited periods, pending investments in accordance with their
respective investment policies.
UTILITIES PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of the Utilities Portfolio (the
"Portfolio") is to provide current income. Long-term capital appreciation is a
secondary objective. The Portfolio seeks to achieve its objectives by
investing in equity and debt securities of companies in the utility industries,
which industries are deemed for these purposes to be comprised of companies
principally engaged (that is, at least 50% of a company's assets, gross income
or net profits results from utility operations or the company is regulated as a
utility by a government agency or authority) in the manufacture, production,
generation, transmission and sale of electric and gas energy and companies
principally engaged in the communications field, including entities such as
telephone, telegraph, satellite, microwave and other companies regulated by
governmental agencies as utilities that provide communication facilities for
the public benefit, but not including those in public broadcasting. The
Portfolio will invest primarily in utility equity and debt securities that have
a high expected rate of return, as determined by the investment adviser. Under
normal market conditions, the Portfolio will invest at least 65% of its assets
in such securities. The Portfolio may invest up to 35% of its assets in equity
and debt securities of non-utility companies believed to afford a reasonable
opportunity for achieving the Portfolio's investment objectives. When the
investment adviser believes that market conditions warrant, the Portfolio may
adopt a temporary defensive posture and may invest, without limit, in debt
securities (whether or not they are utility securities) such as rated or
unrated bonds, debentures and commercial paper, United States government
securities and money market instruments. The Portfolio may invest up to 10% of
its assets in securities rated BB or B by Standard & Poor's Corporation ("S&P")
or Ba or B by Moody's Investors Service, Inc. ("Moody's") whenever the
investment adviser believes that the incremental yield on such securities is
advantageous to the Portfolio in comparison to the additional risk involved.
The yields on lower-rated fixed-income securities generally are higher than the
yields available on higher-rated securities. However, investments in
lower-rated securities may be subject to greater market fluctuations and
greater risks of loss of income or principal (including the possibility of
default by, or bankruptcy of, the issuers of such securities) than higher-rated
securities. Lower-rated securities also may have speculative characteristics.
In addition, the Portfolio may enter into repurchase agreements.
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<PAGE> 87
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may
not be changed without a vote of a majority of the outstanding voting
securities of the Portfolio, as defined in the 1940 Act. The Utilities
Portfolio will not:
(1) purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the
Portfolio's total assets would be invested in the securities of
the issuer, except that up to 25% of the value of the Portfolio's
total assets may be invested without regard to this 5%
limitation;
(2) purchase more than 10% of the voting securities of any one
issuer, provided that this limitation shall not apply to
investments in U.S. government securities;
(3) purchase securities on margin, except that the Portfolio may
obtain any short-term credits necessary for the clearance of
purchases and sales of securities (for purposes of this
restriction, the deposit or payment of initial or variation
margin in connection with futures contracts or related options
will not be deemed to be a purchase of securities on margin by
the Portfolio);
(4) make short sales of securities or maintaining a short position,
except to the extent of 5% of the Portfolio's net assets and
except that the Portfolio may engage in such activities without
limit if, at all times when a short position is open, the
Portfolio owns an equal amount of the securities or securities
convertible into or exchangeable, without payment of any further
consideration, for securities of the same issuer as, and at least
equal in amount to, the securities sold short;
(5) borrow money, including reverse repurchase agreements, except
that the Portfolio may borrow from banks for temporary or
emergency (not leveraging) purposes including the meeting of
redemption requests that might otherwise require the untimely
disposition of securities, in an amount not exceeding 20% of the
value of the Portfolio's total assets (including the amount
borrowed) valued at market less liabilities (not including the
amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the Portfolio's total
assets, the Portfolio will not make any additional investments;
(6) pledge, hypothecate, mortgage or otherwise encumber more than 10%
of the value of the Portfolio's total assets as security for any
indebtedness (for purposes of this restriction (a) the deposit of
assets in escrow in connection with the writing of covered put or
call options and the purchase of securities on a when-issued or
delayed-delivery basis and (b) collateral arrangements with
respect to (i) the purchase and sale of stock options, options on
foreign currencies and options on stock indexes and (ii) initial
or variation margin for futures contracts will not be deemed to
be pledges of the Portfolio's assets);
(7) invest in commodities, except that the Portfolio may purchase or
write futures contracts and options on futures contracts as
described in this Prospectus;
(8) make loans to others, except through the purchase of qualified
debt obligations, loans of portfolio securities and the entry
into repurchase agreements; and
(9) concentrate in any industry, except that the Portfolio will
concentrate in excess of 25% of its assets in the securities of
companies within the utility industries.
In addition, the Portfolio will not purchase restricted securities,
illiquid securities (such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily marketable if more than
10% of the total assets of the Portfolio would be invested in such securities.
5
<PAGE> 88
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
INVESTMENT OBJECTIVE AND POLICIES
The objective of each of the three Zero Coupon Bond Portfolios is to
provide as high an investment return as is consistent with the preservation of
capital. Each Portfolio's investment objective may be changed only with the
approval of a majority of the Portfolio's outstanding shares. There can be no
assurance that a Portfolio will achieve its investment objective.
Each Portfolio seeks to return a reasonably assured targeted dollar amount,
predictable at the time of investment, on a specific target date in the future
by investing in primarily zero coupon securities that pay no cash income but
are acquired by the Portfolio at substantial discounts from their value at
maturity. The Zero Coupon Bond Portfolios may not be appropriate for contract
owners who do not plan to have their premiums invested in shares of the
Portfolios for the long-term or until maturity.
INVESTMENT SECURITIES, STRATEGIES AND TECHNIQUES
Under normal circumstances, each Zero Coupon Bond Portfolio will
invest at least 65% of its net assets in "Stripped Securities," a term used
collectively for Stripped Treasury Securities, Stripped Government Securities,
Stripped Corporate Securities and Stripped Eurodollar Obligations and other
stripped securities, all described below. The Stripped Securities in which
each Portfolio will invest consist of:
(1) debt obligations issued by the U.S. Treasury that have been
stripped of their unmatured interest coupons, interest coupons
that have been stripped from debt obligations issued by the U.S.
Treasury, and receipts and certificates for stripped debt
obligations and stripped coupons, including U.S. government trust
certificates (collectively, "Stripped Treasury Securities") (but
currently not anticipated to be in excess of 55% of the Funds'
assets);
(2) other zero coupon securities issued by the U.S. government and its
agencies and instrumentalities, by a variety of tax-exempt issuers
such as state and local governments and their agencies and
instrumentalities and by "mixed-ownership government corporations"
(collectively, "Stripped Government Securities");
(3) zero coupon securities issued by domestic corporations which
consist of corporate debt obligations without interest coupons,
and, if available, interest coupons that have been stripped from
corporate debt obligations, and receipts and certificates for such
stripped debt obligations and stripped coupons (collectively,
"Stripped Corporate Securities");
(4) zero coupon securities issued by certain entities which consist of
stripped debt obligations and stripped coupons of asset-backed
securities, which zero coupon-type securities may exist today or
may be developed in the future. These securities may be illiquid
and are subject to the 10% limitation for such restricted
securities, as described on page 7.
(5) stripped Eurodollar obligations, which are debt securities
denominated in U.S. dollars that are issued by foreign issuers,
often subsidiaries of domestic corporations ("Stripped Eurodollar
Obligations").
As to the remaining 35% of each Zero Coupon Bond Portfolio, the assets
may be invested in non-zero coupon securities such as common stock and other
equity securities, bonds and other debt securities, and money market
instruments.
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<PAGE> 89
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may
not be changed without a vote of majority of the outstanding voting securities
of each Zero Coupon Bond Portfolio, as defined in the Investment Company Act of
1940, as amended. Each of the Zero Coupon Bond Portfolios will not:
(1) purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the
Portfolio's total assets would be invested in the securities of
the issuer, except that up to 25% of the value of the Portfolio's
total assets may be invested without regard to this 5% limitation;
(2) purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in
U.S. government securities;
(3) purchase securities on margin, except that each Portfolio may
obtain any short-term credits necessary for the clearance of
purchases and sales of securities. For purposes of this
restriction, the deposit or payment of initial or variation margin
in connection with futures contracts or related options will not
be deemed to be a purchase of securities on margin by a Portfolio;
(4) make short sales of securities or maintain a short position,
except to the extent of 5% of each Portfolio's net assets and
except that a Portfolio may engage in such activities without
limit if, at all times when a short position is open, the
Portfolio owns an equal amount of the securities or securities
convertible into or exchangeable, without payment of any further
consideration, for securities of the same issuer as, and at least
equal in amount to, the securities sold short;
(5) borrow money, including reverse repurchase agreements, except that
each Portfolio may borrow from banks for temporary or emergency
(not leveraging) purposes including the meeting of redemption
requests that might otherwise require the untimely disposition of
securities, in an amount not exceeding 20% of the value of the
Portfolio's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the
time the borrowing is made. Whenever borrowings exceed 5% of the
value of a Portfolio's total assets, the Portfolio will not make
any additional investments;
(6) pledge, hypothecate, mortgage or otherwise encumber more than 10%
of the value of a Portfolio's total assets as security for any
indebtedness. For purposes of this restriction (a) the deposit of
assets in escrow in connection with the writing of covered put or
call options and the purchase of securities on a when-issued or
delayed-delivery basis and (b) collateral arrangements with
respect to (i) the purchase and sale of stock options, options on
foreign currencies and options on stock indexes and (ii) initial
or variation margin for futures contracts will not be deemed to be
pledges of a Portfolio's assets;
(7) invest in commodities, except that each Portfolio may purchase or
write futures contracts and options on futures contracts as
described in this Prospectus;
(8) make loans to others, except through the purchase of qualified
debt obligations, loans of portfolio securities and the entry into
repurchase agreements; and
(9) concentrate in any industry.
In addition, the Portfolios will not purchase restricted securities,
illiquid securities (such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily marketable if more than
10% of the total assets of a Portfolio would be invested in such securities.
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<PAGE> 90
VALUATION OF SECURITIES
The current values for the portfolio securities of the Portfolios are
determined as follows. Securities that are traded on an established exchange
are valued on the basis of the last sales price on the exchange where primarily
traded prior to the time of valuation. Securities traded in the
over-the-counter market, for which complete quotations are readily available,
are valued at the mean of the bid and asked prices at the time of valuation.
Short-term money market instruments having maturities of sixty days or less are
valued at amortized cost (original purchase price as adjusted for amortization
of premium or accretion of discount) which, when combined with accrued
interest, approximates market. Short-term money market instruments having
maturities of more than sixty days, for which complete quotations are readily
available, are valued at current market value. The Board of Trustees of the
Series Trust values the following at prices it deems 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 Board's opinion the
last sales price does not reflect a current market value or if no sale
occurred, and (3) other assets.
The Series Trust 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 either Portfolio, 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
Board of Trustees. The Board of Trustees has authorized the use of a pricing
service to determine the fair value of the Portfolios' 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.
DISTRIBUTIONS AND TAXES
It is the Series Trust's intention to distribute dividends from net
investment income and all net realized capital gains from the Portfolios
annually in shares or, at the option of the shareholder, in cash. All of the
Portfolios have qualified, and intend to qualify in the future, as a regulated
investment company under Subchapter M of the Internal Revenue Code. Thus the
Portfolios are relieved of any federal income tax liability by distributing all
of their net investment income and net capital gains, if any, to its
shareholders.
When any Portfolio makes a distribution, it intends to distribute only
its net capital gains and such income as has been predetermined to the best of
the Portfolio'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 Portfolio's books, but will be made on a federal
taxation basis.
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.
</TABLE>
8
<PAGE> 91
<TABLE>
<S> <C>
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.++
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.
</TABLE>
9
<PAGE> 92
<TABLE>
<S> <C>
Ian R. Stuart Vice President and Financial Officer, Financial Services Department
Treasurer (1994-present), Second Vice President and Financial Officer, Financial
One Tower Square Services Department (1991-1994), The Travelers Insurance Company;
Hartford, Connecticut Senior Manager (1986-1991), Price Waterhouse; Treasurer, Board of
Age 39 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.
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 Series Trust 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 Series Trust were held to be a partnership, the possibility of its
shareholders incurring financial loss for that reason appears remote because
the Series Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for obligations of the Series Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Series Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of Series Trust property
for any shareholder held personally liable for the obligations of the Series
Trust.
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.
The Trustees were elected by Shareholders at a meeting held on October
30, 1992. After such meeting, 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, or if at the time of filling a vacancy less than
two-thirds of the Trustees holding office after filling the vacancy were
elected
10
<PAGE> 93
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. Any Trustee may voluntarily resign from office, or Trustees 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 Trust. 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 Trust. The
Series Trust is required to assist in Shareholders' communications. In
accordance with current laws, insurance companies will request voting
instructions from contract owners participating in variable annuity and/or
variable life insurance contracts held by their respective separate accounts.
Insurance companies will vote shares of the Portfolios in the same proportion
as the voting instructions received.
Voting rights are not cumulative, that is, 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 Series Trust, 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 Series Trust (as
defined in the 1940 Act).
INVESTMENT ADVISORY SERVICES
TAMIC
Travelers Asset Management International Corporation ("TAMIC"), an
indirect wholly owned subsidiary of Travelers Group Inc., furnishes investment
management and advisory services to the U.S. Government Securities Portfolio in
accordance with the terms of an Investment Advisory Agreement which was
approved by shareholders at a meeting held on April 23, 1993.
For furnishing investment management and advisory services to the U.S.
Government Securities Portfolio, TAMIC is paid an amount equivalent on an
annual basis to 0.3233% of the average daily net assets of the Portfolio. The
fee is computed daily and paid weekly. The total advisory fees paid to TAMIC
by the U.S. Government Securities Portfolio for the years ended December 31,
1993, 1994 and 1995 were $56,276, $82,937 and $85,175, respectively.
For furnishing investment management and advisory services to the Zero
Coupon Bond Fund Portfolios, Series 1998, 2000 and 2005, TAMIC is paid an
amount equivalent on an annual basis to .10% of the average daily net assets of
each Portfolio. The total advisory fees paid to TAMIC by the Zero Coupon Bond
Fund Portfolios, Series 1998, 2000 and 2005 for the period ended December 31,
1995 were $224, $224 and $225, respectively.
SBMFM
Smith Barney Mutual Funds Management Inc. (SBMFM) an indirect wholly
owned subsidiary of The Travelers Inc., furnishes investment management and
advisory services to the Social Awareness Stock Portfolio through Greenwich
Street Advisors, a division of SBMFM, in accordance with the terms of an
Investment Advisory Agreement dated May 1, 1995 which was approved by
shareholders at a meeting held on April 28, 1995. Prior to May 1, 1995, The
Travelers Investment Management Company (TIMCO) provided investment management
and advisory services. For furnishing investment management and advisory
services to the Fund, SBMFM is paid any amount equivalent on an annual basis to
the advisory fee schedule set forth in the table below. The fee is computed
daily and paid weekly.
11
<PAGE> 94
<TABLE>
<CAPTION>
AGGREGATE NET ASSET VALUE
ANNUAL MANAGEMENT FEE OF THE PORTFOLIO
--------------------- ------------------------------
<S> <C> <C>
0.65% of the first $ 50,000,000, plus
0.55% of the next $ 50,000,000, plus
0.45% of the next $100,000,000, plus
0.40% of amounts over $200,000,000.
</TABLE>
The total advisory fees paid to TIMCO by the Social Awareness Stock
Portfolio for the period ended December 31, 1993, and for the year ended
December 1994 and for the period January through April 1995 were $15,961,
$23,474 and $ 9,877, respectively. The total advisory fee paid to SBMFM for
the period May 1, 1995 through December 31, 1995 was $28,613.
Greenwich Street Advisors, a division of SBMFM, also manages the
day-to-day investment operations of the Utilities Portfolio pursuant to an
Investment Advisory Agreement approved by the Board of Trustees. Under the
Advisory Agreement, SBMFM is responsible for furnishing or causing to be
furnished to the Utilities Portfolio advice and assistance with respect to the
acquisition, holding or disposal of securities and recommendations with respect
to other aspects and affairs of the Portfolio. The Utilities Portfolio pays
SBMFM an advisory fee equal to 0.65% on an annual basis for its services as
investment adviser. The fee is computed daily and paid monthly.
The total advisory fees paid to SBMFM by the Utilities Portfolio for
the period ended December 1994 and for the year ended December 1995 were
$21,804 and $67,791, respectively.
THE ADVISORY AGREEMENTS
Under the terms of their respective Advisory Agreements, TAMIC and
SBMFM shall:
(1) obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
the Portfolios, affecting the economy generally and individual
companies or industries, the securities of which are included in
the Portfolios 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 Portfolios;
(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
programs approved by the Board of Trustees; and
(5) regularly report to the Board of Trustees with respect to
implementation of the approved investment programs and any other
activities in connection with the administration of the assets of
the Portfolios.
As required by the 1940 Act, each 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 Portfolios. In addition, and in
either event, the terms of the Advisory Agreements 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 Agreements, 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 Agreements. The Advisory Agreements
further provide that they will terminate automatically upon assignment; may
be amended only with prior approval of a majority of the outstanding voting
securities of the Portfolios; may
12
<PAGE> 95
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 Portfolios; and may not be terminated by TAMIC or
SBMFM without prior approval of a new investment advisory agreement by a vote
of a majority of the outstanding voting securities of the Portfolios.
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, TIMCO and SBMFM (collectively, the "investment advisers"), in executing
transactions in portfolio securities of the Portfolios, 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 Portfolios, 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 to the Portfolios and the investment advisers is considered to be in
addition to and not in lieu of services required to be performed by the
investment advisers under their respective Investment Advisory Agreements. The
cost, value and specific application of such information are indeterminable and
hence are not practicably allocable among the Portfolios and other clients of
either TAMIC, TIMCO or SBMFM who may indirectly benefit from the availability
of such information. Similarly, the Portfolios 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 Portfolios 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 Portfolios will be
required to deposit and maintain funds with brokers as margin to guarantee
performance of future obligations.
Each of the investment advisers may follow a policy of considering the
sale of shares of the Series Trust a factor in the selection of broker-dealers
to execute portfolio transactions, subject to the requirements of best
execution described above.
13
<PAGE> 96
The investment advisers' policies with respect to brokerage are and
will be reviewed by the Board of Trustees periodically. Because of the
possibility of further regulatory developments affecting the securities
exchanges and brokerage practices generally, the foregoing practices may be
changed, modified or eliminated.
The total brokerage commissions paid by the U.S. Government Securities
Portfolio to TAMIC for the years ended December 31, 1993, 1994 and $1995 were
$35,756, $13,363 and $119,817, respectively. For the year ended December 31,
1995, no portfolio transactions were directed to certain brokers because of
research services. No formula is used in placing portfolio transactions with
brokers which provide research services and no specific amount of transactions
is allocated for research services. No brokerage business was placed with any
brokers affiliated with TAMIC during 1995.
The total brokerage commissions paid by the Social Awareness Stock
Portfolio to TIMCO and SBMFM for the years ended December 31, 1993, 1994 and
1995 were $2,121, $6,302 and $14,657, respectively. (SBMFM became the
investment adviser on May 1, 1995.) For the year ended December 31, 1995,
portfolio transactions in the amount of $8,984,565 were placed with certain
brokers because of research services, of which $13,803 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 $70 and $75 were paid to Smith Barney
Inc. and The Robinson Humphrey Company, Inc., respectively, both affiliates of
TIMCO, which equals, for each, .48% and .51% of Social Awareness Stock
Portfolio's aggregate brokerage commissions paid to such brokers during 1995.
The percentage of the Social Awareness Stock Portfolio's aggregate dollar
amount of transactions involving the payment of commissions effected through
Smith Barney and Robinson Humphrey was .63% and .61%, respectively.
The total brokerage commission paid by the Utilities Portfolio to
SBMFM for the period ended December 31, 1994 and the year ended December 31,
1995 were $8,611 and $20,686. For the year ended December 31, 1995, portfolio
transactions in the amount of $9,792,394 were placed with certain brokers
because of research services, of which $20,686 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. No
brokerage business was placed with any brokers affiliated with SBMFM during
1995.
The total brokerage commission paid by the Zero Coupon Bond
Portfolios, Series 1998, 2000 and 2005 for the period ended December 31, 1995
was $2,064, $2,808 and $3,309, respectively. For the year ended December 31,
1995, no portfolio transactions were directed to certain brokers because of
research services. No formula is used in placing portfolio transactions with
brokers which provide research services and no specific amount of transactions
is allocated for research services. No brokerage business was placed with any
brokers affiliated with TAMIC during 1995.
ADDITIONAL INFORMATION
The Travelers Insurance Company acts as transfer agent and dividend
disbursing agent for the Portfolios. 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 indirectly owned,
through a wholly owned subsidiary, by 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 Company owned 100% of the Series Trust's outstanding shares.
Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York
11245, serves as the custodian of all securities and cash of the Portfolios.
Coopers & Lybrand L.L.P., independent accountants, 100 Pearl Street,
Hartford, Connecticut 06103, are the independent auditors for the Series Trust
and its Portfolios. The services provided by Coopers & Lybrand
14
<PAGE> 97
L.L.P., include primarily the examination of the Series Trust'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 Series Trust 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 Series Trust's
prospectus, this SAI or any supplemental sales literature issued by the Series
Trust, and no person is entitled to rely on any information or representation
not contained therein.
The Series Trust's prospectus and this SAI omit certain information
contained in the Series Trust'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.
15
<PAGE> 98
APPENDIX
COMMERCIAL PAPER RATINGS
The Portfolio's investments in commercial paper are limited to those
rated A-1 by Standard & Poor's Corporation (S&P) or Prime-1 by Moody's
Investors Service, Inc. (Moody's). These ratings and other money market
instruments are described as follows.
Commercial paper rated A-1 by Standard & Poor's 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 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.
16
<PAGE> 99
STATEMENT OF ADDITIONAL INFORMATION
FOR
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000,2005)
L-11788S TIC Ed. 4-96
Printed in U.S.A.
<PAGE> 100
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholder of Cash Income Trust:
We have audited the accompanying statement of assets and liabilities of Cash
Income 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. 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 Cash
Income 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
-48-
<PAGE> 101
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $29,445,550) . . . . . . . . $ 30,242,611
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,159
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360,433
Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,657,031
---------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,342,234
---------------
LIABILITIES:
Payables:
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . 6,147,812
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . 1,242
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 892
---------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,149,946
---------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,192,288
===============
NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,976,806
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 1,520,848
Accumulated net realized gains (losses) on investment security transactions . . . . . 897,573
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 797,061
---------------
Total net assets (applicable to 2,267,056 shares outstanding at $12.43 per share) $ 28,192,288
===============
</TABLE>
See Notes to Financial Statements
-50-
<PAGE> 102
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,667,448
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . $ 85,175
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 45,266
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 469
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 12,124
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,388
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 123
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,055
--------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . 146,600
---------------
Net investment income . . . . . . . . . . . . . . . . . . . 1,520,848
===============
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 56,107,352
Cost of investment securities sold . . . . . . . . . . . . . . . 54,996,560
--------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 1,110,792
Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . (2,374,647)
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 797,061
--------------
Net change in unrealized gain (loss) for the year . . . . . 3,171,708
---------------
Net realized gain and change in unrealized gain (loss) . 4,282,500
---------------
Net increase in net assets resulting from operations . . . . . . . $ 5,803,348
===============
</TABLE>
See Notes to Financial Statements
-51-
<PAGE> 103
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
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 . . . . . . . . . . . . . . . . . . . . . . . . $ 1,520,848 $ 1,418,225
Net realized gain (loss) from investment security transactions . . . 1,110,792 (211,271)
Net change in unrealized gain (loss) on investment securities . . . . 3,171,708 (2,752,337)
--------------- ---------------
Net increase (decrease) in net assets resulting from operations . 5,803,348 (1,545,383)
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income and net short-term realized gains from
investment security transactions . . . . . . . . . . . . . . . . . (1,404,917) (883,624)
Net long-term realized gains from investment security transactions - (63,504)
--------------- ---------------
Total distributions to shareholders . . . . . . . . . . . . . . . (1,404,917) (947,128)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . 5,439,282 7,137,525
Dividend reinvestment . . . . . . . . . . . . . . . . . . . . . . . . 1,404,917 947,128
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . (7,572,507) (6,590,182)
--------------- ---------------
Net increase (decrease) in net assets resulting from
capital share transactions . . . . . . . . . . . . . . . . . . (728,308) 1,494,471
-------------- ---------------
Net increase (decrease) in net assets . . . . . . . . . . . 3,670,123 (998,040)
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . 24,522,165 25,520,205
--------------- ---------------
End of year (including undistributed net investment income as follows:
December, 1995 $1,520,848 and December, 1994 $1,418,225) . . . . . $ 28,192,288 $ 24,522,165
=============== ===============
</TABLE>
See Notes to Financial Statements
-52-
<PAGE> 104
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
BONDS (14.0%)
COLLATERALIZED MORTGAGE
OBLIGATIONS (14.0%)
Federal Farm Credit Banks,
5.93% Notes, 2003 $ 1,000,000 $ 1,009,065
FNMA Remic Trust 1993-05,
7.50% Pass Through, 2008 1,000,000 1,050,009
FNMA Remic Trust 1993-13,
6.50% Pass Through, 2000 1,201,619 1,195,645
Guaranteed Export Certificate 1994-A,
7.12% Sinking Fund, 2006 916,189 969,144
------------
TOTAL BONDS (COST $ 3,971,385) 4,223,863
------------
U.S. GOVERNMENT AGENCY
SECURITIES (31.1%)
Federal Home Loan Mortgage Corp,
7.00% Pass Through, 2010 4,000,000 4,076,252
FNMA,
7.55% Notes, 2004 1,000,000 1,044,571
GNMA 30-Year Single Family,
9.00% Pass Through, 2016 32,417 34,372
GNMA 30-Year Single Family,
9.00% Pass Through, 2019 71,940 76,279
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 371,732 390,551
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 437,973 460,146
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 434,297 456,283
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 394,478 414,449
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 330,407 347,134
GNMA 30-Year Notification,
8.50% Pass Through, 2025 2,000,000 2,100,000
------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES
(COST $9,345,280) 9,400,037
------------
U.S. GOVERNMENT
SECURITIES (42.1%)
United States of America Treasury,
0.00% Notes, 2015 4,000,000 1,242,396
United States of America Treasury,
7.875% Bonds, 2021 5,000,000 6,156,250
United States of America Treasury,
8.75% Bonds, 2017 1,000,000 1,323,125
United States of America Treasury,
11.25% Bonds, 2015 2,500,000 4,009,375
------------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $12,241,249) 12,731,146
------------
SHORT-TERM INVESTMENTS (12.8%)
U.S. GOVERNMENT AGENCY
SECURITIES (12.8%)
Federal Farm Credit Banks,
5.45% due January 11, 1996 $ 2,000,000 $ 1,993,626
Federal Home Loan Banks,
5.46% due January 11, 1996 1,900,000 1,893,939
------------
TOTAL SHORT-TERM
INVESTMENTS (COST $3,887,636) 3,887,565
------------
TOTAL INVESTMENTS (100%)
(COST $ 29,445,550) (A) (B) $ 30,242,611
============
</TABLE>
NOTES
(A) At December 31, 1995, net unrealized appreciation for all securities
was $797,061. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over cost of $803,354 and aggregate gross unrealized
depreciation for all securities in which there was an excess of cost
over market value of $6,293.
(B) The cost of investments for federal income tax purposes amounted to
$29,475,915. 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 $ 772,989
Gross unrealized depreciation (6,293)
-------------
Net unrealized appreciation $ 766,696
=============
</TABLE>
See Notes to Financial Statements
-53-
<PAGE> 105
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $5,699,643) . . . . . . . . . $ 6,989,256
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,458
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,928
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . 29,069
---------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,092,780
---------------
LIABILITIES:
Payable for investment management and advisory fees . . . . . . . . . . . . . . . . . 625
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,069
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,275
---------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,969
---------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,054,811
===============
NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,463,666
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 55,079
Accumulated net realized gains (losses) on investment security transactions . . . . . 246,453
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 1,289,613
---------------
Total net assets (applicable to 492,622 shares outstanding at $14.32 per share) . $ 7,054,811
===============
</TABLE>
See Notes to Financial Statements
-56-
<PAGE> 106
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 102,832
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,038
----------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 128,870
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . 38,490
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 43,095
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 2,157
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 15,556
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,388
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 118
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,056
----------------
Total expenses before reimbursement from The Travelers . . . . . 102,860
Less: Reimbursement from The Travelers . . . . . . . . . . . . . . (29,069)
----------------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 73,791
---------------
Net investment income . . . . . . . . . . . . . . . . . . . 55,079
---------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 3,980,329
Cost of investment securities sold . . . . . . . . . . . . . . . 3,715,090
----------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 265,239
Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . (26,432)
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 1,289,613
----------------
Net change in unrealized gain (loss) for the year . . . . . 1,316,045
---------------
Net realized gain and change in unrealized gain (loss) . 1,581,284
---------------
Net increase in net assets resulting from operations . . . . . . . $ 1,636,363
===============
</TABLE>
See Notes to Financial Statements
-57-
<PAGE> 107
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
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 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,079 $ 51,650
Net realized gain from investment security transactions . . . . . . . . . 265,239 50,675
Net change in unrealized gain (loss) on investment securities . . . . . . 1,316,045 (195,236)
---------------- ----------------
Net increase (decrease) in net assets resulting from operations . . . 1,636,363 (92,911)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income and net short-term realized gains from
investment security transactions . . . . . . . . . . . . . . . . . . . (51,494) (70,411)
Net long-term realized gains from investment security transactions . . . (68,327) (17,258)
---------------- ----------------
Total distributions to shareholders . . . . . . . . . . . . . . . . . (119,821) (87,669)
---------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 2,552,645 1,378,970
Dividend reinvestment . . . . . . . . . . . . . . . . . . . . . . . . . . 119,821 87,669
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . . . (1,013,468) (768,126)
---------------- ----------------
Net increase in net assets resulting from capital share transactions . 1,658,998 698,513
---------------- ----------------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . 3,175,540 517,933
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,879,271 3,361,338
---------------- ----------------
End of year (including undistributed net investment income as follows:
December, 1995 $55,079 and December, 1994 $51,650) . . . . . . . . . . $ 7,054,811 $ 3,879,271
================ ================
</TABLE>
See Notes to Financial Statements
-58-
<PAGE> 108
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ -----------
<S> <C> <C>
COMMON STOCKS (97.7%)
AMUSEMENTS (1.0%)
Walt Disney Co. 1,200 $ 70,800
-----------
BANKING (10.6%)
Banc One Corp. 1,200 45,300
Bank of Boston Corp. 500 23,125
Barnett Banks, Inc. 1,000 59,000
Chase Manhattan Corp. 300 18,187
Citicorp 1,500 100,875
First Chicago NBD 500 19,750
First Union Corp. 600 33,375
H.F. Ahmanson & Co. 1,400 37,100
Mellon Bank Corp. 2,000 107,500
MBNA Corp. 650 23,969
NationsBank Corp. 1,300 90,513
Norwest Corp. 900 29,700
State Street Boston Corp. 3,400 153,000
-----------
741,394
-----------
CHEMICALS, PHARMACEUTICALS, AND
ALLIED PRODUCTS (13.5%)
Air Products & Chemicals, Inc. 1,700 89,675
Amgen (A) 1,200 71,176
Bristol Myers Squibb Co. 1,100 94,463
Johnson & Johnson 1,500 128,437
Merck & Co., Inc. 2,300 151,225
Pfizer, Inc. 1,200 75,600
Praxair, Inc. 5,000 168,125
Procter & Gamble Co. 1,200 99,600
Schering-Plough Corp. 1,200 65,700
-----------
944,001
-----------
COMMUNICATION (5.6%)
Ameritech Corp. 1,400 82,600
Bell Atlantic Corp. 800 53,500
Bellsouth Corp. 1,800 78,300
Capital Cities ABC, Inc. 400 49,350
MCI Communications Corp. 1,000 26,188
NYNEX Corp. 700 37,800
Sprint Corp. 800 31,900
Tele-Communications, Inc. (A) 1,700 33,894
-----------
393,532
-----------
CONSTRUCTION (0.6%)
Kaufman & Broad Home CP 2,800 41,650
-----------
ELECTRICAL AND
ELECTRONIC MACHINERY (2.4%)
AMP, Inc. 500 19,187
DSC Communications, Inc. (A) 200 7,400
Intel Corp. 2,000 113,625
Time Warner, Inc. 700 26,513
-----------
166,725
-----------
FINANCE (4.7%)
American Express Co. 2,700 111,712
Dean Witter Discover & Co. 600 28,200
Federal Home Loan Corp. 1,000 83,500
Federal National Mortgage Assoc. 500 62,062
Green Tree Financial Corp. 600 15,825
Merrill Lynch & Co., Inc. 500 25,500
-----------
326,799
-----------
FOOD (3.9%)
Coca-Cola Co. 1,000 $ 74,250
Kellogg Co. 500 38,625
PepsiCo, Inc. 2,400 134,100
Unilever NV 200 28,150
-----------
275,125
-----------
INSURANCE (4.5%)
Aetna Life & Casualty Co. 200 13,850
American International Group 1,050 97,125
Transamerica Corp. 1,500 109,313
United Healthcare Corp. 1,400 91,700
-----------
311,988
-----------
MACHINERY (7.8%)
Cabletron System, Inc. (A) 300 24,300
Compaq Computer Corp. (A) 1,200 57,600
Deere & Co. 600 21,150
Digital Equipment Corp. (A) 700 44,887
EMC Corp. (A) 7,000 107,625
International Business Machines Corp. 1,100 100,925
Pitney Bowes, Inc. 700 32,900
Sun Microsystems (A) 600 27,413
York International, Inc. 2,800 131,600
-----------
548,400
-----------
METAL PRODUCTS (4.1%)
Belden, Inc. 4,500 115,875
Gillette Co. 800 41,700
Newell Company 5,000 129,375
-----------
286,950
-----------
MISCELLANEOUS MANUFACTURING (9.9%)
Beckman Instruments, Inc. 500 17,687
Dentsply International, Inc. 3,300 131,794
Emerson Electric Co. 1,000 81,750
Medtronic, Inc. 600 33,525
Perkin-Elmer Corp. 2,500 94,375
Stryker Corp. 3,100 162,557
Xerox Corp. 1,200 164,400
-----------
686,088
-----------
OIL & GAS (1.2%)
Anadarko Petroleum 1,500 81,187
-----------
PAPER AND ALLIED PRODUCTS (1.0%)
Tambrands, Inc. 1,500 71,625
-----------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (1.0%)
Tribune Co. 1,200 73,350
-----------
RETAIL (9.5%)
Home Depot, Inc. 2,900 138,837
Kroger Co. (A) 2,700 101,250
May Department Stores 1,500 63,375
McDonalds Corp. 2,000 90,250
Pep Boys-Manny, Moe, Jack 4,000 102,500
The GAP, Inc. 300 12,600
Toys R Us (A) 2,000 43,500
Wal-Mart Stores, Inc. 3,500 78,312
Wendy's International, Inc. 1,700 36,125
-----------
666,749
-----------
RUBBER AND PLASTIC PRODUCTS (0.4%)
Nike, Inc. 400 27,850
-----------
</TABLE>
-59-
<PAGE> 109
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
SERVICES (6.5%)
Columbia/HCA Healthcare Corp. 2,500 $ 126,875
Computer Associates International 1,000 56,875
Microsoft (A) 1,100 96,594
Olsten Corp. 3,600 142,200
Oracle Systems Corp. (A) 700 29,663
-------------
452,207
-------------
TEXTILE MILL PRODUCTS (1.3%)
VF Corp. 1,700 89,675
-------------
TRANSPORTATION (1.3%)
Norfolk Southern Corp. 900 71,437
Southwest Airlines 800 18,600
-------------
90,037
-------------
TRANSPORTATION MANUFACTURING (3.6%)
Fleetwood Enterprises, Inc. 5,800 149,350
Varity Corp. (A) 2,800 103,950
-------------
253,300
-------------
WHOLESALE TRADE (3.3%)
Enron Corp. 3,300 125,813
Marshall Industries (A) 3,300 106,011
-------------
231,824
-------------
TOTAL COMMON STOCKS
(COST $ 5,541,643) 6,831,256
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (2.3%)
REPURCHASE AGREEMENTS (2.3%)
Barclays Bank PLC,
5.25% Repurchase Agreement
dated December 29, 1995 due
January 2, 1996 collateralized
by: United States of America
Treasury, $156,000,
5.875% due July 31, 1997 $ 158,000 $ 158,000
-------------
TOTAL SHORT-TERM
INVESTMENTS (COST $158,000) 158,000
-------------
TOTAL INVESTMENTS (100%)
(COST $5,699,643) (B) (C) $ 6,989,256
=============
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) At December 31, 1995, net unrealized appreciation for all securities
was $1,289,613. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$1,379,690 and aggregate gross unrealized depreciation for all securities in
which there was an excess of cost over market value of $90,077.
(C) The cost of investments for federal income tax purposes amounted to
$5,711,602. 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 $ 1,360,418
Gross unrealized depreciation (82,763)
-------------
Net unrealized appreciation $ 1,277,655
=============
</TABLE>
See Notes to Financial Statements
-60-
<PAGE> 110
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $11,263,719) . . . . . . . . $ 13,356,856
Repurchase agreement, at market value (identified cost $2,144,000) . . . . . . . . . 2,144,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,210
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,122
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,846
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . 1,870
----------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,700,904
----------------
LIABILITIES:
Payables:
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . 353,662
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . 1,350
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,870
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,347
----------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361,229
----------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,339,675
================
NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,660,428
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 441,157
Accumulated net realized gains (losses) on investment security transactions . . . . . 144,953
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 2,093,137
----------------
Total net assets (applicable to 1,193,707 shares outstanding at $12.85 per share) $ 15,339,675
================
</TABLE>
See Notes to Financial Statements
-63-
<PAGE> 111
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 391,560
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,952
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 571,512
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . 67,791
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 48,925
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 11,947
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,391
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 115
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,056
---------------
Total expenses before reimbursement from The Travelers . . . . . 132,225
Less: Reimbursement from The Travelers . . . . . . . . . . . . . . 1,870
---------------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 130,355
---------------
Net investment income . . . . . . . . . . . . . . . . . . . 441,157
---------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 2,272,015
Cost of investment securities sold . . . . . . . . . . . . . . . 2,127,062
---------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 144,953
Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . (77,549)
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 2,093,137
---------------
Net change in unrealized gain (loss) for the year . . . . . 2,170,686
---------------
Net realized gain and change in unrealized gain (loss) . 2,315,639
---------------
Net increase in net assets resulting from operations . . . . . . . $ 2,756,796
===============
</TABLE>
See Notes to Financial Statements
-64-
<PAGE> 112
\ THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
THE PERIOD FEBRUARY 4, 1994 (DATE OPERATIONS COMMENCED)
TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 441,157 $ 139,138
Net realized gain from investment security transactions . . . . . . . 144,953 11,353
Net change in unrealized gain (loss) on investment securities . . . . 2,170,686 (77,549)
----------- ----------
Net increase in net assets resulting from operations . . . . . . . 2,756,796 72,942
----------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM NET INVESTMENT INCOME AND
NET SHORT-TERM REALIZED GAINS FROM INVESTMENT SECURITY TRANSACTIONS . . (150,491) -
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . 9,178,587 7,595,972
Dividend reinvestment . . . . . . . . . . . . . . . . . . . . . . . . 150,491 -
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . (2,352,367) (1,912,255)
----------- ----------
Net increase in net assets resulting from capital share transactions 6,976,711 5,683,717
----------- ----------
Net increase in net assets . . . . . . . . . . . . . . . . . . 9,583,016 5,756,659
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 5,756,659 -
----------- ----------
End of period (including undistributed net investment income as follows:
December, 1995 $441,157 and December, 1994 $139,138) . . . . . . . $15,339,675 $5,756,659
=========== ==========
</TABLE>
See Notes to Financial Statements
-65-
<PAGE> 113
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
COMMON STOCKS (76.7%)
COMMUNICATION (12.0%)
Ameritech Corp. 3,500 $ 206,500
AT&T Corp. 5,000 323,750
Bellsouth Corp. 10,000 435,000
GTE Corp. 7,500 330,000
NYNEX Corp. 3,500 189,000
Sprint Corp. 2,500 99,688
U.S. West, Inc. 5,000 178,750
US West Media (A) 5,000 95,000
-----------
1,857,688
-----------
UTILITIES (64.7%)
Allegheny Power System, Inc. 10,000 286,250
American Electric Power Co. 7,500 303,750
Baltimore Gas & Electric Co. 7,500 213,750
Carolina Power & Light Co. 7,500 258,750
Cinergy Corp. 10,000 306,250
Coastal Corp. 10,000 372,500
CIPSCO, Inc. 5,000 195,000
Dominion Resources, Inc. 7,000 288,750
Duquesne Light Co. 12,750 392,063
DPL, Inc. 10,000 247,500
El Paso Natural Gas Co. 5,000 141,875
Florida Power & Light Co. 12,500 579,687
Florida Progress Corp. 10,000 353,750
General Public Utilities 10,000 340,000
Houston Industries 16,000 388,000
Kansas City Power & Light Co. 10,000 261,250
New York State Electric & Gas Co. 7,500 194,063
NIPSCO Industries, Inc. 10,000 382,500
Ohio Edison Co. 10,000 235,000
Pacific Enterprises 10,000 282,500
Pacificorp 15,000 318,750
Peco Energy Co. 11,000 331,375
Portland General Electric Co. 13,100 381,537
Public Service of New Mexico (A) 15,000 264,375
Public Service Co. of Colorado 7,500 265,313
Public Service Enterprises Group 5,500 168,437
Southern Co. 7,500 184,688
SCE Corp. 6,000 106,500
Tenneco, Inc. 7,000 347,375
Texas Utilities Co. 12,000 493,500
Unicom Corporation 10,500 343,875
Wa Energy Co. 15,000 279,375
Westcoast Energy, Inc. 5,000 73,125
Williams Companies 5,000 219,375
Wisconsin Energy 7,500 229,687
-----------
10,030,475
-----------
TOTAL COMMON STOCKS
(COST $9,888,785)
11,888,163
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
BONDS (2.7%)
UTILITIES (2.7%)
Arizona Public Service Co.,
7.25% Bonds, 2023 $ 200,000 198,262
PECO Energy Co.,
8.75% Bonds, 2022 200,000 217,307
-----------
TOTAL BONDS (COST $376,457) 415,569
-----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
U.S. GOVERNMENT
SECURITIES (6.8%)
United States of America Treasury,
7.50% Notes, 1996 $ 500,000 $ 511,250
United States of America Treasury,
7.75% Notes, 1999 500,000 541,874
-----------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $998,477) 1,053,124
-----------
SHORT-TERM INVESTMENTS (13.8%)
REPURCHASE AGREEMENTS (13.8%)
Barclays Bank PLC,
5.25% Repurchase Agreement
dated December 29, 1995 due
January 2, 1996 collateralized
by: United States of America
Treasury, $2,114,000,
5.875% due July 31, 1997 2,144,000 2,144,000
-----------
TOTAL SHORT-TERM
INVESTMENTS (COST $2,144,000) 2,144,000
-----------
TOTAL INVESTMENTS (100%)
(COST $13,407,719) (B)(C) $15,500,856
===========
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) At December 31, 1995, net unrealized appreciation for all securities
was $2,093,137. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over cost of $2,123,451 and aggregate gross unrealized
depreciation for all securities in which there was an excess of cost
over market value of $30,314.
(C) The cost of investments for federal income tax purposes is identical.
See Notes to Financial Statements
-66-
<PAGE> 114
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Series Trust (the "Series Trust") is a Massachusetts
business trust registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
The Declaration of Trust authorizes the shares of the Series Trust to
be divided into two or more series. As of December 31, 1995, the
Series Trust consisted of six series: U.S. Government Securities
Portfolio, Social Awareness Stock Portfolio, Utilities Portfolio (the
"Portfolios"), Zero Coupon Bond Fund Portfolio Series 1998, Zero
Coupon Bond Fund Portfolio Series 2000 and Zero Coupon Bond Fund
Portfolio Series 2005. Shares in each Portfolio are currently
offered, without a sales charge, to separate accounts of The Travelers
Insurance Company ("The Travelers") and The Travelers Life and Annuity
Company, indirect wholly owned subsidiaries of Travelers Group Inc.,
in connection with the issuance of certain variable annuity and
variable life insurance contracts. The accompanying notes do not
specifically pertain to the Zero Coupon Bond Fund Portfolios, as the
financial statements and accompanying notes for these portfolios are
published in their own annual report.
The following is a summary of significant accounting policies
consistently followed by each Portfolio 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. Each Portfolio 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 a
Portfolio 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. Each
Portfolio 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 each Portfolio'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. Cash and cash equivalents include cash on hand,
securities segregated under federal and brokerage regulations, and
short-term highly liquid investments with maturities generally three
months or less when purchased. Generally, futures contracts are
closed prior to expiration.
Futures contracts purchased by each Portfolio are priced and settled
daily; accordingly, changes in daily prices are recorded as realized
gains or losses and no asset is recorded in the Statements of
Investments. However, when each Portfolio 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. Each Portfolio 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. Each Portfolio may sell the
options before expiration. Options held in each Portfolio 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.
-67-
<PAGE> 115
NOTES TO FINANCIAL STATEMENTS - CONTINUED
REPURCHASE AGREEMENTS. When each Portfolio 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 each Portfolio plus a negotiated interest amount. The seller
under the repurchase agreement will be required to provide to each
Portfolio securities (collateral) whose market value, including
accrued interest, will be at least equal to 102% of the repurchase
price. Each Portfolio 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. Each Portfolio's custodian will take actual or
constructive receipt of all securities underlying repurchase
agreements until such agreements expire.
TAXES. Each Portfolio has qualified, or intends 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,
each Portfolio 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. Each Portfolio 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 each Portfolio 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 common stocks and bonds excluding short-term
investments aggregated $7,228,738 and $7,019,978, respectively, for
U.S. Government Securities Portfolio; $5,748,355 and $3,959,211,
respectively, for Social Awareness Stock Portfolio; and $7,493,306 and
$2,272,015, respectively, for Utilities Portfolio; for the year ended
December 31, 1995. Purchases and sales of direct and indirect U.S.
government obligations were $45,759,332 and $44,807,698, respectively,
for U.S. Government Securities Portfolio; and $498,789 for purchases
of Utilities Portfolio. Realized gains and losses from security
transactions are reported on an identified cost-basis.
Net realized gains (losses) from options transactions in the Social
Awareness Stock Portfolio were $21,118 and ($3,020) for the years
ended December 31, 1995 and 1994, respectively. These gains (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.
-68-
<PAGE> 116
NOTES TO FINANCIAL STATEMENTS - CONTINUED
3. PORTFOLIO CHARGES
Investment management and advisory fees for U.S. Government Securities
Portfolio are calculated daily at an annual rate of 0.3233% of the
Portfolio's average net assets. These fees are paid to Travelers
Asset Management International Corporation, an indirect wholly owned
subsidiary of Travelers Group Inc.
Investment management and advisory fees for Social Awareness Stock
Portfolio are calculated daily at annual rates which start at 0.65%
and decrease, as net assets increase, to 0.40% of the Portfolio's
average net assets. Prior to May 1, 1995, these fees were paid to The
Travelers Investment Management Company, an indirectly wholly owned
subsidiary of Travelers Group Inc. Effective May 1, 1995, these fees
are paid to Greenwich Street Advisors, a division of Smith Barney
Funds Management Inc. ("SBMFM"), an indirect wholly owned subsidiary
of Travelers Group Inc.
Investment management and advisory fees for Utilities Portfolio are
calculated daily at an annual rate of 0.65% of the Portfolio's average
net assets. These fees are paid to Greenwich Street Advisors, a
division of SBMFM, an indirect wholly owned subsidiary of Travelers
Group Inc.
The Travelers has agreed to reimburse U.S. Government Securities
Portfolio, Social Awareness Portfolio and Utilities Portfolio for the
amount by which each Portfolio's aggregate annualized operating
expenses, excluding brokerage commissions and any interest charges and
taxes, exceed 1.25% of each Portfolio's average net assets.
Trustees and officers of the Series Trust, who are also officers and
employees of Travelers Group Inc., or its subsidiaries, receive no
compensation directly from the Series Trust.
-69-
<PAGE> 117
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 each Portfolio were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES
PORTFOLIO
------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1995 1994
------------- -------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . 484,178 655,046
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (672,686) (616,041)
Shares issued in reinvestment of distributions:
from net investment income and net short-term realized gains 138,279 77,901
from net long-term realized gains . . . . . . . . . . . . - 5,990
------------- -------------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50,229) 122,896
============= =============
</TABLE>
<TABLE>
<CAPTION>
SOCIAL AWARENESS STOCK
PORTFOLIO
------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1995 1994
------------- -------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . 205,312 122,407
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (74,604) (67,708)
Shares issued in reinvestment of distributions:
from net investment income and net short-term realized gains 4,774 6,067
from net long-term realized gains . . . . . . . . . . . . 6,139 1,517
------------- -------------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,621 62,283
============= =============
</TABLE>
<TABLE>
<CAPTION>
UTILITIES PORTFOLIO
-------------------------------------
FOR THE YEAR FEBRUARY 4,*
ENDED TO
DECEMBER 31, DECEMBER 31,
1995 1994
------------- --------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . 822,640 754,802
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (209,288) (189,041)
Shares issued in reinvestment of distributions from
net investment income and net short-term realized gains . 14,594 -
------------- --------------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627,946 565,761
============= ==============
</TABLE>
* Date operations commenced.
As of December 31, 1995, all outstanding shares of beneficial interest
of each Portfolio were owned by The Travelers Fund U for Variable
Annuities, and/or 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 $1.06 per share from the
U.S.Government Securities Portfolio; a distribution of net investment
income of $0.28 and a distribution from net long-term realized gains
of $0.34 per share from Social Awareness Stock Portfolio; and a
distribution of net investment income and net short-term realized
gains of $0.47 per share from the Utilites Portfolio, payable on
January 23, 1996, to shareholders of record as of January 22, 1996.
These distributions are not reflected in the accompanying financial
statements.
-70-
<PAGE> 118
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
The Travelers Series Trust:
We have audited the accompanying statements of assets and liabilities of the
U.S. Government Securities Portfolio, Social Awareness Stock Portfolio and the
Utilities Portfolio of The Travelers Series Trust, including the statements of
investments as of December 31, 1995, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of
the applicable periods ended December 31, 1995 and 1994, and the financial
highlights for each of the applicable periods ended December 31, 1995, 1994,
1993 and 1992. 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 also
with brokers for the U.S. Government Securities Portfolio and the Utilities
Portfolio. 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 the
U.S. Government Securities Portfolio, Social Awareness Stock Portfolio, and
Utilities Portfolio of The Travelers Series Trust as of December 31, 1995, the
results of their operations for the year then ended, the changes in their net
assets for each of the applicable periods ended December 31, 1995 and 1994, and
the financial highlights for each of the applicable periods ended December 31,
1995, 1994, 1993 and 1992, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 7, 1996
-74-
<PAGE> 119
STATEMENT OF ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
- ------------------------------------------------------------------------------
MAY 1, 1995
This Statement of Additional Information is not a prospectus but relates
to, and should be read in conjunction with, the Trust's prospectus dated May 1,
1995. A copy of the Prospectus is available from the office of the Series Trust
at The Travelers Insurance Company, Annuity Services 5 SHS, One Tower Square,
Hartford, Connecticut 06183-5030.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE TRAVELERS SERIES TRUST .............................................. 1
U.S. GOVERNMENT SECURITIES PORTFOLIO .................................... 1
Investment Objective and Policies ................................... 1
Investment Restrictions ............................................. 1
SOCIAL AWARENESS STOCK PORTFOLIO ........................................ 2
Investment Objective and Policies ................................... 2
Social Criteria ..................................................... 2
Investment Restrictions ............................................. 2
UTILITIES PORTFOLIO ..................................................... 3
Investment Objective and Policies ................................... 3
Investment Restrictions ............................................. 3
VALUATION OF SECURITIES ................................................. 4
DISTRIBUTIONS AND TAXES ................................................. 5
TRUSTEES AND OFFICERS ................................................... 5
DECLARATION OF TRUST .................................................... 6
INVESTMENT ADVISORY SERVICES ............................................ 7
TAMIC ............................................................... 7
SBMFM ............................................................... 7
Smith Barney Mutual Funds Management Inc. ........................... 7
The Advisory Agreements ............................................. 7
BROKERAGE ............................................................... 8
ADDITIONAL INFORMATION .................................................. 9
FINANCIAL STATEMENTS .................................................... 9
APPENDIX ................................................................ 10
</TABLE>
<PAGE> 120
THE TRAVELERS SERIES TRUST
The Travelers Series Trust (the "Series Trust") is registered with the
Securities and Exchange Commission as an open-end management investment company,
and is organized as a business trust under the laws of the Commonwealth of
Massachusetts. An Agreement and Declaration of Trust dated October 11, 1991 (the
"Declaration of Trust") authorizes the shares of the Series Trust to be divided
into two or more series related to separate portfolios of investments, and
further allows the Board of Trustees to establish additional portfolios at any
time.
The Series Trust is currently divided into three series (the "Portfolios"),
each with its own investment objective and policies. The three Portfolios of the
Series Trust are currently the U.S. Government Securities Portfolio, the Social
Awareness Stock Portfolio, and the Utilities Portfolio, each of which are
diversified portfolios under the Investment Company Act of 1940 (the "1940
Act").
U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the U.S. Government Securities Portfolio is the
selection of investments from the point of view of an investor concerned
primarily with highest credit quality, current income and total return. To
achieve this objective, the Portfolio invests primarily in direct obligations of
the United States Government, in obligations of its instrumentalities supported
by its full faith and credit, and in obligations issued or guaranteed by Federal
Agencies which are independent corporations sponsored by the United States and
which are subject to its general supervisory oversight, but which do not carry
the full faith and credit obligations of the United States.
INVESTMENT RESTRICTIONS
None of the restrictions enumerated in this paragraph may be changed
without a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in the 1940 Act. The U.S. Government Securities Portfolio
will not:
(1) invest more than 5% of its total assets, computed at market value, in
the securities of any one issuer (exclusive of securities issued by
the United States Government, its agencies or instrumentalities, for
which there is no limit);
(2) invest in more than 10% of any class of securities of any one issuer;
(3) borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of up
to 10% of its gross assets computed at cost; while outstanding
according to the 1940 Act, a borrowing may not exceed one-third of the
value of the net assets, including the amount borrowed; the Portfolio
has no intention of attempting to increase its net income by borrowing
and all borrowings will be repaid before additional investments are
made; assets pledged to secure borrowings shall be no more than the
lesser of the amount borrowed or 10% of the gross assets computed at
cost;
(4) underwrite securities, except that the Portfolio may purchase
securities from issuers thereof or others and dispose of such
securities in a manner consistent with its other investment policies;
in the disposition of restricted securities, the Portfolio may be
deemed to be an underwriter, as defined in the Securities Act of 1933;
(5) purchase real estate or interests in real estate, except through the
purchase of securities of a type commonly purchased by financial
institutions which do not include direct interest in real estate or
mortgages, or commodities or commodity contracts, except transactions
involving financial futures in order to limit transactions and
borrowing costs and for hedging purposes;
(6) invest for the primary purpose of control or management;
(7) make margin purchases or short sales of securities, except for
short-term credits which are necessary for the clearance of
transactions, and to place not more than 5% of its net asset value in
total margin deposits for positions in futures contracts;
(8) make loans, except that the Portfolio may purchase money market
securities, enter into repurchase agreements, buy publicly and
privately distributed debt securities and lend limited amounts of its
portfolio securities to broker/dealers; all such investments must be
consistent with the investment objective and policies;
(9) invest more than 25% of its total assets in the securities of issuers
in any single industry (other than securities issued by the United
States Government, its agencies or instrumentalities); or
-1-
<PAGE> 121
(10) 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; when consistent
with its investment objectives, the Portfolio may purchase securities
of brokers, dealers, underwriters or investment advisers.
SOCIAL AWARENESS STOCK PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Social Awareness Stock Portfolio is
long-term capital appreciation and retention of net investment income. The
Portfolio seeks to fulfill this objective by selecting investments, primarily
common stocks, that SBMFM determines meet certain social criteria, based on
analysis of data. It is up to the discretion of the investment adviser to
determine the source for the data. This principal objective does not preclude
the realization of short-term gains when conditions suggest the long-term goal
is accomplished by such short-term transactions.
The assets of the Social Awareness Portfolio generally will be invested in
a portfolio of equity securities, primarily common stocks, diversified across
industries and companies. However, when it is determined that investments of
other types may be advantageous for defensive purposes or for temporary
investment of cash flows, investments may be made in bonds, notes or other
evidence of indebtedness, issued publicly or placed privately, deemed to be of
suitable credit quality, including obligations of the United States Government.
SOCIAL CRITERIA
The Social Awareness Stock Portfolio utilizes certain social criteria to
define a universe of common stocks that are acceptable investment vehicles for
the Portfolio. Companies will not meet the social criteria established for the
Portfolio if a significant portion of their revenues, as determined by SBMFM,
are derived from (a) the production of tobacco, tobacco products, alcohol, or
military defense systems; or (b) the provision of military defense related
services, or gambling services. These investment restrictions are not
fundamental and may be changed without shareholder approval.
If a company fails a social criteria restriction after the Social Awareness
Portfolio has purchased its common stock or should the Portfolio inadvertently
acquire a security which is not an acceptable investment, SBMFM will eliminate
the securities of such company from the Social Awareness Portfolio's portfolio
in an orderly manner within a reasonable period of time.
INVESTMENT RESTRICTIONS
The investment restrictions set forth in Items 1 through 9 below are
fundamental and may not be changed without a vote of a majority of the
outstanding voting securities of the Portfolio, as defined in the 1940 Act.
Items 10 through 13 may be changed by a vote of the Board of Trustees. The
Social Awareness Stock Portfolio will not:
(1) invest more than 5% of its total assets in securities of any one
issuer, except obligations of the United States Government and its
instrumentalities;
(2) borrow money, except that the right is reserved to borrow from banks
for emergency purposes, provided that such borrowings will not exceed
5% of the value of the assets of the Portfolio and that immediately
after the borrowing, and at all times thereafter, and while any such
borrowing is unrepaid, there will be asset coverage of at least 300%
for all borrowings of the Portfolio;
(3) underwrite securities of other issuers, except that the Portfolio
could be deemed an underwriter when engaged in the sale of restricted
securities (see item 13);
(4) purchase interests in real estate, except as may be represented by
securities for which there is an established market;
(5) purchase commodities or commodity contracts, except transactions
involving financial futures in order to limit transaction and
borrowing costs and for hedging purposes;
(6) make loans, except through the acquisition of a portion of privately
placed issue of bonds, debentures or other evidences of indebtedness
of a type customarily purchased by institutional investors (see item
13);
(7) invest in the securities of a company for the purpose of exercising
management or control;
(8) acquire more than 10% of the voting securities of any one issuer (it
is the present practice of the Portfolio not to exceed 5% of the
voting securities of any one issuer);
(9) issue senior securities;
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(10) make short sales of securities;
(11) make purchases on margins, except for short-term credits which are
necessary for the clearance of transactions, and to place not more
than 5% of its net asset value in total margin deposits for positions
in futures contracts;
(12) invest in securities of other investment companies, except as part of
a plan of merger, consolidation or acquisition of assets; or
(13) invest more than 5% of the value of the assets of the Portfolio in
restricted securities (securities which may not be publicly offered
without registration under the Securities Act of 1933).
Changes in the investments of the Portfolio may be made from time to time
to take into account changes in the outlook for particular industries or
companies. The Portfolio's investments will not, however, be concentrated in any
one industry; that is, no more than twenty-five percent (25%) of the value of
its assets will be invested in any one industry. While the Portfolio may
occasionally invest in foreign securities, it is not anticipated that such
investments will, at any time, account for more than ten percent (10%) of its
investment portfolio.
The assets of the Portfolio will be kept fully invested except that (a)
sufficient cash may be kept on hand reasonably to provide for variable annuity
contract obligations, and (b) reasonable amounts of cash, United States
Government or other liquid securities, such as short-term bills and notes, may
be held for limited periods, pending investments in accordance with their
respective investment policies.
UTILITIES PORTFOLIO
INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of the Utilities Portfolio (the
"Portfolio") is to provide current income. Long-term capital appreciation is a
secondary objective. The Portfolio seeks to achieve its objectives by investing
in equity and debt securities of companies in the utility industries, which
industries are deemed for these purposes to be comprised of companies
principally engaged (that is, at least 50% of a company's assets, gross income
or net profits results from utility operations or the company is regulated as a
utility by a government agency or authority) in the manufacture, production,
generation, transmission and sale of electric and gas energy and companies
principally engaged in the communications field, including entities such as
telephone, telegraph, satellite, microwave and other companies regulated by
governmental agencies as utilities that provide communication facilities for the
public benefit, but not including those in public broadcasting. The Portfolio
will invest primarily in utility equity and debt securities that have a high
expected rate of return, as determined by the investment adviser. Under normal
market conditions, the Portfolio will invest at least 65% of its assets in such
securities. The Portfolio may invest up to 35% of its assets in equity and debt
securities of non-utility companies believed to afford a reasonable opportunity
for achieving the Portfolio's investment objectives. When the investment adviser
believes that market conditions warrant, the Portfolio may adopt a temporary
defensive posture and may invest, without limit, in debt securities (whether or
not they are utility securities) such as rated or unrated bonds, debentures and
commercial paper, United States government securities and money market
instruments. The Portfolio may invest up to 10% of its assets in securities
rated BB or B by Standard & Poor's Corporation ("S&P") or Ba or B by Moody's
Investors Service, Inc. ("Moody's") whenever the investment adviser believes
that the incremental yield on such securities is advantageous to the Portfolio
in comparison to the additional risk involved. The yields on lower-rated
fixed-income securities generally are higher than the yields available on
higher-rated securities. However, investments in lower-rated securities may be
subject to greater market fluctuations and greater risks of loss of income or
principal (including the possibility of default by, or bankruptcy of, the
issuers of such securities) than higher-rated securities. Lower-rated securities
also may have speculative characteristics. In addition, the Portfolio may enter
into repurchase agreements.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may not be
changed without a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in the 1940 Act. The Utilities Portfolio will not:
(1) purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the
Portfolio's total assets would be invested in the securities of the
issuer, except that up to 25% of the value of the Portfolio's total
assets may be invested without regard to this 5% limitation;
(2) purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in U.S.
government securities;
(3) purchase securities on margin, except that the Portfolio may obtain
any short-term credits necessary for the clearance
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of purchases and sales of securities (for purposes of this
restriction, the deposit or payment of initial or variation margin in
connection with futures contracts or related options will not be
deemed to be a purchase of securities on margin by the Portfolio);
(4) make short sales of securities or maintaining a short position, except
to the extent of 5% of the Portfolio's net assets and except that the
Portfolio may engage in such activities without limit if, at all times
when a short position is open, the Portfolio owns an equal amount of
the securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same
issuer as, and at least equal in amount to, the securities sold short;
(5) borrow money, including reverse repurchase agreements, except that the
Portfolio may borrow from banks for temporary or emergency (not
leveraging) purposes including the meeting of redemption requests that
might otherwise require the untimely disposition of securities, in an
amount not exceeding 20% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of the Portfolio's total
assets, the Portfolio will not make any additional investments;
(6) pledge, hypothecate, mortgage or otherwise encumber more than 10% of
the value of the Portfolio's total assets as security for any
indebtedness (for purposes of this restriction (a) the deposit of
assets in escrow in connection with the writing of covered put or call
options and the purchase of securities on a when-issued or
delayed-delivery basis and (b) collateral arrangements with respect to
(i) the purchase and sale of stock options, options on foreign
currencies and options on stock indexes and (ii) initial or variation
margin for futures contracts will not be deemed to be pledges of the
Portfolio's assets);
(7) invest in commodities, except that the Portfolio may purchase or write
futures contracts and options on futures contracts as described in
this Prospectus;
(8) make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into
repurchase agreements; and
(9) concentrate in any industry, except that the Portfolio will
concentrate in excess of 25% of its assets in the securities of
companies within the utility industries.
In addition, the Portfolio will not purchase restricted securities,
illiquid securities (such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily marketable if more than 10%
of the total assets of the Portfolio would be invested in such securities.
VALUATION OF SECURITIES
The current values for the portfolio securities of the Portfolios are
determined as follows. Securities that are traded on an established exchange are
valued on the basis of the last sales price on the exchange where primarily
traded prior to the time of valuation. Securities traded in the over-the-counter
market, for which complete quotations are readily available, are valued at the
mean of the bid and asked prices at the time of valuation. Short-term money
market instruments having maturities of sixty days or less are valued at
amortized cost (original purchase price as adjusted for amortization of premium
or accretion of discount) which, when combined with accrued interest,
approximates market. Short-term money market instruments having maturities of
more than sixty days, for which complete quotations are readily available, are
valued at current market value. The Board of Trustees of the Series Trust values
the following at prices it deems 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 Board's opinion the last sales price
does not reflect a current market value or if no sale occurred, and (3) other
assets.
The Series Trust 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 either Portfolio, 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 Board of
Trustees. The Board of Trustees has authorized the use of a pricing service to
determine the fair value of the Portfolios' 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.
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DISTRIBUTIONS AND TAXES
It is the Series Trust's intention to distribute dividends from net
investment income and all net realized capital gains from the Portfolios
annually in shares or, at the option of the shareholder, in cash. All of the
Portfolios have qualified, and intend to qualify in the future, as a regulated
investment company under Subchapter M of the Internal Revenue Code. Thus the
Portfolios are relieved of any federal income tax liability by distributing all
of their net investment income and net capital gains, if any, to its
shareholders.
When any Portfolio makes a distribution, it intends to distribute only its
net capital gains and such income as has been predetermined to the best of the
Portfolio'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 Portfolio's books, but will be made on a federal taxation basis.
As of December 31, 1994, the U.S. Government Securities Portfolio had a
capital loss carryover of approximately $212,281 which expires in 2002. The
Portfolio intends not to distribute realized gains until the carryover is
exhausted. The Portfolio may not realize gains sufficient to use the carryover
before it expires with the passage of time.
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 (1993-
Chairman and Member present), Smith Barney Strategy Advisors, Inc.; President (1994-present), Smith Barney
388 Greenwich Street Mutual Funds Management Inc.; Chairman and/or Director and President of thirty
New York, New York investment companies associated with Smith Barney Board of Trustees, Drew Chairman,
Age 61 University; Trustees, 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++.
Knight Edwards Of Counsel (1988-present), Partner (1956-1988), Edwards & Angell, Attorneys; Member,
Member Advisory Board, (1973-1994) thirty-one mutual funds sponsored by Keystone Group, Inc.;
2700 Hospital Trust Tower Member, Board of Managers, seven Variable Annuity Separate Accounts of The Travelers
Providence, Rhode Island Insurance Company+; Trustee, five Mutual Funds sponsored by The Travelers Insurance
Age 71 Company++.
Robert E. McGill, III Director (1983-present), Executive Vice President (1989-1994), Senior Vice President,
Member Finance and Administration (1983-1989), The Dexter Corporation (manufacturer of
One Elm Street specialty chemicals and materials); Vice Chairman (1990-1992), Director (1983-present),
Windsor Locks, Connecticut Life Technologies, Inc. (life science/present products); Director (1993-present),
Age 63 Analytical Technology, Inc. (manufacturer of measurement instruments); Director
(1994-present), The Connecticut Surety Corporation (insurance); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Trustee, five Mutual Funds sponsored by The Travelers Insurance Company++.
Lewis Mandell Professor of Finance (1980-present) and Associate Dean (1993-present), School of
Member Business Administration, and Director, Center for Research and Development in Financial
368 Fairfield Road, U41F Services (1980-present), University of Connecticut; Director (1992-present), GZA
Storrs, Connecticut Geoenvironmental Tech, Inc. (engineering services); Member, Board of Managers, seven
Age 52 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. (investment management);
Member Assistant Treasurer, Pensions and Benefits Management (1989-1992), United Technologies
222 Berkeley Street Corporation (broad-based designer and manufacturer of high technology products);
Boston, Massachusetts Member, Board of Managers, seven Variable Annuity Separate Accounts of The Travelers
Age 47 Insurance Company+; Trustee, five Mutual Funds sponsored by The Travelers Insurance
Company++.
</TABLE>
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<TABLE>
<S> <C>
Ernest J. Wright Assistant Secretary (1994-present), Counsel (1987-present), The Travelers Insurance
Secretary to the Board Company; Secretary, Board of Managers, seven Variable Annuity Separate Accounts of The
One Tower Square Travelers Insurance Company+; Secretary, Board of Trustees, five Mutual Funds sponsored
Hartford, Connecticut by The Travelers Insurance Company++.
Age 54
Ian R. Stuart Vice President and Financial Officer, Financial Services Department (1994-present),
Treasurer Second Vice President and Financial Officer, Financial Services Department (1991-1994),
One Tower Square The Travelers Insurance Company; Senior Manager (1986-1991), Price Waterhouse;
Hartford, Connecticut Treasurer, Board of Trustees, five Mutual Funds sponsored by The Travelers Insurance
Age 38 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. Mr. McLendon also
owns shares and options to purchase shares of Travelers Group Inc., the
indirect parent of The Travelers Insurance Company.
The Dexter Corporation, of which Mr. McGill is a director, entered into
contracts with The Travelers Insurance Company to provide short-term disability
and life insurance benefits to employees of The Dexter Corporation, and to
administer the health and dental benefits program for employees of The Dexter
Corporation.
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 annual retainer of $10,000 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 annual fee of
$1,800 for each meeting of such Boards attended.
DECLARATION OF TRUST
The Series Trust 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 Series Trust were held to be a partnership, the possibility of its
shareholders incurring financial loss for that reason appears remote because the
Series Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for obligations of the Series Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Series Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of Series Trust property
for any shareholder held personally liable for the obligations of the Series
Trust.
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.
The Trustees were elected by Shareholders at a meeting held on October 30,
1992. After such meeting, 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, or if at the time of filling a vacancy less than
two-thirds of the Trustees holding office after filling the vacancy were 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. Any Trustee may voluntarily resign from office, or Trustees 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
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less than two-thirds of the outstanding shares or other voting interests of the
Trust. 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 Trust. The Series Trust is required to assist in
Shareholders' communications. In accordance with current laws, insurance
companies will request voting instructions from contract owners participating in
variable annuity and/or variable life insurance contracts held by their
respective separate accounts. Insurance companies will vote shares of the
Portfolios in the same proportion as the voting instructions received.
Voting rights are not cumulative, that is, 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 Series Trust, 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 Series Trust (as defined
in the 1940 Act).
INVESTMENT ADVISORY SERVICES
TAMIC
Travelers Asset Management International Corporation ("TAMIC"), an indirect
wholly owned subsidiary of Travelers Group Inc., furnishes investment management
and advisory services to the U.S. Government Securities Portfolio in accordance
with the terms of an Investment Advisory Agreement which was approved by
shareholders at a meeting held on April 23, 1993.
For furnishing investment management and advisory services to the U.S.
Government Securities Portfolio, TAMIC is paid an amount equivalent on an annual
basis to 0.3233% of the average daily net assets of the Portfolio. The fee is
computed daily and paid weekly. The total advisory fees paid to TAMIC by the
U.S. Government Securities Portfolio for the period ended December 31, 1993 and
1994 were $56,276 and $82,937.
SBMFM
Smith Barney Mutual Funds Management Inc. (SBMFM) an indirect wholly owned
subsidiary of The Travelers Inc., furnishes investment management and advisory
services to the Social Awareness Stock Portfolio through Greenwich Street
Advisors, a division of SBMFM, in accordance with the terms of an Investment
Advisory Agreement dated May 1, 1995 which was approved by shareholders at a
meeting held on April 28, 1995. Prior to May 1, 1995, The Travelers Investment
Management Company (TIMCO) provided investment management and advisory services.
For furnishing investment management and advisory services to the Fund, SBMFM is
paid any amount equivalent on an annual basis to the advisory fee schedule set
forth in the table below. The fee is computed daily and paid weekly.
<TABLE>
<CAPTION>
AGGREGATE NET ASSET VALUE
ANNUAL MANAGEMENT FEE OF THE PORTFOLIO
--------------------- -------------------------
<S> <C> <C>
0.65% of the first $ 50,000,000, plus
0.55% of the next $ 50,000,000, plus
0.45% of the next $100,000,000, plus
0.40% of amounts over $200,000,000.
</TABLE>
The total advisory fees paid to TIMCO by the Social Awareness Stock
Portfolio for the period ended December 31, 1993 and 1994 were $15,961 and
$23,474, respectively.
Greenwich Street Advisors, a division of SBMFM, also manages the day-to-day
investment operations of the Utilities Portfolio pursuant to an Investment
Advisory Agreement approved by the Board of Trustees. Under the Advisory
Agreement, SBMFM is responsible for furnishing or causing to be furnished to the
Utilities Portfolio advice and assistance with respect to the acquisition,
holding or disposal of securities and recommendations with respect to other
aspects and affairs of the Portfolio. The Utilities Portfolio pays SBMFM an
advisory fee equal to 0.65% on an annual basis for its services as investment
adviser. The fee is computed daily and paid monthly.
The total advisory fees paid to SBMFM by the Utilities Portfolio for the
period ended December 1994 was $21,804.
THE ADVISORY AGREEMENTS
Under the terms of their respective Advisory Agreements, TAMIC and SBMFM
shall:
(1) obtain and evaluate pertinent economic, statistical and
financial data and other information relevant to the investment
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policy of the Portfolios, affecting the economy generally and
individual companies or industries, the securities of which are
included in the Portfolios 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 Portfolios;
(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 programs
approved by the Board of Trustees; and
(5) regularly report to the Board of Trustees with respect to
implementation of the approved investment programs and any other
activities in connection with the administration of the assets of the
Portfolios.
As required by the Investment Company Act of 1940, as amended, each
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
Portfolios. In addition, and in either event, the terms of the Advisory
Agreements 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 Agreements, 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
Agreements. The Advisory Agreements further provide that they will terminate
automatically upon assignment; may be amended only with prior approval of a
majority of the outstanding voting securities of the Portfolios; 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 Portfolios; and may not be terminated by TAMIC or SBMFM
without prior approval of a new investment advisory agreement by a vote of a
majority of the outstanding voting securities of the Portfolios.
BROKERAGE
Subject to approval of the Board of Trustees, it is the policy of TAMIC,
TIMCO and SBMFM (collectively, the "investment advisers"), in executing
transactions in portfolio securities of the Portfolios, 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 Portfolios, 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 to the Portfolios and the investment advisers is
considered to be in addition to and not in lieu of services required to be
performed by the investment advisers under their respective Investment Advisory
Agreements. The cost, value and specific application of such information are
indeterminable and hence are not practicably allocable among the Portfolios and
other clients of either TAMIC, TIMCO or SBMFM who may indirectly benefit from
the availability of such information. Similarly, the Portfolios 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 Portfolios 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 Portfolios will be required to
deposit and maintain funds with brokers as margin to guarantee performance of
future obligations.
Each of the investment advisers may follow a policy of considering the sale
of shares of the Series Trust a factor in the selection of broker-dealers to
execute portfolio transactions, subject to the requirements of best execution
described above.
The investment advisers' policies with respect to brokerage are and will be
reviewed by the Board of Trustees periodically. Because of the possibility of
further regulatory developments affecting the securities exchanges and brokerage
practices generally, the foregoing practices may be changed, modified or
eliminated.
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<PAGE> 128
The total brokerage commissions paid by the U.S. Government Securities
Portfolio to TAMIC for the period ended December 31, 1992 and the years ended
December 31, 1993 and 1994 were $8,942, $35,756 and $13,363, respectively. For
the year ended December 31, 1994, no portfolio transactions were directed to
certain brokers because of research services. No formula is used in placing
portfolio transactions with brokers which provide research services and no
specific amount of transactions is allocated for research services. No brokerage
business was placed with any brokers affiliated with TAMIC during 1994.
The total brokerage commissions paid by the Social Awareness Stock
Portfolio to TIMCO for the period ended December 31, 1992 and the year ended
December 31, 1993 and 1994 were $2,121, $6,302 and $12,927, respectively. For
the year ended December 31, 1994, portfolio transactions in the amount of
$6,206,533 were placed with certain brokers because of research services, of
which $8,379 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. No brokerage business was placed with any
brokers affiliated with TIMCO during 1994.
The total brokerage commissions paid by the Utilities to SBMFM for the
period ended December 31, 1994 was $8,611. For the year ended December 31, 1994,
no portfolio transactions were placed with certain brokers because of research
services. No formula was used in placing such transactions, and no specific
amount of transactions was allocated for research services. No brokerage
business was placed with any brokers affiliated with TIMCO during 1994.
ADDITIONAL INFORMATION
The Travelers Insurance Company (the "Company") acts as transfer agent and
dividend disbursing agent for the Portfolios. The Company is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. The Company is a wholly owned subsidiary of
The Travelers Insurance Group Inc., which is indirectly owned, through a wholly
owned subsidiary, by Travelers Group Inc. On April 1, 1995, the Company owned
100% of the Series Trust's outstanding shares. The Company's Home Office is
located at One Tower Square, Hartford, Connecticut 06183, telephone (203)
277-0111.
Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York
11245, serves as the custodian of all securities and cash of the Portfolios.
Coopers & Lybrand L.L.P., Independent Accountants, 100 Pearl Street,
Hartford, Connecticut 06103, are the independent auditors for the Series Trust
and its Portfolios. The services provided by Coopers & Lybrand L.L.P., include
primarily the examination of the Series Trust's financial statements. The
financial statements included or incorporated by reference in the Prospectus,
Statement of Additional Information and Registration Statement have been audited
by Coopers & Lybrand L.L.P.,as indicated in their report thereon, and are
incorporated herein by reference 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
Series Trust 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 Series Trust's prospectus,
this Statement of Additional Information or any supplemental sales literature
issued by the Series Trust, and no person is entitled to rely on any information
or representation not contained therein.
The Series Trust's prospectus and this Statement of Additional Information
omit certain information contained in the Series Trust'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.
FINANCIAL STATEMENTS
The financial statements contained in the Series Trust's December 31, 1994
Annual Report to Shareholders are incorporated herein by reference. Copies may
be obtained by writing to The Travelers Insurance Company, Annuity Services--5
SHS, One Tower Square, Hartford, Connecticut 06183-5030, or by calling
1-800-842-0125.
-9-
<PAGE> 129
APPENDIX
COMMERCIAL PAPER RATINGS
The Portfolio's investments in commercial paper are limited to those rated
A-1 by Standard & Poor's Corporation (S&P) or Prime-1 by Moody's Investors
Service, Inc. (Moody's). These ratings and other money market instruments are
described as follows.
Commercial paper rated A-1 by Standard & Poor's 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 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.
-10-
<PAGE> 130
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 131
(TIMCO LOGO WITH GLOBE)
(LOGO WITH UMBRELLA SUBTITLE A COMPANY OF THETRAVELERS)
The Travelers Investment Management Company ("TIMCO") provides equity
management and advisory services for the following Travelers Variable Product
Mutual Funds contained in this report: The Capital Appreciation Fund and the
Social Awareness Stock Portfolio. Additionally, TIMCO is the sub-adviser for
Managed Assets Trust.
(TAMIC LOGO WITH GLOBE AND LINES)
(LOGO SUBTITLE TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION)
Travelers Asset Management International Corporation ("TAMIC") provides fixed
income management and advisory services for the following Travelers Variable
Product Mutual Funds contained in this report: U.S. Government Securities
Portfolio, High Yield Bond Trust, Managed Assets Trust and Cash Income Trust.
(JANUS CAPITAL CORPORATION LOGO WITH TWO FACES)
Janus Capital Corporation ("Janus") is the sub-adviser for Capital Appreciation
Fund. As sub-adviser, Janus is responsible for the daily management of Capital
Appreciation Fund.
(SMITH BARNEY LOGO)
An asset management group of Smith Barney, Greenwich Street Advisors provides
management services for the Utilities Portfolio.
<PAGE> 132
(THETRAVELERS LOGO WITH UMBRELLA)
THE TRAVELERS VARIABLE PRODUCTS MUTUAL FUNDS
INVESTMENT ADVISORY COMMENTARY AS OF DECEMBER 31, 1994
ECONOMIC REVIEW AND OUTLOOK
Economic growth kicked into high gear in 1994, and the economy used up any
excess capacity in product and labor markets. The fitful recovery of the
previous three years was replaced by a broad-based expansion. Unemployment fell
to 5.4% at year-end, from 7.0% at the end of 1993. This robust economic
activity was accompanied by few signs of higher inflation. The Consumer Price
Index rose just 2.7% during 1994, the same as during the prior year. However,
certain commodity prices showed large gains, and there was evidence by year-end
of a modest acceleration in wage gains.
The Federal Reserve ("Fed") started a tightening policy in February, while
there still appeared to be slack in the economy. Fed actions served to push
3-month T-bill rates up from 3.1% at the start of the year to 5.7% at year-end.
The yield curve rose and flattened significantly during the year. Yields on
one-year Treasury bills rose by over 350 basis points, while yields on the
30-year bond were up over 150 basis points. At year-end, there was little
evidence that Fed tightening had started to slow growth. In the fourth quarter,
the economy grew at an annual rate of 4.5%, well above the 2.0-2.5% pace that
many economists think is compatible with price stability.
There is normally a lag of 6-12 months between Federal Reserve actions and the
resulting impact on the economy. Coming into 1994, Fed policy was very
accommodative of economic growth, with real money market interest rates
(adjusted for inflation) close to zero. Monetary policy became truly
restrictive only with the last 2 or 3 rates hikes. With unemployment at levels
that many economists view as inflationary, we expect the Fed to push money
market interest rates somewhat higher in 1995. We think that the Federal
Reserve will succeed in slowing economic growth, and that inflation will stay
below 4% during 1995 and into 1996. However, convincing evidence of the
slowdown may take a while longer to emerge.
FIXED-INCOME MARKET COMMENTARY
Like a neutron bomb, which kills people but leaves buildings intact, rising
interest rates in 1994 decimated complicated strategies much more than it hurt
broad market averages. During the fourth quarter, Orange County and emerging
markets investors were added to the casualty list, joining the hedge funds and
various corporate users of derivatives that were hurt earlier in the year.
While derivatives and mortgage backed securities have taken much of the blame
for these incidents, the rise in short-term interest rates hurt any strategy
that was based on leverage or benefited from the prior three years of low
short-term rates.
For the year, cash was the best performing asset, while stocks treaded water
and bonds had their worst year in recent history. The Lehman Long Treasuries
index showed a negative return of 7.6% for the full year 1994. The long end of
the yield curve stabilized late in the year, allowing long Treasuries to
outperform cash during the fourth quarter. For the year as a whole, mortgage
backed securities and corporates outperformed similar duration Treasuries. Late
in the year, corporate spreads widened modestly with growing concerns over the
1995 economic outlook; as a result, long corporates underperformed similar
duration Treasuries in the fourth quarter.
-1-
<PAGE> 133
We have been concerned by tight spreads on corporate issues throughout 1994. We
expect issuance of new corporates to be light in the first half of 1995; this
will help to support prices of corporate issues. Corporates are still likely to
underperform Treasuries if a significant economic slowdown develops. We think
inflation will stay below 4% in 1995. We also expect stable to modestly lower
yields on Treasuries with maturities of 5 years or longer. If we are correct,
bond investors will enjoy real returns, after inflation, of 4-7% in 1995. If
the Federal Reserve is successful in containing economic growth and inflation,
lower interest rates (stronger bond prices) are likely in 1996.
EQUITY MARKET COMMENTARY
Despite increased pressure by the Federal Reserve Board and a string of
potentially dangerous financial crises, the U.S. stock market managed to
achieve a broad-based gain in the second half of 1994. Surprisingly strong
corporate earnings offset the negative effect of higher interest rates on
equity valuations. During the final six months of 1994, the S&P 500 Stock Index
provided a total return of 4.9%, including dividends. The stocks of small and
medium sized companies provided comparable returns over that period, but with
considerably higher volatility.
Technology stocks led the market during the second half. The office and
business equipment group was up over 25%, owing to continued booming sales of
personal computers and a sharp rebound in networking stocks. Semi conductor
stocks advanced in concert, reflecting strong demand for memory chips and
microprocessors. Investors also returned to many defensive and recently
out-of-favor "growth" groups in the second half. In the consumer staples
sector, for example, beverage stocks rose 24% on earnings surprising and
improving international growth prospects. In the health care sector, drug and
medical product stocks rebounded over 20%.
On the negative side, rising interest rates and fears of an impending economic
slowdown hurt many interest sensitive and early cycle groups. Airline, trucking
and railroad stocks were down over 10%. Auto stocks were off 8%. Regional banks
declined 12%. In the energy sector, independent producers and drilling
companies were down 12%, due to weaker oil and gas prices and the poor outlook
for new production.
We remain constructive, but cautious, in our outlook for stocks in 1995. With
the S&P 500 Stock Index trading at only 14.5 times operating earnings, the
equity market starts the year with reasonable valuation support. A more stable
interest rate environment could even help to reverse the broad-based market
price to earnings ratio contraction that has occurred over the past year. Where
we think the stock market is most likely to run into problems is on the
earnings front. Corporate earnings are expected to grow 8-10% in 1995, but most
of that growth is expected to occur in the first half of the year. By the third
quarter, we expect a noticeable deceleration in earnings growth. With equity
indices near their all-time highs, the stock market is probably more vulnerable
than the bond market to negative surprises, given the relative performance of
the two asset classes over the past year.
(TIMCO LOGO WITH GLOBE) (TAMIC LOGO WITH GLOBE AND LINES)
(LOGO WITH UMBRELLA SUBTITLE (LOGO SUBTITLE TRAVELERS ASSET
A COMPANY OF THETRAVELERS) MANAGEMENT INTERNATIONAL CORPORATION)
-2-
<PAGE> 134
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT
SECURITIES PORTFOLIO
Interest rates rose steadily through 1994, with yields on 10-year Treasuries up
over 2 percentage points. In the fourth quarter, yield curve flattening
accelerated; yields on 1 to 2 year Treasuries rose by over a percentage point,
while the yield on the long bond rose about a tenth of a percentage point. At
year end, only 20 basis points separated the yield on 2-year Treasuries from
the yield on the long bond. Mortgage-backed securities outperformed similar
duration Treasuries. Economic growth remained strong through year end, but we
think the Federal Reserve will succeed in slowing the economy in 1995. As
slower growth becomes evident, we expect bond yields to stabilize and
eventually move lower.
Early in 1994, the portfolio was underweighted in mortgage-backed securities
relative to the benchmark, which is 50% long Treasuries and 50% Mortgage Pass
Throughs. In the third quarter, we brought the mortgage-backed weighting closer
to the benchmark, and this helped fourth quarter performance. With a flatter
yield curve, we will look to move away from the maturity barbell that was in
place during 1994. We think interest rates have moved above levels that are
sustainable in the long run; so we are maintaining interest rate exposure above
the benchmark levels. In mortgage-backed securities, we are focusing on coupons
and structures that will perform well in a stable or declining interest rate
environment.
(LINE CHART REPRESENTING THE FOLLOWING TABLE OF NUMBERS)
AVERAGE ANNUAL TOTAL RETURNS ENDED
DECEMBER 31, 1994:
1 YEAR - 5.64%
<TABLE>
<CAPTION>
U.S. Government Consumer Price Index Lehman
Securities Government
Portfolio Bond Index
<S> <C> <C> <C>
1/24/92 10000 10000 10000
10070 10060 9941
6/92 10340 10141 10334
10740 10205 10844
12/92 10791 10291 10849
11306 10370 11339
6/93 11581 10436 11667
11937 10487 12045
12/93 11815 10573 12005
11264 10638 11641
6/94 11107 10703 11508
10991 10797 11556
12/94 11149 10866 11598
</TABLE>
This chart assumes an initial investment of $10,000 made on January 24,1992
(date operations commenced). Returns include the reinvestment of all
distributions at Net Asset Value and the change in share price for the stated
period, but excludes insurance and administration charges assessed by Travelers
Insurance separate accounts.
Past performance is not predictive of future performance. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
-47-
<PAGE> 135
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value(identified cost $26,685,496)........................ $24,310,849
Interest receivable ....................................................................... 243,588
-----------
Total Assets........................................................................ 24,554,437
-----------
LIABILITIES:
Cash overdraft............................................................................ 12,430
Payable for investment management and advisory fees....................................... 875
Accrued expenses.......................................................................... 18,967
-----------
Total Liabilities................................................................... 32,272
-----------
NET ASSETS................................................................................... $24,522,165
===========
NET ASSETS REPRESENTED BY:
Paid-in capital........................................................................... $25,705,114
Undistributed net investment income....................................................... 1,418,225
Accumulated net realized gains (losses) on investment security transactions............... (226,527)
Net unrealized depreciation on investment securities...................................... (2,374,647)
-----------
Total net assets (applicable to 2,317,285 shares outstanding at $10.58 per share)... $24,522,165
===========
</TABLE>
See Notes to Financial Statements
-48-
<PAGE> 136
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................................ $ 1,599,887
EXPENSES:
Investment management and advisory fees......................... $ 82,937
Accounting and audit fees....................................... 66,680
Custodian fees.................................................. 11,845
Printing and postage............................................ 12,751
Trustees' fees.................................................. 5,511
Registration fees............................................... 1,938
-----------
Total expenses............................................... 181,662
-----------
Net investment income..................................... 1,418,225
-----------
REALIZED AND CHANGE IN UNREALIZED GAIN(LOSS) ON
INVESTMENT SECURITIES:
Realized loss from investment security transactions:
Proceeds from investment securities sold..................... 8,022,134
Cost of investment securities sold........................... 8,233,405
-----------
Net realized loss.......................................... (211,271)
Change in unrealized gain (loss) on investment securities:
Unrealized gain at December 31, 1993......................... 377,690
Unrealized loss at December 31, 1994......................... (2,374,647)
-----------
Net change in unrealized gain (loss) for the year.......... (2,752,337)
-----------
Net realized and change in unrealized gain (loss)....... (2,963,608)
-----------
Net decrease in net assets resulting from operations............ $(1,545,383)
===========
</TABLE>
See Notes to Financial Statements
-49-
<PAGE> 137
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income........................................................... $ 1,418,225 $ 865,566
Net realized gain (loss) from investment security transactions.................. (211,271) 68,277
Net change in unrealized gain (loss) on investment securities................... (2,752,337) 310,644
----------- -----------
Net increase (decrease) in net assets resulting from operations.............. (1,545,383) 1,244,487
----------- -----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income and net short-term realized gains from
investment security transactions .............................................. (883,624) (179,264)
Net long-term realized gains from investment security transactions.............. (63,504) --
----------- -----------
Total distributions to shareholders......................................... (947,128) (179,264)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold....................................................... 7,137,525 16,341,309
Dividend reinvestment........................................................... 947,128 179,264
Payments for shares redeemed.................................................... (6,590,182) (1,082,333)
----------- -----------
Net increase in net assets resulting from capital share transactions......... 1,494,471 15,438,240
----------- -----------
Net increase (decrease) in net assets..................................... (998,040) 16,503,463
NET ASSETS:
Beginning of year.............................................................. 25,520,205 9,016,742
----------- -----------
End of year (including undistributed net investment income as follows:
December, 1994 $1,418,225 and December, 1993 $865,566)...................... $24,522,165 $25,520,205
=========== ===========
</TABLE>
See Notes to Financial Statements
-50-
<PAGE> 138
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
<S> <C> <C>
BONDS (37.1%)
COLLATERALIZED MORTGAGE
OBLIGATIONS (37.1%)
Federal Home Loan Mortgage Corp.,
7.00% Pass Through, 2007 $1,000,000 $ 895,900
Federal Housing Authority 236,
7.796% Pass Through, 2013 (B) 980,342 942,648
Federal Housing Authority 236,
7.275% Pass Through, 2018 (B), 946,970 892,018
FHLMC Multiclass PC Series 1607,
5.50% Pass Through, 2010 1,066,114 917,530
FHLMC Multiclass PC Series 1663,
6.25% Pass Through, 2023 1,000,000 851,560
FNMA Remic Trust 1993-05,
7.50% Pass Through, 2008 1,000,000 930,730
FNMA Remic Trust 1993-13,
6.50% Pass Through, 2000 1,126,196 988,856
FNMA Remic Trust 1994-22,
5.00% Pass Through, 2023 1,000,000 762,690
Guaranteed Export Certificate 1994-A,
7.12% Sinking Fund, 2006 973,043 924,994
Vendee Mortgage Trust 1992-1,
7.75% Pass Through, 2005 200,000 192,750
Vendee Mortgage Trust 1993-3,
6.50% Pass Through, 2020 1,084,404 723,840
----------
TOTAL BONDS
(Cost $10,033,589) 9,023,516
----------
U.S. GOVERNMENT AGENCY SECURITIES (6.1%)
GNMA 30-Year Single Family,
6.00% Pass Through, 2024 1,524,909 1,272,826
GNMA 30-Year Single Family,
10.00% Pass Through, 2018 82,292 86,639
GNMA 30-Year Single Family,
9.00% Pass Through, 2016 35,692 36,049
GNMA 30-Year Single Family,
9.00% Pass Through, 2019 80,844 81,652
----------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES
(Cost $1,531,891) 1,477,166
----------
U.S. GOVERNMENT SECURITIES (42.8%)
United States of America Treasury,
0.00% Notes, 2010 5,860,000 1,737,724
United States of America Treasury,
7.25% Bonds, 2016 3,850,000 3,557,670
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
<S> <C> <C>
U.S. GOVERNMENT SECURITIES (continued)
United States of America Treasury,
7.50% Bonds, 2016 $2,475,000 $ 2,347,389
United States of America Treasury,
7.25% Bonds, 2022 3,000,000 2,768,460
-----------
TOTAL U.S. GOVERNMENT
SECURITIES
(Cost $11,721,200) 10,411,243
-----------
SHORT-TERM INVESTMENTS (14.0%)
U.S. GOVERNMENT AGENCY SECURITIES (2.0%)
Federal National Mortgage Assoc.,
5.56% due January 25, 1995 500,000 494,437
-----------
U.S. GOVERNMENT SECURITIES (4.0%)
United States of America Treasury,
4.81% due January 19, 1995 1,000,000 976,487
-----------
REPURCHASE AGREEMENTS (8.0%)
Merrill Lynch Government
Securities, Inc., 5.25% Repurchase
Agreement dated December 30,
1994, due January 3, 1995,
collateralized by: United States of
America Treasury, $2,045,000,
6.5% due April 30, 1999 1,928,000 1,928,000
-----------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $3,398,815) 3,398,924
-----------
TOTAL INVESTMENTS (100%)
(Cost $26,685,496) (A) (C) $24,310,849
===========
</TABLE>
NOTES
(A) At December 31, 1994, net unrealized depreciation for all securities was
$2,374,647. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$248 and aggregate gross unrealized depreciation for all securities in
which there was an excess of cost over market value of $2,374,895.
(B) Management Priced Security.
(C) The cost of investments for federal income tax purposes is identical.
See Notes to Financial Statements
-51-
<PAGE> 139
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS
STOCK PORTFOLIO
In the second half of 1994, equity investors temporarily shifted their focus
away from Fed policy and back to earnings growth. Through October, the stock
market moved broadly higher on the strength of reported earnings, in spite of
rising interest rates and numerous inflation alarms. Late in the year, however,
investor confidence waned and the market failed to make further gains. For the
six months ending December 31, 1994, the S&P 500 Stock Index had a positive
return of 4.9%, including dividends. During that period, our Portfolio trailed
the unmanaged S&P 500 Stock Index, but outperformed the majority of socially
responsive equity funds tracked by Lipper in the Growth & Income category.
Because the Portfolio mirrors the sector weightings of the S&P 500 Stock Index,
the reasons for our under performance relative to the index were largely
stock-specific. In the utility sector, our holdings included MCI and Sprint,
the long-distance telephone carriers. Both stocks dropped back in response to
earnings disappointments and recent losses of market share to AT&T. In the
health care sector, we lost ground against the index as a result of our
overweighted positions in United Healthcare and Columbia/HCA Healthcare, both
leaders in market-based healthcare reform. Along with most HMO and hospital
management stocks, these shares weakened in the fourth quarter as investors
focused on the potential impact of reductions in Medicare/Medicaid payment
formulas.
The Portfolio was helped by stock selection in the technology sector. In
particular, the shares of Compaq Computer and Micron Technology moved higher,
in response to continued strong sales of personal computers to businesses and
households. In the semi-conductor equipment group, new positions in Applied
Materials and Varian Associates also made positive contributions to
performance. Late in the fourth quarter, the fund was also helped by our
overweighted position in a number of newspaper stocks, including the Tribune
Co., Gannett and Dow Jones.
We continue to employ a disciplined approach to stock selection, emphasizing
stocks that compare favorably on the basis of both valuation and superior
earnings trends. Looking ahead to the next six months, we are cautiously
optimistic about the equity market, based on our view that current valuation
levels allow some room for price to earnings ratio multiple expansion if
interest rates stabilize. We recently trimmed our technology holdings, although
we still maintain core holdings in companies that are well positioned to
benefit from the secular trends toward client/server computing and wireless
personal communications. In the finance sector, we have reduced our bank
holdings because of falling earnings estimates. We maintain our exposure to a
number of industrial cyclical companies, such as Dow Chemical, Morton
International and Stone Container, whose earnings are just now beginning to
reflect firmer commodity prices.
(LINE CHART REPRESENTING THE FOLLOWING TABLE OF NUMBERS)
Average Annual Total Returns
Ended December 31, 1994:
1 year - 2.69%
<TABLE>
<CAPTION>
Social Awareness Stock S&P 500 Stock Index Consumer Price Index
Portfolio
<S> <C> <C> <C>
5/1/92 10000 10000 10000
6/30/92 9920 9908 10058
10130 10215 10122
12/31/92 10950 10738 10207
11452 11199 10286
6/30/93 11402 11256 10351
11847 11545 10401
12/31/93 11776 11812 10487
11252 11362 10551
6/30/94 11168 11409 10615
11688 11971 10708
12/31/94 11460 11968 10776
</TABLE>
This chart assumes an initial investment of $10,000 made on May 1, 1992 (date
operations commenced). Returns include the reinvestment of all distributions at
Net Asset Value and the change in share price for the stated period, but
exclude insurance and administration charges assessed by Travelers Insurance
separate accounts.
Past performance is not predictive of future performance. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
-52-
<PAGE> 140
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $3,607,016)........................ $3,580,584
Cash....................................................................................... 128,752
Receivables:
Dividends................................................................................ 8,890
Interest................................................................................. 301
Investment securities sold............................................................... 265,996
Receivable from Travelers Insurance...................................................... 75,353
----------
Total Assets......................................................................... 4,059,876
----------
LIABILITIES:
Payables:
Investment securities purchased.......................................................... 98,999
Investment management and advisory fees.................................................. 278
Accrued expenses:
Reimbursable expenses.................................................................... 75,353
Other expenses........................................................................... 5,975
----------
Total Liabilities.................................................................... 180,605
----------
NET ASSETS................................................................................... $3,879,271
==========
NET ASSETS REPRESENTED BY:
Paid-in capital............................................................................ $3,804,668
Undistributed net investment income........................................................ 51,650
Accumulated net realized gains (losses) on investment security transactions................ 49,385
Net unrealized depreciation on investment securities....................................... (26,432)
----------
Total net assets (applicable to 351,002 shares outstanding at $11.05 per share)...... $3,879,271
</TABLE>
See Notes to Financial Statements
-53-
<PAGE> 141
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.......................................................... $ 91,034
Interest........................................................... 5,978
----------
Total income................................................... $ 97,012
EXPENSES:
Investment management and advisory fees............................ 23,474
Accounting and audit fees.......................................... 63,682
Custodian fees..................................................... 14,820
Printing and postage............................................... 12,752
Trustees' fees..................................................... 5,512
Registration fees.................................................. 475
----------
Total expenses before reimbursement from Travelers Insuranc.... 120,715
Less: Reimbursement from Travelers Insurance....................... (75,353)
----------
Net expenses................................................... 45,362
---------
Net investment income........................................ 51,650
---------
REALIZED AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold........................ 5,144,675
Cost of investment securities sold.............................. 5,094,000
----------
Net realized gain............................................. 50,675
Change in unrealized gain (loss) on investment securities:
Unrealized gain at December 31, 1993............................ 168,804
Unrealized loss at December 31, 1994............................ (26,432)
----------
Net change in unrealized gain (loss) for the year............. (195,236)
---------
Net realized and change in unrealized gain (loss)........... (144,561)
---------
Net decrease in net assets resulting from operations............ $ (92,911)
=========
</TABLE>
See Notes to Financial Statements
-54-
<PAGE> 142
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OPERATIONS:
Net investment income .................................................. $ 51,650 $ 36,012
Net realized gain from investment security transactions ................ 50,675 50,367
Net change in unrealized gain (loss) on investment securities .......... (195,236) 75,275
---------- ----------
Net increase (decrease) in net assets resulting from operations ...... (92,911) 161,654
---------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income and net short-term realized gains from
investment security transactions ..................................... (70,411) (18,115)
Net long-term realized gains from investment security transactions ..... (17,258) --
---------- ----------
Total distributions to shareholders .................................. (87,669) (18,115)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds for shares sold ............................................... 1,378,970 2,171,936
Dividend reinvestment .................................................. 87,669 18,115
Payments for shares redeemed .......................................... (768,126) (366,665)
---------- ----------
Net increase in net assets resulting from capital
share transactions ................................................ 698,513 1,823,386
---------- ----------
Net increase in net assets ........................................ 517,933 1,966,925
NET ASSETS:
Beginning of year ...................................................... 3,361,338 1,394,413
---------- ----------
End of year (including undistributed net investment income as follows:
December, 1994 $51,650 and December, 1993 $36,012) ................... $3,879,271 $3,361,338
========== ==========
</TABLE>
See Notes to Financial Statements
-55-
<PAGE> 143
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
NO. OF
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
COMMON STOCKS (96.0%)
AGRICULTURE (0.3%)
Dole Food Co., Inc. 400 $ 9,200
--------
AMUSEMENTS (1.2%)
Walt Disney Co. 900 41,513
--------
BANKING (6.4%)
Banc One Corp. 700 17,762
Bank of Boston Corp. 500 12,937
Barnett Banks, Inc. 200 7,675
Chase Manhattan Corp. 200 6,875
Chemical Banking Corp. 300 10,763
Citicorp 700 28,963
First Interstate Bancorp 100 6,763
First Union Corp. 800 33,100
Mellon Bank Corp. 600 18,375
MBNA Corp. 750 17,531
NationsBank Corp. 700 31,588
Norwest Corp. 800 18,700
Signet Banking Corp. 100 2,863
Wells Fargo & Co. 100 14,500
--------
228,395
--------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (15.9%)
Abbott Laboratories 1,100 35,887
Air Products & Chemicals, Inc. 200 8,925
Amgen (A) 100 5,893
Bristol-Myers Squibb Co. 1,400 81,025
Clorox Co. 100 5,888
Dow Chemical Co. 300 20,175
E.I. Dupont de Nemours & Co. 800 45,000
Eastman Chemical Co. 200 10,100
Eli Lilly & Co. 400 26,250
Forest Labs, Inc. (A) 100 4,662
Georgia Gulf Corp. (A) 300 11,663
Great Lakes Chemical Corp. 200 11,400
Johnson & Johnson 800 43,800
Merck & Co., Inc. 1,200 45,750
Morton International, Inc. 900 25,650
Pfizer, Inc. 500 38,625
Praxair, Inc. 600 12,300
Procter & Gamble Co. 1,200 74,400
Schering-Plough Corp. 700 51,800
Union Carbide Corp. 300 8,813
--------
568,006
--------
<CAPTION>
NO. OF
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
COMMUNICATION (8.0%)
AirTouch Communications (A) 400 $ 11,650
Ameritech Corp. 1,200 48,450
Bellsouth Corp. 800 43,300
Capital Cities ABC, Inc. 300 25,575
CBS, Inc. 300 16,612
MCI Communications Corp. 1,500 27,655
NYNEX Corp. 100 3,675
Pacific Telesis Group 400 11,400
Southwestern Bell Corp. 1,000 40,375
Sprint Corp. 700 19,338
Tele-Communications, Inc. (A) 800 17,450
U.S. West, Inc. 400 14,250
Viacom International, Inc. (A) 24 999
Viacom International, Inc., Warrent (A) 300 338
Viacom International, Inc., Cl. B (A) 181 7,353
--------
288,420
--------
CONTRACTORS (0.4%)
Fluor Corp. 300 12,937
--------
ELECTRICAL AND ELECTRONIC MACHINERY (2.7%)
Advanced Micro Device (A) 400 9,950
American Power Conversion (A) 400 6,525
General Instrument Corp. (A) 400 12,000
Intel Corp. 700 44,625
Micron Technology 300 13,237
Varian Associates, Inc. 200 7,000
Whirlpool Corp. 100 5,025
--------
98,362
--------
FINANCE (4.5%)
American Express Co. 300 8,850
Dean Witter Discover & Co. 400 13,550
Federal Home Loan Corp. 700 35,350
Federal National Mortgage Assoc. 500 36,437
Green Tree Financial Corp. 500 15,188
Lehman Brothers Holding, Inc. 700 10,325
Merrill Lynch & Co., Inc. 400 14,300
SunAmerica, Inc. 100 3,625
Transamerica Corp. 500 24,875
--------
162,500
--------
</TABLE>
-56-
<PAGE> 144
STATEMENT OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
NO. OF
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
FOOD (6.2%)
Coca-Cola Co. 1,600 $ 82,400
Conagra, Inc. 700 21,875
General Mills, Inc. 100 5,700
Hershey Foods Corp. 100 4,837
IBP, Inc. 700 21,175
Kellogg Co. 400 23,250
PepsiCo, Inc. 1,200 43,500
Quaker Oats Co. 200 6,150
Unilever NV 100 11,650
--------
220,537
--------
INSURANCE (3.7%)
Aetna Life & Casualty Co. 200 9,425
American General Corp. 200 5,650
American International Group 400 39,200
Chubb Corp. 200 15,475
Health Systems International, Inc. (A) 400 12,150
U.S. Healthcare, Inc. 450 18,506
United Healthcare Corp. 500 22,562
UNUM Corp. 200 7,550
USF&G Corp. 200 2,725
--------
133,243
--------
LUMBER AND WOOD PRODUCTS (0.8%)
Georgia-Pacific Corp. 200 14,300
Weyerhaeuser Co. 400 15,000
--------
29,300
--------
MACHINERY (6.3%)
Applied Materials (A) 500 21,000
Briggs & Stratton Corp. 200 6,550
Caterpillar, Inc. 300 16,538
Cisco Systems, Inc. (A) 400 14,025
Clark Equipment Co. (A) 200 10,850
Compaq Computer Corp. (A) 800 31,600
Deere & Co. 200 13,250
Dover Corp. 300 15,488
International Business Machines Corp. 800 58,800
Pitney Bowes, Inc. 600 19,050
Varity Corp. (A) 500 18,125
--------
225,276
--------
METAL PRODUCTS (2.7%)
Aluminum Company of America 370 32,051
Alumax, Inc. (A) 300 8,513
Gillette Co. 300 22,425
Nucor Corp. 400 22,200
USX-U.S. Steel Group 300 10,650
--------
95,839
--------
<CAPTION>
NO. OF
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
MINING (0.7%)
American Barrick Resources Corp. 700 $ 15,575
Placer Dome, Inc. 500 10,875
--------
26,450
--------
MISCELLANEOUS MANUFACTURING (2.7%)
Callaway Golf Co. 600 19,875
Eastman Kodak Co. 400 19,100
Emerson Electric Co. 200 12,500
Medtronic, Inc. 400 22,250
Thermo Electronics Corp. (A) 300 13,463
Xerox Corp. 100 9,900
--------
97,088
--------
OIL & GAS (0.9%)
Anadarko Petroleum 400 15,400
Pogo Producing Co. 300 5,325
Schlumberger Ltd. 200 10,075
--------
30,800
--------
PAPER AND ALLIED PRODUCTS (2.3%)
Champion International Corp. 300 10,950
International Paper Co. 200 15,075
Kimberly Clark Corp. 400 20,200
Mead Corp. 300 14,587
Stone Container Corp. (A) 1,300 22,425
--------
83,237
--------
PETROLEUM REFINING AND
RELATED INDUSTRIES (3.8%)
Amoco Corp. 700 41,387
Kerr McGee Corp. 300 13,800
Phillips Petroleum Co. 900 29,475
Sun Co., Inc. 400 11,500
Tosco Corp. 600 17,475
Unocal Corp. 800 21,800
--------
135,437
--------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (1.6%)
American Greeting Corporation 200 5,387
Dow Jones & Co., Inc. 300 9,300
Time Warner, Inc. 600 21,075
Tribune Co. 400 21,900
--------
57,662
--------
</TABLE>
-57-
<PAGE> 145
STATEMENT OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
NO. OF
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
RETAIL (6.9%)
Albertsons, Inc. 400 $ 11,600
Home Depot, Inc. 500 23,000
J.C. Penney Co. 400 17,850
Kmart Corp. 700 9,100
Kroger Co. (A) 700 16,888
Lowe's Co.'s, Inc. 200 6,950
May Department Stores 400 13,500
McDonalds Corp. 900 26,325
Sears Roebuck & Co. 700 32,200
The GAP, Inc. 200 6,100
Toys R Us (A) 200 6,100
Wal-Mart Stores, Inc. 3,300 70,125
Walgreen Co. 200 8,750
--------
248,488
--------
RUBBER AND PLASTIC PRODUCTS (1.7%)
Armstrong World Industries 500 19,250
Goodyear Tire & Rubber Co. 300 10,088
Premark International, Inc. 300 13,425
Reebok International, Ltd. 500 19,750
--------
62,513
--------
SERVICES (3.8%)
Columbia HCA Healthcare Corp. 1,100 40,150
Computer Associates International 200 9,700
Dun & Bradstreet Corp. 200 11,000
FHP International Corp. (A) 200 5,100
Microsoft (A) 700 42,875
Omnicom Group, Inc. 300 15,525
Oracle Systems Corp. (A) 300 13,275
--------
137,625
--------
STONE, CLAY, GLASS AND
CONCRETE PRODUCTS (1.0%)
Minnesota Mining &
Manufacturing Co. 700 37,362
--------
TEXTILE MILL PRODUCTS (0.3%)
VF Corp. 200 9,725
--------
TRANSPORTATION (2.5%)
AMR, Inc. (A) 200 10,650
Burlington Northern Railroad 300 14,437
Chicago & North Western Transportation (A) 500 9,625
Consolidated Freightways 400 8,950
Delta Airlines, Inc. 100 5,050
Illinois Central Corp. 400 12,300
<CAPTION>
NO. OF
SHARES MARKET VALUE
------ ------------
<S> <C> <C>
TRANSPORTATION (CONTINUED)
Norfolk Southern Corp. 100 $ 6,063
Southwest Airlines 700 11,725
Union Pacific Corp. 200 9,125
----------
87,925
----------
TRANSPORTATION MANUFACTURING (2.4%)
Echlin, Inc. 400 12,000
Ford Motor Co. 2,100 58,800
PACCAR, Inc. 345 15,180
----------
85,980
----------
UTILITIES (6.1%)
American Electric Power Co. 400 13,150
Baltimore Gas & Electric Co. 400 8,850
Browning and Ferris Ind. 300 8,512
Carolina Power & Light Co. 300 7,988
Central & Southwest Corp. 500 11,313
Duke Power Co. 400 15,250
Florida Power & Light Co. 400 14,050
NIPSCO Industries, Inc. 400 11,900
Pacific Gas & Electric Co. 200 4,875
Panhandle Eastern Corp. 400 7,900
Peco Energy Co. 600 14,700
Portland General Electric Co. 500 9,625
Public Service Co. of Colorado 400 11,750
Public Service Enterprises Group 1,000 26,500
Southern Co. 1,400 28,000
SCE Corp. 600 8,775
Wheelabrator Technologies, Inc. 400 5,900
WMX Technologies, Inc. 300 7,874 -------
----------
216,912
----------
WHOLESALE TRADE (0.2%)
Alco Standard Corp. 100 6,275
----------
TOTAL COMMON STOCKS
(COST $3,463,013) 3,437,007
----------
CALL OPTIONS (1.2%)
S&P 400 Stock Index,
Exp.June, 1995 500 44,750
----------
TOTAL CALL OPTIONS
(COST $45,365) 44,750
----------
</TABLE>
-58-
<PAGE> 146
STATEMENT OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (2.8%)
U.S. Government Securities (2.8%)
United States of America Treasury,
5.77% due March 9,1995 $100,000 $ 98,827
----------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $98,638) 98,827
----------
TOTAL INVESTMENTS (100%)
(Cost $3,607,016) (B) (C) $3,580,584
==========
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) At December 31, 1994, net unrealized depreciation for all securities was
$26,432. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$167,188 and aggregate gross unrealized depreciation for all securities in
which there was an excess of cost over market value of $193,620.
(C) The cost of investments for federal income tax purposes amounted to
$3,625,802. Gross unrealized appreciation and depreciation of
investments, based on identified tax cost, at December 31, 1994, were as
follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 159,533
Gross unrealized depreciation (204,751)
---------
Net unrealized depreciation $ (45,218)
=========
</TABLE>
See Notes to Financial Statements
-59-
<PAGE> 147
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
This past year was a difficult one for utility (electric, telecommunication and
natural gas) investors as this market sector experienced substantial price
declines. The most significant declines were recorded by the electric utility
companies, reflecting both a substantial rise in long-term interest rates and
investor concerns about the fundamental changes occurring within the industry.
The electric utility industry has begun a move from a highly regulated one, to
one with increased competition in the sale of electricity. The goal is to reduce
the cost of electricity and improve industry efficiency. These changes will
require companies to reformulate their corporate strategies and will generally
lead to slower earnings and dividend growth. We are confident that the industry
will survive these structural changes as it provides an essential service. The
decade of the 1990's will be viewed as part of the competitive evolution in the
electric utility industry. Utilities faced the oil crisis of the 1970's and the
nuclear construction cycle of the 1980's and subsequently went to each new highs
for investors with a long-term investment horizon.
We recognized these factors affecting utility stocks early in the year and
maintained a very cautious investment strategy. The Portfolio held a very large
cash position during the first half of the year which enabled us to monitor the
fixed income markets' reaction to stronger-than-expected economic growth and the
corresponding decline in share prices for utility issues. During the second half
of the year, we gradually began to invest in a combination of electric utility,
telecommunication and natural gas companies that have positive investment
outlooks and sound corporate strategies. We placed special emphasis on those
electric companies with favorable competitive positions and more clearly defined
growth rates. This leads to investments in FPL Group and NIPSCO in the electric
company sector, Ameritech, Bell South and AT&T in the telecommunication sector
and Coastal Corporation and Tenneco in the natural gas sector. Our investment
strategy focuses on attractive relative valuation and has lead to additional
holdings in those issues that appear attractively priced when compared to their
peer group averages.
Our outlook for 1995 is more positive as we feel the substantial period of
underperformance by utility issues has ended. Investors are returning to
utilities for their traditional defensive characteristics. During the past
several months several market strategists and utility analysts have increased
their fixed income and utility portfolio allocations. We continue to recommend
utilities as part of a well-balanced, diversified investment portfolio offering
current income and long-term growth. A slowing rate of economic growth during
1995 should provide a favorable long-term interest rate outlook which is
positive for utilities.
(Line chart representing the following table of numbers)
<TABLE>
<CAPTION>
S & P 500 Stock
Utilities Portfolio Consumer Price Index Index
------------------- -------------------- ---------------
<S> <C> <C> <C>
2/4/94 10000 10000 10000
10010 10023 9770
3/94 10000 10057 9345
4/94 10100 10071 9466
5/94 10070 10091 9621
6/94 9889 10119 9384
7/94 10210 10153 9695
8/94 10300 10187 10089
9/94 10070 10208 9846
10/94 10160 10215 10072
11/94 10090 10243 9702
12/94 10169 10273 9844
</TABLE>
----------------------------
Average Annual Total Returns
Ended December 31, 1994:
1 year 1.70%
----------------------------
This chart assumes an initial investment of $10,000 made on February 4, 1994.
Returns include the reinvestment of all distributions at Net Asset Value and the
change in share price for the stated period, but exclude insurance and
administration charges assessed by Travelers Insurance separate accounts.
Past performance is not predictive of future performance. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
-60-
<PAGE> 148
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $6,212,686) ........................ $ 6,135,137
Receivables:
Dividends ................................................................................ 23,037
Interest ................................................................................. 3,655
Investment securities sold ............................................................... 207,193
Receivable from Travelers Insurance ...................................................... 75,274
-----------
Total Assets ..................................................................... 6,444,296
-----------
LIABILITIES:
Cash overdraft ........................................................................... 837
Payable for investment securities purchased .............................................. 604,936
Accrued expenses:
Reimbursable expenses .................................................................... 75,274
Other expenses ........................................................................... 6,590
-----------
Total Liabilities ................................................................ 687,637
-----------
NET ASSETS ................................................................................... $ 5,756,659
===========
NET ASSETS REPRESENTED BY:
Paid-in capital .......................................................................... $ 5,683,717
Undistributed net investment income ...................................................... 139,138
Accumulated net realized gains (losses) on investment security transactions .............. 11,353
Net unrealized depreciation on investment securities ..................................... (77,549)
-----------
Total net assets (applicable to 565,761 shares outstanding at $10.17 per share) .. $ 5,756,659
===========
</TABLE>
See Notes to Financial Statements
-61-
<PAGE> 149
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 4, 1994 (DATE OPERATIONS COMMENCED)
TO DECEMBER 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends ...................................................... $ 126,486
Interest ....................................................... 54,578
---------
Total income ........................................... $ 181,064
EXPENSES:
Investment management and advisory fees ........................ 21,804
Accounting and audit fees ...................................... 60,878
Custodian fees ................................................. 18,000
Printing and postage ........................................... 12,751
Trustees' fees ................................................. 1,911
Registration fees .............................................. 1,856
---------
Total expenses before
reimbursement from Travelers
Insurance .............................................. 117,200
Less: Reimbursement from
Travelers Insurance ............................................ (75,274)
---------
Net expenses ........................................... 41,926
---------
Net investment income ............................ 139,138
---------
REALIZED AND CHANGE IN UNREALIZED LOSS ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold ................. 955,786
Cost of investment securities sold ....................... 944,433
---------
Net realized gain ................................ 11,353
Unrealized loss on investment securities:
December 31, 1994 ...................................... (77,549)
---------
Net realized and change in unrealized loss ....... (66,196)
---------
Net increase in net assets resulting from operations ..... $ 72,942
=========
</TABLE>
See Notes to Financial Statements
-62-
<PAGE> 150
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 4, 1994 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
1994
----
<S> <C>
OPERATIONS:
Net investment income ...................................................... $ 139,138
Net realized gain from investment security transactions .................... 11,353
Net change in unrealized loss on investment securities ..................... (77,549)
-----------
Net increase in net assets resulting from operations ................... 72,942
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds for shares sold ................................................... 7,595,972
Payments for shares redeemed ............................................... (1,912,255)
-----------
Net increase in net assets resulting from capital share transactions ....... 5,683,717
-----------
Net increase in net assets ......................................... 5,756,659
NET ASSETS:
Beginning of period ........................................................ --
-----------
End of period (including undistributed net investment income of $139,138) .. $ 5,756,659
===========
</TABLE>
See Notes to Financial Statements
-63-
<PAGE> 151
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
-------- ----------
<S> <C> <C>
COMMON STOCKS (70.5%)
COMMUNICATION (17.8%)
Ameritech Corp. 3,500 $ 141,312
AT&T Corp. 5,000 251,250
Bell Atlantic Corp. 1,000 49,750
Bellsouth Corp. 5,000 270,625
GTE Corp. 2,000 60,750
NYNEX Corp. 2,000 73,500
Pacific Telesis Group 2,500 71,250
Sprint Corp. 2,500 69,063
U.S. West, Inc. 3,000 106,875
----------
1,094,375
----------
UTILITIES (52.7%)
Central & Southwest Corp. 2,000 45,250
Cinergy Corp. 4,000 93,500
Coastal Corp. 7,500 193,125
CMS Energy Corp. 6,000 137,250
DPL, Inc. 2,000 41,000
Eastern Utility Assoc 5,000 110,000
Florida Power & Light Co. 5,000 175,625
General Public Utilities 5,000 131,250
IPALCO Enterprises 5,000 150,000
New York State Electric & Gas Co. 6,000 114,000
Northeast Utilities, Inc. 5,000 108,125
NIPSCO Industries, Inc. 6,500 193,375
Pacific Gas & Electric Co. 5,000 121,875
Pacificorp 5,000 90,625
Peco Energy Co. 5,000 122,500
Public Service Co. of New Mexico (A) 5,000 65,000
Public Service Co. of Colorado 3,000 88,125
Public Service Enterprises Group 4,000 106,000
Southern Co. 5,000 100,000
SCE Corp. 5,000 73,125
Tenneco, Inc. 5,000 212,500
Texas Utilities Co. 6,500 208,000
TECO Energy, Inc. 5,000 100,625
Unicom Corp. 5,000 120,000
Westcoast Energy, Inc. 5,000 79,375
Western Resources, Inc. 2,000 57,250
Williams Companies 2,500 62,812
Wisconsin Energy 5,000 129,375
----------
3,229,687
----------
TOTAL COMMON STOCKS (Cost $4,400,210) 4,324,062
----------
U.S. GOVERNMENT SECURITIES (16.2%)
United States of America Treasury,
7.75% Notes, 1999 $ 500,000 $ 498,285
United States of America Treasury,
7.50% Notes, 1996 500,000 498,790
----------
TOTAL U.S. GOVERNMENT SECURITIES (Cost $998,476) 997,075
----------
SHORT-TERM INVESTMENTS (13.3%)
Barclays Bank PLC,
5.50% Repurchase Agreement
dated December 30, 1994 due
January 3, 1995 collateralized
by United States of America
Treasury, $815,000,
7.25% due August 31, 1996 814,000 814,000
----------
TOTAL SHORT-TERM INVESTMENTS (Cost $814,000) 814,000
----------
TOTAL INVESTMENTS (100%) (Cost $6,212,686) (B) (C) $6,135,137
==========
</TABLE>
NOTES
(A) Non-Income Producing Security.
(B) At December 31, 1994, net unrealized depreciation for all securities was
$77,549. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over cost of
$72,234 and aggregate gross unrealized depreciation for all securities in
which there was an excess of cost over market value of $149,783.
(C) The cost of investments for federal income tax purposes is identical.
See Notes to Financial Statements
-64-
<PAGE> 152
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Series Trust (the "Series Trust") is a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Declaration of Trust
authorizes the shares of the Series Trust to be divided into two or more series.
As of December 31, 1994, the Series Trust consisted of three series: U.S.
Government Securities Portfolio, Social Awareness Stock Portfolio and Utilities
Portfolio (the "Portfolios"). Shares in each Portfolio are currently offered,
without a sales charge, to separate accounts of The Travelers Insurance Company
("Travelers Insurance"), an indirect wholly owned subsidiary of The Travelers
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 each Portfolio 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. Each Portfolio uses stock index futures contracts, and may
also use interest rate futures contracts, as a substitute for the purchase or
sale of individual securities. When each Portfolio 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. Each Portfolio 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 each Portfolio's practice to hold short-term investments in an amount at
least equal to the notional value of outstanding futures contracts. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by each Portfolio are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statements of Investments. However, when each
Portfolio 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 associated with the futures contract.
OPTIONS. Each Portfolio 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. Each Portfolio may sell the options before expiration. Options held in
each Portfolio 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.
-65-
<PAGE> 153
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
REPURCHASE AGREEMENTS. When each Portfolio 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 each Portfolio plus a negotiated
interest amount. The seller under the repurchase agreement will be required to
provide to each Portfolio securities (collateral) whose market value, including
accrued interest, will be at least equal to 102% of the repurchase price. Each
Portfolio 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. Each Portfolio's
custodian will take actual or constructive receipt of all securities underlying
repurchase agreements until such agreements expire.
TAXES. Each Portfolio 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, each
Portfolio 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. Each Portfolio 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 each Portfolio in its financial
statements. As of December 31, 1994, the U.S. Government Securities Portfolio
had a capital loss carryover of $212,281, which may be available to offset any
future realized taxable capital gains, to the extent provided by regulations.
This amount expires during the year 2002.
OTHER. 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 securities other than short-term investments aggregated
$8,409,218 and $3,361,787, respectively, for U.S. Government Securities
Portfolio; $5,198,931 and $4,749,495, respectively, for Social Awareness Stock
Portfolio; and $5,344,642 and $955,786, respectively, for Utilities Portfolio
for the period ended December 31, 1994. Realized gains and losses from security
transactions are reported on an identified cost basis.
The market value of options held by Social Awareness Stock Portfolio was $44,750
at December 31, 1994. Net realized gains (losses) from options transactions were
($3,020) and $3,922 for the years ended December 31, 1994 and 1993,
respectively. These gain (losses) are included in the net realized gain from
investment securities transactions in both the Statement of Operations and the
Statement of Changes in Net Assets. The market value of options is included on
the Statement of Assets and Liabilities as investment securities at market
value.
3. PORTFOLIO CHARGES
Investment management and advisory fees for U.S. Government Securities Portfolio
are calculated daily at an annual rate of 0.3233% of the Portfolio's average net
asset value. These fees are paid to Travelers Asset Management International
Corporation, an indirect wholly owned subsidiary of The Travelers Inc.
Investment management and advisory fees for Social Awareness Stock Portfolio are
calculated daily at annual rates which start at 0.65% and decrease, as net
assets increase, to 0.40% of the Portfolio's average net asset value. These fees
are paid to The Travelers Investment Management Company, an indirect wholly
owned subsidiary of The Travelers Inc.
Investment management and advisory fees for Utilities Portfolio are calculated
daily at an annual rate of 0.65% of the Portfolio's average net asset value.
These fees are paid to Greenwich Street Advisors, a division of Mutual
Management Corporation which is an indirect wholly owned subsidiary of The
Travelers Inc.
Travelers Insurance has agreed to reimburse the Portfolios for the amount by
which each Portfolio's aggregate annualized operating expenses, excluding
brokerage commissions and any interest charges and taxes, exceed 1.25% of each
Portfolio's average net assets. Trustees and officers of the Series Trust, who
are also officers and employees of The Travelers Inc., or its subsidiaries,
receive no compensation directly from the Series Trust.
-66-
<PAGE> 154
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
each Portfolio were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES PORTFOLIO
------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C>
1994 1993
-------- ---------
Shares sold ...................................................... 655,046 1,437,014
Shares redeemed .................................................. (616,041) (95,094)
Shares issued in reinvestment of distributions:
from net investment income and net short-term realized gains ... 77,901 16,522
from net long-term realized gains .............................. 5,990 --
-------- ---------
Net .............................................................. 122,896 1,358,442
======== =========
</TABLE>
<TABLE>
<CAPTION>
SOCIAL AWARENESS STOCK PORTFOLIO
--------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1994 1993
--------- ---------
<S> <C> <C>
Shares sold ..................................................... 122,407 191,902
Shares redeemed ................................................. (67,708) (32,203)
Shares issued in reinvestment of distributions:
from net investment income and net short-term realized gains .. 6,067 1,639
from net long-term realized gains ............................. 1,517 --
-------- --------
Net ............................................................. 62,283 161,338
======== ========
</TABLE>
<TABLE>
<CAPTION>
UTILITIES PORTFOLIO
-------------------
February 4,* to
December 31,
1994
--------
<S> <C>
Shares sold.................................................. 754,802
Shares redeemed.............................................. (189,041)
--------
Net.......................................................... 565,761
========
</TABLE>
* Date operations commenced.
As of December 31, 1994, all outstanding shares of beneficial interest of each
Portfolio were owned by The Travelers Fund U for Variable Annuities and/or The
Travelers Fund UL for Variable Life Insurance, both of which are separate
accounts of Travelers
Insurance.
5. SUBSEQUENT EVENT
On January 27, 1995, the Board of Trustees declared a distribution of net
investment income of $0.60 per share from the U.S. Government Securities
Portfolio; a distribution of net investment income of $0.14 per share and a
distribution from net long-term realized gains of $0.18 per share from the
Social Awareness Stock Portfolio; and a distribution of net investment income
and net short-term realized gains of $0.24 per share from the Utilities
Portfolio, payable on January 30, 1995, to shareholders of record as of January
27, 1995. These distributions are not reflected in the accompanying financial
statements.
-67-
<PAGE> 155
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
6. FINANCIAL HIGHLIGHTS*
(Per share data for a share outstanding
throughout each period.)
U.S. GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
JANUARY 24,**
FOR THE YEARS ENDED TO
DECEMBER 31 DECEMBER 31,
----------------------- -------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................ $ 11.63 $ 10.79 $ 10.00
INCOME FROM OPERATIONS
Net investment income......................................... 0.60 0.57 0.53
Net gains or losses on securities (realized and unrealized)... (1.23) 0.44 0.26
------- ------- -------
Total from investment operations........................ (0.63) 1.01 0.79
LESS DISTRIBUTIONS
Distributions from net investment income and short-term
realized gains.............................................. (0.39) (0.17) --
Distributions from long-term realized gains................... (0.03) -- --
------- ------- -------
Total distributions......................................... (0.42) (0.17) --
Net asset value, end of period.................................. $ 10.58 $ 11.63 $ 10.79
======= ======= =======
TOTAL RETURN*** (5.64)% 9.48% 7.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)......................... $24,522 $25,520 $ 9,017
Ratio of expenses to average net assets+...................... 0.71% 0.58% 0.38%#
Ratio of net investment income to average net assets.......... 5.56% 5.04% 4.72%#
Portfolio turnover rate....................................... 16% 51% 25%
</TABLE>
* The information set forth in Note 6 replaces the data presented in prior
periods as supplementary information.
** Date operations commenced.
*** Total return is determined by dividing the increase (decrease) in value of
a share during the period, after reflecting the reinvestment of dividends
declared during the period by the beginning of period share price. As
described in Note 1, shares in the U.S. Government Securities Portfolio are
only sold to Travelers Insurance 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 Travelers Insurance separate accounts. For the periods less
than one year, total returns are not annualized.
+ The ratio of expenses to average net assets for 1992-1993 reflects an
expense reimbursement by Travelers Insurance in connection with voluntary
expense limitations. Without the expense reimbursement, the ratios of
operating expenses to average net assets would have been 0.77% and 0.72%
for the year ended December 31, 1993 and the period ended December 31,
1992, respectively. For the year ended December 31, 1994, there was no
expense reimbursement by Travelers Insurance in connection with the
voluntary expense limitations described in Note 3.
# Annualized.
-68-
<PAGE> 156
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
7. FINANCIAL HIGHLIGHTS*
(Per share data for a share outstanding
throughout each period.)
SOCIAL AWARENESS STOCK PORTFOLIO
<TABLE>
<CAPTION>
MAY 1**
FOR THE YEARS ENDED TO
DECEMBER 31, DECEMBER 31,
--------------------- ------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................. $ 11.64 $ 10.95 $ 10.00
Income from operations
Net investment income.......................................... 0.16 0.17 0.16
Net gains or losses on securities (realized and unrealized).... (0.45) 0.65 0.79
------ ------- -------
Total from investment operations........................... (0.29) 0.82 0.95
Less distributions
Distributions from net investment income and short-term
realized gains............................................... (0.24) (0.13) --
Distributions from long-term realized gains.................... (0.06) -- --
------ ------ ------
Total distributions........................................ (0.30) (0.13) --
Net asset value, end of period................................... $ 11.05 $11.64 $ 10.95
======= ======= =======
TOTAL RETURN*** (2.69)% 7.55% 9.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands).......................... $ 3,879 $3,361 $ 1,394
Ratio of expenses to average net assets+....................... 1.25% 1.05% 0.71%#
Ratio of net investment income to average net assets........... 1.43% 1.50% 2.22%#
Portfolio turnover rate........................................ 137% 60% 56%
</TABLE>
* The information set forth in Note 7 replaces the data presented in prior
periods as supplementary information.
** Date operations commenced.
*** Total return is determined by dividing the increase (decrease) in value of
a share during the period, after reflecting the reinvestment of dividends
declared during the period, by the beginning of period share price. As
described in Note 1, shares in the Social Awareness Stock Portfolio are
only sold to Travelers Insurance separate accounts in connection with the
issuance of variable annuity contracts. The total return does not reflect
contract charges or fees assessed by Travelers Insurance separate accounts.
For the periods less than one year, total returns are not annualized.
+ The ratio of expenses to average net assets reflects an expense
reimbursement by Travelers Insurance in connection with voluntary expense
limitations, including those described in Note 3. Without the expense
reimbursement, the ratios of operating expenses to average net assets would
have been 3.34%, 3.73% and 2.19% for the years ended December 31, 1994,
1993 and the period ended December 31, 1992, respectively.
# Annualized.
-69-
<PAGE> 157
NOTES TO FINANCIAL STATEMENTS--CONTINUED
8. FINANCIAL HIGHLIGHTS
(Per share data for a share outstanding
throughout the period.)
UTILITIES PORTFOLIO
<TABLE>
<CAPTION>
FEBRUARY 4,*
TO
DECEMBER 31,
------------
1994
----
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period.............................. $ 10.00
Income from operations
Net investment income........................................... 0.35
Net losses on securities (realized and unrealized).............. (0.18)
-------
Total from investment operations............................. 0.17
Net asset value, end of period.................................... $ 10.17
=======
TOTAL RETURN** 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)........................... $ 5,757
Ratio of expenses to average net assets***...................... 1.25%#
Ratio of net investment income to average net assets............ 3.86%#
Portfolio turnover rate......................................... 32%
</TABLE>
* Date operations commenced.
** Total return is determined by dividing the increase (decrease) in value of
a share during the period, after reflecting the reinvestment of dividends
declared during the period, by the beginning of period share price. As
described in Note 1, shares in the Utilities Portfolio are only sold to
Travelers Insurance separate accounts in connection with the issuance of
variable annuity contracts. The total return does not reflect contract
charges or fees assessed by Travelers Insurance separate accounts. For
periods less than one year, total returns are not annualized.
*** The ratio of expenses to average net assets reflects an expense
reimbursement by Travelers Insurance in connection with the voluntary
expense limitations described in Note 3. Without the expense reimbursement,
the ratio of operating expenses to average net assets would have been 3.49%
annualized.
# Annualized.
-70-
<PAGE> 158
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Travelers Series Trust:
We have audited the accompanying statements of assets and liabilities of
THE TRAVELERS SERIES TRUST:
U.S. GOVERNMENT SECURITIES PORTFOLIO,
SOCIAL AWARENESS STOCK PORTFOLIO AND
UTILITIES PORTFOLIO
including the statements of investments, as of December 31,1994, and the related
statements of operations for the year then ended and for the Utilities Portfolio
for the period February 4,1994 (date operations commenced) to December 31,1994,
the statement of changes in net assets for each of the two years in the period
then ended and for the Utilities Portfolio for the period February 4,1994 (date
operations commenced) to December 31,1994, and the financial highlights for each
of the two years in the period then ended and for the U. S. Government
Securities Portfolio for the period January 24,1992 (date operations commenced)
to December 31, 1992 and the Social Awareness Stock Portfolio for the period May
1, 1992 (date operations commenced) to December 31,1992, and for the Utilities
Portfolio for the period February 4,1994 (date operations commenced) to December
31, 1994. 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, 1994, by correspondence with the custodian and also with brokers
for the Social Awareness Stock Portfolio and Utilities Portfolio. 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 The
Travelers Series Trust: U. S. Government Securities Portfolio, Social Awareness
Stock Portfolio, and Utilities Portfolio as of December 31, 1994, the results of
its operations for the year then ended and for the Utilities Portfolio for the
period February 4, 1994 (date operations commenced) to December 31, 1994, the
changes in its net assets for each of the two years in the period then ended and
for the Utilities Portfolio for the period February 4, 1994 (date operations
commenced) to December 31, 1994 and the financial highlights for each of the two
years in the period then ended and for the U. S. Government Securities Portfolio
for the period January 24, 1992 (date operations commenced) to December 31, 1992
and for the Social Awareness Stock Portfolio for the period May 1, 1992 (date
operations commenced) to December 31, 1992, and for the Utilities Portfolio for
the period February 4, 1994 (date operations commenced) to December 31, 1994, in
conformity with generally accepted accounting principles.
COOPPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 15, 1995
-71-
<PAGE> 159
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 for the period ended December 31,
1994 include:
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
Statements of Assets and Liabilities as of December 31, 1994
Statements of Operations for the year ended December 31, 1994;
For the Utilities Portfolio for the period February 4, 1994
(date operations commenced) to December 31, 1994
Statements of Changes in Net Assets for the years ended December
31, 1994 and 1993; For the Utilities Portfolio for the period
February 4, 1994 (date operations commenced) to December 31,
1994
Statements of Investments as of December 31, 1994
Notes to Financial Statements
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 for the period ended December 31,
1995 include:
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS - SERIES 1998, 2000 AND 2005
Statements of Assets and Liabilities as of December 31, 1995
Statements of Operations for the applicable period ended December
31, 1995
Statements of Changes in Net Assets for the applicable periods
ended December 31, 1995 and 1994
Statements of Investments as of December 31, 1995
Notes to Financial Statements
<PAGE> 160
(b) Exhibits
1. Agreement and Declaration of Trust.
2. By-Laws
5(a). Investment Advisory Agreement between the U.S. Government
Securities Portfolio and Travelers Asset Management
International Corporation
5(b). Investment Advisory Agreement between the Social Awareness Stock
Portfolio and Smith Barney Mutual Fund Management Inc.
(Incorporated herein by reference to Exhibit 5(b) to
Post-Effective Amendment No. 11 to the Registration Statement on
Form N-1A filed on April 25, 1995.)
5(c). Investment Advisory Agreement between the Utilities Portfolio
and Smith Barney Mutual Fund Management Inc. (Incorporated
herein by reference to Exhibit 5(c) to Post-Effective Amendment
No. 11 to the Registration Statement on Form N-1A filed on April
25, 1995.)
5(d). Form of Investment Advisory Agreement between the Zero Coupon
Bond Fund Portfolios of The Trust and Travelers Asset Management
International Corporation. (Incorporated herein by reference
to Exhibit 5(d) to Post-Effective Amendment No. 12 to the
Registration Statement on N-1A filed on June 2, 1995.)
8. Custody Agreement dated February 1, 1995 between the Registrant
and Chase Manhattan Bank, N.A., Brooklyn, New York.
(Incorporated herein by reference to Exhibit 8 to Post-Effective
Amendment No. 11 to the Registration Statement on Form N-1A
filed on April 25, 1995.)
9. Transfer and Recordkeeping Agreement between the Registrant and
The Travelers Insurance Company.
10. Opinion and Consent of Counsel. (Incorporated herein by
reference to the Registrant's most recent Form 24f-2 Notice
filed on February 27, 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 or incorporation by reference of
their reports.
11(b). Powers of Attorney authorizing Ernest J. Wright, Secretary or
Kathleen A. McGah, Assistant Secretary 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> 161
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, Four (4)
without par value
</TABLE>
Item 27. Indemnification
Provisions for the indemnification of the Series Trust's Trustees and officers
are contained in the Series Trust'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 liabilities (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> 162
Item 28. Business and Other Connections of Investment Advisers
U.S. GOVERNMENT SECURITIES PORTFOLIO
ZERO COUPON BONDS PORTFOLIO
Officers and Directors of Travelers Asset Management International Corporation
(TAMIC), the Investment Adviser for the U.S. Government Securities Portfolio
of the Series Trust, 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> 163
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
Officers and Directors of Smith Barney Mutual Funds Management Inc. (SBMFM),
the Investment Adviser for the Social Awareness Stock Portfolio and Utilities
Portfolio of the Series Trust, are set forth in the following table:
<TABLE>
<CAPTION>
Name Position with SBMFM* Other Business
- ---- -------------------- --------------
<S> <C> <C>
Heath B. McLendon Chairman Managing Director of Smith
Barney; Director of certain
investment companies sponsored
by Smith Barney
Jessica Bibliowicz President and Chief Executive Vice President of
Executive Officer Smith Barney Inc. ("Smith
Barney"); Director and/or
President of certain investment
companies sponsored by Smith
Barney.
Lewis E. Daidone Director and Senior Managing Director of Smith
Vice President Barney, Senior Vice President
and Treasurer of certain
investment companies sponsored
by Smith Barney
A. George Saks Director Managing Director and General
Counsel of Smith Barney
Bruce D. Sargent Director and Vice Managing Director of Smith
President Barney; Vice President and
Director of certain investment
companies sponsored by Smith
Barney
Malcolm Van Arsdale Vice President Vice President of Smith Barney
in the Capital Management
Division
Peter M. Coffey Vice President Managing Director of Smith
Barney
James Conahan Controller Managing Director of
Smith Barney
Michael J. Day Treasurer Managing Director of Smith
Barney
Christina T. Sydor General Counsel and Managing Director of Smith
Secretary Barney and Secretary of certain
investment companies sponsored
by Smith Barney
</TABLE>
* Address: 388 Greenwich Street, New York, N.Y. 10013
<PAGE> 164
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> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, The Travelers Series Trust, certifies that
it meets all 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 has duly caused this amendment to this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Hartford, State of Connecticut, on April __, 1996.
THE TRAVELERS SERIES 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 __, 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
Assistant Secretary, Board of Trustees
</TABLE>
<PAGE> 166
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, The Travelers Series Trust, certifies that
it meets all 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 has duly caused this amendment to this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Hartford, State of Connecticut, on April 3, 1996.
THE TRAVELERS SERIES 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 3, 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:
----------------------------------------
Ernest J. Wright, Attorney-in-Fact
Assistant Secretary, Board of Trustees
</TABLE>
<PAGE> 167
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
1. Agreement and Declaration of Trust. Electronically
2. By-Laws. Electronically
5(a). Investment Advisory Agreement between the U.S. Electronically
Government Securities Portfolio and Travelers Asset
Management International Corporation.
5(b). Investment Advisory Agreement between the
Social Awareness Stock Portfolio and Smith Barney
Mutual Fund Management Inc. (Incorporated herein
by reference to Exhibit 5(b) to Post-Effective
Amendment No. 11 to the Registration Statement on
Form N-1A filed on April 25, 1995.)
5(c). Investment Advisory Agreement between the
Utilities Portfolio and Smith Barney Mutual Fund
Management Inc. (Incorporated herein by reference
to Exhibit 5(c) to Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A filed on
April 25, 1995.)
5(d). Form of Investment Advisory Agreement between the
Zero Coupon Bond Fund Portfolios of The Trust and
Travelers Asset Management International Corporation.
(Incorporated herein by reference to Exhibit 5(d) to Post-
Effective Amendment No. 12 to the Registration
Statement on Form N-1A filed on June 2, 1995.
8. Custody Agreement dated February 1, 1995 between
the Registrant and Chase Manhattan Bank, N.A.,
Brooklyn, New York. (Incorporated herein by reference
to Exhibit 8 to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A filed on April 25,
1995.)
9. Transfer and Recordkeeping Agreement between the Electronically
Registrant and The Travelers Insurance Company.
10. Opinion and Consent of Counsel. (Incorporated herein by
reference to the Registrant's most recent Form 24f-2 Notice
filed on February 27, 1996.)
</TABLE>
<PAGE> 168
<TABLE>
<S> <C> <C>
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 or incorporation by reference of their Reports.
11(b). Powers of Attorney authorizing Ernest J. Wright, Electronically
Secretary, or Kathleen A. McGah, Assistant Secretary
to be the 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
THE TRAVELERS SERIES TRUST
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this
11th day of October, 1991, by Maurice F. Lesses (hereinafter with his
successors referred to as the "Trustees").
W I T N E S S E T H
WHEREAS this Trust has been formed to carry on the business of an
investment company;
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series in accordance with the provisions hereinafter set
forth; and
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 Travelers Series
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) "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
herein or elected in accordance with Article IV and where
appropriate means a majority or other
<PAGE> 2
portion of them acting in accordance with the Declaration of
Trust or the By-Laws of the Trust;
(c) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from
time to time or, if more than one Series of Shares is authorized
by the Trustees, the equal proportionate units into which each
such Series of Shares shall be divided from time to time;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article III;
(e) "Shareholder" means a record owner of Shares;
(f) "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to
time;
(g) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "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;
(h) "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;
(i) "Declaration of Trust" shall mean this Agreement and 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 provide investors with a continuous
source of managed investments.
ARTICLE III
Beneficial Interest
2
<PAGE> 3
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, all without par value, and of one class, but the Trustees
shall have the authority from time to time, by appropriate action of the
Trustees, without the requirement of Shareholder approval to divide the class
of Shares into two or more Series of Shares as they deem necessary or
desirable. The Trustees may from time to time divide or combine the Shares
into a greater or lesser number without thereby changing the proportional
beneficial interests in the Trust.
Any additional Series of Shares created hereunder shall represent the
beneficial interest in the assets (and related liabilities) allocated by the
Trustees to such Series of Shares and acquired by the Trust only after creation
of the respective Series of Shares and only on account of such Series. Upon
creation of each Series of Shares, the Trustees may designate it appropriately
and determine the investment policies with respect to the assets allocated to
such Series of Shares, redemption rights, dividend policies, conversion rights,
liquidation rights, voting rights, and such other rights and restrictions as
the Trustees deem appropriate, to the extent not inconsistent with the
provisions of this Declaration of Trust.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer agent or 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 or similar agent, as the case may be, shall be conclusive as to
who are the holders of Shares of each Series and the number of each Series 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 of the appropriate
Series 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 Series.
Section 4. No Preemptive Rights; Shareholder Actions. Shareholders
shall have no preemptive or other right to subscribe to any additional Shares
or other securities issued by the Trust. No action may be brought by a
Shareholder on behalf of the Trust unless a prior demand has been made on the
Trustees and the Shareholders of the Trust.
3
<PAGE> 4
Section 5. Provisions Relating to Series of Shares. Whenever no
Shares of a Series are outstanding, then the Trustees may abolish such Series.
Whenever more than one Series of Shares is outstanding, then the following
provisions shall apply:
(a) Assets belonging to each Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested
or reinvested, all income, earnings and proceeds thereof, and any
funds derived from any reinvestment of such proceeds, shall,
except to the extent specifically otherwise provided in the
provisions adopted by the Trustees establishing the Series,
irrevocably belong to that Series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the
books of the Trust. In the event there are assets, income,
earnings, and proceeds thereof which are not readily identifiable
as belonging to a particular Series, then the Trustees shall
allocate such items to the various Series then existing, in such
manner and on such basis as they, in their sole discretion, deem
fair and equitable. The amount of each such item allocated to a
particular Series by the Trustees shall then belong to that
Series, and each such allocation shall be conclusive and binding
upon the Shareholders of all Series for all purposes.
(b) Liabilities belonging to each Series. The assets belonging to
each particular Series shall, except to the extent specifically
otherwise provided in the provisions adopted by the Trustees
establishing the Series, be charged with the liabilities,
expenses, costs and reserves of the Trust attributable to that
Series; and any general liabilities, expenses, costs and reserves
of the Trust which are not readily identifiable as attributable
to a particular Series shall be allocated by the Trustees to the
various Series then existing, in such manner and on such basis as
they, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
(c) Dividends and Liquidation. Each Share of each respective Series
shall, except to the extent specifically otherwise provided in
the provisions adopted by the Trustees establishing the Series,
have the same rights and pro rata beneficial interest in the
assets and liabilities of the Series as any other such
4
<PAGE> 5
Share. Any dividends paid on the Shares of any Series shall,
except to the extent specifically otherwise provided in the
provisions adopted by the Trustees establishing the Series, only
be payable from and to the extent of the assets (net of
liabilities) belonging to that Series. In the event of
liquidation of a Series, only the assets (less provision for
liabilities) of that Series shall be distributed to the holders
of the Shares of that Series.
(d) Voting by Series. Except as provided in this Section or as
limited by the rights and restrictions of any Series, each Share
of the Trust may vote with and in the same manner as any other
Share on matters submitted to a vote of the Shareholders entitled
to vote thereon, without differentiation among votes from the
separate Series; provided, however, that (i) as to any matter
with respect to which a separate vote of any Series is required
by the 1940 Act, or otherwise by applicable law, or if the
Trustees shall have determined that the matter affects one or
more Series materially differently, a separate vote shall be
required in lieu of the voting described above; (ii) in the event
that the separate vote requirements referred to in (i) above
apply with respect to one or more Series, then, subject to (iii)
below, the Shares of all other Series shall vote without
differentiation among their votes; and (iii) as to any matter
which does not affect the interest of any particular Series, only
the holders of Shares of the one or more affected Series shall be
entitled to vote.
Section 6. Limitation of Personal Liability. Every Shareholder by
virtue of having become a Shareholder shall be held to have expressly assented
and agreed to the terms of this Declaration of Trust and the By-Laws and to
have become a party thereto. The Trustees shall have no power to bind any
Shareholder 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).
5
<PAGE> 6
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 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; they may retain a transfer
agent or a Shareholder servicing agent, or both; they may provide for the
distribution of Shares by the Trust, through one or more principal underwriters
or otherwise; they may set record dates, and in general they may delegate such
authority as they consider desirable to any officers of the Trust and
committees of the Trustees and to any such 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, hypothecate 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;
6
<PAGE> 7
(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 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.
Section 2. Election of Trustees. The Trustee first named above (or
his successors appointed hereunder) shall serve until the election of Trustees
at the first meeting of Shareholders of the Trust. Prior to the first meeting
of shareholders, the initial Trustee may elect additional Trustees to serve
until such meeting and until their successors are elected and qualified. 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 Trustees of
the Trust, the Trustees of the Trust. The Shareholders of the Trust shall
thereafter elect, at
7
<PAGE> 8
any Shareholder meeting called for the purpose in the manner provided herein,
Trustees to succeed those Trustees whose terms expired since the last such
meeting. If reelected, 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 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 in 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 has become mentally or
physically incapacitated may be removed by written instrument signed by a
majority of the other Trustees, specifying the date of his or her removal; 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.
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. An appointment of a Trustee may be made by
the Trustees then in office 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 said appointment shall become effective only at or after
the effective date of said 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 shall be
deemed a Trustee hereunder. Any appointment authorized by this Section 4 is
subject to the provisions of Section 16(a) of the 1940 Act.
Section 5. Number of Trustees. The number of Trustees serving
hereunder at any time shall be determined by the Trustees themselves, but, at
or after the commencement of the business of the Trust, shall not be less than
three (3) nor more than fifteen (15).
8
<PAGE> 9
Whenever a vacancy in the Board of Trustees shall occur or whenever any
Trustee is absent from any meeting of the Board of Trustees or is physically or
mentally incapacitated, the other Trustees shall have all the powers hereunder
and a certificate signed by a majority of the other Trustees of such vacancy,
absence or incapacity shall be conclusive, provided, however, that no vacancy
after the commencement of the business of the Trust 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.
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 be 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 Series of Shares of which he is a
holder, subject to any rights or restrictions applicable to any Series of which
he is a holder.
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. Without limiting
the generality of the powers of the Trustees, subject to applicable law, 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
9
<PAGE> 10
consider appropriate (herein called 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 the 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.
Without limiting the generality of the powers of the Trustees, subject
to applicable law, 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 granted all authority which has been
granted to the Adviser under the contract which the Adviser entered into
pursuant to the preceding paragraph.
Without limiting the generality of the powers of the Trustees, 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.
Section 10. Affiliations of Trustees or Officers, Etc. The fact that
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, Director, officer, partner, Trustee, employee, manager, adviser or
distributor of or for any partnership, corporation, trust, association or other
organization or for any parent or affiliate of any organization, with which any
contract including, without limitation, contracts for services as manager,
investment adviser, distributor, principal underwriters, custodian, transfer
agent or disbursing agent or for related services may have been or may
hereafter be made, or that any such organization, or any parent or affiliate
thereof, is a Shareholder of or has an interest in the Trust, or that (ii) any
partnership, corporation, trust, association or other organization with which a
contract referred to in (i) above may have been or may hereafter be made also
has any one or more of such contracts with one or more other partnerships,
corporations, trusts, associations or other organizations, or has other
business or interests, shall not affect the validity of any such contract or
disqualify any Shareholder, Trustee or officer
10
<PAGE> 11
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders.
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, Sections
2 and 3, (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) with respect to any termination of
this Trust to the extent and as provided in Article IX, Section 4, 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 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 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
11
<PAGE> 12
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 present and entitled
to vote on a question or election shall decide such question or election,
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 Shareholders
entitled to vote on the subject matter thereof holding a majority of the Shares
entitled to vote thereon.
Section 5. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Dividends, Distributions and Redemptions
Section 1. Dividends and Distributions. The Trustees may, but need
not, each year distribute to the Shareholders of each Series such income and
gains as the Trustees may determine 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) in accordance with
generally accepted accounting practices. 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 income of each Series, if any be made, 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 or under the
authority of the Trustees. At any time and from time to time in their
discretion the Trustees may distribute to the Shareholders of any one or more
Series as of a record date or dates determined by or under the authority of the
Trustees, in Shares, in cash or otherwise, all or part of any gain realized on
the sale or disposition of property of the Trust or otherwise, or all or part
of any other principal of the Trust. Each distribution pursuant to this Section
1 shall be made ratably according to the number of Shares of the Series held by
the several Shareholders on the record date for such distribution.
12
<PAGE> 13
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 from time to
time may be determined by or under the authority of the Trustees, the Trust
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 by the Series being redeemed (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. Subject to
applicable law, the Net Asset Value per Share of each Series shall be computed
as of such times as may be determined by or under authority of the Trustees by
determining the value of all the investments of such Series in such manner as
may be determined by or under authority of the Trustees, adding any other
assets of such Series, subtracting all liabilities of such Series and dividing
the result by the number of Shares of such Series outstanding.
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<PAGE> 14
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 time for 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. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, Adviser or Principal Underwriter 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.
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
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<PAGE> 15
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 Covered 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 Covered Person may be or may have been involved
as a party or otherwise or with which such Covered 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 willful 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 such indemnification either for
said 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 a disinterested person or persons to whom the question may be
referred by the
15
<PAGE> 16
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
willful 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. 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 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 held
harmless from and indemnified against all loss and expense arising from such
liability, but only out of the assets of the particular Series of which he is a
Shareholder.
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<PAGE> 17
ARTICLE IX
Miscellaneous
Section 1. Trust Not a Partnership; Shareholders, Trustees Not
personally Liable. 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 or
a particular Series shall look only to the assets of the Trust, or the assets
of that particular Series, 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. Every note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officer or officers shall give notice
that this Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust or by them as Trustee or Trustees or as
officer or officers and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually
but are binding only upon the assets and property of the Trust, or the assets
of the particular Series in question, and may contain such further recital as
he or she or they may deem appropriate, but the omission thereof shall not
operate to bind any Trustee or Trustees or officer or officers or Shareholder
or Shareholders individually or to subject any Series to the obligations of any
other Series.
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
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of the Trustee, and for nothing else. 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.
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<PAGE> 18
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 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 entitled to vote thereon,
may by unanimous action, merge, consolidate, or sell and
convey the assets of the Trust, or of any particular Series,
including its goodwill, to another trust or series of a trust
or corporation organized under the laws of any state of the
United States, which is an 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 or the particular Series and which
may include shares of beneficial interest or stock of such
trust, series 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 or the Series, as the case may be, then outstanding.
(c) The Trustees may at any time sell and convert into money all
the assets of the Trust or of any particular Series upon
notice to the shareholders. Upon making provision for the
payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or of the
particular Series, the Trustees shall distribute the remaining
assets of the Trust or the particular Series, as the case may
be, 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 or the Series, as the
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<PAGE> 19
case may be, 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 as well as any other governmental office
where 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
created under and is to be governed by and construed and administered according
to the laws of the Commonwealth of Massachusetts. 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 amended by a
vote or written consent of the Trustees. However, if such amendment adversely
affects the rights of any Shares of any Series with respect to matters to which
such amendment is applicable, such amendment shall be subject to approval by
holders of a majority of the Shares of each such Series. An amendment or other
action which provides for additional Series of Shares, which Series may vote
together with Shares of other Series and makes other provisions with respect to
such Series and its relation to existing Series, shall not be deemed to
adversely affect the rights of any other Series of Shares. The Trustees may
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<PAGE> 20
also amend this Declaration of Trust without any Shareholder approval to change
the name of the Trust, to change the name of the Trustees, to supply any
omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or, if they deem it necessary, to conform this
Declaration of Trust to the requirements of any applicable federal laws or
regulations or the requirements of the Internal Revenue Code or to eliminate or
reduce any federal, state or local taxes which are or may be payable by the
Trust or the Shareholders, but the Trustees shall not be liable for failing to
do so.
Nothing contained in this Declaration of Trust shall permit the
amendment of this Declaration of Trust to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.
A certificate signed by a majority of the Trustees or by the Secretary
or any Assistant Secretary of the Trust, setting forth an amendment by reciting
that it was duly adopted by the Shareholders or by the Trustees as aforesaid,
or a copy of the Declaration of Trust as amended, and executed by a majority of
the Trustees or certified by the Secretary or any Assistant Secretary of the
Trust, shall be conclusive evidence of such amendment.
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<PAGE> 21
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal in
the City of Boston, Massachusetts, for himself and his assigns, as of the day
and year first above written.
/s/Maurice F. Lesses
Trustee
THE COMMONWEALTH OF MASSACHUSETTS
October 11, 1991
Boston ss:
Then personally appeared before me the above-named Trustee and
acknowledged the foregoing instrument to be his free act and deed.
/s/Joan D. Searfoss
Notary Public
My commission expires:1/29/93
JOAN D. SEARFOSS, Notary Public
(Notary's Seal)
The address of the Trust is One Tower Square, Hartford, Connecticut
06183-1050. The address of the Trustee is 99 High Street, Boston, Massachusetts
02110.
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<PAGE> 1
EXHIBIT 2
THE TRAVELERS SERIES 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 Agreement and Declaration of Trust dated October 11, 1991
(the "Declaration of Trust") of The Travelers Series 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 Meetings. Meetings 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,
by these By-Laws or by the Trustees.
2.2 Meetings Called by Shareholders. Meetings shall be called by the Trustees
upon the written request of Shareholders owning at least twenty-five percent
(25%) of the outstanding Shares entitled to vote. Every such request shall
state the purpose of the meeting and shall be delivered to the Trustees at the
principal office of the Trust. Such meeting shall be held within seventy-five
(75) days after delivery of the request. In case the Trustees shall refuse or
fail, for fourteen (14) days after the request shall have been so delivered, to
call such meeting, the same may be called by the person or persons signing such
request or by any three of them.
2.3 Business to be Transacted. At any 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, at least fourteen (14) but not more than
seventy-five (75) days (including Sundays and holidays) before such meeting to
each Shareholder who is entitled to vote. Notice of a
<PAGE> 2
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 Trust 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, bankrupt,
insolvent or legally incompetent, and whether or not the Trustees or any person
sending such notice have knowledge of his death, bankruptcy, 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 upon 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 to 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 other distribution, the Trustees
may from time to time fix a time, which shall be not more than seventy-five
(75) days before the date of any meeting of Shareholders or the date for the
payment of any dividend or 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.
2
<PAGE> 3
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 Secretary 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. Notice of a special meeting to a Trustee shall be sufficient if
such notice is sent by mail at least forty-eight hours or by facsimile at least
twenty-four hours before the meeting, addressed to him at his usual or last
known business or residence address, or if notice is given 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, nor need
notice be given 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.
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 other 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
<PAGE> 4
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 Chairman, 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, 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. In addition to any duties and powers set forth herein and in the
Declaration of Trust, and subject to law and to the other provisions of these
By-Laws, each officer shall have 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 as the Trustees may from time to time
designate.
4.4 Chairman. Unless the Trustees otherwise provide, the Chairman shall preside
at all meetings of Shareholders and of the Trustees. 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. The Treasurer 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
Chairman.
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 or 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.
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<PAGE> 5
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 Chairman 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 relating to 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 Trustees. 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 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
signed by such a majority.
Members of a committee may participate in a meeting of such committee by means
of a conference telephone or other 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
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<PAGE> 6
6.1 Fiscal Year. The fiscal year of the Trust shall end on the last day of
December in each year.
ARTICLE 7.
Miscellaneous
7.1 Depositories. The funds of the Trust shall be deposited in such
depositories as the Trustees shall designate in accordance with the provisions
of the Declaration of Trust, and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents (including the
Adviser) as the Trustees may from time to time authorize.
7.2 Signatures. All contracts and other instruments shall be executed on behalf
of the Trust by such officer, officers, agent or agents, as provided in the
Declaration of Trust or these By-Laws or as the Trustees may from time to time
by resolution provide.
ARTICLE 8.
Amendment and Repeal of By-Laws
8.1 Amendment and Repeal of By-Laws. In accordance with Article IV of the
Declaration of Trust, the Trustees have the power to alter, amend or repeal
these By-Laws or adopt new By-Laws at any time to the extent that they are not
inconsistent with the Declaration of Trust. Action with respect to the By-Laws
shall be taken by an affirmative vote of a majority of the Trustees. The
Trustees shall in no event adopt By-Laws which are in conflict with the
Declaration of Trust, and any apparent inconsistency shall be construed in
favor of the related provisions in the Declaration of Trust.
6
<PAGE> 1
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 the U.S. Government
Securities Portfolio (hereinafter the "Portfolio"), a separate series of The
Travelers Series Trust (the "Trust"), a Massachusetts business trust
established in Massachusetts by an Agreement and Declaration of Trust dated
October 11, 1991, as amended and/or restated from time to time (the
"Declaration of Trust").
WITNESSETH:
WHEREAS, the Portfolio and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for the
Portfolio.
NOW, THEREFORE, in consideration of the promise and the mutual
agreements herein contained, the parties hereto agree as follows:
1. The Portfolio hereby employs TAMIC to manage the investment and
reinvestment of the assets of the Portfolio and to perform the other
services herein set forth, subject to the supervision of the Board of
Trustees of the Trust (hereinafter the "Board") for the period and on
the terms herein set forth. TAMIC hereby accepts such employment and
agrees during such period, at its own expense, to render the services
and to assume the obligations herein set forth for the compensation
herein provided.
2. In carrying out these obligations to manage the investment and
reinvestment of the assets of the Portfolio, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
the Portfolio, affecting the economy generally and individual
companies or industries, the securities of which are held by the
Portfolio or are under consideration for inclusion therein;
b. be authorized to purchase supplemental research and other
services from brokers at additional cost to the Portfolio;
c. regularly furnish to the Board recommendations with respect to
any investment program for approval, modification or rejection by
the Board;
d. take such steps as are necessary to implement the investment
program approved by the Board; 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
Portfolio.
3. Any investment program undertaken by TAMIC pursuant to this Agreement
and any other activities undertaken by TAMIC on behalf of the Portfolio
shall
<PAGE> 2
at all times be subject to any directives of the Board or any duly
constituted committee thereof acting pursuant to like authority.
4. For the services rendered hereunder, TAMIC will receive an amount
equivalent on an annual basis to 0.3233% of the average daily net assets
of the Portfolio, such fees to be deducted on each valuation date.
5. The services of TAMIC to the Portfolio hereunder are not to be deemed
exclusive and TAMIC shall be free to render similar services to others
so long as its services hereunder are not impaired or interfered with
thereby.
6. If approved by a vote of a majority of the outstanding voting securities
of the Portfolio (as defined in the Investment Company Act of 1940),
this Investment Advisory Agreement:
a. may not be terminated by TAMIC, without the prior approval of a
new Investment Advisory Agreement by a vote of a majority of the
outstanding voting securities of the Portfolio, and shall be
subject to termination, without the payment of any penalty, upon
sixty days' written notice to the investment adviser, by the
Board or by a vote of a majority of the outstanding voting
securities of the Portfolio;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of the Portfolio;
c. shall automatically terminate upon assignment by either party; and
d. shall continue in effect for a period of more than two years from
the date of its execution, only so long as such continuance is
specifically approved (i) at least annually by a vote of a
majority of the Board who are not parties to, or interested
persons of any party to, such agreement, cast in person at a
meeting called for the purpose of voting on such approval and at
which the Board has been furnished such information as may be
reasonably necessary to evaluate the terms of said agreement, or
(ii) by a vote of a majority of the outstanding voting securities
of the Portfolio.
7. This Agreement is made on behalf of the Portfolio by an officer or
Trustee of the Trust, not individually, but solely as an officer or
Trustee under the Declaration of Trust, and the obligations under this
Agreement are not binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or
agents of the Trust personally, but shall bind only the Trust's
property.
8. TAMIC agrees that it shall furnish to the California Commissioner of
Insurance any information or reports concerning the Portfolio as the
Commissioner, in the performance of his or her duties, may request.
9. TAMIC hereby acknowledges that all books and records relating to the
services provided to the Portfolio hereunder are the property of the
Trust and subject to its control; provided, however, that during the
term of the Agreement, the Trust shall not exercise such control so as
to interfere with the performance of TAMIC's duties hereunder.
<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.
U.S. GOVERNMENT SECURITIES PORTFOLIO
OF THE TRAVELERS SERIES TRUST
By:/s/Robert W. Crispin
Chairman, Board of Trustees
WITNESS:
/s/Thomas A. Klee
Secretary, Board of Trustees
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL CORPORATION
By:/s/Eliot P. Williams
Senior Vice President
ATTEST: (Seal)
/s/Harry E. Meyer
Corporate Secretary
<PAGE> 1
EXHIBIT 9
TRANSFER AND RECORDKEEPING AGREEMENT
AGREEMENT made as of the 25th day of October, 1991 by and between The
Travelers Series 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
THE TRAVELERS SERIES 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 incorporation by reference in this Post-Effective Amendment
No. 13 of this Registration Statement on Form N-1A of our report dated February
15, 1995, on our audits of the financial statements and financial highlights
of the U.S. Government Securities Portfolio, Social Awareness Stock Portfolio
and Utilities Portfolio of The Travelers Series Trust and to the inclusion of
our reports dated February 7, 1996, on our audits of the financial statements
and financial highlights of The Travelers Series Trust. We also consent to
the reference to our Firm as experts in accounting and auditing under the
caption "Additional Information".
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 3, 1996
<PAGE> 1
EXHIBIT 11(b)
THE TRAVELERS SERIES 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 The Travelers Series 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 The Travelers Series 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
The Travelers Series Trust
<PAGE> 2
THE TRAVELERS SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Knight Edwards of Providence, Rhode Island, member of
the Board of Trustees of The Travelers Series 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 The Travelers Series 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
The Travelers Series Trust
<PAGE> 3
THE TRAVELERS SERIES 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 The Travelers Series 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 The Travelers Series 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 III
Member of the Board of Trustees
The Travelers Series Trust
<PAGE> 4
THE TRAVELERS SERIES 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 The Travelers Series 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 The Travelers Series 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
The Travelers Series Trust
<PAGE> 5
THE TRAVELERS SERIES 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 The Travelers Series 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 The Travelers Series 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
The Travelers Series Trust
<PAGE> 6
THE TRAVELERS SERIES TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Ian R. Stuart of East Hampton, Connecticut, Treasurer
of The Travelers Series 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
The Travelers Series 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
The Travelers Series Trust
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<NAME> U.S. GOVERNMENT SECURITIES PORTFOLIO
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<NUMBER-OF-SHARES-SOLD> 484178
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<NET-CHANGE-IN-ASSETS> 3670123
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<ACCUMULATED-GAINS-PRIOR> (226527)
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<TABLE> <S> <C>
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<NAME> SOCIAL AWARENESS STOCK PORTFOLIO
<S> <C>
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<DISTRIBUTIONS-OF-GAINS> (68327)
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