<PAGE> 1
MARCH 23, 1998 SUPPLEMENT TO
PROSPECTUS DATED MAY 1, 1997
THE TRAVELERS SERIES TRUST
The following information supplements the Prospectus dated May 1, 1997 for the
Travelers Series Trust and its portfolios.
Effective December 4, 1997, the MFS Mid Cap Growth Portfolio and the MFS
Research Portfolio (the "Portfolios"), are being added as two new series of
shares under The Travelers Series Trust. Information relating to the new
Portfolios, their investment objectives, policies and investment risks, as well
as the investment adviser and subadviser, are provided below.
INVESTMENT OBJECTIVE AND POLICIES - MFS RESEARCH PORTFOLIO
The investment objective of the MFS Research Portfolio is to provide long-term
growth of capital and future income. The Portfolio's securities are selected by
a committee of investment research analysts from the sub-adviser and from MFS
International (U.K.) Limited. The Portfolio's assets are allocated among
industries by the committee. Individual analysts are then responsible for
selecting what they view as the securities best suited to meet the Portfolio's
investment objective within their assigned industry responsibility.
The Portfolio's policy is to invest a substantial proportion of its assets in
the common stocks or securities convertible into common stocks of companies
believed to possess better than average prospects for long-term growth. A
smaller proportion of the assets may be invested in bonds, short-term
obligations, preferred stocks or common stocks whose principal characteristic
is income production rather than growth. Such securities may also offer
opportunities for growth of capital as well as income. In the case of both
growth stocks and income issues, emphasis is placed on the selection of
progressive, well-managed companies.
Other investments are allowed, including, but not limited to, those described
below. The description of these techniques and the associated risks appears in
the Travelers Series Trust prospectus. Subject to the investment restrictions
set forth below, the MFS Research Portfolio may invest in or engage in the
following:
- - repurchase agreements
- - American Depository Receipts
- - emerging market securities (not more than 20% of the Portfolio's net
assets)
- - restricted securities
- - securities lending (not more than 30% of the Portfolio's net assets)
- - "investment grade" securities (rated Baa or better by Moody's Investor
Service, Inc. ("Moody's") or BBB or better by Standard and Poor's Ratings
Services ("S&P") or Fitch Investors Service, Inc. ("Fitch"))
1
<PAGE> 2
- - lower rated securities, commonly known as junk bonds(rated Ba or lower by
Moody's or BB or lower by S&P or Fitch) or securities which the Subadviser
believes to be of similar quality to these lower rated securities (not more
than 30% of the Portfolio's net assets)
- - warrants (not more than 5% of the Portfolio's net assets)
The investment objective and policies of the MFS Research Portfolio are not
fundamental and may be changed without a vote of the majority of the
outstanding voting securities of the Portfolio, as defined in the Investment
Company Act of 1940 ("1940 Act").
INVESTMENT RESTRICTIONS - MFS RESEARCH PORTFOLIO
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 MFS Research Portfolio, as defined in the 1940 Act. The MFS
Research Portfolio may not:
1. invest more than 5% of its total assets, computed at market value,
in the securities of any one issuer (excluding U.S. Government
Securities);
2. invest in more than 10% of any class of securities of any one
issuer;
3. invest more than 5% of the value of its total assets in companies
which, including predecessors, have been in operation for less
than three years;
4. borrow amounts in excess of 5% of its gross assets (taken at the
lower of cost or market value), and then only as a temporary
measure for extraordinary or emergency purposes;
5. pledge, mortgage or hypothecate an amount of assets which (taken
at market value) exceeds 15% of its gross assets (taken at the
lower of cost or market value);
6. underwrite securities, issued by other persons except insofar as
the Portfolio may technically be deemed to be an underwriter, as
defined in the Securities Act of 1933 (the "1933 Act") in selling
a portfolio security;
7. 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
transaction and borrowing costs and for hedging purposes as
described above;
8. invest for the primary purpose of control or management;
9. make margin purchases or short sales of securities, except for
short-term credits which are necessary for the clearance of
transactions;
2
<PAGE> 3
10. make loans, except that the MFS Research 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 Portfolio's
investment objective and policies;
11. invest more than 25% of its total assets in the securities of
issuers in any single industry;
12. purchase the securities of any other investment company, or
investment trust, except in the open market and at customary
brokerage rates, provided however, that the Portfolio shall not
purchase such securities if the purchase would cause more than 10%
of the Portfolio's total assets (taken at market value) to be
invested in the securities of such issuer, and provided that the
Portfolio shall not purchase securities issued by any open-end
investment company;
13. sell any security which the Portfolio does not own unless, at the
time of sale, the Portfolio owns other securities which give it
the right to obtain securities without further payment and
provided that, if such right is conditional, the sale is made upon
the same conditions.
14. purchase or sell any put or call options or any combination
thereof, provided that this shall not prevent the purchase,
ownership, holding or sale of warrants where the grantor of the
warrants is the issuer of the underlying securities; or
15. invest in securities which are subject to legal or contractual
restrictions on resale, or for which there is no readily available
market (e.g., trading in the security is suspended, or, in the
case of unlisted securities, market makers do not exist or will
not entertain bids or offers), unless the Board of Trustees has
determined that such securities are liquid based upon trading
markets for the specific security if more than 10% of the
Portfolio's assets (taken at market value) would be invested in
such illiquid securities.
The MFS Research Portfolio is subject to restrictions in the sale of
portfolio securities to, and in its purchase or retention of securities of,
companies in which the management personnel of TIMCO have a substantial
interest.
RISK FACTORS: MFS RESEARCH PORTFOLIO
Lower Rated Fixed Income Securities: These securities are considered
speculative and, while generally providing greater income than investments in
higher rated securities, will involve greater risk of principal and income
(including the possibility of default or bankruptcy of the issuers of the
security).
Foreign Securities: Risks include changes in currency rates, exchange
control regulations, governmental administrative or economic or monetary policy
(in the U.S. or abroad) or circumstances in dealings between nations. Costs
may be incurred in connection with conversions between currencies. Risks may
also include limited information about issuers, higher brokerage costs,
different accounting standards and thinner trading markets. Foreign securities
markets may also be less liquid, more volatile and less subject to government
supervision than in the U.S.
Emerging Markets: The risks of investing in foreign securities may be
intensified in the case of investment in emerging markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than those of
comparable domestic issuers. Investment in emerging markets may be subject to
delays in settlement, resulting in periods when a portion of the Portfolio's
assets is uninvested and no return is earned thereon. Certain markets may
require payment for securities before delivery, and in such markets the
Portfolio bears the risk that the securities will not be delivered and that the
payment will not be returned.
INVESTMENT OBJECTIVE AND POLICIES- MFS MID CAP GROWTH PORTFOLIO
The investment objective of the MFS Mid Cap Growth Portfolio is to
seek to obtain long term growth of capital. It seeks to achieve its objective
by investing, under normal market conditions, at least 65% of its total assets
in equity securities of companies with medium market capitalization which the
investment adviser believes have above-average growth potential. Medium market
capitalization companies are those whose market capitalization falls within the
range of the Standard & Poor's MidCap 400 Index at the time of the Portfolio's
investment. The S&P MidCap 400 Index is a widely recognized, unmanaged index of
mid-cap common stock prices. Companies whose capitalization falls outside this
range after purchase continue to be
3
<PAGE> 4
considered medium-capitalization companies for the purposes of the Portfolio's
65% policy. The Portfolio may, but is not required to, purchase securities of
companies included in the S&P MidCap 400 Index.
The Index is only used by the Portfolio for purposes of defining the
market capitalization range of companies in which the Portfolio will invest; it
is not intended to be used as a benchmark against which the Portfolio compares
its investment performance.
Consistent with its investment objective, the Portfolio may invest in
fixed income securities; and up to 20% of its net assets in nonconvertible
fixed income securities that are in the lower rating categories (rated BA or
lower by Moody's Investor Service, Inc. ("Moody's") or BB or lower by Standard
& Poor's Rating Services ("S&P") or Fitch Investors Service, Inc. ("Fitch") and
comparable unrated securities (commonly known as "junk bonds"), and may also
invest up to 35% (and generally expects to invest up to 20%) of its net assets
in foreign securities which are not traded on a U.S. exchange (not including
American Depository Receipts).
Other investments are allowed, including, but not limited to, those described
below. The description of these techniques and the associated risks appears in
the Travelers Series Trust prospectus. Subject to the investment restrictions
set forth below, the MFS Mid Cap Growth Portfolio may invest in or engage in
the following:
- - equity securities
- - fixed-income securities
- - emerging markets
- - Brady Bonds
- - American Depository Receipts
- - repurchase agreements
- - portfolio lending
- - "when-issued" securities
- - indexed securities
- - mortgage "dollar roll" transactions
- - restricted securities
- - corporate asset-backed securities
- - options and futures
- - forward contracts
The MFS Mid Cap Growth Portfolio may make investments in an amount of up to 15%
of the value of its net assets in restricted securities which may not be
publicly sold without registration under the 1933 Act. In most instances such
securities are traded at a discount from the market value of unrestricted
securities of the same issuer until the restriction is eliminated. If and when
the Portfolio sells such securities, it may be deemed an underwriter, as such
term is defined in the 1933 Act, with respect thereto, and registration of such
securities under the 1933 Act may be required. The Portfolio will not bear the
expense of such registration. The MFS Mid Cap Growth Portfolio intends to
reach agreements with all such issuers whereby they will pay all expenses of
registration.
4
<PAGE> 5
Non-diversified status: The MFS Mid Cap Growth Portfolio is a non-diversified
portfolio. As a result, the Portfolio is limited as to the percentage of its
assets which may be invested in the securities of any one issuer only by its
investment restrictions and the diversification requirements imposed by the
Internal Revenue Code of 1986, as amended. Since the Portfolio may invest a
relatively high percentage of its assets in a limited number of issuers, the
Portfolio may be more susceptible to any since economic, political or
regulatory occurrence and to the financial conditions of the issuers in which
it invests.
The investment objective and policies of the MFS Mid Cap Growth Portfolio are
not fundamental and may be changed without a vote of the majority of the
outstanding voting securities of the Portfolio, as defined in the Investment
Company Act of 1940 ("1940 Act").
INVESTMENT RESTRICTIONS - MFS MID CAP GROWTH PORTFOLIO
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 MFS Mid Cap Growth Portfolio, as defined in the 1940 Act.
The MFS Mid Cap Growth Portfolio may not:
1. borrow amounts in excess of 33 1/3% of its gross assets (taken at the lower
of cost or market value), and then only as a temporary measure for
extraordinary or emergency purposes;
2. underwrite securities, issued by other persons except insofar as the
Portfolio may technically be deemed to be an underwriter, as defined in the
Securities Act of 1933 (the "1933 Act") in selling a portfolio security;
3. purchase or sell real estate or interests in real estate (including limited
partnership interests but excluding securities secured by real estate or
interests therein and securities of companies, such as real estate
investment trusts, which deal in real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts
(excluding options on securities, stock indexes and foreign currency
("Options"), Options on Futures Contracts and any other type of option,
Futures Contracts and any other type of futures contract and Forward
Contracts) in the ordinary course of its business. The Portfolio reserves
the right to hold and to sell real estate mineral leases, commodities or
commodity contracts acquired as a result of the ownership of securities;
4. issue senior securities except as permitted by the 1940 Act. For purposes
of this restriction, collateral arrangements with respect to any type of
option (including Options on Futures Contracts and Options). Forward
Contracts and any type of futures contract (including Futures Contracts)
and collateral arrangements with respect to initial and variation margin
are not deemed to be the issuance of a senior security;
5. make loans to other persons. For these purposes, the purchase of short term
commercial paper, the purchase of a portion or all of an issue of debt
securities, the lending of portfolio securities, or the investment of the
Portfolio's assets in repurchase agreements, shall not be considered the
making of a loan;
5
<PAGE> 6
6. invest more than 25% of its total assets in the securities of issuers in
any single industry.
The investment restrictions set forth below are nonfundamental and may be
changed without shareholder approval. The MFS Mid Cap Growth Portfolio will
not:
1. invest in illiquid securities, including securities subject to legal or
contractual restrictions on resale, or for which there is no readily
available market (e.g., trading in the security is suspended, or, in the
case of unlisted securities, market makers do not exist or will not
entertain bids or offers), unless the Board of Trustees has determined that
such securities are liquid based upon trading markets for the specific
security if more than 15% of the Portfolio's assets (taken at market value)
would be invested in such illiquid securities. Repurchase agreements
maturing in more than seven days will be deemed to be illiquid for purposes
of the Portfolio's limitation on investment in illiquid securities.
2. invest more than 5% of the Portfolio's net assets, valued at the lower of
cost or market, in warrants, included within such amount, but not to exceed
2% of the Portfolios net assets, may be warrants which are not listed on
the New York or American Stock Exchange. Warrants acquired by the Portfolio
in units or attached to securities may be deemed to be without value;
3. invest for the primary purpose of control or management;
4. purchase the securities of any other investment company in excess of the
amount permitted by the 1940 Act; currently the Portfolio does not intend
to invest more than 5% of its net assets in such securities.
5. make margin purchases, except that the Portfolio may obtain such short-term
credit as may be necessary for the clearance of any transaction and except
that the Portfolio may make margin deposits in connection with any type of
option, futures contract and forward contracts;
6. sell any security which the Portfolio does not own unless, at the time of
sale, the Portfolio owns other securities which give it the right to obtain
securities without further payment and provided that, if such right is
conditional, the sale is made upon the same conditions.
7. invest more than 5% of the value of its total assets in companies which,
including predecessors, have been in operation for less than three years;
8. pledge, mortgage or hypothecate an amount of assets which (taken at market
value) exceeds 33 1/3% of its gross assets (taken at the lower of cost or
market value) For purposes of this restriction, collateral arrangements
with respect to any type of option, any type of futures contracts, Forward
contracts and payments of initial and variation margin in connection
therewith, are not considered a pledge of assets;
6
<PAGE> 7
9. purchase or sell any put or call options or any combination thereof,
provided that this shall not prevent the purchase, ownership, holding or
sale of warrants where the grantor of the warrants is the issuer of the
underlying securities; or (ii) put or call options or combinations thereof
with respect to securities, indexes of securities, foreign currency or
futures contracts (including Futures Contracts) or (b) the purchase,
ownership, holding or sale of contracts for the future delivery of
securities or currencies.
The MFS Mid Cap Growth Portfolio is subject to restrictions in the
sale of portfolio securities to, and in its purchase or retention of securities
of, companies in which the management personnel of TIMCO have a substantial
interest.
RISK FACTORS
Medium Capitalization Stocks: Investing in medium capitalization
stocks may involve greater risk than investing in large capitalization stocks,
since they can be subject to more abrupt or erratic movements. However, they
tend to involve less risk than stocks of small capitalization companies.
Emerging Growth Companies: The stocks of companies in which the Portfolio may
invest may be early in their life cycle but have the potential to become major
enterprises (emerging growth companies). Such companies generally would be
expected to show earnings growth over time that is well above the growth rate
of the overall economy and the rate of inflation, and would have the products,
technologies, management and market and other opportunities which are usually
necessary to become more widely recognized as growth companies.
The nature of investing in emerging growth companies involves greater risk than
is customarily associated with investments in other companies which do not have
emerging growth characteristics. Emerging growth companies often have limited
product lines, markets or financial resources, and they may be dependent on the
management abilities of a limited number of people.
Lower Rated Fixed Income Securities: These securites are considered
speculative and, while generally providing greater income than investments in
higher rated securities, will involve greater risk of principal and income
(including the possibilty of default or bankruptcy of the issuers of the
security).
Foreign Securities: Risks include changes in currency rates, exchange control
regulations, governmental administrative or economic or monetary policy (in the
U.S. or abroad) or circumstances in dealings between nations. Costs may be
incurred in connection with conversions between currencies. Risks may also
include limited information about issuers, higher brokerage costs, different
accounting standards and thinner trading markets. Foreign securities markets
may also be less liquid, more volatile and less subject to government
supervision than in the U.S.
Emerging Markets: The risks of investing in foreign securities may be
intensified in the case of investment in emerging markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than those of
comparable domestic issuers. Investment in emerging markets may be subject to
delays in settlement, resulting in periods when a portion of the Portfolio's
assets is uninvested and no return is earned thereon. Certain markets may
require payment for securities before delivery, and in such markets the
Portfolio bears the risk that the securities will not be delivered and that the
payment will not be returned.
Options, Futures Contracts and Forward Contracts: These types of contracts
entered into for other than hedging purposes have a greater degree of risk
than entering into such contracts for hedging purposes. For example,
transactions may result in losses for the Portfolio which are not offset by
gains in other portfolio positions, thereby reducing gross income.
PORTFOLIO TURNOVER
Although the Portfolios intend to invest in securities selected primarily for
long-term capital growth and do not intend to place emphasis on obtaining
short-term trading profits, such short-term trading may occur. A high turnover
rate should not be interpreted as indicating a variation from the stated
investment policy. It will normally increase a Portfolio's brokerage costs.
The Portfolio turnover rate is anticipated to be approximately 85% for the MFS
Research Portfolio and from 100%-200% for the MFS Mid Cap Growth Portfolio.
PORTFOLIO EXPENSES
Pursuant to an amendment to a Management Agreement dated May 1, 1993 between
the Series Trust and the Travelers, 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 a percentage of each Portfolio's average net
assets for any fiscal year. For the MFS Research Portfolio and the MFS Mid Cap
Growth Portfolio, the amount equals, for each Portfolio, 1.00%. There is,
however, no guarantee of fund expense reimbursements by Travelers.
For their first year, the MFS Research Portfolio's expenses and the MFS Mid Cap
Growth Portfolio's expenses are anticipated to be .20% each, not including
management fees. The subadvisory fee, as described below, is paid by the
Investment Adviser.
INVESTMENT ADVISER AND SUBADVISER
The investment adviser to the Portfolios is Travelers Asset Management
International Corporation (TAMIC). TAMIC is a registered investment adviser
that has provided investment advisory services since its incorporation in 1978.
Its principal offices are located at One Tower Square, Hartford, Connecticut,
and it is an indirect wholly owned subsidiary of Travelers Group Inc., a
financial services holding company. TAMIC also acts as investment adviser or
subadviser for other investment companies used to fund variable products, as
well as for individual and pooled pension and profit-sharing accounts, and for
domestic and offshore insurance companies affiliated with The Travelers
Insurance Company.
For its investment advisory services for the MFS Research Portfolio, TAMIC
receives a fee, equal, on an annual basis, to 0.80% of the Portfolio's average
daily net assets.
For its investment advisory services for the MFS Mid Cap Growth Portfolio,
TAMIC receives a fee, equal, on an annual basis, to 0.80% of the Portfolio's
average daily net assets.
The subadviser to the Portfolios is Massachusetts Financial Services Company, a
registered investment adviser that, along with its predecessor organizations
has provided investment advisory services since 1924. Its principal offices are
located at 500 Boylston St., Boston, Massachusetts. It is a subsidiary of Sun
Life of Canada (U.S.), a wholly owned subsidiary of Sun Life Assurance Company
of Canada. MFS also acts as investment adviser or subadviser for other
investment companies used to fund variable products. For its investment
subadvisory services, MFS receives a fee from TAMIC equal, on an annual basis,
to 0.375% of the MFS Research Portfolio's average daily net assets, and 0.375%
of the MFS Mid Cap Growth Portfolio's average daily net assets.
Investment Professionals
The investment professional responsible for the daily operations of the MFS Mid
Cap Growth Portfolio is Mark Regan. Mr. Regan is a Vice President of MFS and
has been employed by MFS as a portfolio manager since 1989.
MFS Research Portfolio is managed by a committee of various equity research
analysts employed by MFS.
7
L-12688-1 3/98
