<PAGE> 1
FILE NOS: 33-43628
811-6465
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE TRAVELERS SERIES TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio
Disciplined Mid Cap Stock Portfolio
Disciplined Small Cap Stock Portfolio
Equity Income Portfolio
Federated High Yield Portfolio
Federated Stock Portfolio
Jurika & Voyles Core Equity Portfolio
Large Cap Portfolio
Lazard International Stock Portfolio
MFS Emerging Growth Portfolio
MFSM Mid Cap Growth Portfolio
MFS Research Portfolio
NWQ Large Cap Portfolio
Social Awareness Stock Portfolio
Strategic Stock Portfolio
Travelers Quality Bond Portfolio
U.S. Government Securities Portfolio
Utilities Portfolio
Zero Coupon Bond Fund Portfolios (Series 2000 and 2005)
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
May 5, 1999
To the Shareholders:
Notice is hereby given that a Special Shareholder Meeting of Capital
Appreciation Fund (the "Fund") will be held at its office at One Tower Square,
Hartford, Connecticut on Friday, April 30, 1999 at 9:00 a.m. for the following
purposes:
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
Item 1.A. Proposal to Amend the Fundamental Investment Policy on
Issuer Diversification
Item 1.B. Proposal to Amend the Fundamental Investment Policy on
Industry Concentration
Item 1.C. Proposal to Amend the Fundamental Investment Policy on
Borrowing
Item 1.D. Proposal to Amend the Fundamental Investment Policy on
Real Estate
Item 1.E. Proposal to Amend the Fundamental Investment Policy on
Loans
Item 1.F. Proposal to Amend the Fundamental Investment Policy on
Commodities
Item 1.G. Proposal to Amend the Fundamental Investment Policy on
Underwriting
Item 1.H. Proposal to Amend the Fundamental Investment Policy on
Senior Securities
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE CERTAIN
FUNDS'FUNDAMENTAL INVESTMENT POLICIES
Item 2.A. Proposal to Redesignate and Amend the Fundamental Investment
Policy on Liquidity
Item 2.B. Proposal to Redesignate and Amend the Fundamental Investment
Policy on Investments to Exercise Control
Item 2.C. Proposal to Redesignate and Amend the Fundamental Investment
Policy on Short Sales
Item 2.D. Proposal to Redesignate and Amend the Fundamental Investment
Policy on Purchasing on Margin
Item 2.E. Proposal to Redesignate and Amend the Fundamental Investment
Policy on Pledging Assets
Item 2.F. Proposal to Redesignate and Amend the Fundamental Investment
Policy on Oil, Gas and Minerals
Item 2.G. Proposal to Redesignate and Amend the Fundamental Investment
Policy on "Unseasoned Issuers"
Item 2.H. Proposal to Eliminate the Fundamental Investment Policies on
Puts and Calls
Item 2.I. Proposal to Eliminate the Fundamental Investment Policy on
Investing in Warrants
Item 2.J. Proposal to Redesignate and Amend the Fundamental Investment
Policy on Investing in the Securities of Other Investment Companies
<PAGE> 3
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO PERMIT
THE FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR MORE
INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S ADVISORY
AGREEMENT
4. To act on any and all such other business as may properly come before
the meeting.
The close of business on March 1, 1999 has been fixed as the record date for
the determination of beneficial Shareholders entitled to notice of and to vote
at said meeting.
By order of the Board of Trustees.
/s/ ERNEST J. WRIGHT, SECRETARY
Please complete and return the enclosed proxy card as soon as possible in the
post-paid envelope provided. Your prompt response is appreciated.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN
<PAGE> 4
CONVERTIBLE BOND PORTFOLIO
DISCIPLINED MID CAP STOCK PORTFOLIO
DISCIPLINED SMALL CAP STOCK PORTFOLIO
EQUITY INCOME PORTFOLIO
FEDERATED HIGH YIELD PORTFOLIO
FEDERATED STOCK PORTFOLIO
JURIKA & VOYLES CORE EQUITY PORTFOLIO
LARGE CAP PORTFOLIO
LAZARD INTERNATIONAL STOCK PORTFOLIO
MFS EMERGING GROWTH PORTFOLIO
MFS MID CAP GROWTH PORTFOLIO
MFS RESEARCH PORTFOLIO
NWQ LARGE CAP PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
STRATEGIC STOCK PORTFOLIO
TRAVELERS QUALITY BOND PORTFOLIO
U.S. GOVERNMENT SECURITIES PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS (SERIES 2000 AND 2005)
OF
THE TRAVELERS SERIES TRUST
Meeting of Shareholders
April 30, 1999
PROXY STATEMENT
THE BOARD OF TRUSTEES OF THE TRAVELERS SERIES TRUST (THE "TRUST")
SOLICITS YOUR PROXY ON BEHALF OF: Convertible Bond Portfolio ("CB"), Disciplined
Mid Cap Stock Portfolio ("DMCS"), Disciplined Small Cap Stock Portfolio
("DSCS"), Equity Income Portfolio ("EI"), Federated High Yield Portfolio
("FHY"), Federated Stock Portfolio ("FS"), Jurika & Voyles Core Equity Portfolio
("JVCE"), Large Cap ("LC"), Lazard International Stock Portfolio ("LIS"), MFS
Emerging Growth Portfolio ("MFSEG"), MFS Mid Cap Growth Portfolio ("MFSMCG"),
MFS Research Portfolio ("MFSR"), NWQ Large Cap Portfolio ("NWQLC"), Social
Awareness Stock Portfolio ("SAS"), Strategic Stock Portfolio ("SS"), Travelers
Quality Bond Portfolio ("TQB"), U.S. Government Securities Portfolio ("USGS"),
Utilities Portfolio ("Util"), Zero Coupon Bond Fund Portfolio (Series 2000)
("ZCBF 2000"), and Zero Coupon Bond Fund Portfolio (Series 2005) ("ZCBF 2005"),
(each, a "Fund", and collectively, the "Funds"). This proxy statement is being
furnished in connection with the solicitation of voting instructions, as further
described below, from owners of variable contracts ("beneficial owners") for use
at a special shareholders meeting of each Fund to be held at the Trust's office,
One Tower Square, Hartford, Connecticut, at 9:00 a.m. on April 30, 1999, and any
adjournments (the "Meeting"). This proxy material will be mailed to beneficial
owners of Fund shares on or about March 5, 1999.
GENERAL
The purpose of the Meeting generally is to adopt standard
fundamental investment policies for all of the Funds. The specific purposes for
each Fund are set forth below and in the accompanying Notice. To adopt the
proposed standard fundamental investment policies, a Fund may need to adopt a
fundamental policy or to amend, redesignate, or eliminate some or all of its
current fundamental investment policies. The following chart indicates the
beneficial owners who are entitled to provide instructions on each proposal:
<PAGE> 5
SUMMARY OF VOTING ON PROPOSAL ITEMS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
FUND 1.A 1.B 1.C 1.D 1.E 1.F 1.G 1.H 2.A 2.B 2.C 2.D 2.E 2.F 2.G 2.H 2.I 2.J 3.
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CB X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
DMCS X X X X X X X X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
DSCS X X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
EI X
----------------------------------------------------------------------------------------------------------------------------
FHY X X X X X
----------------------------------------------------------------------------------------------------------------------------
FS X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
JVCE X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
LC X
----------------------------------------------------------------------------------------------------------------------------
LIS X X X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
MFSEG X X X
----------------------------------------------------------------------------------------------------------------------------
MFSMCG X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
MFSR X X X X X X X X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
NWQLC X X X X X X
----------------------------------------------------------------------------------------------------------------------------
SAS X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
SS X X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
TQB X
----------------------------------------------------------------------------------------------------------------------------
USGS X X X X X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
UTIL X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
ZCBF 2000 X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
ZCBF 2005 X X X X X X X X X
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
VOTE BY PROXY
An instruction card is enclosed for use at the Meeting. You may revoke
the instruction card at any time before the vote is taken at the Meeting by
sending a written notice of revocation to the Trust's Secretary or by appearing
in person to provide instructions at the Meeting. All instruction cards that are
properly executed, received in time, and not so revoked will be voted at the
Meeting in accordance with the instructions on them. Instruction cards that are
properly executed but provide no specific instructions will be voted in favor of
the Proposals.
COST OF SOLICITATION
Each Fund will pay a portion of the Meeting costs, including the cost of
proxy solicitation, allocated on the basis of each Fund's relative net asset
value. Under the Trust's Management Agreement dated May 1, 1993 (and subsequent
amendments), The Travelers Insurance Company ("Travelers Insurance") reimburses
each Fund for the amount by which its aggregate annual expenses (including the
cost, among other things, of printing, preparing and mailing special meeting
notices and proxy solicitation materials) exceeds a certain percentage of each
Fund's average net assets for any year during
2
<PAGE> 6
which the Management Agreement remains in effect (see Appendix A for a list of
the percentages). Travelers Insurance is located at One Tower Square, Hartford,
Connecticut 06183. Travelers Insurance has engaged the services of Management
Information Services ("MIS") to assist in the solicitation of proxies. The
aggregate cost of soliciting the Funds' beneficial owners is expected to be
approximately [$______].
In addition to the solicitation of proxies by mail, the Trust's trustees,
officers, and/or employees of a Fund's adviser may solicit proxies in person or
by telephone. The adviser of each Fund (except for SAS and Util) is Travelers
Asset Management International Corporation ("TAMIC"), and the investment adviser
for SAS and Util is Mutual Management Corp. ("MMC") (formerly, Smith Barney
Mutual Funds Management, Inc.) (TAMIC and MMC are each, an "adviser", and
together, the "advisers.")
SHAREHOLDERS AND THE VOTE
Shareholders may vote only on matters that concern the Fund or Funds in
which they hold shares. Shareholders are entitled to one vote for each full
share owned and fractional votes for fractional shares. Only shareholders of
record of each Fund at the close of business on March 1, 1999 (the record date)
will be entitled to notice of and to vote at the Meeting.
The number of full and fractional votes for which a beneficial owner is
entitled to provide voting instructions is set forth on the enclosed
instructions card(s). Shares owned by two or more persons (whether as joint
tenants, co-fiduciaries, or otherwise) will be voted as follows, unless a
written instrument or court order providing to the contrary has been filed with
the Trust: (1) if only one person votes, that vote will bind all; (2) if more
than one person votes, the vote of the majority will bind all; and (3) if more
than one person votes and the vote is evenly divided, the vote will be cast
proportionately.
As of the record date, separate accounts that fund variable annuity
contracts and variable life insurance contracts issued by Travelers Insurance
and The Travelers Life and Annuity Company (collectively, with their affiliates,
"The Travelers") were the record owners of all of the Funds' shares. As of that
date, no single shareholder or group, other than The Travelers, beneficially
owned more than 5% of a Fund's outstanding shares.
This proxy material is being mailed to owners of, or participants in,
variable annuities and variable life insurance contracts who had allocated
amounts to one or more Fund through certain separate accounts as of the record
date (namely, the beneficial owners of the shares). The beneficial owners
instruct The Travelers how to vote the shares in which the beneficial owners
have a beneficial interest. The Travelers will vote all shares held by it as
instructed by the contract owners or participants. Further, The Travelers
intends to vote all shares for which no instruction cards are received in the
same proportion as the shares for which instructions are received.
To hold the Meeting with respect to a Fund, a majority of each Fund's
shares entitled to vote must be present in person or by proxy at the Meeting. In
the event that a quorum is present but sufficient votes in favor of one or more
items of a Proposal are not received by the Meeting time, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment requires the affirmative vote of a
majority of the shares present in person or by proxy at the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
if they determine that such adjournment and additional solicitation is
reasonable and in the interests of the particular Fund's shareholders. Each
Fund's shareholders vote separately with respect to each item of a Proposal,
pursuant to the Investment Company Act of 1940, as amended (the "1940 Act") and
the Declaration of Trust.
VOTE REQUIRED: APPROVAL OF EACH ITEM OF EACH PROPOSAL FOR A FUND REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF THE LESSER OF: (A) 67% OF THE FUND'S SHARES
PRESENT AT THE MEETING IN PERSON OR BY PROXY, OR (B) A MAJORITY OF THE FUND'S
OUTSTANDING SHARES.
The Trust's Board of Trustees (the "Board") has approved and recommends
that Fund shareholders approve the following Proposals to amend, redesignate
(and amend as applicable), or eliminate each Fund's current investment policies.
Proposal items that are approved at the Meeting will become effective on May 1,
1999. Proposal items that are not approved at the Meeting will not be
implemented.
3
<PAGE> 7
THE PROPOSALS GENERALLY
For each item of the Proposals, the relevant current investment policy is
described generally below. Each proposed fundamental or operating
(nonfundamental) investment policy also is specifically discussed below. Items
designated as "fundamental" may be changed only with shareholder approval as
described above. The effect of a "FOR" vote on each item of the Proposals is
detailed; specifically, whether the current policy will be: (1) amended, (2)
redesignated (and amended as applicable), or (3) eliminated entirely.
The Board may adopt additional or supplemental fundamental investment
policies for a Fund without shareholder approval if required by federal
regulators or if the Board determines the policies to be necessary or desirable.
The proposed standard investment policies meet all of the requirements of the
1940 Act, and no other fundamental investment policies in addition to the
proposed policies are presently required by the 1940 Act. A detailed listing of
the proposed fundamental and operating (nonfundamental) policies as well as each
Fund's current fundamental policies are provided in Appendices B and C,
respectively, for your reference.
The reasons for the Proposals are: (1) to conform the Funds' fundamental
policies to ones that are expected to become standard for all mutual funds
managed by The Travelers, (2) to simplify and modernize the policies that are
required to be fundamental by the 1940 Act, and (3) to eliminate as fundamental
any policies that are not required to be fundamental by that Act. The Board
believes that standard policies will assist the Funds, The Travelers and the
advisers and subadvisers in monitoring compliance with the various policies to
which the Funds are subject. By reducing to a minimum those policies that can be
changed only with shareholder approval, the Funds will be able to minimize costs
and delay associated with holding frequent shareholders' meetings. The Board
proposes to amend certain of the Funds' investment policies, as described below,
in order to render clearer and simpler statements of the Funds' fundamental
policies. Finally, the Board also believes that The Travelers', the advisers'
and subadvisers' ability to manage the Funds' assets efficiently in a changing
investment environment should be enhanced and that investment management
opportunities should be increased by these changes. The Board may approve or
revise nonfundamental investment policies without seeking approval from
shareholders.
The Board does not anticipate that amending, redesignating, or
eliminating a Fund's current fundamental investment policies generally will
result in a material change in the level of risk associated with an investment
in the Fund. If the proposed changes are approved by a Fund's shareholders at
the Meeting, the registration statement (including each Fund's prospectus and
statement of additional information) will be revised to reflect the changes and
reflect any modified investment policies. In the event that a proposed change is
not approved by a Fund's shareholders, the Fund will retain the relevant current
fundamental policy.
In the following discussion, "the Fund" refers to each Fund.
IN ALL THREE PROPOSALS, FUND POLICIES THAT ARE DESIGNATED AS FUNDAMENTAL
MAY NOT BE CHANGED WITHOUT SHAREHOLDER APPROVAL. OPERATING ( NONFUNDAMENTAL)
POLICIES MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER APPROVAL.
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
ITEM 1.A. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
ISSUER DIVERSIFICATION
The Board has proposed amending the Funds' fundamental investment
policies on issuer diversification to conform such policies to the requirements
of Section 5(b)(1) of the 1940 Act and to permit the Funds greater flexibility
to invest in securities that the advisers consider to present attractive
investment opportunities, including possible conversion to master-feeder or
fund-of-funds structures. The 1940 Act requires that a "diversified" mutual fund
adopt a fundamental investment policy with regard to diversification. The Funds
(except MFSMCG) are "diversified" within the meaning of the 1940 Act. This means
that by law, each Fund must not, with respect to 75% of its total assets, invest
more than 5% of its total assets in the securities of any one issuer or acquire
more than 10% of the outstanding voting securities of any one issuer. These
policies apply only at the time of investment, and a Fund may invest up to 25%
of its total assets without regard to such policies. In addition, these policies
do not apply to Fund holdings of or investments in cash, cash items, U.S.
government securities or securities of other investment companies.
4
<PAGE> 8
Currently, many Funds have policies that are more restrictive than is
required by the 1940 Act. Many Funds apply the diversification policies to 100%
of their assets rather than the 75% required by law. The proposed investment
policy would conform the Funds' diversification policy with the law and among
each other. It should be understood that the proposed amendment, by permitting a
Fund to invest a greater percentage of its assets with a single issuer, could
increase the risk to the Fund in the event of adverse developments affecting the
securities of such issuer.
The proposed fundamental investment policy on diversification is set
forth below in italics followed by a summary of the Funds' current fundamental
investment policies on issuer diversification. The Board believes it is in the
best interests of each Fund and its shareholders and beneficial owners to adopt
the proposed fundamental investment policy in lieu of its current fundamental
diversification policies. Note that the shareholders of DSCS, FHY, LIS, MFSEG,
MFSMCG, and SS will NOT be voting on changes to fundamental investment policies
regarding diversification. Note also that MFSMCG has a nonfundamental investment
policy of "non-diversification" as that term is defined in the 1940 Act.
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND (EXCEPT MFS MID CAP GROWTH
PORTFOLIO) MAY NOT] WITH RESPECT TO 75% OF ITS ASSETS, PURCHASE A SECURITY OTHER
THAN A SECURITY ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT, ITS AGENCIES,
INSTRUMENTALITIES, OR GOVERNMENT-SPONSORED ENTERPRISES OR A SECURITY OF AN
INVESTMENT COMPANY IF, AS A RESULT: (1) MORE THAN 5% OF THE FUND'S TOTAL ASSETS
WOULD BE INVESTED IN THE SECURITIES OF A SINGLE ISSUER, OR (2) THE FUND WOULD
OWN MORE THAN 10% OF THE OUTSTANDING VOTING SECURITIES OF ANY SINGLE ISSUER.
CURRENT FUNDAMENTAL POLICIES: For CB, JVCE, and NWQLC, adoption of the
proposed fundamental diversification policy should not result in any material
change in the Funds' diversification policies. Each of these Funds is
"diversified" under the 1940 Act and currently must comply with the restrictions
described in the proposed investment policy. The proposed policy would merely
conform the Funds' written policy among the other Funds and the requirements of
the 1940 Act. CB and JVCE would adopt language regarding Fund ownership of
voting securities of an issuer (which their current policy does not include).
NWQLC would merely conform the language of its already existing policy regarding
such securities.
The proposed policy would change the stated diversification policies for
DMCS, FS, MFSR, SAS, USGS, Util, ZCBF 2000, and ZCBF 2005. For each of these
Funds, approval of the proposed policy would change the percentage of the Fund's
assets to which the diversification policies apply from 100% to 75%. Although
each Fund currently applies part or all of the diversification policies to 100%
of its assets, only 75% is required by the 1940 Act. For FS and SAS, the
percentage to which the securities-of-a-single-issuer policy applies would be
changed from 100% to 75%. For Util, ZCBF 2000, and ZCBF policies, the percentage
to which the voting-securities restriction applies would be changed from 100% to
75%. For DMCS, MFSR and USGS, the percentage to which both the
securities-of-a-single-issuer and voting-securities policies apply would be
changed from 100% to 75%. In addition, approval of the proposed policy would
mean adding the voting securities policy for DMCS, MFSR and USCS.
ITEM 1.B. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
INDUSTRY CONCENTRATION
The 1940 Act requires that a mutual fund adopt a fundamental policy
whether or not the fund may invest more than 25% of its assets (concentration
policy) in the securities of issuers in any one industry. Certain funds have a
policy not to permit concentration generally. The concentration policy need not
apply to investments in U.S. government securities.
The proposed fundamental investment policy on industry concentration is
set forth below in italics followed by a summary of the Funds' current
fundamental industry concentration policies. The Board believes it is in the
best interests of each Fund and its shareholders and beneficial owners to adopt
the proposed fundamental investment policy in lieu of its current fundamental
industry concentration policy. Note that the shareholders of SAS and Util will
NOT be voting on changes to a fundamental industry concentration policy. Note
also that only Util has a fundamental policy requiring a concentration (in
securities of issuers in the utilities industry).
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND (EXCEPT UTILITIES PORTFOLIO)
MAY NOT] PURCHASE A SECURITY IF, AS A RESULT, MORE THAN 25% OF THE FUND'S TOTAL
ASSETS WOULD BE INVESTED IN SECURITIES OF ISSUERS CONDUCTING THEIR PRINCIPAL
BUSINESS ACTIVITIES IN THE SAME INDUSTRY. FOR PURPOSES OF THIS POLICY, THERE IS
NO LIMIT ON: (1) INVESTMENTS IN U. S. GOVERNMENT SECURITIES, IN REPURCHASE
AGREEMENTS COVERING U. S. GOVERNMENT SECURITIES, IN SECURITIES ISSUED BY THE
STATES, TERRITORIES OR POSSESSIONS OF THE UNITED STATES ("MUNICIPAL SECURITIES")
OR IN FOREIGN GOVERNMENT SECURITIES; OR (2) INVESTMENT IN ISSUERS DOMICILED IN A
SINGLE JURISDICTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY, TO THE EXTENT
5
<PAGE> 9
PERMITTED BY THE 1940 ACT, THE FUND MAY INVEST IN ONE OR MORE INVESTMENT
COMPANIES; PROVIDED THAT, EXCEPT TO THE EXTENT THAT IT INVESTS IN OTHER
INVESTMENT COMPANIES PURSUANT TO SECTION 12(d)(1)(A) OF THE 1940 ACT, THE FUND
TREATS THE ASSETS OF THE INVESTMENT COMPANIES IN WHICH IT INVESTS AS ITS OWN FOR
PURPOSES OF THIS POLICY.
CURRENT FUNDAMENTAL POLICIES: Each of CB, DMCS, DSCS, JVCE, LIS, MFSEG,
MFSMCG, MFSR, NWQLC, SS, USGS, ZCBF 2000, and ZCBF 2005 currently has a
fundamental policy prohibiting concentration in any one industry. The proposed
standard fundamental policy on industry concentration would modify the
investment policy for these Funds. Specifically, for DMCS, DSCS, MFSEG, MFSMCG,
MFSR, NWQLC and SS, the proposed policy would exempt municipal securities,
foreign government securities, and securities in other investment companies from
the current prohibition. For CB, JVCE, LIS and USGS, the proposed policy would
exempt securities in other investment companies from the current prohibition.
Additionally, the proposed policy would establish a percentage for concentration
for ZCBF 2000 and ZCBF 2005 at 25% (neither currently specifies a percentage).
ITEM 1.C. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
BORROWING
The 1940 Act requires that a mutual fund adopt a fundamental policy on
borrowing. The 1940 Act prohibits a fund from issuing any senior security
(including debt), except that it may borrow from banks in an amount not
exceeding one third of its total assets.
Because the Funds may occasionally need to borrow money to meet
substantial shareholder redemption or exchange requests when available cash is
not sufficient to satisfy these needs, the Board has proposed amending the
Funds' current policy to permit the Funds greater flexibility to engage in
borrowing transactions. Much of what is included in the Funds' current
fundamental borrowing policies is not required by applicable law. The proposed
fundamental investment policy would permit borrowing up to the maximum amount
allowed by the 1940 Act and related Security and Exchange Commission ("SEC")
interpretations. Also, the proposed policy would conform the Funds' policies on
borrowing among the Funds and with other funds managed by the advisers. The
Board believes that standard policies will assist the Funds and their advisers
in monitoring compliance with the various investment policies to which the Funds
are subject.
The proposed fundamental investment policy on borrowing is set forth
below in italics followed by a summary of the Funds' current fundamental
borrowing policies. The Board believes it is in the best interests of each Fund
and its shareholders and beneficial owners to adopt the proposed fundamental
investment policy in lieu of its current fundamental investment policy on
borrowing. Note that the shareholders of MFSEG will NOT be voting on changes to
a fundamental investment borrowing policy.
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND MAY NOT] BORROW MONEY IF, AS
A RESULT, OUTSTANDING BORROWINGS WOULD EXCEED AN AMOUNT EQUAL TO ONE THIRD OF
THE FUND'S TOTAL ASSETS.
CURRENT FUNDAMENTAL POLICIES: For each of LIS, MFSR, NWQLC, SAS, USGS,
Util, ZCBF 2000, and ZCBF 2005, the proposed fundamental investment policy could
materially change its borrowing policy by increasing to one third the percentage
of the Fund's assets that may be borrowed. Currently, SAS and USGS are
restricted to borrowing 5% and 10% of their gross assets, respectively, and 1/3
of their net assets. MFSR currently may borrow up to 5% of its gross assets.
NWQLC, ZCBF 2000, and ZCBF 2005 may each borrow no more than 10% of its total
assets, and Util, ZCBF 2000, and ZCBF 2005 currently are each restricted to
borrowing 20% of its total assets. Although JVCE currently may borrow up to
33-1/3 (one third) of its gross assets, it and LIS, MFSR, NWQLC, SAS, USGS,
Util, ZCBF 2000, and ZCBF 2005 are prohibited from making any additional
investments when borrowing exceeds 5% of total assets. Additionally, in the case
of all of these Funds and FHY (which may currently borrow one third of its net
asset value "under certain purposes"), approval of the proposed restriction
would eliminate the restriction of borrowing only for emergency, temporary
and/or "certain purposes".
For CB, DMCS, DSCS, FS, JVCE, MFSMCG, and SS, the proposed fundamental
investment policy would change their borrowing policies by allowing the Funds to
borrow for purposes other than "emergency" or "temporary" or "under certain
purposes". None of these "purposes" is defined, however, nor is a Fund required
to limit itself to these "purposes" in accordance with the 1940 Act and related
rules and SEC interpretations. Approval of the proposed policy would permit
clarification of each Fund's policy as well as permit it to engage in borrowing
in a manner consistent with current law and the SEC's interpretive positions.
Further, approval of the proposed policy would eliminate the prohibition on JVCE
from making any additional investments when its borrowing exceeds 5% of its
total assets.
6
<PAGE> 10
ITEM 1.D. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
REAL ESTATE
The 1940 Act requires that a mutual fund adopt a fundamental policy on
acquiring interests in real estate. The Board has proposed that the Funds'
current fundamental investment policies on investments in real estate be amended
so that they are more clear and uniform.
The proposed fundamental real estate policy is not expected to affect the
Funds' investment programs or instruments in which they invest. The Funds will
not purchase or sell real estate. The Board believes that the proposed real
estate policy would clarify that a Fund is permitted to hold and sell real
estate only in the event that a Fund acquired the real estate as a result of the
ownership of securities or other instruments. Further, the proposed amendment
would clarify that the Funds may purchase all types of securities secured by
real estate, or interests therein, or issued by companies that invest in real
estate.
The proposed fundamental investment policy on real estate is set
forth below in italics followed by a summary of the Funds' current fundamental
real estate investment policies. The Board believes it is in the best interests
of each Fund and its shareholders and beneficial owners to adopt the proposed
fundamental investment policy in lieu of its current fundamental real estate
policy. Note that the shareholders of FHY, NWQLC, Util, ZCBF 2000, and ZCBF 2005
will NOT be voting on changes to a fundamental real estate policy.
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND MAY NOT] PURCHASE OR
SELL REAL ESTATE UNLESS ACQUIRED AS A RESULT OF OWNERSHIP OF SECURITIES OR OTHER
INSTRUMENTS (BUT THIS SHALL NOT PREVENT THE FUND FROM INVESTING IN SECURITIES OR
OTHER INSTRUMENTS BACKED BY REAL ESTATE OR IN SECURITIES OF COMPANIES ENGAGED IN
THE REAL ESTATE BUSINESS).
CURRENT FUNDAMENTAL POLICIES: For CB, DMCS, DSCS, JVCE, MFSMCG,
MFSR, SS, and USGS, approval of the proposed fundamental investment policy
primarily would conform the language of their current real estate policies with
the standard policy. Similarly, for LIS, MFSEG, and FS, approval of the proposed
policy primarily would clarify what is considered "real estate" or an "interest
in real estate". The proposed policy could potentially have a material effect on
SAS. SAS's current policy allows it to purchase securities representing
interests in real estate so long as there is an established market for those
securities, while the proposed policy would not restrict SAS to those for which
there is an established market. Further, the proposed policy would ensure that
no Fund would be in violation of a fundamental investment policy in the event
that it were to acquire real estate as a result of its ownership of securities
or other instruments.
ITEM 1.E. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
LOANS
The 1940 Act requires that a mutual fund adopt a fundamental policy on
loans. Many of the Funds' current fundamental loan policies prohibit the Funds
from lending money or other assets other than through the purchase of publicly
distributed bonds or other corporate debt securities.
The Board believes that securities lending and investments in repurchase
agreements and debt instruments other than publicly distributed bonds could be
potentially attractive investments for the Funds. The Board proposes to amend
the Funds' current fundamental loan policies to permit the Funds to engage in
securities lending to the extent permitted by applicable law and to enter into
repurchase agreements as well as purchase debt obligations. The proposed policy
generally would incorporate the Funds' current investment policies while
restating them more succinctly. Further, the proposed policy would allow each
Fund to make loans to the extent permitted by law, up to one third of the Fund's
total assets.
The proposed fundamental investment policy on loans is set forth below in
italics followed by a summary of the Funds' current fundamental loan policies.
The Board believes it is in the best interests of each Fund and its shareholders
and beneficial owners to adopt the proposed fundamental loan policy in lieu of
its current fundamental loan policy. Note that the shareholders of FHY, FS, and
MFSEG will NOT be voting on changes to a fundamental investment policy regarding
loans.
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND MAY NOT] MAKE LOANS TO OTHER
PARTIES IF, AS A RESULT, MORE THAN ONE THIRD OF ITS TOTAL ASSETS WOULD BE LOANED
TO OTHER PARTIES. FOR PURPOSES OF THIS LIMITATION, ENTERING INTO REPURCHASE
AGREEMENTS, LENDING SECURITIES, AND ACQUIRING ANY DEBT SECURITY ARE NOT DEEMED
TO BE THE MAKING OF LOANS.
7
<PAGE> 11
CURRENT FUNDAMENTAL POLICIES: For CB, and JVCE, approval of the proposed
fundamental investment policy would not cause any material change in the Funds'
policies regarding loans. The proposed policy would merely conform the language
while making no substantive changes. For DMCS, DSCS, LIS, MFSMCG, MFSR, NWQLC,
SS, USGS, Util, ZCBF 2000, and ZCBF 2005, the proposed policy would have the
effect of allowing each Fund to make loans up to one third of its total asset
value, which may be a material change in the amount of assets that may be
loaned.
ITEM 1.F. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
COMMODITIES
The 1940 Act requires that a mutual fund adopt a fundamental policy on
investments in commodities. The Board has proposed amendments to the Funds'
current fundamental investment policies to provide the Funds with greater
flexibility in buying and selling futures contracts and options on futures
contracts. The Funds' current investment policies generally prohibit investment
in commodities, although the majority permit investing in specific types of
securities (i.e. futures contracts and options on futures contracts) for hedging
purposes. The restrictive provisions of the Funds' current fundamental
commodities policies are not required by law. The Board believes the Funds'
advisers should have greater flexibility to enter into futures contracts and
related options consistent with each Fund's investment objective and program, as
market and regulatory developments require and permit, without the necessity of
seeking further shareholder approval. The new policy would also conform each
Fund's policy on commodities to one that is expected to become standard for the
advisers' funds. The Board believes that standard policies will assist the Funds
and their advisers in monitoring compliance with the various investment policies
to which the Funds are subject.
The proposed fundamental investment policy on commodities is set forth
below in italics followed by a summary of the Funds' current fundamental
commodities policies. The Board believes it is in the best interests of each
Fund and its shareholders and beneficial owners to adopt the proposed
fundamental investment policy on commodities in lieu of its current fundamental
commodities policy. Note that the shareholders of FHY, FS, LIS, MFSEG, and NWQLC
will NOT be voting on changes to a fundamental commodities policy.
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND MAY NOT] PURCHASE OR SELL
PHYSICAL COMMODITIES UNLESS ACQUIRED AS A RESULT OF OWNERSHIP OF SECURITIES OR
OTHER INSTRUMENTS (BUT THIS SHALL NOT PREVENT THE FUND FROM PURCHASING OR
SELLING OPTIONS, AND FUTURES CONTRACTS AND OPTIONS ON FUTURES OR FROM INVESTING
IN SECURITIES OR OTHER INSTRUMENTS BACKED BY PHYSICAL COMMODITIES).
CURRENT FUNDAMENTAL POLICIES: The proposed fundamental policy would
change the policies of all of the Funds by allowing them to own physical
commodities if such commodities happen to be acquired through ownership of
securities or other instruments and allowing them to invest in securities backed
by physical commodities. The proposed policy would allow CB and JVCE to invest
in options, futures contracts and options on futures and would allow DMCS, DSCS,
MFSR, SAS, SS and USGS to invest in these contracts without limiting the Fund's
investments to a specific purpose. Approval of the proposed policy would cause
no material change in the policy of MFSMCG.
ITEM 1.G. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
UNDERWRITING
The 1940 Act requires that a mutual fund adopt a fundamental investment
policy on underwriting securities of other issuers. The Funds' current
fundamental investment policies on underwriting provide that the Funds will not
engage in underwriting the securities of other issuers. The Board proposes to
restate the Funds' current policies on underwriting to make them more succinct
and uniform. The proposed policy, which does not represent a material change in
any of the Funds' current investment policies, would prohibit the Funds from
underwriting the securities of other issuers (which is not a part of the normal
activities of a mutual fund). The proposed policy also would clarify that sales
of portfolio securities by a Fund that may be deemed to be an underwriting are
not prohibited.
The proposed fundamental investment policy on underwriting is set forth
below in italics followed by a summary of the Funds' current fundamental
underwriting policies. The Board believes it is in the best interests of each
Fund and its shareholders and beneficial owners to adopt the proposed
fundamental investment policy on underwriting in lieu of its current fundamental
underwriting policy. Note that the shareholders of CB, FHY, MFSEG, NWQLC, Util,
ZCBF 2000, and ZCBF 2005 will NOT be voting on changes to a fundamental
underwriting policy.
8
<PAGE> 12
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND MAY NOT] BE AN UNDERWRITER
(AS THAT TERM IS DEFINED IN THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT")) OF SECURITIES ISSUED BY OTHER PERSONS EXCEPT, TO THE EXTENT THAT IN
CONNECTION WITH THE DISPOSITION OF ITS ASSETS, THE FUND MAY BE DEEMED TO BE AN
UNDERWRITER.
CURRENT FUNDAMENTAL POLICIES: The proposed fundamental investment policy
on underwriting does not represent a material change from the current policies
for DMCS, DSCS, FS, JVCE, LIS, MFSMCG, MFSR, SAS, SS and USGS. Generally it
conforms the language of the existing policies to the new uniform policy
regarding underwriting. However, for FS, LIS and MFSEG, the proposed policy
would add language clarifying that activities involved in the disposition of
assets for which the Fund could technically be considered an underwriter are not
considered underwriting for purposes of the policy.
ITEM 1.H. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES ON
SENIOR SECURITIES
The 1940 Act restricts the ability of a mutual fund to issue "senior
securities" (as defined in that Act) and requires that a mutual fund adopt a
fundamental policy with respect to the issuance of such securities. Although the
definition of a "senior security" involves somewhat complex statutory and
regulatory concepts, a senior security is generally thought of as a bond or
other class of security preferred over shares of a Fund with respect to the
Fund's assets or earnings. A senior security generally does not include
temporary or emergency borrowings by a Fund (which might occur to meet
shareholder redemption requests) in accordance with federal law and the Fund's
investment policies. Various investment techniques that obligate a Fund to pay
money at a future date (e.g., the purchase of securities for settlement on a
date that is longer than normal) occasionally raise questions as to whether a
"senior security" may be created. The Funds use such techniques only in
accordance with applicable regulatory requirements under the 1940 Act.
The Funds' current fundamental policies on senior securities prohibit the
issuance of senior securities. The proposed amendment would amend the current
policies to permit Funds to issue senior securities to the extent permitted by
the 1940 Act. The amendment clarifies that certain investment practices (such as
forward purchases of securities and currencies, options and futures
transactions, which may have a leverage effect on a Fund) would not be
considered senior securities if such practices are conducted in a manner
consistent with current law and SEC interpretive positions. The proposed
amendment provides the Funds maximum flexibility to respond to a changing
regulatory environment.
The proposed fundamental investment policy on senior securities is set
forth below in italics followed by a summary of the Funds' current fundamental
investment policies on senior securities. The Board believes it is in the best
interests of each Fund and its shareholders and beneficial owners to adopt the
proposed fundamental investment policy on senior securities in lieu of its
current fundamental investment policy on senior securities. Note that the
shareholders of DMCS, FHY, JVCE, MFSEG, MFSR, NWQLC, USGS, Util, ZCBF 2000, and
ZCBF 2005 will NOT be voting on changes to a fundamental investment policy
regarding senior securities.
PROPOSED NEW FUNDAMENTAL POLICY: [EACH FUND MAY NOT] ISSUE ANY CLASS OF
SENIOR SECURITIES EXCEPT TO THE EXTENT CONSISTENT WITH THE 1940 ACT.
CURRENT FUNDAMENTAL POLICIES: The proposed policy does not represent a
material change from the current policies of CB, DSCS, FS, LIS, MFSMCG, SAS and
SS. It merely conforms the language of the existing policies to the new standard
policy on senior securities and clarifies that Funds are allowed to issue senior
securities only to the extent permitted by the 1940 Act.
9
<PAGE> 13
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE CERTAIN
FUNDS' FUNDAMENTAL INVESTMENT POLICIES
ITEM 2.A. PROPOSAL TO REDESIGNATE THE FUNDAMENTAL INVESTMENT POLICY ON
LIQUIDITY
The Board has proposed that the fundamental investment policies of LIS
and MFSR on purchasing unmarketable or illiquid securities be redesignated from
a fundamental policy to an nonfundamental operating policy. If the proposed
change is approved by shareholders, the Board has approved adopting an operating
policy that would: (1) allow a Fund to invest up to 15% of its net assets in
illiquid securities, and (2) conform the Fund's operating policy in this area to
one that is expected to become standard for all the advisers' funds. LIS's and
MFSR's current fundamental policies for illiquid securities limit each Fund to a
maximum of 10% of the Fund's total assets, which is no longer required by the
1940 Act and SEC interpretations. The proposed operating policy would permit
each Fund to invest up to 15% of its total assets in illiquid securities,
currently permissible under applicable SEC interpretations, which should provide
the Funds with greater flexibility in responding to market and regulatory
developments.
As an open-end investment company, a Fund may not hold a significant
amount of illiquid securities because such securities may present valuation
problems. Also, it is possible the Fund could have difficulty satisfying
redemptions within seven days as required under the 1940 Act. In general, the
SEC defines an illiquid security as one that cannot be sold in the ordinary
course of business within seven days at approximately the value at which the
Fund has valued the security. Illiquid securities may include securities with
legal or contractual restrictions on resale ("restricted securities") and
repurchase agreements with a maturity of more than seven days.
The securities markets, however, are evolving, and new types of
instruments have developed. In light of these developments, each Fund's current
fundamental policy, by essentially assuming all restricted securities are
unmarketable, is overly broad and unnecessarily restrictive. For example, the
markets for various types of securities--repurchase agreements, commercial
paper, and some corporate bonds and notes--are almost exclusively institutional.
These instruments are often either exempt from registration or sold in
transactions not requiring registration. Although these securities may be
technically classified as "restricted", institutional investors often
justifiably rely either on the issuer's ability to honor a demand for repayment
in less than seven days or on an efficient institutional market in which the
unregistered security can be readily resold. The fact that the securities may be
restricted because of legal or contractual restrictions on resale to the general
public is, therefore, not dispositive of the liquidity of such investments.
In recognition of the increased size and liquidity of the institutional
markets for unregistered securities and in light of the importance of
institutional investors in the capital formation process, the SEC has adopted
rules, including Rule 144A under the 1933 Act, designed to further facilitate
efficient trading among institutional investors. These rules permit a broader
institutional trading market for securities subject to restriction on resale to
the general public. Since institutional markets are developing that trade in
these securities, the Funds are constrained by their current investment
policies. Accordingly, the advisers have recommended that the Funds' current
fundamental policy be eliminated. Further, the advisers have recommended that
each Fund adopt an operating policy that would permit investing in illiquid
securities to the extent permissible under the 1940 Act and treating
"restricted" securities that are nonetheless liquid to be purchased without
regard to a Fund's limit on illiquid investments. Of course, the Funds would
modify their operating policy to comply with future regulatory and market
developments.
If this proposal is approved by shareholders, the specific types of
securities that might be deemed to be liquid would be determined from time to
time by the advisers under guidelines approved by the Board, with reference to
legal, regulatory and market developments. By making the Funds' policies on
illiquid securities nonfundamental, the Funds would be able to respond more
quickly to market developments because no shareholder vote would be required to
redefine what types of securities may be deemed liquid or illiquid. In
accordance with the Funds' policy prohibiting any Fund from acting as an
underwriter, no Fund would purchase restricted securities for the purpose of
subsequent distribution in a manner that would cause a Fund to be deemed an
underwriter.
If approved by shareholders, the new operating policy adopted by the
Board would allow a Fund to invest up to 15% of its net assets in illiquid
securities. The 15% limit would be a higher percentage of illiquid securities
than the Fund is currently permitted (10%) and is the result of a liberalization
in 1992 by the SEC regarding these securities. If the
10
<PAGE> 14
fundamental policy is changed to an operating policy, each Fund would, without
the necessity of any further shareholder vote, be able to take advantage of any
future changes in SEC policy in this area.
The proposed operating policy on illiquid securities is set forth below
in italics followed by a summary of each Fund's current fundamental investment
policies on illiquid (including "restricted") securities. The Board believes it
is in the best interests of each Fund and its shareholders and beneficial owners
to redesignate such policies as nonfundamental operating policies and to adopt
the proposed language.
PROPOSED NEW OPERATING POLICY: [THE FUND MAY NOT] INVEST MORE THAN 15% OF
ITS NET ASSETS IN: (1) SECURITIES THAT CANNOT BE DISPOSED OF WITHIN SEVEN DAYS
AT THEIR THEN-CURRENT VALUE; (2) REPURCHASE AGREEMENTS NOT ENTITLING THE HOLDER
TO PAYMENT OF PRINCIPAL WITHIN SEVEN DAYS; AND (3) SECURITIES SUBJECT TO
RESTRICTIONS ON THE SALE OF THE SECURITIES TO THE PUBLIC WITHOUT REGISTRATION
UNDER THE 1933 ACT ("RESTRICTED SECURITIES") THAT ARE NOT READILY MARKETABLE.
THE FUND MAY TREAT CERTAIN RESTRICTED SECURITIES AS LIQUID PURSUANT TO
GUIDELINES ADOPTED BY THE TRUST'S BOARD OF TRUSTEES.
CURRENT FUNDAMENTAL POLICY: [The Fund will not] 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 has determined that such
securities are liquid based upon trading markets for the specific security if
more than 10% of the Fund's assets (taken at market value) would be invested in
such illiquid securities.
ITEM 2.B PROPOSAL TO REDESIGNATE THE FUNDAMENTAL INVESTMENT POLICIES
ON INVESTMENTS TO EXERCISE CONTROL
The Board recommends that the shareholders approve the redesignation from
fundamental to an operating policy on purchasing securities for the purpose of
exercising control of the issuer. If the proposed change is approved by
shareholders, the Board has approved an operating policy that would: (1)
prohibit a Fund from investing for the purpose of exercising control of an
issuer, and (2) conform the Fund's operating policy in this area to one that is
expected to become standard for all the advisers' funds to which this type of
restriction is appropriate.
Several Funds (DMCS, DSCS, LIS, MFSR, SAS, SS and USGS) currently have
fundamental investment policies that prohibit them from purchasing securities
for the purpose of exercising control of management of a company. In the past,
this restriction was an outgrowth of requirements mandated by certain state
securities laws. However, as a result of the enactment of the National
Securities Market Improvement Act of 1996 ("NSMIA"), state law restrictions on
investment to exercise control of management no longer apply to the Funds. In
addition, the 1940 Act currently does not contain any equivalent restrictions.
The proposed operating policy on investing to exercise control is set
forth below in italics followed by a summary of the Funds' current fundamental
investment policies on investing to exercise control. The Board believes it is
in the best interests of each Fund and its shareholders and beneficial owners to
redesignate such policies as a nonfundamental operating policy and to adopt the
proposed language.
PROPOSED NEW OPERATING POLICY: [EACH FUND WILL NOT] MAKE INVESTMENTS FOR
THE PURPOSE OF EXERCISING CONTROL OF AN ISSUER. INVESTMENTS BY THE FUND IN
ENTITIES CREATED UNDER THE LAWS OF FOREIGN COUNTRIES SOLELY TO FACILITATE
INVESTMENT IN SECURITIES IN THAT COUNTRY WILL NOT BE DEEMED THE MAKING OF
INVESTMENTS FOR THE PURPOSE OF EXERCISING control.
CURRENT FUNDAMENTAL POLICIES: The current policies are essentially the
same in substance as the proposed operating policy.
ITEM 2.C. PROPOSAL TO REDESIGNATE AND AMEND AS APPLICABLE THE FUNDAMENTAL
INVESTMENT POLICIES CONCERNING SHORT SALES
Several Funds (DMCS, DSCS, FHY, MFSR, SS, USGS, Util, ZCBF 2000, and ZCBF
2005) have fundamental investment policies limiting short sales of securities.
The Board recommends that shareholders approve redesignating the fundamental
investment policies as an operating policy.
11
<PAGE> 15
In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. Under
the proposed operating policy, entering into short sales "against-the-box" would
not be deemed to be engaging in the strategy of short sales of securities. In a
short sale "against-the-box," a Fund could engage in short sales if it owned,
or, by virtue of its ownership of other securities, had the right to obtain,
securities equivalent in kind and amount to the securities sold short.
If the proposed change is approved by shareholders, the Board has
approved an operating policy, that generally would: (1) permit the Funds to
engage in short sales against-the-box, and (2) exclude transactions in options,
and futures contracts and options on futures from short sales. In all cases, the
redesignation/amendment of the Funds' policies on short sales should not change
the current operations of those Funds. The proposed operating policies on short
sales are set forth below in italics followed by a summary of the Funds' current
fundamental investment policies on short sales. The Board believes it is in the
best interests of each Fund and its shareholders and beneficial owners to
redesignate such policies as a nonfundamental operating policy.
PROPOSED NEW OPERATING POLICIES:
(1) [FOR DMCS, MFSR AND USGS -- EACH FUND WILL NOT] SELL SECURITIES
SHORT, UNLESS IT OWNS OR HAS THE RIGHT TO OBTAIN SECURITIES
EQUIVALENT IN KIND AND AMOUNT TO THE SECURITIES SOLD SHORT (SHORT
SALES "AGAINST-THE-BOX"), AND PROVIDED THAT TRANSACTIONS IN
FUTURES CONTRACTS AND OPTIONS ON FUTURES ARE NOT DEEMED TO
CONSTITUTE SELLING SECURITIES SHORT;
(2) [FOR DSCS AND SS - EACH FUND WILL NOT] MAKE SHORT SALES OF
SECURITIES EXCEPT IN CONFORMITY WITH APPLICABLE LAW AND
REGULATIONS, AND UNLESS AFTER SUCH SALE (EXCLUDING THE VALUE OF
ANY SECURITIES SOLD SHORT AGAINST-THE-BOX), THE MARKET VALUE OF
ALL SECURITIES SOLD SHORT DOES NOT EXCEED 25% OF THE FUND'S TOTAL
ASSET VALUE, AND THE FUND'S AGGREGATE SHORT SALES OF A PARTICULAR
CLASS OF AN ISSUER'S SECURITIES DO NOT EXCEED 25% OF THE THEN
OUTSTANDING SECURITIES OF THAT CLASS OF THE ISSUER'S SECURITIES,
AND PROVIDED THAT TRANSACTIONS IN FUTURES CONTRACTS AND OPTIONS ON
FUTURES ARE NOT DEEMED TO CONSTITUTE SELLING SECURITIES SHORT;
(3) [FOR UTIL, ZCBF 2000 AND ZCBF 2005 - EACH FUND WILL NOT] MAKE
SHORT SALES OF SECURITIES OR MAINTAIN A SHORT POSITION, EXCEPT TO
THE EXTENT OF 5% OF THE FUND'S NET (EXCLUDING THE VALUE OF ANY
SECURITIES SOLD SHORT AGAINST-THE-BOX), AND PROVIDED THAT
TRANSACTIONS IN OPTIONS, AND FUTURES CONTRACTS AND OPTIONS ON
FUTURES ARE NOT DEEMED TO CONSTITUTE SELLING SECURITIES SHORT; AND
(4) [FOR FHY - THE FUND WILL NOT] SELL SECURITIES SHORT EXCEPT, UNDER
STRICT LIMITATIONS, THE FUND MAY MAINTAIN OPEN SHORT POSITIONS SO
LONG AS NOT MORE THAN 10% OF THE VALUE OF ITS NET ASSETS IS HELD
AS COLLATERAL FOR THOSE POSITIONS, AND PROVIDED THAT TRANSACTIONS
IN OPTIONS, AND FUTURES CONTRACTS AND OPTIONS ON FUTURES ARE NOT
DEEMED TO CONSTITUTE SELLING SECURITIES SHORT.
Current Policies: For DMCS, MFSR, and USGS, approval would add the
provision clarifying that sales "against-the-box" are not considered short
sales. For DSCS, FHY, SS, Util, ZCBF 2000, and ZCBF 2005, approval would make
the current fundamental policy an operating policy and add the provision
clarifying that sales "against-the-box" are not considered short sales.
ITEM 2.D. PROPOSAL TO REDESIGNATE AND AMEND AS APPLICABLE THE
FUNDAMENTAL INVESTMENT POLICIES ON PURCHASING ON MARGIN
DMCS, MFSR, USGS, Util, ZCBF 2000 and ZCBF 2005 have fundamental
investment policies limiting purchasing securities on margin. Margin purchases
involve the purchase of securities with money borrowed from a broker. "Margin"
is the cash or eligible securities that the borrower places with its broker as
collateral for the margin loan. The Board recommends that shareholders approve
redesignating each fundamental investment policy as an operating policy. The
purpose of the proposal is to allow the Funds greater flexibility in responding
to market and regulatory developments by providing the Board with the authority
to make changes in the Funds' policies on margin without further shareholder
approval. The new policy would also make the Funds' policies on margin uniform,
allowing for more efficient management of the Funds. The Board believes that
standard policies will assist the Funds and their advisers in monitoring
compliance with the various investment policies to which the Funds are subject.
Set forth below is the proposed operating policy on purchasing
securities on margin in italics followed by a summary of the Funds' current
fundamental margin policies. The Board believes it is in the best interests of
each Fund and
12
<PAGE> 16
its shareholders and beneficial owners to redesignate the fundamental investment
policy to an operating policy, and to adopt the proposed language.
PROPOSED NEW OPERATING POLICY: [EACH FUND WILL NOT] PURCHASE SECURITIES
ON MARGIN, EXCEPT THAT THE FUND MAY USE SHORT-TERM CREDIT FOR THE CLEARANCE OF
ITS PORTFOLIO TRANSACTIONS, AND PROVIDED THAT THE FUND MAY MAKE INITIAL AND
VARIATION MARGIN PAYMENTS IN CONNECTION WITH FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS OR OTHER PERMISSIBLE INVESTMENTS.
CURRENT FUNDAMENTAL POLICIES: Redesignating the fundamental investment
restriction regarding purchasing securities on margin as an operating policy and
approving the uniform language is not expected to materially change the policies
for the following funds: LIS, MFSR, USGS, Util and ZCBF. Additionally, for DMCS,
LIS and MFSR approval of this proposal will clarify that use of short-term
credits for clearing transactions and/or transactions in futures contracts and
options is not considered purchasing on margin. For DMCS, approval of the
proposal will also eliminate the 5% of net asset value restriction on total
margin deposits for positions in futures contracts. Currently, the policies on
short sales and purchasing on margin for MFSR and USGS are stated in a single
provision. Approval of this proposal will separate those provisions, and two
operating policies will be instituted (see Proposal Item 2.C, above).
ITEM 2.E. PROPOSAL TO REDESIGNATE AND AMEND AS APPLICABLE THE
FUNDAMENTAL INVESTMENT POLICIES ON PLEDGING ASSETS
Several Funds (DMCS, FHY, FS, LIS, MFSR, NWQLC, USGS, Util, ZCBF 2000,
and ZCBF 2005) have fundamental policies on pledging assets. The Board has
proposed that these policies be eliminated and replaced with an operating
policy. Restrictions on pledging assets were imposed under certain state
securities laws. As a result of the recent enactment of NSMIA, however, state
law restrictions on pledging no longer apply to the Funds. In addition, the 1940
Act currently does not contain any specific restrictions on pledging, except
indirectly as it relates to "borrowings". If the proposed change is approved by
shareholders, the Board has approved an operating policy, that would: (1) permit
the Funds to pledge assets in connection with any borrowings, and (2) allow the
Funds to pledge assets in connection with permissible investments.
The new operating policy would allow each Fund to pledge its assets,
consistent with its current or proposed fundamental policy on borrowing and only
as permitted by the 1940 Act. The Board believes it is advisable to provide the
Funds with greater flexibility in pursuing their investment objectives and in
responding to regulatory and market developments. The new policy would also
conform the Funds' policies on pledging their assets to one that is expected to
become standard for the Funds' investment advisers. The Board believes that
standard policies will assist the Funds and their investment advisers in
monitoring compliance with the various investment policies to which the Funds
are subject.
The proposed operating policy on pledging is set forth below in italics
followed by a summary of the Funds' current fundamental pledging policies. The
Board believes it is in the best interests of each Fund and its shareholders and
beneficial owners to redesignate and amend as applicable the fundamental
investment restriction as an operating policy.
PROPOSED NEW OPERATING POLICY: [EACH FUND WILL NOT] PLEDGE ITS ASSETS
EXCEPT AS PERMITTED BY THE 1940 ACT.
CURRENT RESTRICTIONS: Currently, FHY, FS, LIS, MFSR, USGS, Util and ZCBF
are restricted to pledging assets to secure permitted borrowing in an amount
that is typically a percentage of the Fund's assets. For FS, Util and ZCBF, 10%
is permitted. USGS is permitted the lesser of 10% of assets or the amount
borrowed. MFSR is allowed 15%. FHY and LIS are not restricted, so long as the
assets are pledged to secure permitted borrowing. NWQLC, however, is permitted
to pledge up to 10% of its assets, regardless of purpose. The new operating
policy would allow each Fund to pledge its assets, consistent with its current
or proposed fundamental policy on borrowing and only as permitted by the 1940
Act.
ITEM 2.F. PROPOSAL TO ELIMINATE THE FUNDAMENTAL INVESTMENT POLICIES
ON OIL, GAS AND MINERALS
Several Funds (CB, DMCS, JVCE and MFSMCG) currently have fundamental
investment policies prohibiting investment in oil, gas and mineral leases and/or
exploration and development programs. In the past, this provision was imposed by
certain state securities laws and regulations. However, as the result of the
recent enactment of NSMIA, these state law restrictions no longer apply to the
Funds. The 1940 Act currently does not contain any equivalent restrictions.
Moreover, this provision is redundant because of the fundamental investment
restriction regarding physical commodities
13
<PAGE> 17
exists under both the current and the proposed investment policies on
commodities. The Board has concluded that it is in the best interests of each
Fund and its shareholders and beneficial owners to eliminate such policies.
ITEM 2.G. PROPOSAL TO ELIMINATE THE FUNDAMENTAL INVESTMENT POLICIES
ON "UNSEASONED ISSUERS"
DMCS and MFSR each currently has a fundamental investment policy that
prohibits it from investing in securities issued by a corporation that has not
been in continuous operation for three years (typically referred to as
"unseasoned issuers"). This investment policy is based on restrictions on
investment in unseasoned issuers contained in certain state securities laws and
regulations. However, as a result of the recent enactment of NSMIA, state law
restrictions on permissible investments no longer apply to these Funds. In
addition, the 1940 Act currently does not contain any equivalent restrictions.
The Board, therefore, has concluded that it is in the best interests of each
Fund and its shareholders to eliminate the policy on unseasoned issuers. In
addition, the Board believes that elimination of this policy will increase the
Funds' flexibility to invest in unseasoned issuers that otherwise might meet its
investment objectives and policies.
Securities of unseasoned issuers may be subject to greater risk than
securities of more established companies because unseasoned issuers have only a
brief operating history and may have more limited markets and financial
resources. However, the Board believes that the increasing prevalence of
unseasoned issuers, the investment opportunities offered by such issuers, and
the fact that any such investments would be made in accordance with the
advisers' evaluation of the issuers consistent with investment objective and
policies of a Fund warrants the elimination of the current policy.
ITEM 2.H. PROPOSAL TO ELIMINATE THE FUNDAMENTAL INVESTMENT POLICIES
ON PUTS AND CALLS
FS and MFSR each currently has a fundamental investment policy that
prohibits it from writing (i.e., selling) or purchasing put or call options or
any combination thereof. Options such as puts and calls are contracts giving the
holder the right to either buy or sell a financial instrument at a specified
price before a specified time. If the option is not exercised or sold, it
becomes worthless at its expiration date, and the premium payment is lost to the
option holder. If a mutual fund writes an option, it receives a premium that it
keeps whether or not the option is sold.
In the past, the Funds' current fundamental policies restricting writing
or purchasing puts and calls also were a response to certain state securities
laws and regulations. However, as a result of the recent enactment of NSMIA,
state law restrictions on purchasing put or call options no longer apply to the
Funds. In addition, the 1940 Act currently does not require that such
restriction be fundamental. Moreover, the Board believes that allowing the Funds
to utilize put and call options would provide the Funds with an additional means
of attempting to hedge some of the risks associated with certain investments,
affording these Funds greater flexibility in pursuing its investment objective.
At this time, FS (but not MFSR) intends to invest in puts or calls or
combinations thereof. However, the Board believes it in the best interest of FS
and MFSR and its shareholders that each Fund be provided with greater
flexibility in responding to market and regulatory developments. It is proposed
therefore that FS's and MFSR's fundamental policy restricting the use of these
interests be eliminated.
ITEM 2.I. PROPOSAL TO ELIMINATE FUNDAMENTAL INVESTMENT POLICY ON
INVESTING IN WARRANTS
DMCS currently has a fundamental investment policy that limits the Fund's
investment in warrants to 5% of its total assets. Restrictions on purchasing
warrants were imposed under certain state securities laws. As a result of the
recent enactment of NSMIA, however, state law restrictions on purchasing
warrants no longer apply to DMCS. In addition, the 1940 Act currently does not
contain any specific restrictions on purchasing warrants. The Board, therefore,
has concluded that it is in the best interests of the Fund and its shareholders
to eliminate the current policy on purchasing warrants. The Board does not
anticipate that eliminating the Fund's current fundamental investment policies
on warrants will result in a material change of the Fund's practices.
14
<PAGE> 18
ITEM 2.J. PROPOSAL TO REDESIGNATE AND AMEND THE FUNDAMENTAL
INVESTMENT POLICIES ON INVESTING IN THE SECURITIES OF OTHER
INVESTMENT COMPANIES
Several Funds (DMCS, LIS, MFSR and USGS) currently have fundamental
investment policies restricting or prohibiting investments in securities issued
by other investment companies. While the 1940 Act limits the extent to which a
mutual fund may invest in other investment companies, that Act does not require
the adoption of a fundamental policy with respect to investment in other
investment companies. Certain of the Fund's policies merely recite prohibitions
similar to those set forth in that Act with respect to investments in other
investment companies. The Funds are subject to these restrictions whether or not
they are recited in an investment policy. The Board believes that such
fundamental policies are unnecessary and should be eliminated and that the
standard operating policy adopted instead. Elimination of the fundamental
policies is not expected to have any impact on the Funds' investment practices
except as regulatory requirements may change in the future. The elimination of
the fundamental policies and adoption of the standard operating policy,
therefore, would permit a Fund maximum flexibility in responding to a changing
regulatory environment and allow the Funds to invest in other investment
companies, including investment in a master-feeder or fund-of-funds structure.
Adoption of the proposed operating policy would permit all of the Funds
maximum flexibility in responding to a changing regulatory environment,
including investing through a master-feeder or fund-of-funds structure. The
Board believes it is in the best interests of each Fund and its shareholders and
beneficial owners to eliminate the current fundamental policies and unnecessary
restrictions on investment in other investment companies and to adopt the
following operating policy:
PROPOSED NEW OPERATING POLICY: [Each Fund may not] invest in securities
of another investment company, except to the extent permitted by the 1940 Act
and rules, regulations and exemptive orders of the Securities Exchange
Commission.
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO PERMIT FUNDS
TO INVEST ALL OR A PORTION OF THEIR ASSETS IN ONE OR MORE INVESTMENT
COMPANIES AND RELATED AMENDMENTS TO THE FUNDS' ADVISORY AGREEMENTS
Approval of this Proposal would enable a Fund, with the approval of the
Board, at some future time to invest its assets in a master-feeder or
fund-of-funds structure. None of the Funds currently intends to convert to
either a master-feeder or fund-of-funds structure. In a master-feeder structure,
a fund seeks to achieve its investment objective by investing in a single
investment company having substantially the same investment objective, policies
and risk profile as the Fund. In a fund-of-funds structure, a Fund diversifies
its assets by investing in two or more investment companies, each with a
different investment objective, policies and risk profiles. A Fund investing in
either a master-feeder or fund-of-funds structure would continue to pursue its
current investment objective through investment in one or more investment
companies, referred to as "Master Portfolios." The Master Portfolio in turn
would invest directly in the securities of individual issuers. A Fund investing
in one or more Master Portfolios is referred to as a "Feeder Fund."
The following illustration compares a traditional mutual fund structure
(where a Fund invests directly in portfolio securities) with a master-feeder and
a fund-of-funds structure.
[GRAPHIC: Flow chart of traditional, master-feeder & fund-of-funds
structures]
The primary reason to use a master-feeder or fund-of-funds structure
would be to provide a mechanism to pool, in a single Master Portfolio, the
common investments of a number of Feeder Funds and potentially other direct
investors in the Master Portfolio. After approval of this Proposal and a
subsequent Board determination to implement the policies described herein (which
is not currently proposed), the assets of more than one Feeder Fund could be
pooled in each Master Portfolio. That pooling of assets is designed to create a
larger asset base for each Feeder Fund in order to provide investment and
administrative efficiencies and enhanced portfolio diversification. See "Board
Evaluation" below. There can be no assurance that any Fund's total expenses
would be reduced as a result of the Fund's investment in a master-feeder or
fund-of-funds structure.
Approval by shareholders of a Fund of this Proposal will permit that Fund
to convert in the future to a master-feeder or fund-of-funds structure or
otherwise invest all or a portion of its investable assets in one or more
investment companies to the extent permitted by law.
15
<PAGE> 19
Specifically, approval of this Proposal by Fund shareholders would permit
a Fund, solely with Board approval at some future time, to use a master-feeder
feeder or fund-of-funds structure. It would amend that Fund's fundamental
investment policies regarding diversification, concentration and/or investment
in the securities of other investment companies. The amendments would clarify
that the diversification and concentration policies of a Fund operating in a
master-feeder or fund-of-funds structure apply to the portfolio securities of
the Master Portfolios in which the Fund invests rather than to the interests in
the Master Portfolios held by the Fund. These amendments are discussed in detail
below under "Amendments to Investment Policies".
Approval of this Proposal by a Fund also would amend that Fund's
investment advisory agreement, for a Fund using a master-feeder or fund-of-funds
structure, to eliminate the payment by a Feeder-Fund of advisory fees for
portfolio management on assets invested in a Master Portfolio.
Upon approval of this Proposal, a Fund could convert to a master-feeder
or fund-of-funds structure solely upon the Board's determination that the
conversion is in the best interests of the Fund and its shareholders. A Fund
would provide shareholders prior notice of a conversion. The Board would retain
the right to withdraw a Fund's investment in a Master Portfolio at any time, and
the Fund could thereafter resume investing directly in individual securities or
could re-invest its assets in another Master Portfolio.
The conversion to a master-feeder or fund-of-funds structure would be
accomplished by transferring each converting Fund's assets to the appropriate
Master Portfolio in exchange for an interest in the Master Portfolio equal in
value to the assets transferred. Each converting Fund's assets would be
transferred in kind to the Master Portfolio(s) and valued in accordance with the
Fund's normal valuation procedures. The conversion would not affect the net
asset value of the shares of a Fund. All costs of the conversions would be borne
by the Fund or Funds involved.
MASTER-FEEDER AND FUND-OF-FUNDS STRUCTURES
Each Master Portfolio would be a separate series of a registered,
open-end management investment company that was formed as a business trust under
Delaware law. Each master-feeder or fund-of-funds structure and its
corresponding risks are described separately below. Aspects of the two
structures that are similar are described below under "Common Aspects of the
Master-Feeder or Fund-of-Funds Structures."
MASTER-FEEDER
In a master-feeder structure, a Feeder Fund holds as its primary asset an
interest in a Master Portfolio with substantially the same investment objective,
policies and risk profile as the Fund. In addition, to the extent necessary to
manage cash balances, a Feeder Fund may invest directly in cash and cash
equivalents. The Fund would otherwise continue its normal operations. The
structure is designed to achieve investment and administrative efficiencies and
enhanced portfolio diversification by allowing a Fund to pool its assets with
the assets of other entities invested in the Master Portfolio.
When required under the 1940 Act, a Master Portfolio will hold a meeting
of interestholders in order to obtain their approval of a change to the
Portfolio's operations. As an interestholder of a Master Portfolio, a Feeder
Fund would be entitled to vote in proportion to the Fund's relative interest in
the Master Portfolio. If required by the 1940 Act or applicable state law, a
Fund investing through a master-feeder structure will hold a meeting of its
shareholders to obtain instructions on how to vote its interest in the Master
Portfolio and will vote its interest in the Master Portfolio in proportion to
the votes cast by the Fund's shareholders or may, under certain circumstances,
without a meeting of shareholders vote its interests in the Master Portfolio in
proportion to the votes cast by the outside interestholders. In other
circumstances, the Board will vote the Feeder Fund's interest in the Master
Portfolio in accordance with the best interests of the Fund's shareholders.
Subject to applicable legal requirements, the Feeder Fund will not seek
instructions from its shareholders with respect to: (1) any proposal relating to
a Master Portfolio that, if made with respect to the Fund, would not require the
vote of Fund shareholders; or (2) any proposal relating to the Master Portfolio
that is substantially the same as a proposal previously approved by the Fund's
shareholders.
FUND-OF-FUNDS
16
<PAGE> 20
In a fund-of-funds structure, a Feeder Fund holds interests in two or
more Master Portfolios and, to the extent it manages a portion of its assets
directly, individual securities of other issuers. The Fund would otherwise
continue its normal operations. A Fund might invest in a number of different
Master Portfolios to achieve investment and administrative efficiencies and
enhanced portfolio diversification by pooling its assets with the assets of
other entities invested in the Master Portfolios.
In general, the fund-of-funds structure is suitable for a Feeder Fund
that follows a "multi-style" investment approach. That approach involves the
investment, through percentage allocations consistent with the Fund's investment
objective and policies, in a number of Master Portfolios, each with a different
investment objective and investment policies. The "multi-style" approach is
intended to increase asset diversification and to reduce the risk of relying on
a single investment style. A Fund would convert to a fund-of-funds structure if
the Board were to determine that it was in the best interests of the Fund to
follow a "multi-style" investment approach in which the Fund's assets would be
allocated among several Master Portfolios.
A Feeder Fund's investments in the investment styles and Master
Portfolios would be viewed by the adviser as no different from investments made
directly by the adviser on behalf of a Fund in portfolio securities.
Accordingly, consistent with a Feeder Fund's investment objective and policies,
the adviser would be able to make changes in the percentage allocations at any
time it deemed appropriate, including in response to market or other conditions.
The adviser also would rebalance periodically the investments among the Master
Portfolios to ensure that the Fund continued to operate in accordance with any
target percentage allocations.
When business or financial conditions warrant, a Feeder Fund might assume
a temporary defensive position and directly invest without limit in cash or
prime-quality cash equivalents. During periods when and to the extent that a
Feeder Fund assumes a temporary defensive position, the Fund's assets could be
invested outside of the specified ranges.
If a Master Portfolio holds a meeting of interestholders, for instance to
obtain their approval of a change in the Portfolio's operations or investment
advisory agreement, a Feeder Fund, as an interestholder of a Master Portfolio,
would be entitled to vote in proportion to its relative interest in the Master
Portfolio. A Feeder Fund investing through a fund-of-funds structure would not,
in general, hold a shareholder meeting when a Master Portfolio is conducting a
meeting of its interestholders. As with any direct investment in securities, the
Board would vote the Fund's interests in the Master Portfolio in the best
interests of the shareholders of the Fund.
COMMON ASPECTS OF THE MASTER-FEEDER AND FUND-OF-FUNDS STRUCTURES
A Fund would invest in a Master Portfolio on the same terms and
conditions as any other investor in the Master Portfolio and would bear a
proportionate share of the Master Portfolio's expenses.
The Master Portfolios generally offer their shares only to institutional
or other qualified shareholders. Other pooled investment vehicles that invest in
the Master Portfolio, including other mutual funds, might be marketed in
different ways than those used by a particular Feeder Fund or to different types
of investors than those investing in that Feeder Fund. Another mutual fund
investing in a Master Portfolio might sell fund shares to the general public at
a different public offering price than the Funds' shares and could have
different fees and expenses than the Funds. Also, other investors in a Master
Portfolio may have different yields and returns than those of a particular
Feeder Fund.
If there are other investors in a Master Portfolio, there could be no
assurance that a vote of all the interestholders of the Master Portfolio would
result in the same outcome as a vote of the shareholders of the Feeder Fund. If
the outcome of a Master Portfolio vote were not consistent with the vote of the
Fund shareholders, the Board would consider whether it was still in the best
interests of the Fund and its shareholders to invest in the Master Portfolio.
The Board would retain the right to redeem a Feeder Fund's investment in a
Master Portfolio at any time if the Board were to determine that it is in the
best interests of the Fund and its shareholders to do so. A Fund might redeem,
for example, if the outcome of a vote of the interestholders of a Master
Portfolio were not acceptable to the Board. A redemption could result in an
in-kind distribution of portfolio securities (as opposed to a cash distribution)
to the Fund by the Master Portfolio.
If a Feeder Fund were to withdraw its investment from a Master Portfolio,
the Board would consider what action should be taken to manage the withdrawn
assets. Possible actions could include management of the Fund's assets in
accordance with its investment objectives and policies by its adviser (and/or
named subadvisers) or investment of the assets
17
<PAGE> 21
in another Master Portfolio. The inability of a Fund to find a suitable
replacement investment(s) could have a significant impact on Fund shareholders.
A Feeder Fund's investments in a Master Portfolio could be affected by
the actions of other large investors in the Master Portfolio. If, for example, a
Master Portfolio had another large investor that redeemed its interest in the
Master Portfolio, the Fund and the Master Portfolio's remaining investors could
experience higher pro rata operating expenses and resulting lower returns.
Investment of a Feeder Fund's assets in a Master Portfolio would affect
the Fund's current arrangements for management and administrative services. As a
result of the investment, some services would be provided by the service
providers of the relevant Master Portfolio while others would continue to be
provided directly to the Fund. Except as described in this Proxy Statement, the
overall rate at which a Fund would bear costs for the provision of investment
advisory and other services would remain unchanged.
TAX CONSEQUENCES
Management of the Trust would proceed with a conversion to a
master-feeder or fund-of-funds structure only upon receipt of an opinion of
counsel to the effect that neither a contribution of the Feeder Fund's assets to
a Master Portfolio in exchange for an interest in the Master Portfolio nor a
withdrawal of a Fund's assets (at that time) from a Master Portfolio would
result in the recognition of gain or loss to the Fund for federal income tax
purposes.
Each Fund currently qualifies for treatment as a regulated investment
company under the Internal Revenue Code of 1986. As such, a Fund does not pay
federal income or excise taxes to the extent that it distributes to shareholders
its net investment income and any net realized capital gain at certain times.
[The Funds are not liable for any income, corporate excise, or franchise taxes
in the Commonwealth of Massachusetts.] Each Master Portfolio in which a Fund
would invest would conduct its operations in a manner such that any Fund so
invested would qualify for treatment as a regulated investment company.
A Master Portfolio would not be required to pay federal income taxes on
its net investment income and capital gains, as it would be structured for
treatment as a partnership for federal income tax purposes. All of a Master
Portfolio's interest, dividends and gains and losses would be deemed to have
been "passed through" to the respective Feeder Funds in proportion to each
Fund's holdings of the Master Portfolio, regardless of whether such interests,
dividends or gains were distributed by the Portfolio or losses were realized by
the Portfolio.
AMENDMENTS TO THE ADVISORY AGREEMENTS
Approval of this Proposal constitutes approval of changes to the
investment advisory agreements between an adviser and the Trust on behalf of the
Funds (the "Advisory Agreements"). A provision would be added to each agreement
that would prohibit duplicative payment at the Feeder Fund level of an advisory
fee for investment management services if Fund assets were invested in a Master
Portfolio.
AMENDMENTS TO INVESTMENT POLICIES
Upon approval of this Proposal by the shareholders of each Fund, the Fund
would amend its fundamental investment policies regarding diversification and
concentration that otherwise would be inconsistent with the conversion of the
Fund to a master-feeder or fund-of-funds structure. The amendments described
below would not in any other way affect the manner in which a Fund currently
operates. The Funds' new (or current, as the case may be) diversification and
concentration policies, which are set forth in Appendices B and C to this Proxy
Statement, would be superseded or supplemented by the policies stated above.
EFFECTS ON THE FUNDS
Approval of this Proposal would affect the Funds in the following ways.
Currently, all Funds except JVCE are not permitted to invest using either a
master-feeder or fund-of-funds structure. JVCE currently is permitted to use a
master-feeder but not a fund-of-funds structure. Upon approval of this Proposal,
all Funds would be permitted, in the future, subject to the Board's approval, to
invest using a master-feeder or fund-of-funds structure without obtaining
shareholder
18
<PAGE> 22
approval at that time. None of these Funds, however, currently intend to convert
to either master-feeder or fund-of-funds structure.
Shareholders of each Fund are requested to approve this Item to: (1)
permit the Fund to convert in the future to a master-feeder or fund-of-funds
structure subject only to Board approval at that time; (2) approve the
amendments to the Investment Advisory Agreement(s); and, (3) standardize the
Funds' investment policies with respect to master-feeder or fund-of-fund
structures.
BOARD EVALUATION
In considering the matters described in this Proposal at the Meeting, the
Board considered each Fund, including generally the potential benefits, costs
and risks, as presented to the Board by The Travelers, of a possible future
conversion to a master-feeder or fund-of-funds structure. In this regard, the
Board considered the following:
- The possibility that a Fund using a master-feeder or fund-of-funds
structure could achieve greater investment and administrative
efficiencies and potentially enhanced portfolio diversification than it
could realize if it did not so convert. The Board considered that to the
extent certain operating costs may be fixed and are currently borne by a
Fund alone, these expenses could instead be borne in whole or in part
directly by a Master Portfolio and indirectly shared pro rata by the Fund
and other investors in the Fund's Master Portfolio.
- The agreement of advisers to waive fees and/or reimburse expenses so as
to maintain the total combined operating expenses of the Master
Portfolios for the first fiscal year following conversion to a
master-feeder structure at the same levels as each Fund's total operating
expenses prior to the conversion.
- The fact that a larger asset base might allow the purchase of investment
securities by a Master Portfolio in larger denominations, resulting in
possible reductions in certain transactional and custodial expenses.
- The diversification that might be achieved by investing a portfolio with
a larger asset base. Greater diversification is beneficial to
shareholders of a Fund because it may reduce the negative effect of the
adverse performance of any one security on the performance of the entire
investment portfolio.
- The flexibility both to attract and retain assets under management
provided by a master-feeder or fund-of-funds structure.
- The fact that in certain cases the foregoing benefits would likely arise
only if a Fund's Master Portfolio were to attract the assets of investors
other than those currently investing in the Fund; and, that there could
be no assurance that expense savings or other benefits would be realized
even if other investors were to invest in a Master Portfolio.
- Management of the Trust's opinion that over time the aggregate per share
expenses of a Fund investing in a Master Portfolio should not be more
than the expenses that would be incurred by a Fund if it continues to
invest directly in securities, although there can be no assurance that
any expense savings would be realized.
- The possibility that the advisers and The Travelers might benefit through
increased economies of scale in the event that assets under management
rise, whether or not there would be a corresponding benefit to Fund
shareholders; particularly, that conversion to a master-feeder or
fund-of-funds structure may enable TAMIC and MMC to increase assets under
management through development of new feeder funds with less risk than
would be possible without this structure. Because investors in a new
feeder fund would invest their assets in a Master Portfolio with an
established performance record, TAMIC and MMC could attract assets with
less risk of limited success than is typical in the early, developmental
years of an investment vehicle.
Based on the foregoing, the Board, including a majority of the independent
trustees, determined that it would be in the best interests of each Fund and its
respective shareholders for shareholders to approve this Proposal.
19
<PAGE> 23
OTHER BUSINESS
The Trust's management Knows of no other business which may come before
the meeting. However, if any additional matters are properly presented at the
meeting, it is intended that the persons named in the enclosed proxy, or their
substitutes, will vote such proxy in accordance with their judgment on such
matters.
GENERAL INFORMATION
The table below indicates the number of outstanding shares of beneficial
interest in each of the Funds as of March 1, 1999, the record date:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
FUND NUMBER OF RECORD HOLDERS
- ------------------------------------------------------------------------------------------------
<S> <C>
Convertible Bond
- ------------------------------------------------------------------------------------------------
Disciplined Mid Cap Stock
- ------------------------------------------------------------------------------------------------
Disciplined Small Cap Stock
- ------------------------------------------------------------------------------------------------
Federated High Yield
- ------------------------------------------------------------------------------------------------
Federated Stock
- ------------------------------------------------------------------------------------------------
Jurika & Voyles Core Equity
- ------------------------------------------------------------------------------------------------
Lazard International Stock
- ------------------------------------------------------------------------------------------------
MFS Emerging Growth
- ------------------------------------------------------------------------------------------------
MFS Mid Cap Growth
- ------------------------------------------------------------------------------------------------
MFS Research
- ------------------------------------------------------------------------------------------------
NWQ Large Cap
- ------------------------------------------------------------------------------------------------
Social Awareness Stock
- ------------------------------------------------------------------------------------------------
Strategic Stock
- ------------------------------------------------------------------------------------------------
Travelers Quality Bond
- ------------------------------------------------------------------------------------------------
U.S. Government Securities
- ------------------------------------------------------------------------------------------------
Utilities
- ------------------------------------------------------------------------------------------------
Zero Coupon Bond Fund 2000
- ------------------------------------------------------------------------------------------------
Zero Coupon Bond Fund 2005
- ------------------------------------------------------------------------------------------------
</TABLE>
A copy of each Fund's Annual Shareholder Report for the year ended
December 31, 1998, including financial statements, has been mailed to
shareholders of record at the close of business on that date and to persons who
became shareholders of record between that time and the close of business on
March 1, 1999, the record date for the determination of the shareholders who
are entitled to be notified of and to vote at the meeting.
SHAREHOLDER PROPOSALS
The Trust does not have annual or any other regularly scheduled meetings
of Shareholders, and currently has no plans to hold another meeting of
Shareholders of the Trust. Special Meetings of the Shareholders may be called
by the Trustees upon the written request of Shareholders owning at least 25% of
the outstanding Shares entitled to vote and such written Shareholders request
must be received by the Trust's Secretary at One Tower Square, Hartford,
Connecticut 06183 within a reasonable time before the solicitation is made.
It is suggested that beneficial Shareholders submit their proposals by
Certified Mail -- Return Receipt Requested by December 31, 1998. The Securities
and Exchange Commission has adopted certain requirements which apply to any
proposals of Shareholders.
The Investment Adviser
Travelers Asset Management International Corporation, One Tower Squre,
Hartford, Connecticut, serves as investment adviser to the Trust pursuant to an
Investment Advisory Agreement.
The Trust's Administration
Travelers Insurance, One Tower Square, Hartford, Connecticut 06183, is
the administrator of the Trust. Travelers has entered into a subadministrative
contract with an affiliate, Mutual Management Corp. to provide these services
to the Trust.
Officers of the Trust
Name Title Position Held Since
---- ----- -------------------
Heath B. McLendon Chariman and President January 27, 1995
Ernest J. Wright Secretary October 21, 1994
Kathleen A. McGah Assistant Secretary January 27, 1995
Lewis E. Daidone Treasurer October 25, 1996
Irving David Controller October 25, 1996
Barbara Brinn Assistant Treasurer October 25, 1996
Marianne Motley Assistant Treasurer October 25, 1996
Anthony Pace Assistant Treasurer October 25, 1996
The officers of the Trust serve for one year or until their respective
successors are chosen and qualified. The Trust pays no salaries or compensation
to any of its officers, all of whom are employees of The Travelers Insurance
Company or its affiliates.
20
<PAGE> 24
APPENDIX A
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
EXPENSE CAP (AS A PERCENTAGE OF AVERAGE DAILY
FUND NET ASSETS)
- ----------------------------------------------------------------------------------------
<S> <C>
CB 0.80%
- ----------------------------------------------------------------------------------------
DMCS 0.95%
- ----------------------------------------------------------------------------------------
DSCS 1.00%
- ----------------------------------------------------------------------------------------
EC 0.95%
- ----------------------------------------------------------------------------------------
FHY 0.95%
- ----------------------------------------------------------------------------------------
FS 0.95%
- ----------------------------------------------------------------------------------------
JVCE 1.00%
- ----------------------------------------------------------------------------------------
LC 0.95%
- ----------------------------------------------------------------------------------------
LIS 1.25%
- ----------------------------------------------------------------------------------------
MFSEG 0.95%
- ----------------------------------------------------------------------------------------
MFSMCG 1.00%
- ----------------------------------------------------------------------------------------
MFSR 1.00%
- ----------------------------------------------------------------------------------------
NWQLC 1.00%
- ----------------------------------------------------------------------------------------
SAS 1.25%
- ----------------------------------------------------------------------------------------
SS 0.90%
- ----------------------------------------------------------------------------------------
TQB 0.75%
- ----------------------------------------------------------------------------------------
USGS 1.25%
- ----------------------------------------------------------------------------------------
Util 1.25%
- ----------------------------------------------------------------------------------------
ZCBF (Series 2000) 0.15%
- ----------------------------------------------------------------------------------------
ZCBF (Series 2005) 0.15%
- ----------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE> 25
APPENDIX B
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
[Subject to shareholder approval at a meeting held April 30, 1999, the Funds
(except as indicated below) adopted the following investment policies as
fundamental (those that may not be changed without shareholder approval). Each
Fund may not:
1. DIVERSIFICATION: (except MFS Mid Cap Growth Portfolio) with respect to
75% of its assets, purchase a security other than a security issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or a
security of an investment company if, as a result, more than 5% of the Fund's
total assets would be invested in the securities of a single issuer or the Fund
would own more than 10% of the outstanding voting securities of any single
issuer.
2. INDUSTRY CONCENTRATION: (except Utilities Portfolio) purchase a security
if, as a result, more than 25% of the Fund's total assets would be invested in
securities of issuers conducting their principal business activities in the same
industry. For purposes of this limitation, there is no limit on : (1)
investments in U. S. government securities, in repurchase agreements covering U.
S. government securities, in securities issued by the states, territories or
possessions of the United States ("municipal securities") or in foreign
government securities; or (2) investment in issuers domiciled in a single
jurisdiction. Notwithstanding anything to the contrary, to the extent permitted
by the 1940 Act, a Fund may invest in one or more investment companies; provided
that, except to the extent that it invests in other investment companies
pursuant to Section 12(d)(1)(A) of the 1940 Act, the Fund treats the assets of
the investment companies in which it invests as its own for purposes of this
policy.
3. BORROWING: borrow money if, as a result, outstanding borrowings would
exceed an amount equal to one-third of the Fund's total assets.
4. REAL ESTATE: purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
5. LENDING: make loans to other parties if, as a result, more than one-third
of its total assets would be loaned to other parties. For purposes of this
limitation, entering into repurchase agreements, lending securities and
acquiring any debt security are not deemed to be the making of loans.
6. COMMODITIES: purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures contracts or
from investing in securities or other instruments backed by physical
commodities).
7. UNDERWRITING: underwrite (as that term is defined in the 1933 Act)
securities issued by other persons except, to the extent that in connection with
the disposition of its assets, the Fund may be deemed to be an underwriter.
8. SENIOR SECURITIES: issue any class of senior securities except to the
extent consistent with the 1940 Act.]
PROPOSED OPERATING (NONFUNDAMENTAL) POLICIES
The following investment policies are nonfundamental policies with which each
Fund (except as noted) currently complies:
1. MFS MID CAP GROWTH PORTFOLIO is "non-diversified" as that term is defined
in the 1940 Act. To the extent required to qualify as a regulated investment
company under the Code, the Fund may not purchase a security (other than a U.S.
Government security or a security of an investment company) if, as a result: (1)
with respect to 50% of its assets, more than 5% of the Fund's total assets would
be invested in the securities of any single issuer; (2) with respect to 50% of
its assets, the Fund would own more than 10% of the outstanding securities of
any single issuer; or (3) more than 25% of the Fund's total assets would be
invested in the securities of any single issuer.
2. BORROWING: for purpose of the borrowing limitation, the following are not
treated as borrowings to the extent they are fully collateralized: (1) the
delayed delivery of purchased securities (such as the purchase of when-issued
securities); (2)
B-1
<PAGE> 26
reverse repurchase agreements; (3) dollar-roll transactions; and (5) the lending
of securities ("leverage transactions"). (See Fundamental Limitation No. 2
"Borrowing".)
3. LIQUIDITY: No Fund will invest more than 15% of its net assets in: (1)
securities that cannot be disposed of within seven days at their then-current
value; (2) repurchase agreements not entitling the holder to payment of
principal within seven days; and, (3) securities subject to policies on the sale
of the securities to the public without registration under the 1933 Act
("restricted securities") that are not readily marketable. Each Fund may treat
certain restricted securities as liquid pursuant to guidelines adopted by the
Trust's Board of Trustees.
4. EXERCISING CONTROL OF ISSUERS: No Fund will make investments for the
purpose of exercising control of an issuer. Investments by a Fund in entities
created under the laws of foreign countries solely to facilitate investment in
securities in that country will not be deemed the making of investments for the
purpose of exercising control.
5. OTHER INVESTMENT COMPANIES: No Fund will invest in securities of another
investment company, except to the extent permitted by the 1940 Act.
6. SHORT SALES:
- [For DMCS, MFSR and USGS -- Each Fund will not] sell securities short,
unless it owns or has the right to obtain securities equivalent in kind
and amount to the securities sold short (short sales "against-the-box"),
and provided that transactions in futures contracts and options on
futures are not deemed to constitute selling securities short;
- [For DSCS and SS - Each Fund will not] make short sales of securities
except in conformity with applicable law and regulations, and unless
after such sale (excluding the value of any securities sold short
against-the-box), the market value of all securities sold short does not
exceed 25% of the Fund's total asset value, and the Fund's aggregate
short sales of a particular class of an issuer's securities do not exceed
25% of the then outstanding securities of that class of the issuer's
securities, and provided that transactions in futures contracts and
options on futures are not deemed to constitute selling securities short;
- [For Util, ZCBF 2000 and ZCBF 2005 - Each Fund will not] engage in short
sales of securities or maintain a short position in excess of 5% of the
Fund's net assets (excluding the value of any securities sold short
against-the-box), and provided that transactions in options, and futures
contracts and options on futures are not deemed to constitute selling
securities short; and
- [For FHY - The Fund will not] engage in short sales of securities or
maintain a short position in excess of 10% of the Fund's net assets
(excluding the value of any securities sold short against-the-box), and
provided that transactions in options, and futures contracts and options
on futures are not deemed to constitute selling securities short.
7. PURCHASING ON MARGIN: No Fund will purchase securities on margin, except
that a Fund may use short-term credit for the clearance of its portfolio
transactions, and provided that initial and variation margin payments in
connection with futures contracts and options on futures contracts shall not
constitute purchasing securities on margin.
8. LENDING: No Fund will lend a security if, as a result, the amount of
loaned securities would exceed an amount equal to one-third of the Fund's total
assets.
B-2
<PAGE> 27
APPENDIX C
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
CONVERTIBLE BOND PORTFOLIO
In pursuing its objective, Convertible Bond Portfolio currently is subject to
the following fundamental investment policies. The Fund will not:
(1) with respect to 75% of its assets, 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 more than 25% of its assets in companies within a single
industry, except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;
(3) borrow amounts in excess of 33-1/3% of its gross assets (taken at
the lower cost or market value), and then only as a temporary
measure for extraordinary or emergency purposes. The Fund may not
purchase additional securities when borrowings exceed 5% of total
assets;
(4) issue senior securities;
(5) make loans of more than one-third of the Fund's net assets,
including loans of securities;
(6) purchase or sell commodities or commodity contracts, or interests
in oil, gas or other mineral leases, or other mineral exploration
or development programs;
(7) purchase or sell 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;
and underwrite securities of any other company, except that the
Fund may invest in companies that engage in such businesses, and
except to the extent that the Fund may technically be deemed to be
an underwriter, as defined in the 1933 Act in selling a portfolio
security.
DISCIPLINED MID CAP STOCK PORTFOLIO
In pursuing its objective, Disciplined Mid Cap Stock Portfolio currently is
subject to the following fundamental investment policies. The Fund will not:
(1) invest more than 5% of its total assets, computed at market value,
in the securities of any one issuer;
(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 have been in operation for less than three years;
(4) borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of
up to 33-1/3% of its gross assets computed at cost; while
outstanding, a borrowing may not exceed one-third of the value of
its net assets, including the amount borrowed; the Fund has no
intention of attempting to increase its net income by means of
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
Fund's gross assets computed at cost;
(5) underwrite securities, except that the Fund may purchase
securities from issuers thereof or others and dispose of such
securities in a manner consistent with its other investment
policies; in the
C-1
<PAGE> 28
disposition of restricted securities it may be deemed to be an
underwriter, as defined in the 1933 Act;
(6) 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 costs and for hedging purposes as described above;
(7) invest for the primary purpose of control or management;
(8) 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;
(9) make loans, except that the Fund 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 Fund's investment objective and
restrictions;
(10) invest more than 25% of its total assets in the securities of
issuers in any single industry;
(11) purchase the securities of any other investment company, 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;
(12) invest in interests in oil, gas or other mineral exploration or
development programs; or
(13) invest more than 5% of its net assets in warrants, valued at the
lower of cost or market; warrants acquired by the Fund in units or
attached to securities will be deemed to be without value with
regard to this restriction.
DISCIPLINED SMALL CAP STOCK PORTFOLIO
In pursuing its objective, Disciplined Small Cap Stock Portfolio currently is
subject to the following fundamental investment policies. The Fund will not:
(1) invest 25 % or more of its total assets in any one industry;
(2) borrow amounts in excess of 33-1/3% of its gross assets (taken at
the lower of cost or market value), except that as a temporary
measure for extraordinary or emergency purposes, the Fund may
borrow up to 5% more;
(3) issue senior securities;
(4) make loans, except that the Fund may purchase debt securities, may
enter into repurchase agreements, and may lend its securities;
(5) underwrite the securities of other issuers, except insofar as the
Fund may technically be deemed to be an underwriter, as defined in
the 1933 Act in the disposition of a portfolio security;
(6) invest for the primary purpose of control or management;
(7) purchase real estate or interests in real estate, other than
securities secured by real estate, participation therein or real
estate investment trusts and similar instruments;
(8) purchase or sell commodities or commodities contracts except for
hedging purposes;
C-2
<PAGE> 29
(9) make any short sales of securities, except in conformity with
applicable laws, rules and regulations and unless, giving effect
to such sale, the market value of all securities sold short does
not exceed 25% of the value of the Fund's total assets and the
Fund's aggregate short sales of a particular class of an issuer's
securities to not exceed 25% of the then outstanding securities of
that class of the issuer's securities; or
(10) purchase any security (other than U.S. government securities) such
that: (a) more than 25% of the Fund's total assets would be
invested in securities of a single issuer, or (b) as to 75% of the
Fund's total assets; more than 5% of the Fund's total assets would
be then invested in securities of a single issuer, or the Fund
would own more than 10% of the voting securities of a single
issuer.
EQUITY INCOME PORTFOLIO
Equity Income Portfolio currently is subject to the following fundamental
investment restrictions. The Fund may not:
(1) with respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities of other
investment companies or securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities) if,
as a result; more than 5% of the Fund's total assets would be
invested in the securities of that issuer or the Fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33-1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation.
(3) underwrite securities issued by others, except to the extent that
the Fund may be considered to be an underwriter within the meaning
of the 1933 Act in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies
or instrumentalities) if, as a result, more than 25% of the Fund's
total assets would be invested in the securities of companies
whose principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments
backed by real estate or securities or companies engaged in the
real estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall
not prevent the Fund from purchasing or selling options and
futures contracts or from investing in securities or other
instruments backed by physical commodities);
(7) lend any security or make any other loan if, as a result, more
than 33-1/3% of its total assets would be lent to other parties,
but this limitation does not apply to purchases of debt securities
or to repurchase agreements;
(8) the Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all the assets in the securities of a
single open-end management investment company managed by the
subadviser or any affiliate or successor with substantially the
same investment objective, policies, and limitations as the Fund.
C-3
<PAGE> 30
FEDERATED HIGH YIELD PORTFOLIO
In pursuing its objective, Federated High Yield Portfolio currently is subject
to the following fundamental investment policies. The Fund will not:
(1) borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a
set date) except, under certain circumstances, the Fund may borrow
up to one-third of the value of its net assets;
(2) sell securities short except, under strict limitations, the Fund
may maintain open short positions so long as not more than 10% of
the value of its net assets is held as collateral for those
positions; or
(3) pledge assets except to secure permitted borrowing.
FEDERATED STOCK PORTFOLIO
In pursuing its objective, Federated Stock Portfolio currently complies with the
following fundamental investment policies. The Fund will not:
(1) borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of
its total assets and pledge up to 10% of the value of those assets
to secure such borrowings;
(2) invest more than 5% of its total assets in the securities of one
issuer (except cash and cash items and U.S. government
securities);
(3) acquire more than 10% of the voting securities of any one issuer;
(4) invest in real estate;
(5) issue senior securities;
(6) trade in puts and calls; or
(7) underwrite securities.
JURIKA & VOYLES CORE EQUITY PORTFOLIO
In pursuing its objective, Jurika & Voyles Core Equity Portfolio currently
complies with the following fundamental investment policies. The Fund will not:
(1) with respect to 75% of its assets, 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 more than 25% of its assets in companies within a single
industry; except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;
(3) 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. The Fund may not
purchase additional securities when borrowings exceed 5% of total
assets;
(4) issue senior securities;
(5) make loans of more than one-third of the Fund's net assets,
including loans of securities;
C-4
<PAGE> 31
(6) purchase or sell commodities or commodity contracts, or interests
in oil, gas or other mineral leases, or other mineral exploration
or development programs;
(7) purchase or sell 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;
and
(8) underwrite securities of any other company, except that the Fund
may invest in companies that engage in such businesses, and except
to the extent that the Fund may technically be deemed to be an
underwriter, as defined in the 1933 Act in selling a portfolio
security;
LARGE CAP PORTFOLIO
In pursuing its objective, Large Cap Portfolio is subject to the following
fundamental investment policies. The Fund will not:
(1) with respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities of other
investment companies or securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities) if,
as a result, more than 5% of the Fund's total assets would be
invested in the securities of that issuer, or the Fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the 1940 Act;
(3) borrow money, except that the Fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33-1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation.
(4) underwrite securities issued by others, except to the extent that
the Fund may be considered to be an underwriter within the meaning
of the 1933 Act in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies
or instrumentalities) if, as a result, more than 25% of the Fund's
total assets would be invested in the securities of companies
whose principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments
backed by real estate or securities or companies engaged in the
real estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall
not prevent the Fund from purchasing or selling options and
futures contracts or from investing in securities or other
instruments backed by physical commodities);
(8) lend any security or make any other loan if, as a result, more
than 33-1/3% of its total assets would be lent to other parties,
but this limitation does not apply to purchases of debt securities
or to repurchase agreements;
(9) the Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all the assets in the securities of a
single open-end management investment company managed by the
subadviser or any affiliate or successor with substantially the
same investment objective, policies, and limitations as the Fund.
LAZARD INTERNATIONAL STOCK PORTFOLIO
C-5
<PAGE> 32
In pursuing its objective, Lazard International Stock Portfolio currently is
subject to the following fundamental investment policies. The Fund will not:
(1) issue senior securities, borrow money or pledge or mortgage its
assets, except that the Fund may borrow from banks for temporary
purposes, including the meeting of redemption requests which might
require the untimely disposition of securities. For purposes of
this investment restriction, the Fund's entry into options,
forward contracts, futures contracts, including those related to
indexes shall not constitute borrowing;
(2) make loans, except loans of portfolio securities not having a
value in excess of 10% of the Fund's total assets and except that
the Fund may purchase debt obligations in accordance with its
investment objectives and policies and may engage in securities
lending;
(3) invest in illiquid securities if immediately after such investment
more than 10% of the value of the Fund's net assets, taken at
market value, would be invested in such securities;
(4) purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization; provided, however, the Fund may purchase
securities in an amount up to 5% of the value of its total assets
in any one closed-end fund and may purchase in the aggregate
securities of closed-end funds in an amount of up to 10% of the
value of the Fund's total assets;
(5) purchase the securities of issuers conducting their principal
business in the same industry, if the value of the value of the
Fund's investment exceeds 25% of the Fund's then current net asset
value;
(6) purchase or sell real estate except in a manner consistent with
specific rules described in greater detail in the prospectus;
(7) purchase securities on margin;
(9) make investments for the purpose of exercising control or
management.
MFS EMERGING GROWTH PORTFOLIO
In pursuing its objective, MFS Emerging Growth Portfolio currently is subject to
the following fundamental investment policies. The Fund will not:
(1) borrow money in an amount in excess of 33-1/3% of its net assets;
(2) underwrite securities;
(3) concentrate its investments in any particular industry in excess
of 25% of its total net assets;
(4) purchase or sell real estate in the ordinary course of its
business.
C-6
<PAGE> 33
MFS MID CAP GROWTH PORTFOLIO
In pursuing its objective, MFS Mid Cap Growth Portfolio currently is subject to
the following fundamental investment policies. The Fund will 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 Fund may technically be deemed to be an underwriter, as
defined in 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
Fund 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 Fund's assets in repurchase agreements,
shall not be considered the making of a loan;
(6) invest more than 25% of its total assets in the securities of
issuers in any single industry.
MFS RESEARCH PORTFOLIO
In pursuing its objective, MFS Research Portfolio currently is subject to the
following fundamental investment policies. The Fund will 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 Fund may technically be deemed to be an underwriter, as
defined in the 1933 Act in selling a portfolio security;
C-7
<PAGE> 34
(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;
(10) make loans, except that the Fund 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 Fund'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 Fund shall not
purchase such securities if the purchase would cause more than 10%
of the Fund's total assets (taken at market value) to be invested
in the securities of such issuer, and provided that the Fund shall
not purchase securities issued by any open-end investment company;
(13) sell any security which the Fund does not own unless, at the time
of sale, the Fund 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 has determined
that such securities are liquid based upon trading markets for the
specific security if more than 10% of the Fund's assets (taken at
market value) would be invested in such illiquid securities.
NWQ LARGE CAP PORTFOLIO
In pursuing its investment objective, NWQ Large Cap Portfolio currently is
subject to the following fundamental investment policies. The Fund may not:
(1) with respect to 75% of its assets, 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) with respect to 75% of its assets, invest in more than 10% of any
class of securities of any one issuer;
(3) invest more than 25% of its total assets in companies within a
single industry; however, there are no limitations on investment
made in instruments issued or guaranteed by the U.S. Government
when the Fund adopts a temporary defensive position;
(4) make loans, except by purchasing debt securities as allowed by the
investment policies, or entering into repurchase agreements, or by
lending its portfolio securities to banks, brokers dealers and
other financial institution
C-8
<PAGE> 35
(5) (a) borrow amounts in excess of 10% 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, and (b) the Fund
may not purchase additional securities when borrowings exceed 5%
of total assets;
(6) pledge, mortgage or hypothecate an amount of assets which (taken
at market value) exceeds 10% of its gross assets (taken at the
lower of cost or market value).
SOCIAL AWARENESS STOCK PORTFOLIO
In pursuing its objective, Social Awareness Stock Portfolio currently is subject
to the following fundamental investment policies. The Fund will not:
(1) invest more than 5% of its total assets in securities of any one
issuer, except obligations of the U.S. 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 Fund 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 Fund;
(3) underwrite securities of other issuers, except that the Fund could
be deemed an underwriter when engaged in the sale of restricted
securities (see item 4, under nonfundamental restrictions);
(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 4, under nonfundamental restrictions);
(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 Fund not to exceed 5% of the
voting securities of any one issuer);
(9) issue senior securities.
STRATEGIC STOCK PORTFOLIO
In pursuing its objective, Strategic Stock Portfolio currently is subject to the
following fundamental investment policies. The Fund will not:
(1) invest 25% or more of its total assets in any one industry;
(2) borrow amounts in excess of 33 1/3% of its gross assets (taken at
the lower of cost or market value), except that as a temporary
measure for extraordinary or emergency purposes, the portfolio may
borrow up to 5% more;
(3) issue senior securities;
C-9
<PAGE> 36
(4) make loans, except that the Fund may purchase debt securities, may
enter into repurchase agreements, and may lend its securities;
(5) underwrite the securities of other issuers, except insofar as the
Fund may technically be deemed to be an underwriter, as defined in
the 1933 Act in the disposition of a portfolio security;
(6) invest for the primary purpose of control or management;
(7) purchase real estate or interests in real estate, other than
securities secured by real estate, participation therein or real
estate investment trusts and similar instruments;
(8) purchase or sell commodities or commodities contracts except for
hedging purposes;
(9) make any short sales of securities, except in conformity with
applicable laws, rules and regulations and unless, giving effect
to such sale, the market value of all securities sold short does
not exceed 25% of the value of the Fund's total assets and the
Fund's aggregate short sales of a particular class of an issuer's
securities to not exceed 25% of the then outstanding securities of
that class of the issuer's securities; or
(10) purchase any security (other than U.S. obligations) such that: (a)
more than 25% of the Fund's total assets would be invested in
securities of a single issuer, or (b) as to 75% of the Fund's
total assets, more than 5% of the Fund's total assets would be
then invested in securities of a single issuer, or the Fund would
own more than 10% of the voting securities of a single issuer.
U.S. GOVERNMENT SECURITIES PORTFOLIO
In pursuing its objective, U.S. Government Securities currently is subject to
the following fundamental investment policies. The Fund 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 U.S. 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
Fund 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 Fund 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 Fund
may be deemed to be an underwriter, as defined in the 1933 Act;
(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;
C-10
<PAGE> 37
(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 Fund 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 U.S. 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 Fund may purchase
securities of brokers, dealers, underwriters or investment
advisers.
UTILITIES PORTFOLIO
In pursuing its objective, Utilities Portfolio currently is subject to the
following fundamental investment policies. The Fund 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 Fund's
total assets would be invested in the securities of the issuer,
except that up to 25% of the value of the Fund'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 Fund 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 Fund);
(4) make short sales of securities or maintaining a short position,
except to the extent of 5% of the Fund's net assets and except
that the Fund may engage in such activities without limit if, at
all times when a short position is open, the Fund 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 Fund 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
Fund'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 Fund's total assets, the Fund will not make any
additional investments;
(6) pledge, hypothecate, mortgage or otherwise encumber more than 10%
of the value of the Fund'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 Fund's assets);
C-11
<PAGE> 38
(7) invest in commodities, except that the Fund may purchase or write
futures contracts and options on futures contracts;
(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 Fund will concentrate
in excess of 25% of its assets in the securities of companies
within the utility industries.
ZERO COUPON BOND FUND PORTFOLIOS (SERIES 2000 AND 2005)
In pursuing its objective, each Zero Coupon Bond Fund Portfolio follows the
following fundamental investment policies. The Fund 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 Fund's
total assets would be invested in the securities of the issuer,
except that up to 25% of the value of the Fund'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 Fund 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 Fund;
(4) make short sales of securities or maintain a short position,
except to the extent of 5 % of each Fund's net assets and except
that a Fund may engage in such activities without limit if, at all
times when a short position is open, the Fund 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 Fund 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
Fund'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 Fund's total assets, the Fund will not make any
additional investments;
(6) pledge, hypothecate, mortgage or otherwise encumber more than 10%
of the value of a Fund'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 Fund's assets;
(7) invest in commodities, except that each Fund may purchase or write
futures contracts and options on futures contracts;
(8) make loans to others, except through the purchase of qualified
debt obligations, loans of portfolio securities and the entry into
repurchase agreements; and
C-12
<PAGE> 39
(9) concentrate in any industry.
C-13
<PAGE> 40
THE TRAVELERS SERIES TRUST
CONVERTIBLE BOND PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Convertible Bond Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.H. Proposal To Amend the Fundamental Investment Policies On Senior Securities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.F. Proposal To Eliminate the Fundamental Investment Policies On Oil, Gas and Minerals
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 41
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: ________________, 1999
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
---------------------------------------
Signature(s) if held jointly (Title(s),
if required)
<PAGE> 42
THE TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Disciplined Mid Cap Stock Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.B Proposal To Redesignate the Fundamental Investment Policies On Investments
To Exercise Control
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
Item 2.D. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Purchasing On Margin
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
Item 2.F. Proposal To Eliminate the Fundamental Investment Policies On Oil, Gas and Minerals
Item 2.G. Proposal To Eliminate the Fundamental Investment Policies On "Unseasoned Issuers"
Item 2.I. Proposal To Eliminate Fundamental Investment Policy On Warrants
Item 2.J. Proposal To Redesignate and Amend the Fundamental Investment Policies On
Investing in the Securities Of Other Investment Companies
</TABLE>
<PAGE> 43
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 44
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED PRE-ADDRESSED, POSTAGE-PAID
ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS
AT LEFT.
DATE: ________________, 1999
If signing in a representative
capacity (as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or
general partner), please indicate
such capacity following signature.
Proxies for custodian accounts must
be signed by the named custodian,
not by the minor.
------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 45
THE TRAVELERS SERIES TRUST
DISCIPLINED SMALL CAP STOCK PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Disciplined Small Cap Stock Portfolio of The Travelers Series Trust which
the undersigned is entitled to vote at a Special Meeting of Shareholders to be
held at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
Item 1.H. Proposal To Amend the Fundamental Investment Policies On Senior Securities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.B Proposal To Redesignate the Fundamental Investment Policies On Investments
To Exercise Control
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 46
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
DATE: , 1999
----------------
If signing in a representative capacity (as attorney, executor or
administrator, trustee, guardian or custodian, corporate officer or general
partner), please indicate such capacity following signature. Proxies for
custodian accounts must be signed by the named custodian, not by the minor.
------------------------------------------
Signature(s) if held jointly (Title(s), if
required)
<PAGE> 47
THE TRAVELERS SERIES TRUST
EQUITY INCOME PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Equity Income Portfolio of The Travelers Series Trust which the undersigned
is entitled to vote at a Special Meeting of Shareholders to be held at
9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford, Connecticut,
and at any adjournment thereof, in the manner directed below with respect to
the matters described in the Proxy Statement for the Special meeting, receipt
of which is hereby acknowledged, and in their discretion, upon such other
matters as may properly come before the Special Meeting or any adjournment
thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT
POLICIES TO PERMIT EACH FUND TO INVEST ALL OR A
PORTION OF ITS ASSETS IN ONE OR MORE INVESTMENT
COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 48
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSAL 3. THE SHARES REPRESENTED HEREBY WILL
BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
DATE: , 1999
----------------
If signing in a representative capacity (as attorney, executor or
administrator, trustee, guardian or custodian, corporate officer or general
partner), please indicate such capacity following signature. Proxies for
custodian accounts must be signed by the named custodian, not by the minor.
------------------------------------------
Signature(s) if held jointly (Title(s), if
required)
<PAGE> 49
THE TRAVELERS SERIES TRUST
FEDERATED HIGH YIELD PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Federated High Yield Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 50
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
DATE: , 1999
-----------------
If signing in a representative capacity (as
attorney, executor or administrator,
trustee, guardian or custodian, corporate
officer or general partner), please
indicate such capacity following signature.
Proxies for custodian accounts must be
signed by the named custodian, not by the
minor.
-------------------------------------------
Signature(s) if held jointly (Title(s), if
required)
<PAGE> 51
THE TRAVELERS SERIES TRUST
FEDERATED STOCK PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Federated Stock Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
Item 1.H. Proposal To Amend the Fundamental Investment Policies On Senior Securities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
Item 2.H. Proposal To Eliminate the Fundamental Investment Policies On Puts And Calls
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 52
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
DATE: , 1999
----------------
If signing in a representative capacity (as
attorney, executor or administrator,
trustee, guardian or custodian, corporate
officer or general partner), please
indicate such capacity following signature.
Proxies for custodian accounts must be
signed by the named custodian, not by the
minor.
-------------------------------------------
Signature(s) if held jointly (Title(s), if
required)
<PAGE> 53
THE TRAVELERS SERIES TRUST
JURIKA & VOYLES CORE EQUITY PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Jurika & Voyles Core Equity Portfolio of The Travelers Series Trust which
the undersigned is entitled to vote at a Special Meeting of Shareholders to be
held at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.F. Proposal To Eliminate the Fundamental Investment Policies On Oil, Gas and Minerals
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 54
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
----------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 55
THE TRAVELERS SERIES TRUST
LARGE CAP PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Large Cap Portfolio of The Travelers Series Trust which the undersigned is
entitled to vote at a Special Meeting of Shareholders to be held at 9:00 a.m.
on Friday, April 30, 1099 at One Tower Square, Hartford, Connecticut, and at
any adjournment thereof, in the manner directed below with respect to the
matters described in the Proxy Statement for the Special meeting, receipt of
which is hereby acknowledged, and in their discretion, upon such other matters
as may properly come before the Special Meeting or any adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT
POLICIES TO PERMIT EACH FUND TO INVEST ALL OR A
PORTION OF ITS ASSETS IN ONE OR MORE INVESTMENT
COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 56
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSAL 3. THE SHARES REPRESENTED HEREBY WILL
BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
DATE: , 1999
----------------
If signing in a representative capacity (as attorney, executor or
administrator, trustee, guardian or custodian, corporate officer or general
partner), please indicate such capacity following signature. Proxies for
custodian accounts must be signed by the named custodian, not by the minor.
------------------------------------------
Signature(s) if held jointly (Title(s), if
required)
<PAGE> 57
THE TRAVELERS SERIES TRUST
LAZARD INTERNATIONAL STOCK PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
Lazard International Stock Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
Item 1.H. Proposal To Amend the Fundamental Investment Policies On Senior Securities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.A. Proposal To Redesignate the Fundamental Investment Policy On Liquidity
Item 2.B Proposal To Redesignate the Fundamental Investment Policies On Investments
To Exercise Control
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment Policies
On Pledging Assets
Item 2.J. Proposal To Redesignate and Amend the Fundamental Investment Policies
On Investing in the Securities Of Other Investment Companies
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 58
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: ,1999
-----------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 59
THE TRAVELERS SERIES TRUST
MFS EMERGING GROWTH PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the MFS Emerging Growth Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 60
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
-----------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 61
THE TRAVELERS SERIES TRUST
MFS MID CAP GROWTH PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the MFS Mid Cap Growth Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
Item 1.H. Proposal To Amend the Fundamental Investment Policies On Senior Securities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
Item 2.F. Proposal To Eliminate the Fundamental Investment Policies On
Oil, Gas and Minerals
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 62
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
-------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 63
THE TRAVELERS SERIES TRUST
MFS RESEARCH PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the MFS Research Portfolio of The Travelers Series Trust which the undersigned
is entitled to vote at a Special Meeting of Shareholders to be held at 9:00
a.m. on Friday, April 30, 1099 at One Tower Square, Hartford, Connecticut, and
at any adjournment thereof, in the manner directed below with respect to the
matters described in the Proxy Statement for the Special meeting, receipt of
which is hereby acknowledged, and in their discretion, upon such other matters
as may properly come before the Special Meeting or any adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.A. Proposal To Redesignate the Fundamental Investment Policy On Liquidity
Item 2.B Proposal To Redesignate the Fundamental Investment Policies On Investments
To Exercise Control
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
Item 2.D. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Purchasing On Margin
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
Item 2.G. Proposal To Eliminate the Fundamental Investment Policies On "Unseasoned Issuers"
Item 2.H. Proposal To Eliminate the Fundamental Investment Policies On Puts And Calls
Item 2.J. Proposal To Redesignate and Amend the Fundamental Investment Policies On
Investing in the Securities Of Other Investment Companies
</TABLE>
<PAGE> 64
<TABLE>
<S> <C>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT
POLICIES TO PERMIT EACH FUND TO INVEST ALL OR A PORTION
OF ITS ASSETS IN ONE OR MORE INVESTMENT COMPANIES AND
RELATED AMENDMENTS TO THE FUND'S ADVISORY AGREEMENT
</TABLE>
<PAGE> 65
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
---------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 66
THE TRAVELERS SERIES TRUST
NWQ LARGE CAP PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the NWQ Large Cap Portfolio of The Travelers Series Trust which the undersigned
is entitled to vote at a Special Meeting of Shareholders to be held at 9:00
a.m. on Friday, April 30, 1099 at One Tower Square, Hartford, Connecticut, and
at any adjournment thereof, in the manner directed below with respect to the
matters described in the Proxy Statement for the Special meeting, receipt of
which is hereby acknowledged, and in their discretion, upon such other matters
as may properly come before the Special Meeting or any adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental
Investment Policies On Pledging Assets
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT
POLICIES TO PERMIT EACH FUND TO INVEST ALL OR A PORTION
OF ITS ASSETS IN ONE OR MORE INVESTMENT COMPANIES AND
RELATED AMENDMENTS TO THE FUND'S ADVISORY AGREEMENT
<PAGE> 67
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
----------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 68
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Social Awareness Stock Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
Item 1.H. Proposal To Amend the Fundamental Investment Policies On Senior Securities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.B Proposal To Redesignate the Fundamental Investment Policies On Investments
To Exercise Control
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 69
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
-----------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 70
THE TRAVELERS SERIES TRUST
STRATEGIC STOCK PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Strategic Stock Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G. Proposal To Amend the Fundamental Investment Policies On Underwriting
Item 1.H. Proposal To Amend the Fundamental Investment Policies On Senior Securities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.B Proposal To Redesignate the Fundamental Investment Policies On Investments
To Exercise Control
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 71
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
---------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 72
THE TRAVELERS SERIES TRUST
TRAVELERS QUALITY BOND PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Travelers Quality Bond Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 73
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
---------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 74
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the U.S. Government Securities Portfolio of The Travelers Series Trust which
the undersigned is entitled to vote at a Special Meeting of Shareholders to be
held at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.D. Proposal To Amend the Fundamental Investment Policies On Real Estate
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
Item 1.G Proposal To Amend the Fundamental Investment Policies On Underwriting
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.B Proposal To Redesignate the Fundamental Investment Policies On Investments
To Exercise Control
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
Item 2.D. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Purchasing On Margin
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
Item 2.J. Proposal To Redesignate and Amend the Fundamental Investment Policies
On Investing in the Securities Of Other Investment Companies
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES
TO PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE FUND'S
ADVISORY AGREEMENT
<PAGE> 75
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 76
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Utilities Portfolio of The Travelers Series Trust which the undersigned is
entitled to vote at a Special Meeting of Shareholders to be held at 9:00 a.m.
on Friday, April 30, 1099 at One Tower Square, Hartford, Connecticut, and at
any adjournment thereof, in the manner directed below with respect to the
matters described in the Proxy Statement for the Special meeting, receipt of
which is hereby acknowledged, and in their discretion, upon such other matters
as may properly come before the Special Meeting or any adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
Item 2.D. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Purchasing On Margin
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 77
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 78
THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO (SERIES 2000)
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
Zero Coupon Bond Fund Portfolio of The Travelers Series Trust which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Special
meeting, receipt of which is hereby acknowledged, and in their discretion,
upon such other matters as may properly come before the Special Meeting or any
adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
Item 2.D. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Purchasing On Margin
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 79
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
<PAGE> 80
THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO (SERIES 2005)
Proxy for a Special Meeting of Shareholders to be held on April 30, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints Heath
B. McLendon and Robert E. McGill III, or either one of them, as Proxies, with
full power of substitution, to vote on behalf of the undersigned all shares of
the Zero Coupon Bond Fund Portfolio (Series 2005) of The Travelers Series Trust
which the undersigned is entitled to vote at a Special Meeting of Shareholders
to be held at 9:00 a.m. on Friday, April 30, 1099 at One Tower Square,
Hartford, Connecticut, and at any adjournment thereof, in the manner directed
below with respect to the matters described in the Proxy Statement for the
Special meeting, receipt of which is hereby acknowledged, and in their
discretion, upon such other matters as may properly come before the Special
Meeting or any adjournment thereof.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX(ES) BELOW.
FOR AGAINST ABSTAIN
1. PROPOSAL TO ADOPT STANDARD FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 1.A. Proposal To Amend the Fundamental Investment Policies On Issuer Diversification
Item 1.B. Proposal To Amend the Fundamental Investment Policies On Industry Concentration
Item 1.C. Proposal To Amend the Fundamental Investment Policies On Borrowing
Item 1.E. Proposal To Amend the Fundamental Investment Policies On Loans
Item 1.F. Proposal To Amend the Fundamental Investment Policies On Commodities
</TABLE>
2. PROPOSAL TO REDESIGNATE (AND AMEND AS APPLICABLE) OR ELIMINATE
CERTAIN FUNDS' FUNDAMENTAL INVESTMENT POLICIES
<TABLE>
<S> <C>
Item 2.C. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies Concerning Short Sales
Item 2.D. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Purchasing On Margin
Item 2.E. Proposal To Redesignate and Amend As Applicable the Fundamental Investment
Policies On Pledging Assets
</TABLE>
3. PROPOSAL TO AMEND CERTAIN FUNDAMENTAL INVESTMENT POLICIES TO
PERMIT EACH FUND TO INVEST ALL OR A PORTION OF ITS ASSETS IN ONE OR
MORE INVESTMENT COMPANIES AND RELATED AMENDMENTS TO THE
FUND'S ADVISORY AGREEMENT
<PAGE> 81
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE SHARES REPRESENTED
HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE MARK, SIGN DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT.
DATE: , 1999
------------------
If signing in a representative capacity
(as attorney, executor or
administrator, trustee, guardian or
custodian, corporate officer or general
partner), please indicate such capacity
following signature. Proxies for
custodian accounts must be signed by
the named custodian, not by the minor.
--------------------------------------
Signature(s) if held jointly
(Title(s), if required)
