SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant [XXX]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ XXX] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c)
or Sec. 240.14a-12
TRAVELERS SERIES FUND INC.
(Name of Registrant as Specified In Its Charter)
MICHAEL KOCUR
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[XXX] $125 per Exchange Act Rules 0-11 (c) (1)(ii), 14a-
6 (i)(1), or
14a-6(j)(2) or the 1940 Act Rule 20a-1.
[ ] $500 per each party to the controversy pursuant to
Exchange Act
Rule 14a-6(i)(3).
[ ] 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:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated
and state how it
was determined.
[ ] 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:
September , 1996
Dear Shareholder:
The enclosed proxy statement relates to a meeting of the
shareholders of
the Van Kampen American Capital Enterprise Portfolio (the
"Portfolio") of
Travelers Series Fund Inc. (the "Fund"). VK/AC Holding,
Inc., the corporate parent
of the Portfolio's investment sub-adviser, Van Kampen
American Capital Asset
Management, Inc. (the "Sub-Adviser"), has entered into a
merger agreement with
Morgan Stanley Group Inc. ("Morgan Stanley") and certain of
Morgan Stanley's
affiliates. Pursuant to the merger agreement, the Sub-
Adviser will become an
indirect subsidiary of Morgan Stanley. The Sub-Adviser will
continue to provide
the Portfolio with investment advisory and management
services following the
merger, however, the primary purpose of the meeting is to
permit the Portfolio's
shareholders to consider a new investment subadvisory
agreement, to take effect
following the merger, as
required by the federal securities laws. The new investment
subadvisory agreement
among the Fund, its investment manager and the Sub-Adviser
will be substantially
identical to the Portfolio's current investment subadvisory
agreement, except for
the dates of execution, effectiveness and termination. The
attached proxy
statement seeks shareholder approval of the proposed new
investment subadvisory
agreement.
Your vote is important and your
participation
in the governance of the Portfolio does make a difference.
The proposal has been unanimously approved by the
Directors of the Fund,
who recommend you vote "FOR" the proposal. Your immediate
response will help save
on the costs of additional solicitations. We look forward
to your participation.
PLEASE SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED
POSTAGE-PAID
ENVELOPE.
Sincerely,
Heath B. McLendon
Chairman of the Board
TRAVELERS SERIES FUND INC. on behalf of
its Van Kampen American Capital Enterprise Portfolio
388 Greenwich Street
New York, New York 10013
Telephone (800) 224-7523
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
To be Held on October 25, 1996
A Special Meeting of Shareholders (the "Meeting") of
the Van Kampen
American Capital Enterprise Portfolio (the "Portfolio"), a
separate series
of Travelers Series Fund Inc. (the "Fund"), will be held at
the offices of
the Fund, 388 Greenwich Street, 22nd Floor, New York, New
York 10013 at
9:30 A.M. the following purposes:
1. With respect to the Fund on behalf of the Portfolio,
to approve or
disapprove a new investment subadvisory agreement (the "New
Subadvisory
Agreement");
2. To transact such other business as may properly
come before the
Meeting or any adjournments thereof.
Shareholders of record of the Portfolio at the
close of business on
September 6, 1996 are entitled to notice of and to vote at
this meeting or any
adjournment thereof.
By Order of the Board of Directors
Christina T. Sydor
Secretary
September , 1996
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY
OF ITS MOST RECENT ANNUAL REPORT (AND THE MOST RECENT
SEMIANNUAL REPORT SUCCEEDING THE ANNUAL REPORT) TO A
SHAREHOLDER OF THE PORTFOLIO UPON REQUEST. ANY SUCH
REQUEST SHOULD BE MADE BY CALLING (800) 224-7523 OR BY
WRITING TO THE FUND AT 388 GREENWICH STREET, NEW YORK,
NEW YORK 10013.
SHAREHOLDERS OF THE PORTFOLIO ARE INVITED TO
ATTEND THE MEETING IN PERSON. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE INDICATE YOUR VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD,DATE AND SIGN
THE PROXY CARD, AND RETURN IT IN THE ENVELOPE PROVIDED,
WHICH IS ADDRESSED FOR YOUR CONVENIENCE
AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF
FURTHER
SOLICITATION, WE ASK THAT YOU MAIL YOUR PROXY PROMPTLY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
CAST YOUR
VOTE:
FOR APPROVAL OF THE NEW SUBADVISORY
AGREEMENT. YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY
NO MATTER HOW MANY SHARES YOU OWN.
PROXY STATEMENT
TRAVELERS SERIES FUND INC. on behalf of
Van Kampen American Capital Enterprise Portfolio
388 Greenwich Street
New York, New York 10013
Telephone (800) 224-7523
SPECIAL MEETING OF SHAREHOLDERS
October 25, 1996
This proxy statement is furnished in connection
with the solicitation by
the Board of Directors (the "Directors" or the "Board") of
the Travelers Series
Fund Inc. (the "Fund") on behalf of its series, Van Kampen
American Capital
Enterprise Portfolio (the "Portfolio") of proxies to be
voted at a Special Meeting
of Shareholders, and all adjournments thereof (the
"Meeting") of the Portfolio, to
be held at the offices of the Fund, 388 Greenwich Street,
New York, New York
10013 on the 22nd floor, Friday, October 25, 1996, at 9:30
a.m. The
approximate mailing date of this proxy statement and
accompanying form of
proxy is September , 1996.
The primary purpose of the Meeting is to permit
the Portfolio's
shareholders to consider a New Subadvisory Agreement
(defined below) to take
effect following the consummation of the transactions
contemplated by an Agreement
and Plan
of Merger, dated as of June 21, 1996 (the "Merger
Agreement"), among Morgan
Stanley Group Inc. ("Morgan Stanley"), MSAM Holdings II,
Inc., MSAM
Acquisition Inc. and VK/AC Holding, Inc. ("VKAC Holding"),
the indirect
parent corporation of the Portfolio's investment sub-
adviser. Pursuant to
the
Merger Agreement, the Portfolio's investment sub-adviser
will become an indirect
subsidiary of Morgan Stanley. The shareholder vote on the
New Subadvisory
Agreement is required under the Investment Company Act of
1940, as amended (the
"1940 Act"), as a result of Morgan Stanley's contemplated
acquisition of the
investment subadviser. The Portfolio's New Subadvisory
Agreement is substantially
identical to the Portfolio's Current Subadvisory Agreement
(defined below),
except for the dates of execution, effectiveness and
termination.
The Board has fixed the close of business on September 6,
1996, as the record
date (the "Record Date") for the determination of holders of
Shares of the
Portfolio entitled to vote at the Meeting (the "Shares").
Shareholders of the
Portfolio (the "Shareholders") on the Record Date will be
entitled to one vote per share with
respect to each proposal submitted to the Shareholders of
the Portfolio,
with no Share having cumulative voting rights.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF
ITS
MOST RECENT ANNUAL REPORT (AND THE MOST RECENT SEMI-
ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT) TO A SHAREHOLDER
OF THE
PORTFOLIO UPON REQUEST. ANY SUCH REQUEST SHOULD BE DIRECTED
TO THE FUND
BY CALLING (800) 224-7523 OR BY WRITING TO THE FUND, 388
GREENWICH
STREET, NEW YORK, NEW YORK 10013.
At the close of business on September 6, 1996, there
were issued and
outstanding
Shares of the Portfolio.
The persons who, to the knowledge of the Fund, owned
beneficially more than 5%
of the Portfolio's outstanding Shares as of September 6,
1996 are set forth at
Annex A hereto. As of the Record Date, the officers and
Directors of the Fund
beneficially owned less than 1% of the outstanding shares of
the Portfolio.
Voting
The voting requirement for passage of a particular
proposal depends on the
nature of the particular proposal. With respect to Proposal
1, a "vote of a majority
of the outstanding voting securities" is required, which is
defined under the 1940
Act as the lesser of (i) 67% or more of the voting
securities of the Portfolio
entitled to vote thereon present in person or by proxy at
the Meeting, if the holders
of more than 50% of the outstanding voting securities
entitled to vote thereon are
present in person or represented by proxy, or (ii) more than
50% of the outstanding
voting securities of the Portfolio entitled to vote thereon.
THE BOARD RECOMMENDS THAT YOU CAST YOUR VOTE:
FOR
APPROVAL OF THE NEW SUBADVISORY AGREEMENT.
All Shares of the Portfolio affected by a proposal will
vote together as a
single class on such proposal. All properly executed proxies
received prior to the
Meeting will be voted at the Meeting in accordance with the
instructions marked
thereon.
Only owners of variable annuity contracts issued by the
Travelers Insurance Company
("Travelers Insurance") that were invested in the Portfolio
as of the close of
business on September 6, 1996 are considered "shareholders
of record" and
are entitled to notice of and to vote at the meeting. Each
share of stock is
entitled to one vote for the proposal. On the Record Date
the Portfolio had
shares of voting securities.
Travelers Insurance is the sole legal shareholder
of the Portfolio, since
the Portfolio technically offers its shares only for
purchases by Travelers
Insurance's separate accounts on behalf of its variable
contracts. Nevertheless,
with respect to the meeting, Travelers Insurance will
solicit and accept timely
voting instructions from its contract owners who own units
in a Travelers separate
account that corresponds to shares in the Portfolio and vote
them in accordance
with such instructions. Travelers Insurance will vote all
Portfolio shares related
to the variable contracts for which it has not received
timely voting instructions
in the same proportion as the shares for which it has
received timely instructions.
Proxies received prior to the Meeting on which no
vote is indicated will be
voted "for" the proposal. For purposes of determining the
presence of a quorum for
transacting business at the Meeting, abstentions and broker
"non-votes" (that is,
proxies from brokers or nominees indicating that such
persons have not received
instructions from the beneficial owner or other persons
entitled to vote shares on
a particular matter with respect to which the brokers or
nominees do not have
discretionary power) will be treated as shares that are
present but which have not
been voted. Because abstentions and broker non-votes are not
treated as shares
voted, abstentions and broker non-votes would have no impact
on the Proposal. A
majority of the outstanding Shares entitled to vote on the
proposal must be
present in person or by proxy to have a quorum to conduct
business at the
Meeting.
Shareholders who execute proxies may revoke them
at any time before they
are voted by filing with the Fund a written notice of
revocation, by delivering
a duly executed proxy bearing a later date or by attending
the Meeting and
voting in person.
The Fund knows of no business other than that
mentioned in Proposal 1 of
the Notice that will be presented for consideration at the
Meeting. If any other
matters are properly presented, it is the intention of the
persons named on the
enclosed proxy to vote proxies in accordance with their best
judgment. In the
event a quorum is present at the Meeting but sufficient
votes to approve the
proposal are not received, the persons named as proxies may
propose one or more
adjournments of
the Meeting to permit further solicitation of proxies
provided they determine
that
such an adjournment and additional solicitation is
reasonable and in the interest
of shareholders based on a consideration of all relevant
factors, including the
nature of the relevant proposal, the percentage of votes
then cast, the percentage
of negative votes then cast, the nature of the proposed
solicitation activities
and the nature of the reasons for such further solicitation.
PROPOSAL 1: APPROVAL OF NEW SUBADVISORY AGREEMENT
The Sub-Adviser
Van Kampen American Capital Asset Management, Inc. (the
"Sub-Adviser")
acts as investment subadviser for the Portfolio. The Sub-
Adviser has acted as
investment subadviser for the Portfolio since the Portfolio
commenced its
invest[HL] ment operations in June 1994.
The Sub-Adviser currently is a wholly-owned subsidiary of
Van Kampen
American Capital, Inc. ("VKAC"), which is a wholly-owned
subsidiary of VKAC
Holding, which in turn is controlled, through the ownership
of a substantial
majority of its common stock, by The Clayton & Dubilier
Private Equity Fund IV
Limited Partnership ("C&D L.P."), a Connecticut limited
partnership. C&D L.P.
is managed by Clayton, Dubilier & Rice, Inc., a New York
based private
investment firm. The General Partner of C&D L.P. is Clayton
& Dubilier
Associates IV Limited Partnership ("C&D Associates L.P.").
The general
partners of C&D Associates L.P. are Joseph L. Rice, III, B.
Charles Ames,
William A. Barbe, Alberto Cribiore, Donald J. Gogel, Leon J.
Hendrix, Jr.,
Hubbard C. Howe and
Andrall E. Pearson, each of whom is a principal of Clayton,
Dubilier &
Rice,
Inc. In addition, certain officers, directors and employees
of VKAC own, in
the aggregate, approximately 6% of the common stock of VKAC
Holding and have
the
right to acquire, upon the exercise of options (whether or
not vested),
approximately an additional 12% of the common stock of VKAC
Holding.
Currently, and after giving effect to the exercise of such
options, no officer or
director of the Fund owns or would own 5% of more of the
common stock of VKAC
Holding. The addresses of VKAC Holding, VKAC and the Sub-
Adviser are One Parkview
Plaza, Oakbrook Terrace, Illinois 60181 and 2800 Post Oak
Blvd., Houston, Texas
77056.
Prior to December 1994, the Sub-Adviser provided investment
advisory
services under the name "American Capital Asset Management,
Inc."
Information Concerning Morgan Stanley
Morgan Stanley and various of its directly or
indirectly owned
subsidiaries, including Morgan Stanley & Co. Incorporated
("Morgan Stanley &
Co."), a
registered broker-dealer and investment adviser, and Morgan
Stanley
International, are engaged in a wide range of financial
services. Their principal
businesses include securities underwriting, distribution and
trading; merger,
acquisition, restructuring and other corporate finance
advisory activities;
merchant banking; stock brokerage and research services;
asset management;
trading of futures, options, foreign exchange, commodities
and swaps (involving
foreign exchange, commodities,
indices and interest rates); real estate advice, financing
and investing; and
global custody, securities clearance services and securities
lending. Morgan
Stanley Asset Management Inc. ("MSAM") also is a wholly-
owned subsidiary of
Morgan Stanley. As of June 30, 1996, MSAM, together with its
affiliated
investment advisory companies, had approximately $103.5
billion of assets under
management and fiduciary advice.
The Acquisition
Pursuant to the Merger Agreement, MSAM Acquisition Inc.
will be merged
with and into VKAC Holding and VKAC Holding will be the
surviving corporation
(the "Acquisition"). Following the Acquisition, VKAC Holding
and the Sub-
Adviser will be indirect subsidiaries of Morgan Stanley.
The Sub-Adviser anticipates that the consummation of
the Acquisition
will
occur by the end of November 1996, provided that a number of
conditions set forth
in the Merger Agreement are met or waived. The conditions
require, among other
things, that as of the closing of the Acquisition the
shareholders of certain
investment companies (including the Portfolio) and investors
in certain
accounts advised by the Sub-Adviser or its affiliates, which
investment
companies and accounts have aggregate assets in excess of a
specified
minimum amount, have approved new
investment advisory agreements or consented to the
assignment of existing
investment advisory agreements. At the closing, MSAM
Acquisition Inc. will
pay approximately $740 million (based on VKAC's long-term
debt outstanding
as of July 31, 1996) in cash to the stockholders of VKAC
Holding (excluding
certain management stockholders), and to persons owning
options to purchase
stock of
VKAC Holding, subject to certain purchase price adjustments
set forth in the
Merger Agreement. As of July 31, 1996, VKAC had long-term
debt outstanding
of approximately $410 million. To the extent that pre-tax
income of VKAC
prior to the closing of the Acquisition permits the
repayment of its long-
term debt, the purchase price for the equity interests in
VKAC Holding will
be increased by the amount of long-term debt repaid. The
purchase price also
is subject to certain adjustments based, among other things,
on assets under
management of VKAC and
its subsidiaries at the time of closing. The Sub-Adviser
also contemplates
that, as part of the Acquisition, certain officers and
directors of VKAC
Holding and its affiliates will contribute to MSAM Holdings
II, Inc. their
existing shares of common stock of VKAC Holding in exchange
for approximately
$25 million of shares of preferred stock of MSAM Holdings
II, Inc. which, in
turn, will be exchangeable into common stock, par value
$1.00 per share, of
Morgan Stanley at specified times over a four year period.
Such shares of
preferred stock will
represent, in the aggregate, 5% of the combined voting power
in MSAM Holdings
II, Inc., the remainder of which will be indirectly owned by
Morgan Stanley.
VKAC Holding will engage in certain preparatory transactions
prior to the
Acquisition, including the distribution to stockholders of
VKAC Holding of (i)
all of VKAC Holding's investment in McCarthy, Crisanti &
Maffei, Inc., a wholly
owned subsidiary engaged in the business of distributing
research and financial
information, (ii) all of VKAC Holding's investment in
Hansberger Global
Investors, Inc., a company in which VKAC Holding made a
minority investment in
May 1996, and (iii) certain related cash amounts.
There is no financing condition to the closing of the
Acquisition. VKAC
has been advised by Morgan Stanley that as of August 30,
1996, no determination
has been made whether any additional indebtedness will be
incurred by Morgan
Stanley and its affiliates or VKAC and its affiliates in
connection with the
Acquisition. In addition, the disposition of VKAC's
outstanding long-term
indebtedness (including its bank loans and senior notes) in
connection with the
Acquisition has not yet been determined.
The operating revenue of VKAC and its subsidiaries for the
fiscal year
ended December 31, 1995, less expenses for the same period,
was more than adequate
to service VKAC's outstanding debt. VKAC prepaid $80 million
of its long-term debt
in 1995, and has continued to make debt prepayments during
1996. VKAC Holding
and VKAC believe, based on the earnings experience of VKAC
and its
subsidiaries, that after the Acquisition the operating
revenue of VKAC and its
subsidiaries should be more than sufficient to service their
debt and that VKAC
and its subsidiaries should be able to conduct their
respective operations as
now conducted and as proposed to be conducted.
The Merger Agreement does not contemplate any changes,
other than
changes in the ordinary course of business, in the
management or operation of
the SubAdviser relating to the Portfolio, the personnel
managing the Portfolio
or other services or business activities of the Portfolio.
The Acquisition is
not expected to result in material changes in the business,
corporate structure
or composition
of the senior management or personnel of the Sub-Adviser, or
in the manner in
which the SubAdviser renders services to the Portfolio.
Morgan Stanley has agreed
in the Merger Agreement that, for a period of two years from
the date of the
Acquisition, it will cause the Sub-Adviser to provide
compensation and employee
benefits which are substantially comparable in the aggregate
to those presently
provided. The Sub Adviser does not anticipate that the
Acquisition or any
ancillary transactions will cause a reduction in the quality
of services now
provided to the Portfolio, or have any adverse effect on the
Sub-Adviser's
ability to fulfill its respective obligations under the New
Subdvisory Agreement
or operate its business in a manner consistent with past
business practices.
Certain officers of the Sub-Adviser previously entered
into employment
agreements with VKAC Holding which expire from between 1997
and 2000. Certain
officers of the Sub-Adviser also previously entered into
retention agreements
with VKAC Holding which will remain in place for two years
following the
consummation of the Acquisition. The Merger Agreement
contemplates that
Morgan Stanley will, and will cause VKAC Holding to, honor
such employment
and retention agreements. The employment agreements and
retention agreements
are intended to
assure that the services of the officers are available to
the Sub-Adviser (and
thus to the Portfolio) for a remaining term of two to four
years. As described
above, certain officers and employees of VKAC and the Sub-
Adviser are expected to
contribute
their existing shares of common stock of VKAC Holding to
MSAM Holdings
II, Inc. in exchange for approximately $25 million of
preferred stock in
MSAM
Holdings II, Inc. which, in turn, will be exchangeable into
common stock, par
value $1.00 per share, of Morgan Stanley at specified times
over a four year
period. Such shares of preferred stock will represent, in
the aggregate, 5% of
the combined voting power in MSAM Holdings II, Inc.
The Subadvisory Agreements
Consummation of the Acquisition may constitute an
"assignment" (as
defined in the 1940 Act) of the investment subadvisory
agreement currently in
effect among the Fund on behalf of the Portfolio, the Sub-
Adviser and the
investment
manager, Travelers Investment Adviser, Inc. (the "Manager")
(the "Current
Subadvisory Agreement"). As required by the 1940 Act, the
Current
Subadvisory Agreement provides for its automatic termination
in the event
of an assignment. See "The Current Subadvisory Agreement"
below.
In anticipation of the Acquisition and in order for the
Sub-Adviser
to continue to serve as investment sub-adviser to the
Portfolio after
consummation of the Acquisition, a new investment
subadvisory agreement
(the "New Subadvisory Agreement") between the Fund, on
behalf of the
Portfolio, the Sub-Adviser and the Manager must be approved
(i) by a
majority of the Directors of the Fund who are not parties to
the New
Subadvisory Agreement or interested persons of any such
party
("Disinterested Directors") and (ii) by the holders of a
majority of the
outstanding voting securities (within the meaning of the
1940 Act) of the
Portfolio. See "The New Subadvisory Agreement" below.
The following summary of the Current Subadvisory Agreement
and the New
Subadvisory Agreement set forth herein is qualified by
reference to Annex
D.
The Current Subadvisory Agreement. The Current
Subadvisory Agreement
for the Fund on behalf of the Portfolio, dated as of
December 20, 1994, was last
approved by a majority of the Directors, including a
majority of the
Disinterested Directors, voting in person at a meeting
called for that purpose
on June 4, 1996, to continue the Current Subadvisory
Agreement for a period of
one year. The Current Subadvisory Agreement was last
approved by shareholders of
the Portfolio at a meeting held on December 9, 1994 relating
to the acquisition
of the SubAdviser's corporate parent by The Van Kampen
Merritt Companies, Inc.
Under the Current Subadvisory Agreement, the Sub-
Adviser, subject to the
supervision, direction and approval of the Directors and the
Manager, conducts a
continual program of investment, evaluation and, if
appropriate in the view of
the Sub-Adviser, sale and reinvestment of the Portfolio's
assets. Under the
Current Subadvisory Agreement, the Sub-Adviser is
responsible for the day-to-day
operations and investment decisions for the Portfolio and is
authorized, in
its sole discretion and without prior consultation with the
Manager, to: (a)
manage the Portfolio's assets in accordance with its
investment objective(s) and
policies; (b) make investment decisions; (c) place purchase
and sale orders for
portfolio
transactions; and (d) employ professional portfolio managers
and securities
analysts who provide research services.
The Current Subadvisory Agreement provides that
the Sub-Adviser shall
not be liable for any error of judgment or mistake of law,
or for any loss
suffered by the
Portfolio in connection with the matters to which the
Current Subadvisory
Agreement relates, except; a loss resulting from willful
misfeasance, bad faith,
gross negligence or reckless disregard of its obligations or
duties under the
Current Subadvisory Agreement.
Under the Current Subadvisory Agreement the
Manager pays the Sub-Adviser
as compensation for services rendered an annual fee
calculated at the rate of
0.325% of the Portfolio's average daily net assets. The
subadvisory fee is
payable for each calendar month as soon as practicable after
the end of that
month. The Manager paid the Sub-Adviser $41,601 for services
rendered for the
last fiscal year.
Annex B contains a schedule of brokerage
commissions paid by the
Portfolio on portfolio transactions during the past fiscal
year, including such
commissions paid by the Fund to affiliated brokers, Smith
Barney Inc. and
Robinson Humphrey, Inc.
The Sub-Adviser's activities are subject to the
review and supervision
of the Board to which the Sub-Adviser renders periodic
reports with respect to
the Portfolio's investment activities. The Current
Subadvisory Agreement may be
terminated at any time without payment of any penalty, on 60
days written notice
by (i) the Directors, (ii) the holders of a majority of the
Portfolio's outstanding
voting securities or (iii) the Sub-Adviser. The Current
Subadvisory Agreement will
automatically terminate in the event of its assignment.
Annex C indicates the net assets of the Portfolio
as of August 12, 1996, the
advisory fee rate, the aggregate amount of subadvisory fees
paid by the Portfolio to
the Sub-
Adviser during the last fiscal year and the aggregate amount
of any other
material payments paid by the Portfolio to the Sub-Adviser
during the last
fiscal year. Annex C also indicates the net assets of each
investment company
advised or subadvised by the Sub-Adviser that has a similar
investment objective
with that of the Portfolio and the advisory fee rate.
The Sub-Adviser bears all expenses (excluding
brokerage costs, custodian
fees, auditors fees or other expenses borne by the Portfolio
or the Fund) in
connection with the performance of its services under the
Agreement. The
Portfolio bears certain other expenses incurred in its
operation, including, but
not limited to, investment advisory fees, sub-advisory fees
(other than sub-
advisory fees paid pursuant to this Agreement) and
administration fees; fees for
necessary professional and brokerage services; costs
relating to local
administration of
securities; fees for any pricing service; the costs of
regulatory compliance; and
pro rata costs associated with maintaining the Fund's legal
existence and
shareholder relations. All other expenses not specifically
assumed by the Sub-
Adviser
hereunder or by the Manager under the investment management
agreement are borne
by the Portfolio or the Fund.
The New Subadvisory Agreement. The Board approved the
proposed New
Subadvisory Agreement among the Fund on behalf of the
Portfolio, the Manager
and the Sub-Adviser on September 3, 1996, the form of which
is attached hereto
as Annex D. The form of the proposed New Subadvisory
Agreement is substantially
identical to the Current Subadvisory Agreement among the
Fund on behalf of the
Portfolio, the Manager and the Sub-Adviser, except for the
dates of execution,
effectiveness and termination.
The investment subadvisory fee as a percentage of net
assets payable
by the Portfolio will be the same under the New Subadvisory
Agreement as under
the Current Subadvisory Agreement. If the investment
subadvisory fee under the
New Subadvisory Agreement had been in effect for the
Portfolio's most recently
completed fiscal year, advisory fees paid to the Sub-Adviser
by the Portfolio
would have been identical to those paid under the Current
Subadvisory
Agreement.
The Board met on September 3, 1996, at which meeting
the Directors,
including the Disinterested Directors, concluded that if the
Acquisition
occurs,
entry by the Fund into a New Subadvisory Agreement would be
in the best interest
of the
Portfolio and the shareholders of the Portfolio. The Board,
including the
Disinterested Directors, unanimously approved the New
Subadvisory Agreement for
the Portfolio and recommended such agreement for approval by
the shareholders of
the Portfolio at the Meeting. The New Subadvisory Agreement
would take effect as
to the Portfolio upon the later to occur of (i) the
obtaining of shareholder
approval
or (ii) the closing of the Acquisition. The New Subadvisory
Agreement will
continue in effect for an initial two year term and
thereafter for successive
annual periods as long as such continuance is approved in
accordance with the 1940
Act.
In evaluating the New Subadvisory Agreement, the Board
took into account
that the Portfolio's Current Subadvisory Agreement and its
New Subadvisory
Agreement, including the terms relating to the services to
be provided thereunder
by the Sub-Adviser and the fees and expenses payable by the
Portfolio, are
substantially identical except for the dates of execution,
effectiveness and
termination. The Directors also considered other possible
benefits to the Sub-
Adviser and Morgan Stanley that may result from the
Acquisition, including the
continued use, to the extent permitted by law, of Morgan
Stanley & Co. and its
affiliates for brokerage services.
The Board also considered the terms of the Merger
Agreement and the
possible effects of the Acquisition upon VKAC's and the Sub-
Adviser's organization
and
upon the ability of the Sub-Adviser to provide advisory
services to the Portfolio.
The Board considered the skills and capabilities of the Sub-
Adviser and the
representations that no material change was planned in the
current management or
facilities of the Sub-Adviser. In this regard, the Board was
informed of the
resources of Morgan Stanley to be made available to VKAC and
the Sub-Adviser,
after giving effect to the Acquisition, to secure for the
Portfolio quality
investment research, investment advice and other client
services. The Board
considered the financial resources of Morgan Stanley and
Morgan Stanley's
representation to the
Board that it will provide sufficient capital to support the
operations of the Sub
Adviser. The Board also considered the reputation, expertise
and resources of
Morgan Stanley and its affiliates in domestic and
international financial
markets. The Board considered the continued employment of
members of senior
management of the Sub-Adviser and VKAC pursuant to
employment and
retention agreements and the incentives provided to such
members and other key
employees of the Sub-Adviser and VKAC, to be important to
help to assure
continuity of the personnel primarily responsible for
maintaining the quality
of investment subadvisory and other services for the
Portfolio.
The Board also considered the effects on the Portfolio of
the Sub-Adviser
becoming an affiliate of Morgan Stanley. Following the
Acquisition, the 1940
Act
will prohibit or impose certain conditions on the ability of
the Portfolio to
engage in certain transactions with Morgan Stanley and its
affiliates. For
example, absent exemptive relief, the Portfolio will be
prohibited from purchasing
securities from Morgan Stanley & Co., a wholly-owned broker-
dealer subsidiary of
Morgan
Stanley, in transactions in which Morgan Stanley & Co. acts
as a principal, and
the
Portfolio will have to satisfy certain conditions in order
to engage in
securities transactions in which Morgan Stanley & Co. acts
as a broker or to
purchase securities in an underwritten offering in which
Morgan Stanley & Co. is
acting as an underwriter. In this connection, management of
the Sub-Adviser does
not believe these prohibitions or conditions will have a
material effect on the
management or performance of the Portfolio.
The Board was advised that Section 15(f) of the 1940
Act is applicable to
the Acquisition. Section 15(f) of the 1940 Act permits, in
the context of a
change in control of an investment adviser to a registered
investment company,
the receipt by such investment adviser, or any of its
affiliated persons, of an
amount or benefit in connection with such sale, as long as
two conditions are
satisfied. First, an "unfair burden" must not be imposed on
the investment
company for which the investment
adviser acts in such capacity as a result of the sale of
such interest, or any
express or implied terms, conditions or understandings
applicable thereto. The term
"unfair burden," as defined in the 1940 Act, includes any
arrangement during the
two-year period after the transaction whereby the investment
adviser (or predecessor
or successor adviser) or any "interested person," as defined
in the 1940 Act, of any
such adviser, receives or is entitled to receive any
compensation, directly or
indirectly, from the investment company or its security
holders (other than fees for
bona fide investment advisory and other services), or from
any person in connection
with the purchase or sale of securities or other property
to, from or on behalf of
the investment company (other than ordinary fees for bona
fide principal
underwriting services).
Management of the Portfolio is aware of no
circumstances arising from the
Acquisition, preparatory transactions to the Acquisition or
any potential financing
that might result in the imposition of an "unfair burden" on
the Portfolio.
Moreover, Morgan Stanley has agreed in the Merger Agreement
that, upon
consummation of the Acquisition, it will take no action
which would have the
effect, directly or indirectly, of violating any of the
provisions of Section 15(f)
of the 1940 Act in respect of the Acquisition. In this
regard the Merger Agreement
provides that Morgan Stanley will use its reasonable best
efforts to assure that
(i) no "unfair burden" will be imposed on the Portfolio as a
result of the
transactions contemplated by the Merger Agreement and (ii)
except as provided in
the Merger Agreement, that the investment subadvisory fees
paid by the Portfolio
will not be increased for a period of two years from the
closing of the
Acquisition and that, during such period, subadvisory fee
waivers shall not be permitted to expire except
in accordance with their terms, the Sub-Adviser may permit a
voluntary
fee waiver unilaterally adopted by it to expire at any time
and no assurance can
be given that
voluntary waivers will not be permitted to expire during the
two year period.
During the two year period following the Acquisition, the
Sub-Adviser does not
intend to change its policies with respect to the
circumstances under which
voluntary fee waivers may be permitted to expire. Following
the Acquisition, to
the extent permitted by applicable law, VKAC anticipates
that the Portfolio will
continue to use Morgan Stanley & Co. and its affiliates for
brokerage services.
The second condition of Section 15(f) is that during
the three-year
period immediately following a transaction to which Section
15(f) is applicable,
at least 75% of the subject investment company's board of
directors must not be
"interested persons" (as defined in the 1940 Act) of such
investment company's
investment adviser or predecessor adviser. The current
composition of the Board
would be in compliance with such condition subsequent to the
Acquisition.
Based upon its review, the Board concluded that the New
Subadvisory Agreement is in the best interests
of the Portfolio and the and the Shareholders of the
Portfolio. Accordingly, after consideration of the
above factors, and such other factors and
information that the Directors deemed relevant, the
Directors, including the
Disinterested Directors, unanimously approved the New Sub-
Advisory Agreement and
voted to
recommend its approval to the Shareholders of the Portfolio.
In the event that Shareholders of the Portfolio do not
approve the New
Subadvisory Agreement with respect to the Portfolio and the
Acquisition is
consummated, the Board would seek to obtain for such
Portfolio interim
investment advisory services at the lesser of cost or the
current fee rate
either from the SubAdviser or from another advisory
organization. Thereafter,
the Board would either negotiate a new investment
subadvisory agreement with an
advisory organization selected by the Board or make
appropriate arrangements,
in either event subject to approval of the Shareholders of
the Portfolio. In
the event the Acquisition is not consummated, the Sub-
Adviser would continue to
serve as investment subadviser of the Portfolio pursuant to
the terms of the
Current Subadvisory Agreement.
Shareholder Approval
To become effective, the New Subadvisory Agreement
must be approved by
a majority of the outstanding voting securities of the
Portfolio. The "vote of
a
majority of the outstanding voting securities" is defined
under the 1940 Act as
the lesser of the vote of (i) 67% or more of the Shares of
the Portfolio entitled
to vote thereon present at the Meeting if the holders of
more than 50% of such
outstanding Shares are present in person or represented by
proxy; or (ii) more
than 50% of such outstanding Shares of the Portfolio
entitled to vote thereon.
The New Subadvisory Agreement was unanimously approved by
the Board after
consideration of all
factors which they determined to be relevant to their
deliberations, including
those discussed above. The Board also unanimously determined
to submit the New
Subadvisory Agreement for consideration by the Shareholders
of the Portfolio.
THE BOARD OF DIRECTORS OF THE PORTFOLIO RECOMMENDS A
VOTE " FOR " APPROVAL OF THE NEW SUBADVISORY AGREEMENT.
OTHER INFORMATION
Directors and Officers of the Sub-Adviser
The following table sets forth certain information
concerning the
principal executive officers and directors of the Sub-
Adviser. The address of
each of the following persons is noted below.
Name and Address
Principal Occupation
Don G. Powell 2800 Post Oak Blvd.
Houston, TX 77056 President, Chief Executive Officer
and a Director of VKAC Holding and VKAC and
Chairman, Chief Executive Officer and a Director of Van
Kampen
American Capital Distributors, Inc. ("Distributors"), the
Sub-
Adviser, Van Kampen American Capital Management, Inc., Van
Kampen American Capital Investment Advisory Corp. (the "VK
Adviser"), and Van Kampen American Capital Advisors, Inc.
Chairman, President and a Director of Van Kampen American
Capital Exchange Corporation, American Capital Contractual
Services, Inc. and American Capital Shareholders
Corporation.
Chairman and a Director of ACCESS Investor Services, Inc.
("ACCESS"), Van Kampen Merritt Equity Advisors Corp.,
McCarthy,
Crisanti & Maffei, Inc., and Van Kampen American Capital
Trust
Company, Chairman, President and a Director of Van Kampen
American Capital Services, Inc. Director, Trustee or
Managing
General Partner of other openend investment companies and
closed-end investment companies advised by the SubAdviser.
Prior
to July 1996, Chairman and Director of VSM, Inc. and VCJ,
Inc.
Prior to July 1996, President, Chief Executive Officer and a
Trustee/Director of certain open-end investment companies
and
closedend investment companies advised by the SubAdviser and
the
VK Adviser.
Dennis J. McDonnell One Parkview Plaza
Oakbrook Terrace, IL 60181 President, Chief Operating
Officer
and a Director of the Sub-Adviser, the VK Adviser,
Van Kampen American Capital
Management, Inc. Executive Vice President
and a Director of VKAC Holding and VKAC.
President and Director of Van Kampen
Merritt Equity Advisors Corp. Director
of Van Kampen Merritt Equity Holding
Corp. and McCarthy, Crisanti & Maffei,
S.A. Chief Executive Officer McCarthy,
Crisanti & Maffei, Inc. Chairman and a
Director of MCM Asia Pacific Company,
Limited. President and a
Trustee/Director of open-end investment
companies and closed-end investment
companies advised by the Sub-Adviser and
the VK Adviser. Prior to December, 1991,
Senior Vice President of Van Kampen
Merritt Inc.
Ronald A. Nyberg One Parkview Plaza
Oakbrook Terrace, IL 60181 Executive
Vice President, General Counsel and
Secretary of VKAC and VKAC Holding.
Executive Vice President, General
Counsel and a Director of Distributors,
the SubAdviser, the VK Adviser, Van
Kampen American Capital Management,
Inc., Van Kampen Merritt Equity Advisors
Corp. Executive Vice President, General
Counsel and Assistant Secretary of Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital
Exchange Corporation, ACCESS, Van Kampen
American Capital Services, Inc., and
American Capital Shareholders
Corporation. Executive Vice President,
General Counsel, Assistant Secretary and
Director of Van Kampen American Capital
Trust Company. General Counsel of
McCarthy, Crisanti & Maffei, Inc. Vice
President of open-end investment
companies and closed-end investment
companies advised by the Adviser. Vice
President and Secretary of
open-end investment companies and closed
end investment companies advised by the
VK Adviser. Director of ICI Mutual
Insurance Co., a provider of insurance
to members of the Investment Company
Institute. Prior to July 1996, Executive
Vice President and General Counsel of
VSM Inc., and Executive Vice President,
General Counsel and Director of VCJ Inc.
William R. Rybak One Parkview Plaza
Oakbrook Terrace, IL 60181 Executive
Vice President and Chief Financial
Officer of VKAC Holding, and VKAC since
February 1993, and Treasurer of VKAC Holding through
December 1993.
Executive Vice President, Chief Financial Officer and
Director of
Distributors, the Sub-Adviser, the VK Adviser and Van Kampen
American
Capital Management, Inc. Executive Vice President, Chief
Financial
Officer, Treasurer and Director of Van Kampen Merritt Equity
Advisors Corp. Executive Vice President and Chief Financial
Officer
of Van Kampen American Capital Advisors, Inc., Van
Kampen American Capital Exchange Corporation, Van Kampen
American
Capital Trust Company, ACCESS and American
Capital Contractual Services, Inc. and Van Kampen Merritt
Equity
Holdings Corp. Chief Financial Officer and Treasurer of
McCarthy,
Crisanti and Maffei, Inc.
Chairman of the Board of Hinsdale Financial Corp., a savings
and
loan holding company. Prior to July 1996, Executive Vice
President,
Chief Financial Officer and a Director of VCJ Inc., and
Executive
Vice President and Chief Financial Officer of VSM Inc.
Peter W. Hegel One Parkview Plaza
Oakbrook Terrace, IL 60181 Executive Vice President of the
Sub-
Adviser, the VK Adviser and Van Kampen American
Capital Advisors, Inc. Director of
McCarthy, Crisanti & Maffei, Inc. and
Van Kampen American Capital Management,
Inc. Vice President of open-end
investment
companies and closed-end investment
companies advised by the Sub-Adviser and
the VK Adviser. Prior to July 1996,
Director of VSM Inc.
Robert C. Peck, Jr 2800 Post Oak
Blvd.
Houston, TX 77056 Executive Vice
President of the VK Adviser. Executive
Vice President and Director of the Sub-
Adviser. Vice President of certain
openend investment companies and closed-
end investment companies advised by the
SubAdviser and the VK Adviser.
Alan T. Sachtleben 2800 Post Oak
Blvd.
Houston, Texas 77056 Executive Vice
President of the VK Adviser. Executive
Vice President and Director of the Sub-
Adviser. Vice President of certain
openend investment companies and closed-
end investment companies advised by the
Sub-
Adviser and the VK Adviser.
None of the Directors or officers of the Fund are officers
of the Sub-
Adviser. With respect to the Funds, as of September 6, 1996,
the Directors
and officers
as a group owned less than 1% of the outstanding shares of
the Portfolio. At such
date
the "interested persons" of the Portfolio as a group owned
an aggregate of less than
5% of the outstanding shares of the Portfolio.
No Director has owned any securities of or has had
any other material
interest in, or a material interest in a material
transaction with, the Sub-Adviser
or its respective affiliates since the beginning of such
Fund's most recent fiscal
year.
EXPENSES
VKAC Holding will bear the expense of preparing, printing
and mailing the
enclosed form of proxy, the accompanying Notice and this
Proxy Statement.
In order to obtain the necessary quorum at the Meeting,
additional
solicitation may be made by mail, telephone, telegraph or
personal interview by
representatives
of the Fund, the Sub-Adviser or VKAC, or by the Transfer
Agent, or by First Data
Investors Services Group, a solicitation firm located in
Boston, Massachusetts
that has been engaged to assist in proxy solicitations at an
estimated cost of
approximately $ .
SHAREHOLDER PROPOSALS
As a general matter, the Portfolio does not hold
regular annual meetings
of shareholders. Any Shareholder who wishes to submit
proposals for consideration
at a meeting of the Portfolio should send such proposal to
the Portfolio at
388
Greenwich Street, New York, New York 10013. To be considered
for presentation at
a shareholders' meeting, rules promulgated by the SEC
require that, among other
things, a shareholder's proposal must be received at the
offices of such Fund a
reasonable time before a solicitation is made. Timely
submission of a proposal
does not necessarily mean that such proposal will be
included.
GENERAL
Management of the Portfolio does not intend to
present and does not have
reason to believe that others will present any other items
of business at the
Meeting. However, if other matters are properly presented to
the Meeting for a
vote, the proxies will be voted upon such matters in
accordance with the judgment
of the persons acting under the proxies.
A list of shareholders of the Portfolio entitled
to be present and vote at
the Meeting will be available at the offices of the
Portfolio, 388 Greenwich
Street, New York, New York 10013, for inspection by any
shareholder during regular
business hours for ten days prior to the date of the
Meeting.
Failure of a quorum to be present at the Meeting
for the Portfolio may
necessitate adjournment and may subject such the Portfolio
to additional expense.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE
REQUESTED
TO FILL IN, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
Christina T. Sydor
Secretary
September , 1996
ANNEX A
List of 5% Beneficial Owners as of
,
1996
Name and Address of Holder
Fund
Amount of Ownership
Percentage Ownership
%
ANNEX B
BROKERAGE BY FUND
Fund Name
Total Commissions
Aggregate Amount of Commissions Paid to Affiliated
Brokers % of Aggregate Commissions Paid to
Affiliated Brokers
(1) Smith Barney Inc.
(2) Robinson Humphrey, Inc.
ANNEX C
The following table indicates the size of
each investment company
advised or subadvised by the Sub-Adviser and, the advisory
fee rate.
Name
Net Assets on August 12, 1996
Annual Management Fee as Percent of Average Net Assets
Aggregate Amount of Adviser/Sub- Adviser's Fee for Last
Fiscal Year
Amount of Other Material Payments
to Adviser/Sub Adviser for the Last Fiscal Year
(In Millions)
ADVISER OPEN-END:
Van Kampen American
Capital Enterprise Fund $1,372.9 (1)
5,293,215 131,706
Van Kampen American
Capital Life Investment
Trust Enterprise Fund $79.3 (2) 299,035 # 55,772
(1) 0.50% on the first $1 billion; 0.45% on the
next $1 billion; 0.40% on the
next $1 billion; and 0.35% on the excess over $3 billion.
(2) 0.50% on the first $500 million of the
combined net assets on certain of
the Funds of the Trust; 0.45% on the next $500 million; and
0.40% on the excess
over $1 billion.
# This amount is net of either a voluntary advisory fee
waiver or expense
reduction.
ANNEX D
FORM OF INVESTMENT SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT
TRAVELERS SERIES FUND INC.
(Van Kampen American Capital Enterprise Portfolio)
October , 1996
Van Kampen American Capital Asset Management, Inc.
2800 Post Oak Blvd.
Houston, TX 77056
Dear Sirs:
Travelers Series Fund Inc. (the "Company"), a corporation
organized under the
laws of the State of Maryland, on behalf of the Van Kampen
American Capital
Enterprise Portfolio (the "Portfolio") and Travelers
Investment Adviser,
Inc.
(the "Manager"), each confirms its agreement with Van Kampen
American Capital
Asset Management, Inc. (the "Sub-Adviser"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital relating to the
Portfolio by
investing and reinvesting in investments of the kind and in
accordance with the
investment objective(s), policies and limitations specified
in the prospectus (the
"Prospectus") and the statement of additional information
(the "Statement") filed
with the Securities and Exchange Commission as part of the
Company's Registration
Statement on Form N-1A, as amended or supplemented from time
to time, and in
the manner and to the extent as may from time to time be
approved by the
Board of Directors of the Company (the "Board"). Copies of
the Prospectus and
the Statement have been or will be submitted to the Sub-
Adviser. The Company
agrees promptly to provide copies of all amendments and
supplements to the
current Prospectus and the Statement to the Sub-Adviser on
an on-going basis.
Until the Company delivers any such amendment or supplement
to the Sub-
Adviser, the Sub-Adviser shall be fully protected in relying
on the
Prospectus and Statement of Additional Information as
previously furnished to
the SubAdviser. The Company employs the Manager as the
manager to the
Portfolio pursuant to the Transfer and Assumption of
Management Agreement
dated September 3, 1996 (the "Management Agreement"), and
the Company and the
Manager desire to employ and hereby appoint the Sub-Adviser
to act as the
sub-investment adviser to the Portfolio. The Sub-Adviser
accepts the
appointment and agrees to furnish the services for the
compensation set
forth below.
2. Services as Sub-Adviser
Subject to the supervision, direction and approval of the
Board of the
Company and the Manager, the Sub-Adviser shall conduct a
continual program of
investment, evaluation and, if appropriate in the view of
the Sub-Adviser, sale
and reinvestment of the Portfolio's assets. The Sub-Adviser
is authorized, in its
sole discretion and without prior consultation with the
Manager, to: (a) manage
the Portfolio's assets in accordance with the Portfolio's
investment objective(s)
and policies as stated in the Prospectus and the Statement;
(b) make investment
decisions for the Portfolio; (c) place purchase and sale
orders for portfolio
transactions on behalf of the Portfolio; and (d) employ
professional portfolio
managers and securities analysts who provide research
services to the Portfolio.
In addition, (i) the Sub-Adviser shall furnish the
Manager daily
information concerning portfolio transactions and quarterly
and annual reports
concerning transactions and performance of the Portfolio in
such form as may be
mutually agreed upon, and the Sub-Adviser agrees to review
the Portfolio and
discuss the management of it with the Manager and the Board
of Directors of the
Company.
(ii) Unless the Manager gives the Sub-Adviser written
instructions to the
contrary, the Sub-Adviser shall use its good faith judgment
in a manner which it
reasonably believes best serves the interests of the
Portfolio's shareholders to
vote or abstain from voting all proxies solicited by or with
respect to the issuers
of securities in which assets of the Portfolio may be
invested.
(iii) The Sub-Adviser shall maintain and preserve such
records related to
the Portfolio's transactions as required under the
Investment Company Act of 1940,
as amended (the "1940 Act"). The Manager shall maintain and
preserve all books
and other records not related to the Portfolio's
transactions as required under
the 1940 Act. The Sub-Adviser shall timely furnish to the
Manager all
information relating to the Sub-Adviser's services hereunder
reasonably
requested by the Manager to keep and preserve the books and
records of the
Portfolio. The Sub Adviser agrees that all records which it
maintains for the
Portfolio are the property of the Company and the Sub-
Adviser will surrender
promptly to the Company copies of any of such records.
(iv) The Sub-Adviser shall maintain compliance procedures
for the
Portfolio that it reasonably believes are adequate to ensure
the Portfolio's
compliance with (A) the 1940 Act and the rules and
regulations promulgated
thereunder and
(B) the Portfolio's investment objective(s) and policies as
stated in the
Prospectus and Statement. The Sub-Adviser shall maintain
compliance
procedures that it reasonably believes are adequate to
ensure its compliance
with the Investment Advisers Act of 1940.
(v) The Sub-Adviser has adopted a written code of
ethics that it
reasonably believes complies with the requirements of Rule
17j-1 under the
1940 Act, which it
will provide to the Company. The Sub-Adviser has policies
and procedures
regarding the detection and prevention and the misuse of
material,
nonpublic information by the Sub-Adviser and its employees
as required by
the Insider Trading and Securities Fraud Enforcement Act of
1988.
3. Brokerage
In selecting brokers or dealers (including, if
permitted by applicable law,
Smith Barney Shearson Inc. or any other broker or dealer
affiliated with the Manager
or the Sub-Adviser) to execute transactions on behalf of the
Portfolio, the Sub-
Adviser will seek the best overall terms available. In
assessing the best overall
terms available for any transaction, the Sub-Adviser will
consider factors it
deems relevant, including, but not limited to, the breadth
of the market in the
security, the price of the security, the financial condition
and execution
capability of the broker or dealer and the reasonableness of
the commission, if
any, for the specific transaction and on a continuing basis.
In selecting brokers
or dealers to execute a particular transaction, and in
evaluating the best
overall terms available, the Sub Adviser is authorized to
consider the brokerage
and research services (as those terms are defined in Section
28(e) of the
Securities Exchange Act of 1934) provided to the Portfolio
and/or other accounts
over which the Sub-Adviser or its affiliates exercise
investment discretion.
Nothing in this paragraph shall be deemed to prohibit the
Sub-Adviser from paying
an amount of commission for effecting a securities
transaction in excess of the
amount of commission another member of an exchange, broker,
or dealer would have
charged for effecting that transaction, if the Sub-Adviser
determined in good
faith that such amount of commission was
reasonable in relation to the value of the brokerage and
research services provided
by such member, broker, or dealer, viewed in terms of either
that particular
transaction or its overall responsibilities with respect to
the Portfolio and/or
other accounts over which the Sub-Adviser or its affiliates
exercise investment
discretion.
4. Information Provided to the Company and the Manager
The Sub-Adviser shall keep the Company and the Manager
informed of
developments materially affecting the Portfolio's holdings,
and shall, on its own
initiative, furnish the Company and the Manager from time to
time with whatever
information the Sub-Adviser believes is appropriate for this
purpose.
5. Compensation
In consideration of the services rendered pursuant to this
Agreement, the
Manager will pay the Sub-Adviser an annual fee calculated at
the rate of 0.325% of
the Portfolio's average daily net assets; the fee is
calculated daily and paid
monthly. The Sub-Adviser shall have no right to obtain
compensation directly from
the Company for services provided hereunder and agrees to
look solely to the
Manager
for payment of fees due. The fee for the period from the
Effective Date
(defined below) of the Agreement to the end of the month
during which
the Effective Date
occurs shall be prorated according to the proportion that
such period bears to the
full monthly period. Upon any termination of this Agreement
before the end of a
month, the fee for such part of that month shall be prorated
according to the
proportion that such period bears to the full monthly period
and shall be payable
upon the date of termination of this Agreement. For the
purpose of determining
fees payable to the Sub-Adviser, the value of the
Portfolio's net assets shall be
computed at the times and in the manner specified in the
Prospectus and/or the
Statement.
6. Expenses
The Sub-Adviser shall bear all expenses (excluding
brokerage costs,
custodian fees, auditors fees or other expenses to be borne
by the Portfolio or
the Company) in connection with the performance of its
services under this
Agreement. The
Portfolio will bear certain other expenses to be incurred in
its operation,
including, but not limited to, investment advisory fees, sub-
advisory fees (other
than subadvisory fees paid pursuant to this Agreement) and
administration fees;
fees for necessary professional and brokerage services;
costs relating to local
administration
of securities; fees for any pricing service; the costs of
regulatory compliance;
and
pro rata costs associated with maintaining the Company's
legal existence and
shareholder relations. All other expenses not specifically
assumed by the Sub-
Adviser hereunder or by the Manager under the Management
Agreement are borne by the
Portfolio or the Company.
7. Reduction of Fee
If in any fiscal year the aggregate expenses of the
Portfolio (including
fees pursuant to the Management Agreement and any other
investment advisory or
administration agreement, but excluding interest, taxes,
brokerage and
extraordinary expenses) exceed the expense limitation of any
state having
jurisdiction over the Portfolio, the Sub-Adviser shall
reduce its fee by the
proportion of such excess expense equal to the proportion
that its fee
hereunder bears to the aggregate of fees paid by the
Portfolio for management
services in that year, to the extent required by state law.
A fee reduction
pursuant to this paragraph 7, if any, shall be estimated,
reconciled and paid
on a monthly basis. The Company confirms that, as of the
date of this
Agreement, no such expense limitation is applicable to the
Portfolio.
8. Standard of Care
The Sub-Adviser shall exercise its best judgment and
shall act in good
faith in rendering the services listed in paragraphs 2 and 3
above. The Sub-Adviser
shall not be liable for any error of judgment or mistake of
law or for any loss
suffered by the Portfolio or the Manager in connection with
the matters to which
this Agreement
relates, provided that nothing in this Agreement shall be
deemed to protect or
purport to protect the Sub-Adviser against any liability to
the Manager, the
Company or to the shareholders of the Portfolio to which the
Sub-Adviser would
otherwise be subject by reason of willful misfeasance, bad
faith or gross
negligence on its part in the performance of its duties or
by reason of the Sub-
Adviser's reckless disregard of its obligations and duties
under this Agreement.
9. Term of Agreement
This Agreement shall become effective , 1996 (the
"Effective
Date") and shall continue for an initial two-year term and
shall continue
thereafter so long as such continuance is specifically
approved at least
annually as required by the 1940 Act. This Agreement is
terminable, without
penalty, on 60 days' written notice, by the Board of the
Company or by vote of
holders of a majority (as defined in the 1940 Act and the
rules thereunder) of
the outstanding voting securities of the Portfolio, or upon
60 days' written
notice, by the SubAdviser. This Agreement will
also terminate automatically in the event of its assignment
(as defined in the
1940 Act and the rules thereunder).
10. Services to Other Companies or Accounts
The Company understands that the Sub-Adviser now acts,
will continue to
act and may act in the future as investment manager or
adviser to fiduciary and
other managed accounts, and as investment manager or adviser
to other
investment companies, including any offshore entities, or
accounts, and the
Company has no objection to the Sub-Adviser's so acting,
provided that whenever
the Portfolio and one or more other investment companies or
accounts managed or
advised by the Sub-Adviser have available funds for
investment, investments
suitable and appropriate for each will be allocated in
accordance with a
formula believed to be equitable to each company and
account. The Company
recognizes that in some cases this procedure may adversely
affect the size of
the position obtainable for
the Portfolio. In addition, the Company understands that the
persons employed by
the Sub-Adviser to assist in the performance of the Sub-
Adviser's duties under
this Agreement will not devote their full time to such
service and nothing
contained in this Agreement shall be deemed to limit or
restrict the right of the
Sub-Adviser or any affiliate of the Sub-Adviser to engage in
and devote time and
attention to other businesses or to render services of
whatever kind or nature.
11. Representations
The Company represents that a copy of the Articles of
Incorporation is on
file with the Secretary of the State of Maryland.
Each of the parties hereto represents that the Agreement
has been duly
authorized, executed and delivered by all required corporate
action.
If the Sub-Adviser is organized as a partnership the
Sub-Adviser agrees to
notify the Manager and the Company of any changes in the Sub-
Adviser's general
partners within a reasonable time after such change.
12. Use of Name
The Company may use the name "Van Kampen American
Capital Asset
Management, Inc.", "Van Kampen American Capital Asset
Management", or
"Van Kampen American Capital" only for so long as this
Agreement or any
extension, renewal, or amendment hereof remains in effect.
At such times as
this Agreement shall no longer be in effect, the Company
shall cease to use
such a name or any other name indicating that it is advised
by or otherwise
connected with the Sub-Adviser and shall promptly change its
name accordingly.
The Company acknowledges that it has adopted the name "Van
Kampen American
Capital Enterprise Portfolio" through permission of the Sub-
Adviser, and
agrees that the
Sub-Adviser reserves to itself and any successor to its
business the right to
grant the non-exclusive right to use the aforementioned
names or any similar names
to any other corporation or entity, including but not
limited to any investment
company of which the Sub-Adviser or any subsidiary or
affiliate thereof or any
successor to the business of any thereof shall be the
investment adviser.
If the foregoing is in accordance with your
understanding, kindly indicate
your acceptance of this Agreement by signing and returning
the enclosed copy of
this Agreement.
Very truly yours:
TRAVELERS INVESTMENT ADVISER, INC.
By:
TRAVELERS SERIES FUND INC.
By:
Accepted:
VAN KAMPEN AMERICAN CAPITAL ASSET
MANAGEMENT, INC.
By:
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
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TRAVELERS SERIES FUND INC - Van Kampen
American
Capital Enterprise Portfolio
This Proxy is Solicited on Behalf
of the Directors of Travelers
Series Fund Inc.
The undersigned holder of shares of the Van Kampen American
Capital Enterprise
Portfolio (the "Portfolio"), a portfolio of the Travelers
Series Fund Inc., a
Maryland corporation, hereby appoint Heath B. McLendon,
Christina, T. Sydor,
and Nancy LeDonne attorneys and proxies for the undersigned
all shares of the
Portfolio that the undersigned is entitled to vote at the
Special Meeting of
Shareholders of the Portfolio to be held at the offices of
the Portfolio, 388
Greenwich Street, New York, New York, 1003 on Friday,
October 25, 1996 at 2:00
P.M., and any adjournment or adjournments thereof. The
undersigned hereby
acknowledges receipt of the Notice of Special Meeting and
Proxy Statement
dated September __, 1996 and hereby instructs said attorneys
and proxies to
vote said shares as indicated hereon. In their discretion,
the proxies are
authorized to vote upon such other business as may properly
come before the
Special Meeting. A majority or the proxies present and
acting at the Special
Meeting in person or by substitute (or, if only one shall be
so present, then
that one) shall have and may exercise all the power
authority of said proxies
hereunder. The undersigned hereby revokes any proxy
previously given.
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN
THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your
name appears on this Proxy. If joint
owners, EITHER may sign this Proxy.
When signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your
fill title.
DATE:
____________________________________
______
____________________________________
____________
____________________________________
____________
(Signature(s), Title(s), if
applicable)
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
............................................................
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Please indicate your vote by an "X" in the appropriate box
below.
This proxy, if properly executed, will be voted in the
manner directed herein
by the undersigned shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL.
Please refer to the Proxy Statement for a discussion of the
Proposal.
1. APPROVAL OF A NEW SUBADVISORY AGREEMENT FOR
FOR AGAINST
ABSTAIN
THE VAN KAMPEN AMERICAN CAPITAL ENTERPRISE
PORTFOLIO
Please sign on the reverse side. XXX
