EX-99.(d)(60)
EXHIBIT (d)(60)
Form of
THE TRAVELERS SERIES TRUST
SUBADVISORY AGREEMENT
MFS TOTAL RETURN PORTFOLIO
This Subadvisory Agreement (this "Agreement") is entered into as of
[DATE], 2005 by and between Travelers Investment Adviser, Inc., a Delaware
corporation (the "Manager"), and Massachusetts Financial Services Company, a
________ corporation (the "Subadviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated
________, 2005 (the "Advisory Agreement") with The Travelers Series Trust (the
"Fund"), pursuant to which the Manager provides portfolio management services to
the MFS Total Return Portfolio (the "Portfolio");
WHEREAS, the Manager desires to retain the Subadviser to render portfolio
management services in the manner and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Manager and the Subadviser agree as follows:
1. SUBADVISORY SERVICES.
a. The Subadviser shall, subject to the supervision of the
Fund's Board of Trustees and the Manager and in cooperation with the Manager, as
administrator, or with any other administrator appointed by the Manager or the
Fund (the "Administrator"), manage the investment and reinvestment of the assets
of the Portfolio. The Subadviser shall invest and reinvest the assets of the
Portfolio in conformity with (1) the investment objective, policies and
restrictions of the Portfolio set forth in the Fund's prospectus and statement
of additional information, as revised or supplemented from time to time,
relating to the Portfolio (the "Prospectus"), (2) any additional policies or
guidelines established by the Manager or by the Fund's Trustees that have been
furnished in writing to the Subadviser and (3) the provisions of the Internal
Revenue Code (the "Code") applicable to "regulated investment companies" (as
defined in Section 851 of the Code) and "segregated asset accounts" (as defined
in Section 817 of the Code) including, but not limited to, the diversification
requirements of Section 817(h) of the Code and the regulations thereunder, all
as from time to time in effect (collectively, the "Policies"), and with all
applicable provisions of law, including without limitation all applicable
provisions of the Investment Company Act of 1940 (the "1940 Act") the rules and
regulations thereunder and the interpretive opinions thereof of the staff of the
Securities and Exchange Commission ("SEC") ("SEC Positions"); provided, however,
that the Manager agrees to inform the Subadviser of any and all applicable state
insurance law restrictions that operate to limit or restrict the investments the
Portfolio might otherwise make ("Insurance Restrictions"), and to inform the
Subadviser promptly of any changes in such Insurance Restrictions. Subject to
the foregoing, the Subadviser is authorized, in its discretion and without prior
consultation with the Manager, to buy, sell, lend and otherwise trade in any
stocks, bonds and other securities and investment instruments on behalf of the
Portfolio, without regard to the length of time the securities have been held
and the resulting rate of portfolio turnover or any tax considerations; and the
majority or the whole of the Portfolio may be invested in such proportions of
stocks, bonds, other securities or investment instruments, or cash, as the
Subadviser shall determine. Notwithstanding the foregoing provisions of this
Section 1.a, however, the Subadviser shall, upon written instructions from the
Manager, effect such portfolio transactions for the Portfolio as the Manager
shall determine are necessary in order for the Portfolio to comply with the
Policies.
b. The Subadviser shall furnish the Manager and the
Administrator daily, weekly, monthly, quarterly and/or annual reports concerning
portfolio transactions and the investment performance of the Portfolio in such
form as may be mutually agreed upon, and agrees to review the Portfolio and
discuss the management of the Portfolio with representatives or agents of the
Manager, the Administrator or the Fund at their reasonable request. The
Subadviser shall, as part of a complete portfolio compliance testing program,
perform quarterly diversification testing under Section 817 (h) of the Code. The
Subadviser shall provide timely notice each calendar quarter that
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such diversification was satisfied, or if not satisfied, that corrections were
made within 30 days of the end of the calendar quarter. The Subadviser shall
also provide the Manager, the Administrator or the Fund with such other
information and reports as may reasonably be requested by the Manager, the
Administrator or the Fund from time to time, including without limitation (i)
all material as reasonably may be requested by the Trustees of the Fund pursuant
to Section 15(c) of the 1940 Act; (ii) monthly or quarterly compliance
checklists in the form prescribed by the Manager; and (iii) such periodic
reports as may be required by the Fund's or the Manager's compliance program
under Rule 38a-1 under the 1940 Act. The Subadviser shall furnish the Manager
(which may also provide it to the Fund's Board of Trustees) with copies of all
material comments that are directly related to the Portfolio and the services
provided under this Agreement received from the SEC following routine or special
SEC examinations or inspections.
If the Fund inadvertently fails the diversification requirements
of Section 817(h) of the Code, the Subadviser shall assist the Manager in the
preparation of any request for relief or argument to the Commissioner of the
Internal Revenue Service pursuant to Treas. Reg. Section 1-817-5(c)(2) and
Revenue Procedure 92-25 (or its successor).
c. The Subadviser shall provide to the Manager a copy of the
Subadviser's Form ADV as filed with the SEC and any amendments or restatements
thereof in the future and a list of the persons whom the Subadviser wishes to
have authorized to give written and/or oral instructions to custodians of assets
of the Portfolio.
d. Unless the Manager gives the Subadviser written
instructions to the contrary, the Subadviser shall use its good faith judgment
in a manner which it reasonably believes best serves the interest 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
are invested. The Manager shall instruct the Fund's custodian, the
Administrator, and other parties providing services to a Portfolio to promptly
forward misdirected proxy statements to the Subadviser. The Subadviser shall
provide the Fund in a timely manner with such records of its proxy voting on
behalf of each Portfolio as necessary for the Fund to comply with the
requirements of Form N-PX or any successor law, rule, regulation or SEC
Position.
e. The Subadviser represents, warrants and agrees that it has
adopted and implemented, and throughout the term of this Agreement will maintain
in effect and implement, policies and procedures reasonably designed to prevent,
detect and correct violations by the Subadviser and its supervised persons, and,
to the extent the activities of the Subadviser could affect the Fund, by the
Fund, of "federal securities laws" (as defined in Rule 38a-1 under the 1940
Act), and that the Subadviser has provided the Fund with true and complete
copies of its policies and procedures (or summaries thereof) and related
information requested by the Fund. The Subadviser agrees to cooperate with
periodic reviews by the Fund's compliance personnel of the Subadviser's policies
and procedures, their operation and implementation and other compliance matters
and to provide to the Fund from time to time such additional information and
certifications in respect of the Subadviser's policies and procedures,
compliance by the Subadviser with federal securities laws and related matters as
the Fund's compliance personnel may reasonably request. The Subadviser agrees to
promptly notify the Manager of any material compliance violations that affect a
Portfolio.
f. In accordance with Rule 17a-10 under the 1940 Act and any
other applicable law, the Subadviser shall not consult with any other subadviser
to the Portfolio or any subadviser to any other portfolio of the Trust or to any
other investment company or investment company series for which the Manager or
an affiliated person of the Manager serves as investment adviser concerning
transactions for the Portfolio in securities or other assets, other than for
purposes of complying with conditions of paragraphs (a) and (b) of Rule 12d3-1
under the 1940 Act.
g. As the delegate of the Trustees of the Fund, the Subadviser
shall be responsible for providing reasonable and good faith fair valuations for
any securities in the Portfolio for which current market quotations are not
readily available or reliable.
h. The Subadviser agrees that all books and records which it
maintains for the Fund are the Fund's property. The Subadviser also agrees upon
request of the Manager or the Fund, promptly to surrender the books and records
to the requester or make the books and records available for inspection by
representatives of regulatory authorities. The Subadviser shall permit all books
and records with respect to the Portfolio to be
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inspected and audited by the Manager and the Administrator at all reasonable
times during normal business hours, upon reasonable notice. The Subadviser
further agrees to maintain and preserve the Fund's books and records in
accordance with the Investment Company Act and rules thereunder.
2. OBLIGATIONS OF THE MANAGER.
a. The Manager shall provide (or cause the Fund's custodian to
provide) information to the Subadviser in a timely manner regarding such matters
as the composition of assets in the Portfolio, cash requirements and cash
available for investment in the Portfolio, and all other information as may be
reasonably necessary for the Subadviser to perform its responsibilities
hereunder.
b. The Manager has furnished the Subadviser a copy of the
Prospectus and agrees during the continuance of this Agreement to furnish the
Subadviser copies of any revisions or supplements thereto at, or, if
practicable, before the time the revisions or supplements become effective. The
Manager agrees to furnish the Subadviser with relevant sections of minutes of
meetings of the Trustees of the Fund applicable to the Portfolio to the extent
they may affect the duties of the Subadviser, and with copies of any financial
statements or reports of the Fund with respect to the Portfolio to its
shareholders, and any further materials or information which the Subadviser may
reasonably request to enable it to perform its functions under this Agreement,
including, but not limited to, timely information relating to any Insurance
Restrictions.
3. CUSTODIAN. The Manager shall provide the Subadviser with a copy of
the Portfolio's agreement with the custodian designated to hold the assets of
the Portfolio (the "Custodian") and any modifications thereto (the "Custody
Agreement"). The assets of the Portfolio shall be maintained in the custody of
the Custodian identified in, and in accordance with the terms and conditions of,
the Custody Agreement (or any sub-custodian properly appointed as provided in
the Custody Agreement). The Subadviser shall provide timely instructions
directly to the Fund's custodian, in the manner and form as required by the
Fund's Custody Agreement (including with respect to exchange offerings and other
corporate actions) necessary to effect the investment and reinvestment of the
Portfolio's assets. Any assets added to the Portfolio shall be delivered
directly to the Custodian.
4. EXPENSES. Except for expenses specifically assumed or agreed to be
paid by the Subadviser pursuant hereto, the Subadviser shall not be liable for
any expenses of the Manager or the Fund including, without limitation, (a)
interest and taxes, (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments with respect
to the Portfolio, and (c) custodian fees and expenses. The Subadviser will pay
its own expenses incurred in furnishing the services to be provided by it
pursuant to this Agreement.
5. PURCHASE AND SALE OF ASSETS. Absent instructions from the Manager
to the contrary, the Subadviser shall place all orders for the purchase and sale
of securities for the Portfolio with brokers or dealers selected by the
Subadviser, which may include brokers or dealers affiliated with the Subadviser
provided such orders comply with Rule 17e-1 (or any successor or other relevant
regulations) under the 1940 Act in all respects. To the extent consistent with
applicable law and then-current SEC Positions, purchase or sell orders for the
Portfolio may be aggregated with contemporaneous purchase or sell orders of
other clients of the Subadviser. The Subadviser shall use its best efforts to
obtain Portfolio securities at prices which are advantageous to the Portfolio
and at commission rates that are reasonable in relation to the benefits
received. However, the Subadviser may select brokers or dealers on the basis
that they provide brokerage, research or other services or products to the
Portfolio and/or other accounts serviced by the Subadviser. Not all such
services or products need to be used by the Subadviser in managing the
Portfolio. The Subadviser agrees that securities are to be purchased through
brokers and dealers that, in the Subadviser's best judgment, offer the best
combination of price and execution. The Subadviser, in seeking to obtain best
execution of portfolio transactions for the Portfolio, may consider the quality
and reliability of brokerage services, as well as research and investment
information and other services provided by brokers or dealers. Accordingly, the
Subadviser's selection of a broker or dealer for transactions for the Portfolio
may take into account such relevant factors as (i) price, (ii) the broker's or
dealer's facilities, reliability and financial responsibility, (iii) when
relevant, the ability of the broker to effect securities transactions,
particularly with regard to such aspects as timing, order size and execution of
the order, (iv) the broker's or dealer's recordkeeping capabilities and (v) the
research and other services provided by such broker or dealer to the Subadviser
which are expected to enhance its general portfolio management capabilities
(collectively, "Research"), notwithstanding that
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the Portfolio may not be the exclusive beneficiary of such Research. Commission
rates, being a component of price is one factor considered together with other
factors. The Subadviser shall not be obligated to seek in advance competitive
bidding for the most favorable commission rate applicable to any particular
transaction for the Portfolio or to select any broker-dealer on the basis of its
purported posted commission rate. Accordingly, in compliance with Section 28(e)
of the Securities Exchange Act of 1934, as amended, the Adviser, in its
discretion, may cause the Portfolio to pay a commission for effecting a
transaction for the Portfolio in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, provided
that the Subadviser has determined in good faith that the commission is
reasonable in relation to the value of the brokerage and/or Research provided by
the broker to the Subadviser viewed in terms of that particular transaction or
its overall responsibilities with respect to the account as to which the
Subadviser exercises investment discretion. From time to time, when determined
by the Subadviser in its capacity of a fiduciary to be in the best interest of
the Portfolio, the Subadviser may purchase securities from or sell securities on
behalf of the Portfolio to another account managed by the Subadviser at
prevailing market levels in accordance with the procedures under Rule 17a-7
under the 1940 Act and other applicable law.
6. COMPENSATION OF THE SUBADVISER. As full compensation for all
services rendered, facilities furnished and expenses borne by the Subadviser
hereunder, the Manager shall pay the Subadviser compensation at the annual rate
of: 0.375% of the combined average daily net assets of the Portfolio, the MFS
Value Portfolio of the Trust, and the MFS Mid Cap Growth Portfolio of the Trust
(the "Combined Assets") up to $600,000,000; 0.350% of Combined Assets between
$600,000,000 and $900,000,000; 0.325% of Combined Assets between $900,000,000
and $1,500,000,000; 0.300% of Combined Assets between $1,500,000,000 and
$2,500,000,000; and 0.250% of Combined Assets over $2,500,000,000. Such
compensation shall be payable monthly in arrears or at such other intervals, not
less frequently than quarterly, as the Manager is paid by the Portfolio pursuant
to the Advisory Agreement. If the Subadviser shall serve for less than the whole
of any month or other agreed-upon interval, the foregoing compensation shall be
prorated. The Manager may from time to time waive the compensation it is
entitled to receive from the Fund; however, any such waiver will have no effect
on the Manager's obligation to pay the Subadviser the compensation provided for
herein.
7. NON-EXCLUSIVITY. The Manager agrees that the services of the
Subadviser are not to be deemed exclusive and that the Subadviser and its
affiliates are free to act as investment manager and provide other services to
various investment companies and other managed accounts, except as the
Subadviser and the Manager or the Administrator may otherwise agree from time to
time in writing before or after the date hereof. This Agreement shall not in any
way limit or restrict the Subadviser or any of its directors, officers,
employees or agents from buying, selling or trading any securities or other
investment instruments for its or their own account or for the account of others
for whom it or they may be acting, provided that such activities do not
adversely affect or otherwise impair the performance by the Subadviser of its
duties and obligations under this Agreement. The Manager recognizes and agrees
that the Subadviser may provide advice to or take action with respect to other
clients, which advice or action, including the timing and nature of such action,
may differ from or be identical to advice given or action taken with respect to
the Portfolio. The Subadviser shall for all purposes hereof be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Fund or the Manager in any way or
otherwise be deemed an agent of the Fund or the Manager except in connection
with the investment management services provided by the Subadviser hereunder.
8. LIABILITY. Except as may otherwise be provided by the 1940 Act or
other federal securities laws, neither the Subadviser nor any of its officers,
partners, managing directors, employees, affiliates or agents shall be subject
to any liability to the Manager, the Fund, the Portfolio or any shareholder of
the Portfolio for any loss arising from any claim or demand based upon, any
error of judgment, or any loss arising out of any investment or other act or
omission in the course of, connected with, or arising out of any service to be
rendered under this Agreement, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of any duties or by reason of
reckless disregard of its obligations and duties. The Manager acknowledges and
agrees that the Subadviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved by
the Portfolio or that the Portfolio will perform comparably with any standard or
index, including other clients of the Subadviser, whether public or private.
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9. EFFECTIVE DATE AND TERMINATION. This Agreement shall become
effective as of [DATE], 2005, and
a. unless otherwise terminated, this Agreement shall continue
in effect until [DATE], 2007, and from year to year thereafter so long as such
continuance is specifically approved at least annually (i) by the Board of
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio, and (ii) by vote of a majority of the Trustees of
the Fund who are not interested persons of the Fund, the Manager or the
Subadviser, cast in person at a meeting called for the purpose of voting on such
approval;
b. this Agreement may at any time be terminated on sixty days'
written notice to the Subadviser either by vote of the Board of Trustees of the
Fund or by vote of a majority of the outstanding voting securities of the
Portfolio;
c. this Agreement shall automatically terminate in the event
of its assignment or upon the termination of the Advisory Agreement;
d. this Agreement may be terminated by the Subadviser on sixty
days' written notice to the Manager and the Fund, or, if approved by the Board
of Trustees of the Fund, by the Manager on sixty days' written notice to the
Subadviser; and
Termination of this Agreement pursuant to this Section 9 shall be without
the payment of any penalty. In the event of termination of this Agreement, all
compensation due to the Subadviser through the date of termination will be
calculated on a pro rata basis through the date of termination and paid on the
first business day after the next succeeding month end.
10. AMENDMENT. This Agreement may be amended at any time by mutual
consent of the Manager and the Subadviser, provided that, if required by law (as
may be modified by any exemptions received by the Manager), such amendment shall
also have been approved by vote of a majority of the outstanding voting
securities of the Portfolio and by vote of a majority of the Trustees of the
Fund who are not interested persons of the Fund, the Manager or the Subadviser,
cast in person at a meeting called for the purpose of voting on such approval.
11. CERTAIN DEFINITIONS. For the purpose of this Agreement, the terms
"vote of a majority of the outstanding voting securities," "interested person,"
"affiliated person" and "assignment" shall have their respective meanings
defined in the 1940 Act, subject, however, to such exemptions as may be granted
by the SEC under the 1940 Act.
12. GENERAL.
a. The Subadviser may perform its services through any
employee, officer or agent of the Subadviser, and the Manager shall not be
entitled to the advice, recommendation or judgment of any specific person;
provided, however, that the persons identified in the Prospectus of the
Portfolio shall perform the portfolio management duties described therein until
the Subadviser notifies the Manager that one or more other employees, officers
or agents of the Subadviser, identified in such notice, shall assume such duties
as of a specific date. The Subadviser shall use commercially reasonable efforts
to inform the Manager of any such events enough time prior to the event taking
effect such that allows the Manager sufficient time to prepare and file any
necessary supplement to the Prospectus.
b. If any term or provision of this Agreement or the
application thereof to any person or circumstances is held to be invalid or
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the fullest extent permitted by law.
c. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
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13. USE OF NAME.
It is understood that the names "Massachusetts Financial Services
Company" and "MFS" and any derivative names or logos associated with such names
are the valuable property of the Subadviser, and that the Fund has the right to
include such phrases as a part of the names of its series or for any other
purpose only so long as this Agreement shall continue. Upon termination of this
Agreement the Fund shall forthwith cease to use such phrases and logos.
TRAVELERS INVESTMENT ADVISER, INC.
By ______________________________
Name:
Title:
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By _____________________________
Name:
Title: