-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G4d98fxKHt9NiA+g7NMOjLW8RNG1EKoz/sJDEQ/qQqlne5pn0SXEV/fHGKPVAjMi UPVI7mKIVEpMZazJbPqvTA== 0000950123-05-002828.txt : 20050309 0000950123-05-002828.hdr.sgml : 20050309 20050309135543 ACCESSION NUMBER: 0000950123-05-002828 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050309 DATE AS OF CHANGE: 20050309 EFFECTIVENESS DATE: 20050309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRAVELERS SERIES TRUST CENTRAL INDEX KEY: 0000880583 IRS NUMBER: 061346133 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06465 FILM NUMBER: 05668901 BUSINESS ADDRESS: STREET 1: CITIGROUP ASSET MANAGEMENT STREET 2: 125 BROAD STREET, 10TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 212-291-2556 MAIL ADDRESS: STREET 1: CITIGROUP ASSET MANAGEMENT STREET 2: 125 BROAD STREET, 10TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10004 N-CSR 1 y04914anvcsr.txt FORM N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6465 THE TRAVELERS SERIES TRUST (Exact name of registrant as specified in charter) 125 Broad Street, New York, NY 10004 (Address of principal executive offices) (Zip code) Robert I. Frenkel, Esq. Smith Barney Fund Management LLC 300 First Stamford Place Stamford, CT 06902 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 451-2010 Date of fiscal year end: DECEMBER 31 Date of reporting period: DECEMBER 31, 2004 ITEM 1. REPORT TO STOCKHOLDERS. The Annual Report to Stockholders is filed herewith. 1 of 12 ANNUAL REPORT DECEMBER 31, 2004 [UMBRELLA ART TOP] [UMBRELLA ART BOTTOM] THE TRAVELERS SERIES TRUST: ZERO COUPON BOND FUND PORTFOLIO SERIES 2005 [TRAVELERS LOGO] The Travelers Insurance Company The Travelers Life and Annuity Company One Cityplace Hartford, CT 06103 ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- WHAT'S INSIDE LETTER FROM THE CHAIRMAN.................................... 1 MANAGER OVERVIEW............................................ 2 FUND AT A GLANCE............................................ 4 FUND EXPENSES............................................... 5 PERFORMANCE COMPARISON...................................... 7 SCHEDULE OF INVESTMENTS..................................... 8 STATEMENT OF ASSETS AND LIABILITIES......................... 9 STATEMENT OF OPERATIONS..................................... 10 STATEMENTS OF CHANGES IN NET ASSETS......................... 11 FINANCIAL HIGHLIGHTS........................................ 12 NOTES TO FINANCIAL STATEMENTS............................... 13 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 16 ADDITIONAL INFORMATION...................................... 17 IMPORTANT TAX INFORMATION................................... 20
- -------------------------------------------------------------------------------- LETTER FROM THE CHAIRMAN [R. JAY GERKEN PHOTO] R. JAY GERKEN, CFA Chairman, President and Chief Executive Officer DEAR SHAREHOLDER, Despite sharply rising oil prices, threats of terrorism, geopolitical concerns and uncertainties surrounding the presidential election, the U.S. economy continued to expand during the reporting period. Following a robust 4.5% gain in the first quarter of 2004, gross domestic product ("GDP")(i) growth was 3.3% in the second quarter of the year. This decline was largely attributed to higher energy prices. However, third quarter 2004 GDP rose a strong 4.0%. While fourth quarter GDP figures have not yet been released, continued growth is expected. Turning to the financial markets, stocks in both the U.S. and abroad rallied sharply during the fourth quarter of 2004, helping to produce solid gains for the year. With the uncertainty of the presidential election behind them, coupled with falling oil prices, investors were drawn to the equity markets. The overall bond market also generated positive returns during the fiscal year. This was surprising to many, given the economic expansion and five interest rate hikes by the Federal Reserve Board ("Fed").(ii) Please read on for a more detailed look at prevailing economic and market conditions during the fund's fiscal year and to learn how those conditions may have affected fund performance. INFORMATION ABOUT YOUR FUND As you may be aware, several issues in the mutual fund and variable product industry have recently come under the scrutiny of federal and state regulators. Travelers Life & Annuity and some of its affiliates have received requests for information from various government regulators regarding market timing, late trading, fees, revenue sharing, producer compensation and other mutual fund and variable product issues in connection with various investigations. The fund has been informed that Travelers Life & Annuity and its affiliates are responding to those information requests, but are not in a position to predict the outcome of these requests and investigations. As previously disclosed by Citigroup, the Staff of the Securities and Exchange Commission ("SEC") has notified Citigroup Asset Management ("CAM") and Citicorp Trust Bank ("CTB"), an affiliate of CAM, that the Staff is considering recommending a civil injunctive action and/or an administrative proceeding against CAM, CTB, the former CEO of CAM, two former employees and a current employee of CAM, relating to the creation, operation and fees of an internal transfer agent unit that serves various CAM-managed funds. Citigroup is cooperating with the SEC and will seek to resolve this matter in discussion with the SEC Staff. Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the fund. For further information, please see the "Additional Information" note in the Notes to the Financial Statements included in this report. As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you continue to meet your financial goals. Sincerely, /s/ R. Jay Gerken R. Jay Gerken, CFA Chairman, President and Chief Executive Officer January 14, 2005 1 - -------------------------------------------------------------------------------- MANAGER OVERVIEW ZERO COUPON BOND FUND PORTFOLIO SERIES 2005 MARKET/ECONOMIC OVERVIEW The economic expansion entered its fourth year at the close of 2004. Led by strong consumer and business demand, the balance of growth was quite healthy. The employment picture improved during the year, as rising profits led to increased corporate willingness to hire new employees. Strong consumer and business fundamentals appear likely to continue into 2005 and consumer spending looks to strengthen further relative to last year. Inflation began to rise modestly in 2004 as shortages of certain goods and commodities developed around the world. In 2005, inflation pressures look to rise as healthy growth continues to improve corporate pricing power. The ongoing economic recovery and rising price pressures caused the Fed to institute a series of five 25 basis point(iii) rate hikes, beginning in mid-2004. This trend looks to continue well into 2005. After the end of the fund's reporting period, at their February meeting, the Fed once again raised the target rate by 0.25% to 2.50%. PERFORMANCE UPDATE(1) For the twelve months ended December 31, 2004, the Zero Coupon Bond Fund Portfolio Series 2005 returned 1.06%. In comparison, a U.S. Treasury STRIP maturing on November 15, 2005,(iv) which is similar to securities in the fund, returned 0.99% during the same time period. In comparison, the fund's unmanaged benchmark, the Merrill Lynch Zero Coupon 10-Year Index(v) returned 7.03%, and the Lipper Variable Target Maturity Funds Category Average was 3.05% for the same period.(2) PERFORMANCE SNAPSHOT AS OF DECEMBER 31, 2004 (UNAUDITED)
6 MONTHS 12 MONTHS Zero Coupon Bond Fund Portfolio Series 2005 1.09% 1.06% Merrill Lynch Zero Coupon 10-Year Index 7.38% 7.03% U.S. Treasury STRIP Maturing 11/15/05 0.85% 0.99% Lipper Variable Target Maturity Funds Category Average 3.37% 3.05%
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN ABOVE. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE AND INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE FIGURES MAY REFLECT REIMBURSEMENTS AND/OR FEE WAIVERS, WITHOUT WHICH THE PERFORMANCE WOULD HAVE BEEN LOWER. FUND RETURNS ASSUME THE REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS AT NET ASSET VALUE AND THE DEDUCTION OF ALL FUND EXPENSES. Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the period ended December 31, 2004 and include the reinvestment of dividends and capital gains, if any. Returns were calculated among the 9 funds for the six-month period and among the 9 funds for the 12-month period in the variable target maturity funds category. (1) The fund is an underlying investment option of various variable annuity and variable life products. The fund's performance returns do not reflect the deduction of initial sales charges and expenses imposed in connection with investing in variable annuity or variable life contracts such as administrative fees, account charges, and surrender charges, which if reflected, would reduce the performance of the fund. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. (2) Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the 12-month period ended December 31, 2004, including the reinvestment of dividends and capital gains, if any, calculated among the 9 funds in the fund's Lipper category. 2 As the fund is scheduled to mature in December 2005 (please see special note below), it is primarily invested in short-term U.S. Treasury STRIPS. Because of the short-term nature of the fund's holdings, the fund underperformed its benchmark indices, which are composed of longer-term holdings. CONTRIBUTORS TO PERFORMANCE As of December 31, 2004, the effective duration of the portfolio was 1.11 years. During the fiscal year, the yield curve(vi) flattened as short and intermediate term rates increased more than longer-term rates. The portfolio had less exposure to the negative effects of these rising interest rate moves. The fund's short-term cash position benefited results, as the yield it earned continued to increase in the rising rate environment. Thank you for your investment in the Zero Coupon Bond Fund Portfolio Series 2005. As ever, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the fund's investment goals. Sincerely, - -s- GENE COLLINS Gene C. Collins Travelers Asset Management International Company LLC February 3, 2005 SPECIAL NOTE The fund is scheduled to mature in December of 2005 (the "Target Date"). On the fund's Target Date, the fund will be converted to cash and contract owners may invest in another of the funding options available under their contract. If a contract owner does not complete an instruction form directing what should be done with liquidation proceeds, the proceeds will be automatically invested in the money market funding option available under the contract. The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index. (i) Gross domestic product is a market value of goods and services produced by labor and property in a given country. (ii) The Fed is responsible for the formulation of a policy designated to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments. (iii) A basis point is one one-hundredth (1/100 or 0.01) of one percent. (iv) Treasury STRIPS (Separate Trading of Registered Interest and Principal Securities) are Treasuries that have been stripped of their interest payment (its coupon). A STRIP pays no cash income but is purchased at a substantial discount from its value at maturity. (v) The Merrill Lynch Zero Coupon 10-Year Index is a U.S. Government stripped security that has a maturity not greater than 10 years. (vi) The yield curve is the graphical depiction of the relationship between the yield on bonds of the same credit quality but different maturities. 3 - -------------------------------------------------------------------------------- FUND AT A GLANCE (UNAUDITED) (GRAPH)
DECEMBER 31, 2004 JUNE 30, 2004 ----------------- ------------- U.S. Treasury Obligations 81.6 81 Repurchase Agreement 18.4 14.5 Corporate Bonds & Notes 0 4.5
4 - -------------------------------------------------------------------------------- FUND EXPENSES (UNAUDITED) EXAMPLE As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. This example is based on an investment of $1,000 invested on July 1, 2004 and held for the six months ended December 31, 2004. ACTUAL EXPENSES The table below titled "Based on Actual Total Return" provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period." - -------------------------------------------------------------------------------- BASED ON ACTUAL TOTAL RETURN(1)
BEGINNING ENDING ANNUALIZED EXPENSES ACTUAL TOTAL ACCOUNT ACCOUNT EXPENSE PAID DURING RETURN(2) VALUE VALUE RATIO THE PERIOD(3) - -------------------------------------------------------------------------------------------------------------- Zero Coupon Bond Fund Portfolio Series 2005 1.09% $1,000.00 $1,010.90 0.15% $0.76 - --------------------------------------------------------------------------------------------------------------
(1) For the six months ended December 31, 2004. (2) Assumes reinvestment of dividends and capital gains distributions, if any, at net asset value. Total return is not annualized, as it may not be representative of the total return for the year. Total returns do not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges, which, if reflected, would reduce the total returns. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. (3) Expenses (net of expense reimbursement and/or voluntary fee waiver) are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 366. 5 - -------------------------------------------------------------------------------- FUND EXPENSES (UNAUDITED) (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below titled "Based on Hypothetical Total Return" provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BASED ON HYPOTHETICAL TOTAL RETURN(1)
HYPOTHETICAL BEGINNING ENDING ANNUALIZED EXPENSES TOTAL ACCOUNT ACCOUNT EXPENSE PAID DURING RETURN VALUE VALUE RATIO THE PERIOD(2) - ------------------------------------------------------------------------------------------------------------- Zero Coupon Bond Fund Portfolio Series 2005 5.00% $1,000.00 $1,024.38 0.15% $0.76 - -------------------------------------------------------------------------------------------------------------
(1) For the six months ended December 31, 2004. (2) Expenses (net of expense reimbursement and/or voluntary fee waiver) are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 366. 6 - -------------------------------------------------------------------------------- PERFORMANCE COMPARISON -- ZERO COUPON BOND FUND PORTFOLIO SERIES 2005 (UNAUDITED)
AVERAGE ANNUAL TOTAL RETURNS ---------------------------- Twelve Months Ended 12/31/04 1.06% Five Years Ended 12/31/04 6.83 10/11/95* through 12/31/04 6.22 CUMULATIVE TOTAL RETURN ------------------------------------------------- 10/11/95* through 12/31/04 74.51% * Commencement of operations.
This chart assumes an initial investment of $10,000 made on October 11, 1995, assuming reinvestment of dividends, through December 31, 2004. The STRIP issue is not an index. Rather, it is a U.S. Treasury zero coupon bond with a maturity date that is similar to those in the Portfolio. The Merrill Lynch Zero Coupon 10-Year Index is comprised of U.S. Government stripped securities which have a maturity not greater than ten years. [Performance graph - Series 2005]
ZERO COUPON BOND FUND U.S. TREASURY STRIP MERRILL LYNCH ZERO COUPON PORTFOLIO SERIES 2005 MATURING 11/15/05 10-YEAR INDEX --------------------- ------------------- ------------------------- 10/11/95 10000 10000 10000 12/95 10480 10687 10691 12/96 10580 10584 10585 12/97 11810 11101 12072 12/98 13258 12542 13945 12/99 12540 11820 12502 12/00 14311 13583 15436 12/01 15228 14845 15976 12/02 16871 16880 19332 12/03 17268 17253 19836 12/31/04 17451 17423 21231
- -------------------------------------------------------------------------------- Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value. All figures represent past performance and are not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The graph does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. 7 - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS DECEMBER 31, 2004
FACE AMOUNT SECURITY VALUE - ---------------------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS -- 81.9% $1,375,000 U.S. Treasury Note, Stripped Interest Payment only, to yield 6.301% due 11/15/05....................................... $1,343,523 1,800,000 U.S. Treasury Note, Stripped Interest Payment only, to yield 3.960% due 5/15/07........................................ 1,672,830 1,350,000 U.S. Treasury Note, Stripped Principal Payment only, to yield 6.461% due 8/15/05.................................. 1,328,746 - ---------------------------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATIONS (Cost -- $4,240,953)........ 4,345,099 - ---------------------------------------------------------------------------------------------- REPURCHASE AGREEMENT -- 18.5% 981,000 State Street Bank and Trust Co. dated 12/31/04, 1.400% due 1/3/05; Proceeds at maturity -- $981,114; (Fully collateralized by U.S. Treasury Bond, 11.250% due 2/15/15; Market value -- $1,007,715) (Cost -- $981,000)............ 981,000 - ---------------------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 100.4% (Cost -- $5,221,953*)........... 5,326,099 Liabilities in Excess of Other Assets -- (0.4)%............. (20,537) - ---------------------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0%.................................. $5,305,562 - ----------------------------------------------------------------------------------------------
* Aggregate cost for federal income tax purposes is $5,223,933. SEE NOTES TO FINANCIAL STATEMENTS. 8 - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2004 ASSETS: Investments, at value (Cost -- $4,240,953)................ $4,345,099 Repurchase agreement, at value (Cost -- $981,000)......... 981,000 - ------------------------------------------------------------------------- Total investments, at value (Cost -- $5,221,953).......... 5,326,099 Cash...................................................... 31 Interest receivable....................................... 38 Receivable from administrator............................. 12,382 - ------------------------------------------------------------------------- TOTAL ASSETS.............................................. 5,338,550 - ------------------------------------------------------------------------- LIABILITIES: Trustees' fees payable.................................... 2,400 Payable for Fund shares reacquired........................ 1,016 Investment advisory fee payable........................... 292 Accrued expenses.......................................... 29,280 - ------------------------------------------------------------------------- TOTAL LIABILITIES......................................... 32,988 - ------------------------------------------------------------------------- TOTAL NET ASSETS............................................ $5,305,562 - ------------------------------------------------------------------------- NET ASSETS: Paid-in capital........................................... $5,203,396 Accumulated net realized loss from investment transactions........................................... (1,980) Net unrealized appreciation of investments................ 104,146 - ------------------------------------------------------------------------- TOTAL NET ASSETS............................................ $5,305,562 - ------------------------------------------------------------------------- SHARES OUTSTANDING.......................................... 485,741 - ------------------------------------------------------------------------- NET ASSET VALUE............................................. $10.92 - -------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS. 9 - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 INVESTMENT INCOME: Interest.................................................. $ 243,365 - --------------------------------------------------------------------------- EXPENSES: Audit and legal........................................... 35,152 Shareholder communications................................ 20,279 Trustees' fees............................................ 10,271 Custody................................................... 8,328 Investment advisory fee (Note 2).......................... 5,282 Administration fee (Note 2)............................... 3,169 Transfer agency services (Note 2)......................... 2,500 Other..................................................... 548 - --------------------------------------------------------------------------- TOTAL EXPENSES............................................ 85,529 Less: Expense reimbursement and fee waiver (Notes 2 and 6)..................................................... (79,294) - --------------------------------------------------------------------------- NET EXPENSES.............................................. 6,235 - --------------------------------------------------------------------------- NET INVESTMENT INCOME....................................... 237,130 - --------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3): Realized Gain From Investment Transactions................ 45,046 Net Change in Unrealized Appreciation/Depreciation of Investments............................................ (224,712) - --------------------------------------------------------------------------- NET LOSS ON INVESTMENTS..................................... (179,666) - --------------------------------------------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 57,464 - ---------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS. 10 - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31,
2004 2003 - --------------------------------------------------------------------------------------- OPERATIONS: Net investment income..................................... $ 237,130 $ 281,130 Net realized gain......................................... 45,046 14,656 Net change in unrealized appreciation/depreciation........ (224,712) (145,875) - --------------------------------------------------------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS.................... 57,464 149,911 - --------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 1): Net investment income..................................... (239,703) (285,700) Net realized gains........................................ (59,702) (36,106) - --------------------------------------------------------------------------------------- DECREASE IN NET ASSETS FROM DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS........................................... (299,405) (321,806) - --------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS (NOTE 4): Net proceeds from sale of shares.......................... 1,362,300 1,190,465 Net asset value of shares issued for reinvestment of dividends and distributions............................ 299,405 321,806 Cost of shares reacquired................................. (1,745,735) (2,187,042) - --------------------------------------------------------------------------------------- DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS....... (84,030) (674,771) - --------------------------------------------------------------------------------------- DECREASE IN NET ASSETS...................................... (325,971) (846,666) NET ASSETS: Beginning of year......................................... 5,631,533 6,478,199 - --------------------------------------------------------------------------------------- END OF YEAR*.............................................. $ 5,305,562 $ 5,631,533 - --------------------------------------------------------------------------------------- * Includes undistributed net investment income of:.......... -- $2,209 - ---------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS. 11 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS For a share of beneficial interest outstanding throughout each year ended December 31:
2004 2003(1) 2002(1) 2001(1) 2000(1) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF YEAR............... $11.45 $11.84 $11.78 $11.56 $10.65 - ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS: Net investment income.......................... 0.52 0.49 0.55 0.61 0.67 Net realized and unrealized gain (loss)........ (0.40) (0.21) 0.70 0.13 0.79 - ----------------------------------------------------------------------------------------------------------------------- Total Income From Operations..................... 0.12 0.28 1.25 0.74 1.46 - ----------------------------------------------------------------------------------------------------------------------- LESS DIVIDENDS AND DISTRIBUTIONS FROM: Net investment income.......................... (0.52) (0.61) (1.05) (0.50) (0.55) Net realized gains............................. (0.13) (0.06) (0.14) (0.02) -- - ----------------------------------------------------------------------------------------------------------------------- Total Dividends and Distributions................ (0.65) (0.67) (1.19) (0.52) (0.55) - ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF YEAR..................... $10.92 $11.45 $11.84 $11.78 $11.56 - ----------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2).................................. 1.06% 2.36% 10.79% 6.41% 14.13% - ----------------------------------------------------------------------------------------------------------------------- NET ASSETS, END OF YEAR (000'S).................. $5,306 $5,632 $6,478 $5,744 $4,346 - ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: Expenses(3)(4)................................. 0.12% 0.15% 0.15% 0.15% 0.15% Net investment income.......................... 4.49 4.11 4.58 5.18 6.07 - ----------------------------------------------------------------------------------------------------------------------- PORTFOLIO TURNOVER RATE.......................... 0% 0% 0% 16% 30% - -----------------------------------------------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares method. (2) Total returns do not reflect expenses associated with your variable contract such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. (3) Travelers Insurance Company has agreed to reimburse the fund for certain expenses for the years ended December 31, 2004, 2003, 2002, 2001 and 2000 respectively. In addition, Smith Barney Fund Management LLC voluntarily waived a portion of its fee for the year ended December 31, 2004. If such expenses were not reimbursed and/or fees not voluntarily waived, actual expense ratios would have been 1.62%, 1.16%, 1.27%, 1.28% and 1.44%, respectively. (4) As a result of an expense limitation, the ratio of expenses to average net assets will not exceed 0.15%. SEE NOTES TO FINANCIAL STATEMENTS. 12 - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The Zero Coupon Bond Fund Portfolio Series 2005 ("Fund"), a separate diversified investment fund of The Travelers Series Trust ("Trust"), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Shares of the Trust are offered exclusively for use with certain variable annuity and variable life insurance contracts offered through the separate accounts of various affiliated life insurance companies. In accordance with its prospectus, the Fund will liquidate in December 2005. Accounting rules require that financial statements for entities in liquidation, or for which liquidation appears imminent, be prepared on a liquidation basis of accounting. As U.S. generally accepted accounting principles ("GAAP") for investment companies are materially consistent with the liquidation basis of accounting, the financial statements have been prepared in conformity with GAAP for investment companies. The following are significant accounting policies consistently followed by the Fund and are in conformity with GAAP. Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. (A) INVESTMENT VALUATION. Securities traded on national securities markets are valued at the closing price on such markets. Securities for which no sales prices were reported and U.S. government agencies and obligations are valued at the mean between the last reported bid and ask prices or on the basis of quotations received from reputable brokers or other recognized sources. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates value. (B) REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the Fund's policy that a custodian takes possession of the underlying collateral securities, the value of which at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults and the value of the collateral declines of if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. (C) STRIPPED SECURITIES. The Fund invests primarily in "Stripped Securities," a term used collectively for Stripped Treasury Securities, Stripped Government Securities, Stripped Corporate Securities, and Stripped Eurodollar Obligations as well as other stripped securities. Stripped securities can be securities consisting of debt obligations that have been stripped of unmatured interest coupons, securities consisting of unmatured interest coupons that have been stripped from debt obligations. Stripped Securities do not make periodic payments of interest prior to maturity. The market value of Stripped Securities will fluctuate in response to changes in economic conditions, interest rates and the market's perception of the securities. Fluctuations in response to interest rates may be greater than those for debt obligations of comparable maturities that pay interest currently. The amount of fluctuation increases with a longer period of maturity. (D) SECURITY TRANSACTIONS AND INVESTMENT INCOME. Security transactions are accounted for on a trade date basis. Interest income is recorded on the accrual basis. The cost of investments sold is determined by use of the specific identification method. (E) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net investment income and distributions of net realized gains to shareholders of the Fund, if any, are declared at least annually. Dividends and distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP. (F) FEDERAL AND OTHER TAXES. It is the Fund's policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute substantially all of its taxable income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required. (G) RECLASSIFICATION. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, during the current year, $364 has been reclassified between paid-in capital and overdistributed net investment income, as a result of permanent differences attributable to a taxable overdistribution of net investment income. This reclassification has no effect on net assets or net asset values per share. 13 - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Travelers Asset Management International Company LLC ("TAMIC"), an indirect wholly-owned subsidiary of Citigroup Inc. ("Citigroup"), acts as investment adviser to the Fund. The Fund pays TAMIC an investment advisory fee calculated at an annual rate of 0.10% of the Fund's average daily net assets. The investment management fee is calculated daily and paid monthly. The Travelers Insurance Company ("TIC"), another indirect wholly-owned subsidiary of Citigroup, acts as administrator to the Fund. The Fund pays TIC an administration fee calculated at an annual rate of 0.06% of the Fund's average daily net assets. This fee is calculated daily and paid monthly. TIC has entered into a sub-administration service agreement with Smith Barney Fund Management LLC ("SBFM"). TIC pays SBFM, as sub-administrator, an administration fee calculated at an annual rate of 0.02% of the Fund's average daily net assets plus $30,000, subject to a maximum of 0.06% of the Fund's average daily net assets. During the year ended December 31, 2004, the Fund had a contractual expense limitation in place of 0.15%. As a result, TIC has agreed to reimburse the Fund for expenses in the amount of $77,605. This expense limitation is renewed annually and can be terminated at any time by TIC with 60 days' notice. In addition, during the year ended December 31, 2004, SBFM voluntarily waived a portion of its fee in the amount of $1,689. Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as the Fund's transfer agent. During the year ended December 31, 2004, the Fund paid transfer agent fees of $2,500 to CTB. One Trustee and all officers of the Trust are employees of Citigroup or its affiliates and do not receive compensation from the Trust. 3. INVESTMENTS During the year ended December 31, 2004, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows: - ------------------------------------------------------------------------ Purchases................................................... -- - ------------------------------------------------------------------------ Sales....................................................... $1,335,310 - ------------------------------------------------------------------------
At December 31, 2004, the aggregate unrealized appreciation and depreciation of investments for federal income tax purposes were as follows: - ---------------------------------------------------------------------- Gross unrealized appreciation............................... $102,166 Gross unrealized depreciation............................... -- - ---------------------------------------------------------------------- Net unrealized appreciation................................. $102,166 - ----------------------------------------------------------------------
4. SHARES OF BENEFICIAL INTEREST The Declaration of Trust authorizes the issuance of an unlimited number of shares of beneficial interest without par value. Transactions in shares of the Fund were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 2004 DECEMBER 31, 2003 - ---------------------------------------------------------------------------------------------------- Shares sold................................................. 118,416 99,770 Shares issued on reinvestment............................... 27,353 27,948 Shares reacquired........................................... (151,897) (182,780) - ---------------------------------------------------------------------------------------------------- Net Decrease................................................ (6,128) (55,062) - ----------------------------------------------------------------------------------------------------
5. INCOME TAX INFORMATION AND DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions paid during the fiscal years ended December 31, was as follows:
2004 2003 - --------------------------------------------------------------------------------- Distributions paid from: Ordinary income........................................... $239,716 285,700 Long-term capital gains................................... 59,689 36,106 - --------------------------------------------------------------------------------- Total Distributions Paid.................................... $299,405 $321,806 - ---------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) As of December 31, 2004, the components of accumulated earnings on a tax basis were as follows: - ---------------------------------------------------------------------- Unrealized appreciation..................................... $102,166* - ----------------------------------------------------------------------
* The difference between book-basis and tax-basis unrealized appreciation is attributable to the tax deferral of losses on wash sales. 6. ADDITIONAL INFORMATION In connection with an investigation previously disclosed by Citigroup, the Staff of the Securities and Exchange Commission ("SEC") has notified Citigroup Asset Management ("CAM"), the Citigroup business unit that includes the funds' investment manager and other investment advisory companies; Citicorp Trust Bank ("CTB"), an affiliate of CAM; Thomas W. Jones, the former CEO of CAM; and three other individuals, one of whom is an employee and two of whom are former employees of CAM, that the SEC Staff is considering recommending a civil injunctive action and/or an administrative proceeding against each of them relating to the creation and operation of an internal transfer agent unit to serve various CAM-managed funds. In 1999, CTB entered the transfer agent business. CTB hired an unaffiliated subcontractor to perform some of the transfer agent services. The subcontractor, in exchange, had signed a separate agreement with CAM in 1998 that guaranteed investment management revenue to CAM and investment banking revenue to a CAM affiliate. The subcontractor's business was later taken over by PFPC Inc., and at that time the revenue guarantee was eliminated and a one-time payment was made by the subcontractor to a CAM affiliate. CAM did not disclose the revenue guarantee when the boards of various CAM-managed funds hired CTB as transfer agent. Nor did CAM disclose to the boards of the various CAM-managed funds the one-time payment received by the CAM affiliate when it was made. As previously disclosed, CAM has already paid the applicable funds, primarily through voluntary fee waivers, a total of approximately $17 million (plus interest), which is the amount of the revenue received by Citigroup relating to the revenue guarantee. In addition, the SEC Staff has indicated that it is considering recommending action based on the adequacy of the disclosures made to the fund boards that approved the transfer agency arrangement, CAM's initiation and operation of, and compensation for, the transfer agent business and CAM's retention of, and agreements with, the subcontractor. Citigroup is cooperating fully in the SEC's investigation and is seeking to resolve the matter in discussions with the SEC Staff. On January 20, 2005, Citigroup stated that it had established an aggregate reserve of $196 million ($25 million in the third quarter of 2004 and $171 million in the fourth quarter of 2004) related to its discussions with the SEC Staff. Settlement negotiations are ongoing and any settlement of this matter with the SEC will require approval by the Citigroup Board and acceptance by the Commission. Unless and until any settlement is consummated, there can be no assurance that any amount reserved by Citigroup will be distributed. Nor is there at this time any certainty as to how the proceeds of any settlement would be distributed, to whom any such distribution would be made, the methodology by which such distribution would be allocated, and when such distribution would be made. Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the funds. 7. SUBSEQUENT EVENT NOTE On January 31, 2005, Citigroup announced that it has reached an agreement with MetLife, Inc. ("MetLife") to sell Citigroup's life insurance and annuity businesses ("Travelers Life & Annuity") to MetLife. As part of this transaction, TAMIC, currently an indirect wholly owned subsidiary of Citigroup, would become an indirect wholly owned subsidiary of MetLife. TAMIC is the investment adviser to Zero Coupon Bond Fund Portfolio Series 2005. The transaction is subject to certain regulatory approvals, as well as other customary conditions to closing. The transaction is expected to close this summer. In connection with this transaction, the Trust's Board of Trustees will be asked to approve new investment advisory and administrative services contracts, and, to the extent required by law, variable annuity and variable life contract owners, who beneficially own the shares of the funds, will be asked to approve new investment advisory agreements. 15 - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE TRAVELERS SERIES TRUST: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Zero Coupon Bond Fund Portfolio Series 2005 of The Travelers Series Trust ("Trust") as of December 31, 2004, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2004, by correspondence with the custodian and broker. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Zero Coupon Bond Fund Portfolio Series 2005 of The Travelers Series Trust as of December 31, 2004, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP New York, New York February 18, 2005 16 - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) INFORMATION ABOUT TRUSTEES AND OFFICERS The business and affairs of The Travelers Series Trust ("Trust") are managed under the direction of the Trust's Board of Trustees. Information pertaining to the Trustees and Officers of the Trust is set forth below. The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling the Trust's administrator at 1-800-842-9368.
TERM OF NUMBER OF OFFICE(1) AND PORTFOLIOS IN POSITION(S) LENGTH FUND COMPLEX OTHER NAME, ADDRESS HELD WITH OF TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY BOARD MEMBERSHIPS AND BIRTH YEAR FUND SERVED PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------- NON-INTERESTED TRUSTEES(2): Frances M. Hawk Trustee Since 1991 Private Investor 5 Board of Managers CFA, CFP of 6 Variable 108 Oxford Hill Annuity Separate Lane Accounts of The Downingtown, PA Travelers Birth Year: 1948 Insurance Co. ("TIC") Lewis Mandell Trustee Since 1990 Professor, University of 5 Delaware North 160 Jacobs Hall Buffalo Corp.; Board of Buffalo, NY Managers of 6 Birth Year: 1943 Variable Annuity Separate Accounts of TIC Robert E. McGill, Trustee Since 1990 Retired 5 Lydall Inc.; Board III of Managers of 6 295 Hancock Road Variable Annuity Williamstown, MA Separate Accounts Birth Year: 1931 of TIC INTERESTED TRUSTEE: R. Jay Gerken, Chairman, Since 2002 Managing Director of Citigroup 219 Chairman, Board of CFA(3) President Global Markets ("CGM"); Managers of 6 Citigroup Asset and Chief Chairman, President and Chief Variable Annuity Management ("CAM") Executive Executive Officer of Smith Separate Accounts 399 Park Avenue, Officer Barney Fund Management LLC of TIC 4th Floor ("SBFM"), Travelers Investment New York, NY 10022 Adviser, Inc. ("TIA") and Citi Birth Year: 1951 Fund Management Inc. ("CFM"); President and Chief Executive Officer of certain mutual funds associated with Citigroup Inc. ("Citigroup"); formerly, Portfolio Manager of Smith Barney Allocation Series Inc. (from 1996 to 2001) and Smith Barney Growth and Income Fund (from 1996 to 2000)
17 - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
TERM OF NUMBER OF OFFICE(1) AND PORTFOLIOS IN POSITION(S) LENGTH FUND COMPLEX OTHER NAME, ADDRESS HELD WITH OF TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY BOARD MEMBERSHIPS AND BIRTH YEAR FUND SERVED PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE - --------------------------------------------------------------------------------------------------------------------------- OFFICERS: Andrew B. Shoup Senior Vice Since 2004 Director of CAM; Senior Vice N/A N/A CAM President and President and Chief 125 Broad Street Chief Administrative Officer of 11th Floor Administrative mutual funds associated with New York, NY 10004 Officer Citigroup; Head of Birth Year: 1956 International Funds Administration of CAM (from 2001 to 2003); Director of Global Funds Administration of CAM from 2000 to 2001; Head of U.S. Citibank Funds Administration of CAM (from 1998 to 2000) Kaprel Ozsolak Chief Since 2004 Vice President of CGM; Chief N/A N/A CAM Financial Financial Officer and 125 Broad Street Officer and Treasurer of certain mutual 11th Floor Treasurer funds associated with New York, NY 10004 Citigroup; Controller of Birth Year: 1965 certain mutual funds associated with Citigroup (from 2002 to 2004) William D. Wilcox Chief Since 2004 Counsel and Chief Compliance N/A N/A Travelers Life & Compliance Officer (since 1999), TIC; Annuity Officer Chief Anti- Money Laundering One Cityplace Compliance Officer (since Hartford, CT 06103 2002), 6 Variable Annuity Birth Year: 1964 Separate Accounts of TIC; Chief Compliance Officer (since 2004), 5 mutual funds and 6 Variable Separate Accounts sponsored by TIC
18 - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
TERM OF NUMBER OF OFFICE(1) AND PORTFOLIOS IN POSITION(S) LENGTH FUND COMPLEX OTHER NAME, ADDRESS HELD WITH OF TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY BOARD MEMBERSHIPS AND BIRTH YEAR FUND SERVED PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE - --------------------------------------------------------------------------------------------------------------------------- Andrew Beagley Chief Anti- Since 2002 Director of CGM (since 2000); N/A N/A CAM Money Director of Compliance, North 399 Park Avenue, Laundering America, CAM (since 2000); 4th Floor Compliance Chief Anti-Money Laundering New York, NY 10022 Officer Compliance Officer, Chief Birth Year: 1962 Compliance Officer and Vice President of certain mutual funds associated with Citigroup; Director of Compliance, Europe, the Middle East and Africa, Citigroup Asset Management (from 1999 to 2000); Chief Compliance Officer, SBFM, CFM, TIA, Salomon Brothers Asset Management Limited, Smith Barney Global Capital Management Inc. Kathleen A. McGah Secretary Since 2004 Deputy General Counsel of TIC; N/A N/A Travelers Life & Assistant Secretary of 5 Annuity mutual funds and 6 Variable One Cityplace Separate Accounts sponsored by Hartford, CT 06103 TIC (from 1995 to 2004) Birth Year: 1950 Ernest J. Wright Assistant Since 2004 Vice President and Secretary N/A N/A Travelers Life & Secretary of TIC; Secretary of 5 mutual Annuity funds and 6 Variable Separate One Cityplace Accounts sponsored by TIC Hartford, CT 06103 (from 1994 to 2004) Birth Year: 1940
- --------------- (1) Each Trustee and officer serves until his or her respective successor has been duly elected and qualified. (2) Mr. Knight Edwards is an Emeritus Trustee. An Emeritus Trustee is permitted to attend meetings, but has no voting power. (3) Mr. Gerken is an "interested person" of the Trust as defined in the Investment Company Act of 1940, as amended, because Mr. Gerken is Managing Director of CGM, an indirect wholly-owned subsidiary of Citigroup, and his ownership shares and options to purchase shares of Citigroup, the indirect parent of TIC. 19 - -------------------------------------------------------------------------------- IMPORTANT TAX INFORMATION (UNAUDITED) The following information is provided with respect to the ordinary income distributions paid by the Trust during the taxable year ended December 31, 2004. - ------------------------------------------------------------------------------------ Record Date................................................. 6/24/2004 12/27/2004 Payable Date................................................ 6/25/2004 12/28/2004 - ------------------------------------------------------------------------------------ Interest from Federal Obligations........................... 86.75% 91.23% - ------------------------------------------------------------------------------------ Long-Term Capital Gain Distributions Paid Per Share......... $0.0318 $0.0978 - ------------------------------------------------------------------------------------
The law varies in each state as to whether and what percentage of dividend income attributable to federal obligations is exempt from state income tax. We recommend that you consult with your tax adviser to determine if any portion of the dividends you received is exempt from state income taxes. Please retain this information for your records. 20 THE TRAVELERS SERIES TRUST - -------------------------------------------------------------------------------- TRUSTEES R. Jay Gerken, CFA Chairman Frances M. Hawk, CFA, CFP Lewis Mandell Robert E. McGill, III OFFICERS R. Jay Gerken, CFA President and Chief Executive Officer Andrew B. Shoup Senior Vice President and Chief Administrative Officer Kaprel Ozsolak Chief Financial Officer and Treasurer William D. Wilcox Chief Compliance Officer Andrew Beagley Chief Anti-Money Laundering Compliance Officer Kathleen A. McGah Secretary Ernest J. Wright Assistant Secretary INVESTMENT ADVISER Travelers Asset Management International Company LLC ADMINISTRATOR The Travelers Insurance Company CUSTODIAN State Street Bank and Trust Company TRANSFER AGENT Citicorp Trust Bank, fsb. The Fund is a separate investment fund of The Travelers Series Trust, a Massachusetts business trust. This report is prepared for the general information of variable annuity or life contract owners and is not an offer of shares of the Zero Coupon Bond Fund Portfolio Series 2005 and is not for use with the general public. THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A FREE PROSPECTUS. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's website at www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call 1-800-842-9368. Information on how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 and a description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (1) without charge upon request, by calling 1-800-842-9368, (2) on the Fund's website at www.citigroupAM.com and (3) on the SEC's website at www.sec.gov. VG-ZERO (Annual) (2-05) Printed in U.S.A. ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Trustees of the registrant has determined that Robert E. McGill, a member of the Board's Audit Committee, possesses the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an "audit committee financial expert," and has designated Mr. McGill as the Audit Committee's financial expert. Mr. McGill is an "independent" Trustee pursuant to paragraph (a)(2) of Item 3 to Form N-CSR. Item 4. Principal Accountant Fees and Services (a) Audit Fees for The Travelers Series Trust were $276,000 and $276,000 for the years ended 12/31/04 and 12/31/03. (b) Audit-Related Fees for The Travelers Series Trust were $0 and $0 for the years ended 12/31/04 and 12/31/03. (c) Tax Fees for The Travelers Series Trust of $36,400 and $36,400 for the years ended 12/31/04 and 12/31/03. These amounts represent aggregate fees paid for tax compliance, tax advice and tax planning services, which include (the filing and amendment of federal, state and local income tax returns, timely RIC qualification review and tax distribution and analysis planning) rendered by the Accountant to Travelers Series Trust. (d) All Other Fees for The Travelers Series Trust of $0 and $0 for the years ended 12/31/04 and 12/31/03. (e) (1) Audit Committee's pre-approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X. The Charter for the Audit Committee (the "Committee") of the Board of each registered investment company (the "Fund") advised by Smith Barney Fund Management LLC or Salomon Brothers Asset Management Inc or one of their affiliates (each, an "Adviser") requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund's independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee. The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible. Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund ("Covered Service Providers") constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit. (2) For The Travelers Series Trust, the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% and 100% for the years ended 12/31/04 and 12/31/03; Tax Fees were 100% and 100% for the years ended 12/31/04 and 12/31/03; and Other Fees were 100% and 100% for the years ended 12/31/04 and 12/31/03. (f) N/A (g) Non-audit fees billed by the Accountant for services rendered to Travelers Series Trust and CAM and any entity controlling, controlled by, or under common control with CAM that provides ongoing services to Travelers Series Trust. Fees billed to and paid by Citigroup Global Markets, Inc. related to the transfer agent matter as fully described in the notes to the financial statements titled "additional information" were $75,000 and $0 for the years ended 12/31/04 and 12/31/03. (h) Yes. The Travelers Series Trust's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates which were not pre-approved (not requiring pre-approval) is compatible with maintaining the Accountant's independence. All services provided by the Accountant to the Travelers Series Trust or to Service Affiliates which were required to be pre-approved were pre-approved as required. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant's internal control over financial reporting. 2 of 12 ITEM 11. EXHIBITS. (a) Code of Ethics attached hereto. Exhibit 99.CODE ETH (b) Attached hereto. Exhibit 99.CERT Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 99.906CERT Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized. THE TRAVELERS SERIES TRUST By: /s/ R. Jay Gerken (R. Jay Gerken) Chief Executive Officer of THE TRAVELERS SERIES TRUST Date: March 9, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ R. Jay Gerken (R. Jay Gerken) Chief Executive Officer of THE TRAVELERS SERIES TRUST Date: March 9, 2005 By: /s/ Kaprel Ozsolak (Kaprel Ozsolak) Chief Financial Officer of THE TRAVELERS SERIES TRUST Date: March 9, 2005 3 of 12 EX-99.CODE ETH 2 y04914aexv99wcodeeth.txt CODE OF ETHICS EX 99.CODE ETH SARBANES-OXLEY ACT CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF CAM/U.S. REGISTERED INVESTMENT COMPANIES I. COVERED OFFICERS/PURPOSE OF THE CODE This code of ethics (the "Code") for Citigroup Asset Management's ("CAM's") U. S. registered proprietary investment companies (collectively, "Funds" and each a, "Company") applies to each Company's Chief Executive Officer, Chief Administrative Officer, Chief Financial Officer and Controller (the "Covered Officers") for the purpose of promoting: - honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; - compliance with applicable laws and governmental rules and regulations; - the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and - accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. ADMINISTRATION OF CODE The Regional Director of CAM Compliance, North America ("Compliance Officer") is responsible for administration of this Code, including granting pre-approvals (see Section III below) and waivers (as described in Section VI below), applying this Code in specific situations in which questions are presented under it and interpreting this Code in any particular situation. 4 of 12 III. COVERED OFFICERS SHOULD ETHICALLY HANDLE ACTUAL AND APPARENT CONFLICTS OF INTEREST OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The compliance programs and procedures of the Company and its investment adviser are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code (see Section VII below). Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between a Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and a Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of a Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Directors\Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. * * * * Each Covered Officer must: - not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting ( e.g. through fraudulent accounting 5 of 12 practices) by the Company whereby the Covered Officer(1) would benefit personally to the detriment of the Company; or - not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than for the benefit of the Company; and - not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market affect of such transactions. - There are some potential conflict of interest situations that should always be discussed with the Compliance Officer, if material. Examples are as follows: (1) service as a director on the board of any public or private company; (2) any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, (3) a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership; and (4) the receipt of any gifts or the conveyance of any value (including entertainment ) from any company with which the Company has current or prospective business dealings, except: (a) any non-cash gifts of nominal value (nominal value is less than $100); and (b) customary and reasonable meals and entertainment at which the giver is present, such as the occasional business meal or sporting event. IV. DISCLOSURE AND COMPLIANCE Each Covered Officer: - should be familiar with his or her responsibilities in connection with the disclosure requirements generally applicable to the Company; - ---------------- (1) Any activity or relationship that would present a conflict for a Covered Officer would also present a conflict for the Covered Officer if a member of a Covered Officer's family (spouse, minor children and any account over which a Covered Officer is deemed to have beneficial interest) engages in such an activity or has such a relationship. 6 of 12 - should not knowingly misrepresent, or knowingly cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; - should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and the investment adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and - is responsible to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. V. REPORTING AND ACCOUNTABILITY Each Covered Officer must: - upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that the Covered Officer has received, read, and understands the Code; - annually thereafter affirm to the Board that he or she has complied with the requirements of the Code; - annually disclose affiliations and other relationships related to conflicts of interest; - not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and - notify the Compliance Officer promptly if he knows of any violation of this Code (failure to do so is itself a violation of this Code). In rendering decisions and interpretations and in conducting investigations of potential violations under the Code, the Compliance Officer may, at his discretion, consult with such persons as he determines to be appropriate, including, but not limited to, a senior legal officer of the Company or its investment adviser or its affiliates, independent auditors or other consultants, subject to any requirement to seek pre-approval from the Company's audit committee for the retention of independent auditors to perform permissible non-audit services. The Funds will follow these procedures in investigating and enforcing the Code: - the Compliance Officer will take all appropriate action to investigate any potential violation of which he becomes aware; - if, after investigation the Compliance Officer believes that no violation has occurred, the Compliance Officer is not required to take any further action; 7 of 12 - any matter that the Compliance Officer believes is a violation will be reported to the Directors of the Fund who are not "interested persons" as defined in the Investment Company Act the ("Non-interested Directors") - if the Non-interested Directors of the Board concur that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; and - any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules The Compliance Officer shall submit an annual report to the Board describing any waivers granted. VI. WAIVERS(2) A Covered Officer may request a waiver of any of the provisions of the Code by submitting a written request for such waiver to the Compliance Officer, setting forth the basis of such request and explaining how the waiver would be consistent with the standards of conduct described herein. The Compliance Officer shall review such request and make a determination thereon in writing, which shall be binding. In determining whether to waive any provisions of this Code, the Compliance Officer shall consider whether the proposed waiver is consistent with honest and ethical conduct and other purposes of this Code. VII. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' investment advisers, principal underwriters, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The codes of ethics of the funds and the investment advisers and principal underwriters under Rule 17j-1 of the Investment Company Act and the Citigroup Code of Conduct and Citigroup Statement of Business Practices as well as other policies of the Fund's investment advisers or their affiliates are separate requirements applying to the Covered Officers and others, and are not part of this Code. - -------------------- (2) For purposes of this Code, Item 2 of Form N-CSR defines "waiver" as "the approval by a Company of a material departure from a provision of the Code" and includes an "implicit waiver," which means a Company's failure to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an executive officer of the Company. 8 of 12 VIII. AMENDMENTS Any amendments to this Code, other than amendments to Exhibits A, B and C must be approved or ratified by a majority vote of the Board, including a majority of Non-interested Directors. IX. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and Company and their respective counsel, counsel to the non-Interested Directors or independent auditors or other consultants referred to in Section V above. X. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. 9 of 12 EX-99.CERT 3 y04914aexv99wcert.txt CERTIFICATION CERTIFICATIONS PURSUANT TO SECTION 302 EX-99.CERT CERTIFICATIONS I, R. Jay Gerken, certify that: 1. I have reviewed this report on Form N-CSR of The Travelers Series Trust - Zero Coupon Bond Fund Portfolio Series 2005; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial data; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2005 /s/ R. Jay Gerken ------------------------------- R. Jay Gerken Chief Executive Officer 10 of 12 I, Kaprel Ozsolak, certify that: 1. I have reviewed this report on Form N-CSR of The Travelers Series Trust - Zero Coupon Bond Fund Portfolio Series 2005; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial information included in this report, and the financial statements on which the financial information is based, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial data; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2005 /s/ Kaprel Ozsolak ------------------------------- Kaprel Ozsolak Chief Financial Officer 11 of 12 EX-99.906CERT 4 y04914aexv99w906cert.txt 906 CERTIFICATION CERTIFICATIONS PURSUANT TO SECTION 906 EX-99.906CERT CERTIFICATION R. JAY GERKEN, Chief Executive Officer, and KAPREL OSZOLAK, Chief Financial Officer of The Travelers Series Trust - Zero Coupon Bond Fund Portfolio Series 2005 (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended December 31, 2004 (the "Form N-CSR") fully complies with the requirements of section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Chief Executive Officer Chief Financial Officer The Travelers Series Trust - The Travelers Series Trust - Zero Coupon Bond Fund Portfolio Zero Coupon Bond Fund Portfolio Series 2005 Series 2005 /s/ R. Jay Gerken /s/ Kaprel Ozsolak - --------------------------- ------------------------------------ R. Jay Gerken Kaprel Ozsolak Date: March 9, 2005 Date: March 9, 2005 This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Commission. 12 of 12 -----END PRIVACY-ENHANCED MESSAGE-----