<PAGE> 1
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
------------------------------------------------
(Exact name of Registrant)
THE TRAVELERS LIFE AND ANNUITY COMPANY
--------------------------------------
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
---------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (860) 277-0111
ERNEST J. WRIGHT
Secretary
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
---------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485
- ----------
on ___________ pursuant to paragraph (b) of Rule 485
- ----------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
- ----------
__________ on ___________ pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
- ---------- previously filed post-effective amendment.
AN INDEFINITE AMOUNT OF VARIABLE ANNUITY CONTRACT UNITS WAS REGISTERED PURSUANT
TO RULE 24f-2 OF THE INVESTMENT COMPANY ACT OF 1940. A RULE 24f-2 NOTICE FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1996 WAS FILED ON FEBRUARY 28, 1997.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE> 2
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
- --- ---------------------
<S> <C> <C>
1. Cover Page Prospectus
2. Definitions Glossary of Special Terms
3. Synopsis Prospectus Summary
4. Condensed Financial Information Not Applicable
5. General Description of Registrant, The Insurance Company; The Separate
Depositor, and Portfolio Companies Account and the Funding Options; Voting
Rights
6. Deductions (and Expenses) Fee Table; Charges and Deductions;
Distribution of Variable Annuity Contracts
7. General Description of Variable The Contract; Ownership Provisions; Transfers
Annuity Contracts
8. Annuity Period The Annuity Period; Payment Options
9. Death Benefit Death Benefit
10. Purchases and Contract Value The Contract
11. Redemptions Surrenders and Redemptions; Miscellaneous
Contract Provisions; The Contract
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings and Opinions
14. Table of Contents of Statement Appendix D
of Additional Information
</TABLE>
<TABLE>
<CAPTION>
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
<S> <C>
15. Cover Page Statement of Additional Information
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company
18. Services Principal Underwriter; Distribution and
Management Agreement
19. Purchase of Securities Being Offered Valuation of Assets
20. Underwriters Principal Underwriter
21. Calculation of Performance Data Performance Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
PROSPECTUS
This Prospectus describes an individual flexible premium variable annuity
contract (the "Contract") offered by The Travelers Life and Annuity Company (the
"Company"). The Contract is currently available for use in connection with (1)
individual nonqualified purchases; (2) Individual Retirement Annuities (IRAs)
pursuant to Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code"); and (3) qualified retirement plans. Qualified contracts include
contracts qualifying under Section 401(a), 403(b), or 408(b) of the Code.
Purchase Payments made under the Contract will accumulate on a fixed
and/or a variable basis, as selected by you. If on a variable basis, the value
of the Contract prior to the Maturity Date will vary continuously to reflect
the investment experience of the underlying funds (the "Funding Options")
available under The Travelers Fund ABD II for Variable Annuities ("Fund ABD
II"). The Funding Options currently available are: Capital Appreciation Fund;
Cash Income Trust; Alliance Growth Portfolio, MFS Total Return Portfolio and
Putnam Diversified Income Portfolio of The Travelers Series Fund, Inc. and
Travelers Quality Bond Portfolio, Lazard International Stock Portfolio, MFS
Emerging Growth Portfolio, Federated Stock Portfolio, Federated High Yield
Portfolio, Large Cap Portfolio, Equity Income Portfolio and Mid Cap Disciplined
Equity Fund of The Travelers Series Trust. A Fixed Account Option is also
available and is described in Appendix A. The Fixed Account option may not be
available in some jurisdictions. Unless specified otherwise, this prospectus
refers to the Funding Options.
This Prospectus provides the information about Fund ABD II that you should know
before investing. Please read it and retain it for future reference. Additional
information about Fund ABD II is contained in a Statement of Additional
Information ("SAI") dated ______,1997 which has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus. A copy may be obtained, without charge, by writing to The Travelers
Life and Annuity Company, Annuity Investor Services, One Tower Square, Hartford,
Connecticut 06183-9061, or by calling (860) 277-0111. The Table of Contents of
the SAI appears in Appendix C of this Prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
THE UNDERLYING FUNDS. BOTH THIS CONTRACT PROSPECTUS AND THE UNDERLYING FUND
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
THIS PROSPECTUS IS DATED _____, 1997.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.............................................................. 4
PROSPECTUS SUMMARY..................................................................... 5
FEE TABLE.............................................................................. 7
THE INSURANCE COMPANY.................................................................. 10
THE SEPARATE ACCOUNT AND THE FUNDING OPTIONS........................................... 10
The Travelers Fund ABD II For Variable Annuities (Fund ABD II)....................... 10
The Funding Options.................................................................. 10
Funding Option Investment Managers................................................... 11
Substitutions and Additions.......................................................... 11
PERFORMANCE INFORMATION................................................................ 11
THE CONTRACT........................................................................... 14
Purchase Payments.................................................................... 15
Right to Return...................................................................... 15
Accumulation Units................................................................... 15
CHARGES AND DEDUCTIONS................................................................. 16
Administrative Charges............................................................... 16
Mortality and Expense Risk Charge.................................................... 16
Reduction or Elimination of Contract Charges......................................... 17
Funding Option Charges............................................................... 17
Premium Tax.......................................................................... 17
Changes in Taxes Based Upon Premium or Value......................................... 17
OWNERSHIP PROVISIONS................................................................... 17
Types of Ownership................................................................... 17
Beneficiary.......................................................................... 18
Annuitant............................................................................ 18
TRANSFERS.............................................................................. 18
Dollar Cost Averaging (Automated Transfers).......................................... 18
Telephone Transfers.................................................................. 19
SURRENDERS AND REDEMPTIONS............................................................. 19
Systematic Withdrawals............................................................... 20
DEATH BENEFIT.......................................................................... 20
Death Proceeds Prior to the Maturity Date............................................ 20
Death Proceeds After the Maturity Date............................................... 21
THE ANNUITY PERIOD..................................................................... 21
Maturity Date........................................................................ 21
Allocation of Annuity................................................................ 21
Variable Annuity..................................................................... 22
Fixed Annuity........................................................................ 22
PAYMENT OPTIONS........................................................................ 22
Election of Options.................................................................. 22
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Annuity Options...................................................................... 23
Income Options....................................................................... 23
MISCELLANEOUS CONTRACT PROVISIONS...................................................... 24
Termination.......................................................................... 24
Misstatement......................................................................... 24
Required Reports..................................................................... 24
Suspension of Payments............................................................... 24
Transfers of Contract Values to other Securities..................................... 25
FEDERAL TAX CONSIDERATIONS............................................................. 25
General Taxation of Annuities........................................................ 25
Tax Law Diversification Requirements for Variable Annuities.......................... 25
Ownership of the Investments......................................................... 25
Penalty Tax for Premature Distributions.............................................. 26
Mandatory Distributions for Qualified Plans.......................................... 26
Nonqualified Annuity Contracts....................................................... 26
Individual Retirement Annuities...................................................... 27
Qualified Pension and Profit-Sharing Plans........................................... 27
Federal Income Tax Withholding....................................................... 27
VOTING RIGHTS.......................................................................... 28
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS............................................. 29
Conformity with State and Federal Laws............................................... 29
LEGAL PROCEEDINGS AND OPINIONS......................................................... 29
APPENDIX A: THE FIXED ACCOUNT.......................................................... 30
APPENDIX B: Contracts issued in the State of Florida................................... 31
APPENDIX C: Table of Contents of the Statement of Additional Information............... 32
</TABLE>
3
<PAGE> 7
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT -- an accounting unit of measure used to calculate the value
of a Contract before Annuity Payments begin.
ACCUMULATION UNIT VALUE -- the dollar amount of an Accumulation Unit.
ANNUITANT -- the person on whose life this contract is issued and the amount of
the monthly Annuity Payments depend.
ANNUITY PAYMENTS -- a series of periodic payments (a) for life; (b) for life
with either a minimum number of payments or a determinable sum assured; or (c)
for the joint lifetime of the Annuitant and another person ("Contingent
Annuitant") and thereafter during the lifetime of the survivor.
ANNUITY UNIT -- an accounting unit of measure used to calculate the amount of
Annuity Payments.
COMPANY -- (WE, OUR) -- The Travelers Life and Annuity Company.
COMPANY'S HOME OFFICE -- the principal offices of The Travelers Life and Annuity
Company located at One Tower Square, Hartford, Connecticut 06183-9061.
CONTRACT DATE -- the date on which the Contract, benefits and the contract
provisions become effective.
CONTRACT OWNER (YOU, YOUR) -- the person or entity to whom the Contract is
issued or assigned. A married spouse may be designated as the joint owner.
CONTRACT VALUE -- the current value of Accumulation Units credited to the
Contract and the Fixed Account less any administrative charges.
CONTRACT YEARS -- twelve-month periods beginning on the Contract Date.
FIXED ACCOUNT -- an additional account into which Purchase Payments may be
allocated and which is included in the Contract Value. Purchase Payments
allocated to the Fixed Account will earn interest at a rate guaranteed by the
Company; this rate will change from time to time.
FUNDING OPTION(S) -- the investment option(s) available under the Separate
Account.
HOME OFFICE -- The Travelers Life and Annuity Company, One Tower Square,
Hartford, CT 06183
INCOME PAYMENTS -- optional forms of payments made by the Company which are
based on an agreed-upon number of payments or payment amount.
MATURITY DATE -- the date on which the first Annuity or Income Payment is to
begin under a Contract.
PURCHASE PAYMENT -- a gross amount paid to the Company during the accumulation
period.
SEPARATE ACCOUNT -- assets set aside by the Company, the investment experience
of which is kept separate from that of other assets of the Company (Fund ABD
II).
SUB-ACCOUNT -- The portion of the assets of the Separate Account which is
allocated to a particular Funding Option.
VALUATION DATE -- generally, a day on which the Funding Option is valued. A
Valuation Date is any day on which the New York Stock Exchange is open for
trading. The value of Accumulation Units and Annuity Units will be determined as
of the close of trading on the New York Stock Exchange.
VALUATION PERIOD -- the period between the close of business on successive
Valuation Dates.
VARIABLE ANNUITY -- an annuity contract which provides for accumulation and for
Annuity Payments which vary in amount in accordance with the investment
experience of a Separate Account.
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to the Company.
4
<PAGE> 8
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
INTRODUCTION
The Contract described in this Prospectus is both an insurance policy and a
security. As an insurance policy, it is subject to the insurance laws and
regulations of each state in which it is available for distribution. As a
security, it is subject to the federal securities laws. The Contract is an
individual flexible premium variable annuity. It allows you to allocate Purchase
Payments to any or all of the Funding Options currently available under Fund ABD
II, as well as to the Fixed Account. (See "The Funding Options.") An
initial lump-sum Purchase Payment of at least $5,000 must be made to the
Contract; additional Purchase Payments of at least $500 may be made. In some
states, subsequent Purchase Payments may not be allowed. (See "Purchase
Payments.")
RIGHT TO RETURN
You may return the Contract and receive a full refund of the Contract Value
(including charges) within twenty days after the Contract is delivered to you,
unless state law requires a longer period. (See "Right to Return.")
CHARGES AND EXPENSES
There are no sales or surrender charges in this contract.
Contract charges include the contract administrative expense charge ($30
annually) and a Sub-Account administrative expense charge (0.15% on an annual
basis of the average daily net assets allocated to each of the Funding
Options). (See "Administrative Charges.") A mortality and expense risk charge,
equivalent on an annual basis to 1.25% of the daily net assets of amounts
allocated to each Funding Option will also be charged. (See "Mortality and
Expense Risk Charge.") If applicable, state premium taxes will also be
deducted and paid when due. (See "Premium Tax.")
TRANSFERS
Prior to the Maturity Date, you may reallocate the Cash Value among the Fixed
Account and any of the Sub-Accounts available under Fund ABD II. Transfers
between the variable Sub-Accounts are unlimited. Transfers between the Fixed
Account and any of the Sub-Accounts are subject to certain restrictions. (See
"Transfers," and "Appendix A.") Dollar-Cost Averaging, or automated transfers,
are also available. The minimum automated transfer amount is $400. (See
"Dollar Cost Averaging (Automated Transfers.")
SURRENDERS
Prior to the Maturity Date, you may surrender all or part of the Contract Value
subject to certain limitations. You will be liable for income tax on the
taxable portion of any full or partial surrender, and you may incur a 10% tax
penalty if such surrender is made prior to the age of 59 1/2. (See "Surrenders
and Redemptions," and "Penalty Tax for Premature Distributions.")
Systematic withdrawals of at least $100 on a monthly, quarterly, semiannual or
annual basis may be elected if your Contract Value is at least $15,000. Any
applicable premium taxes will be deducted. (See "Systematic Withdrawals.")
5
<PAGE> 9
DEATH BENEFIT
A death benefit is payable to the Beneficiary upon the death of the Annuitant
prior to the Maturity Date with no Contingent Annuitant surviving. The death
benefit will vary based on the Annuitant's age at the time of death. (See "Death
Benefit.")
THE ANNUITY PERIOD
On the Maturity Date, or other agreed-upon payment date, the Company will
provide Annuity or Income Payments as described in the section entitled "The
Annuity Period."
THE FIXED ACCOUNT
Although this Prospectus specifically applies only to the variable features of
the Contract, the Contract also allows you to allocate Purchase Payments to a
Fixed Account where they will earn interest at a rate guaranteed by the Company,
which interest rate will not be less than 3% per year. (See "Appendix A.")
6
<PAGE> 10
FEE TABLE
- --------------------------------------------------------------------------------
FUND ABD II AND THE UNDERLYING FUNDING OPTIONS
The purpose of the Fee Table is to assist Contract Owners in understanding the
various costs and expenses that a Contract Owner will bear, directly or
indirectly, under the Contract. Additional information regarding the charges and
deductions assessed under the Contract can be found on page __. Expenses shown
do not include premium taxes, which may be applicable.
CONTRACT OWNER TRANSACTION EXPENSES
Annual Contract Administrative Charge
(Waived if Contract Value is $40,000 or more) $ 30
ANNUAL SEPARATE ACCOUNT CHARGES
(As a percentage of average daily net asset value of amounts held in the
Separate Account)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge 1.25%
Sub-Account Administrative Charge 0.15%
-----
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 1.40%
</TABLE>
7
<PAGE> 11
FUNDING OPTION ANNUAL EXPENSES
(as a percentage of average daily net assets of the Funding Option)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
MANAGEMENT FEE OTHER EXPENSES TOTAL FUND
PORTFOLIO NAME (AS A PERCENTAGE OF ASSETS) (AFTER EXPENSES ARE REIMBURSED) OPTION EXPENSES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund 0.75% -- --
Cash Income Trust 0.32% -- --
Alliance Growth 0.80% -- --
MFS Total Return 0.80% -- --
Putnam Diversified Income 0.75% -- --
Travelers Quality Bond 0.32% -- --
Lazard International Stock 0.83% -- --
MFS Emerging Growth 0.75% -- --
Federated Stock 0.63% -- --
Federated High Yield 0.65% -- --
Large Cap 0.75% -- --
Equity Income 0.75% -- --
Mid Cap Disciplined Equity
</TABLE>
(1) Other Expenses take into account the current expense reimbursement
arrangement with the Company. The Company has agreed to reimburse the Fund
for the amount by which its aggregate expenses (including the management
fee, but excluding brokerage commissions, interest charges and taxes)
exceeds 0.60%. Without such arrangement, Other Expenses would have been
for Cash Income Trust.
(2) Other expenses are as of October 31, 1996, (the Fund's fiscal year end)
taking into account the current expense limitations agreed to by the
Manager. The Manager waived all of its fees for the period and reimbursed
the Portfolios for their expenses. If such fees were not waived and
expenses were not reimbursed, Total Underlying Fund Expenses would have
been as follows: Alliance Growth Portfolio, ; Putnam Diversified
Income Portfolio, and MFS Total Return Portfolio, .
8
<PAGE> 12
EXAMPLE*
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Assuming a 5% annual return, a $1,000 investment would be subject to the
following expenses, regardless of whether the contract has been surrendered.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO NAME 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Fund -- -- -- --
Cash Income Trust -- -- -- --
Alliance Growth -- -- -- --
MFS Total Return -- -- -- --
Putnam Diversified Income -- -- -- --
Travelers Quality Bond** -- -- -- --
Lazard International Stock** -- -- -- --
MFS Emerging Growth** -- -- -- --
Federated Stock** -- -- -- --
Federated High Yield** -- -- -- --
Large Cap** -- -- -- --
Equity Income** -- -- -- --
Mid Cap Disciplined Equity
</TABLE>
* The Example reflects the $30 Annual Contract Fee as an annual charge of
_____% assets.
** For new investment options, expenses are estimated for 1 and 3 years only.
9
<PAGE> 13
THE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The Travelers Life and Annuity Company (the "Company"), an indirect wholly owned
subsidiary of Travelers Group Inc., is a stock insurance company chartered in
1973 in Connecticut and continuously engaged in the insurance business since
that time. The Company is licensed to conduct a life insurance business in a
majority of the states of the United States and intends to become licensed in
the remaining states, except New York. The Company's Home Office is located at
One Tower Square, Hartford, Connecticut 06183.
THE SEPARATE ACCOUNT AND THE FUNDING OPTIONS
- --------------------------------------------------------------------------------
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES ("FUND ABD II")
Fund ABD II was established on October 17, 1995 and is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended (the "1940 Act"). The assets of Fund
ABD II will be invested exclusively in the shares of the Funding Options.
The assets of Fund ABD II are held for the exclusive benefit of the owners of
this separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to Fund ABD II are, in
accordance with the Contracts, credited to or charged against Fund ABD II
without regard to other income, gains and losses of the Company. The assets held
by Fund ABD II are not chargeable with liabilities arising out of any other
business which the Company may conduct. Obligations under the Contract are
obligations of the Company.
All investment income and other distributions of the Funding Options are payable
to Fund ABD II. All such income and/or distributions are reinvested in shares of
the respective Funding Option at net asset value. Shares of the Funding Options
listed above are currently sold only to life insurance company separate accounts
to fund variable annuity and variable life insurance contracts. Fund shares are
not sold to the general public.
THE FUNDING OPTIONS
Purchase Payments are allocated to the Funding Options in accordance with the
selections made by the Contract Owner.
More detailed information about the options and their inherent risks may be
found in the current prospectuses for the Funding Options. These prospectuses
are included with and must accompany this Prospectus. Since there are varying
degrees of risk inherent in each option, please read them carefully before
investing. Additional copies of the prospectuses may be obtained by contacting
your registered representative or by calling (860) 277-0111. Some of the Funding
Options may not be available in every state due to various insurance
regulations.
10
<PAGE> 14
FUNDING OPTION INVESTMENT MANAGERS:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
FUNDING OPTION INVESTMENT ADVISER SUB-ADVISER
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund Travelers Asset Management Janus Capital Corporation
International Corporation
("TAMIC")
- ----------------------------------------------------------------------------------------------
Cash Income Trust TAMIC
- ----------------------------------------------------------------------------------------------
Alliance Growth Portfolio Travelers Investment Adviser, Alliance Capital
Inc. ("TIA") Management L.P.
- ----------------------------------------------------------------------------------------------
MFS Total Return Portfolio TIA MFS
- ----------------------------------------------------------------------------------------------
Putnam Diversified Income TIA Putnam Investment Management,
Portfolio Inc
- ----------------------------------------------------------------------------------------------
Travelers Quality Bond TAMIC
Portfolio
- ----------------------------------------------------------------------------------------------
Lazard International Stock TAMIC Lazard Freres Asset
Portfolio Management
- ----------------------------------------------------------------------------------------------
MFS Emerging Growth Portfolio TAMIC MFS
- ----------------------------------------------------------------------------------------------
Federated Stock Portfolio TAMIC Federated Investment
Counseling, Inc.
- ----------------------------------------------------------------------------------------------
Federated High Yield TAMIC Federated Investment
Portfolio Counseling, Inc.
- ----------------------------------------------------------------------------------------------
Large Cap Portfolio TAMIC Fidelity Management &
Research Company
- ----------------------------------------------------------------------------------------------
Equity Income Portfolio TAMIC Fidelity Management &
Research Company
- ----------------------------------------------------------------------------------------------
Mid Cap Disciplined Equity TAMIC Travelers Investment
Management Company
</TABLE>
SUBSTITUTIONS AND ADDITIONS
If any of the Funding Options become unavailable for allocating Purchase
Payments, or if, in our judgment further investment in a Funding Option becomes
inappropriate for the purposes of the Contract, we may substitute another
registered, open-end management investment company. Substitution may be made
with respect to both existing investments and the investment of any future
Purchase Payments. However, no such substitution will be made without notice to
Contract Owners, state approval if applicable, and without prior approval of the
SEC, to the extent required by the 1940 Act, or other applicable law. Additional
Funding Options may also be added.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Company may advertise different types of historical
performance for the Funding Options available through Fund ABD II. The Company
may advertise the "standardized average annual total returns" of each,
calculated in a manner prescribed by the SEC, as well as the "non-standardized
total return," both described below.
"Standardized average annual total return" will show the percentage rate of
return of a hypothetical initial investment of $1,000 for the most recent one-,
five- and ten-year periods (or fractional periods thereof). This standardized
calculation reflects the deduction of all applicable charges made to the
Contract, except for premium taxes which may be imposed by certain states.
"Non-standardized total return" will be calculated in a similar manner, except
non-standardized total returns will not reflect the deduction of any applicable
$30 annual contract administrative charge, which would decrease the level of
performance shown if reflected in these calculations.
11
<PAGE> 15
Performance information may be quoted numerically or may be presented in a
table, graph or other illustration. Advertisements may include data comparing
performance to well-known indices of market performance (including, but not
limited to, the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500
Index and the S&P 400 Index, the Lehman Brothers Long-T-Bond Index, the Russell
1000, 2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley
Capital International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of Fund ABD
II and the Funding Options.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. A Contract Owner's Contract
Value at redemption may be more or less than original cost.
In certain cases a newly created funding option has the same investment
objectives, investment adviser, and follows the same investment strategies as a
publicly-available (retail) mutual fund. In such cases, the performance of the
retail fund may be shown, adjusted for any contract charges and fees. Any such
information presented would conform to the standard and nonstandard performance
requirements discussed above. Information regarding the existing and cloned fund
performance figures is provided below.
12
<PAGE> 16
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1996
(NOTE: where performance information is not available for the full periods
indicated, the returns are shown since the fund commenced operations
(inception).)
<TABLE>
<CAPTION>
HYPOTHETICAL
FUND PERFORMANCE ACCUMULATION UNIT VALUE PERFORMANCE
--------------------- -----------------------------------------------
COLUMN A COLUMN B COLUMN C
--------------------- --------------------- --------------------- INCEPTION
1 YR 5 YRS 10 YRS 1 YR 5 YRS 10 YRS 1 YR 5 YRS 10 YRS DATE
---- ----- ------ ---- ----- ------ ---- ----- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
SECTION ONE --*
EXISTING FUNDS AND
CORRESPONDING RETAIL FUNDS
- ------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH PORTFOLIO
Existing Fund xx% xx% xx% xx% xx% xx% xx% xx% xx% 6/94
Corresponding Retail Fund xx% xx% xx% xx% xx% xx% xx% xx% xx% 10/87
MFS TOTAL RETURN PORTFOLIO
Existing Fund xx% xx% xx% xx% xx% xx% xx% xx% xx% 6/94
Corresponding Retail Fund xx% xx% xx% xx% xx% xx% xx% xx% xx% 10/70
PUTNAM DIVERSIFIED INCOME
PORTFOLIO
Existing Fund xx% xx% xx% xx% xx% xx% xx% xx% xx% 6/94
Corresponding Retail Fund xx% xx% xx% xx% xx% xx% xx% xx% xx% 10/88
- ------------------------------------------------------------------------------------------------------------------
SECTION TWO --**
EXISTING FUNDS
- ------------------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION FUND
[subadviser Janus] xx% xx% xx% xx% xx% xx% xx% xx% xx% 5/83
TRAVELERS CASH INCOME TRUST xx% xx% xx% xx% xx% xx% xx% xx% xx% 12/87
- ------------------------------------------------------------------------------------------------------------------
SECTION THREE --***
CORRESPONDING RETAIL FUNDS
- ------------------------------------------------------------------------------------------------------------------
FEDERATED HIGH YIELD TRUST xx% xx% xx% xx% xx% xx% xx% xx% xx% 8/84
FEDERATED STOCK FUND xx% xx% xx% xx% xx% xx% xx% xx% xx% 3/82
LAZARD INTERNATIONAL EQUITY
PORTFOLIO xx% xx% xx% xx% xx% xx% xx% xx% xx% 10/91
MFS EMERGING GROWTH FUND --
SERIES B xx% xx% xx% xx% xx% xx% xx% xx% xx% 12/86
FIDELITY EQUITY INCOME FUND xx% xx% xx% xx% xx% xx% xx% xx% xx% 5/66
FIDELITY ADVISER LARGE CAP STOCK
FUND xx% xx% xx% xx% xx% xx% xx% xx% xx% 6/95
</TABLE>
- ---------------
Future performance of these underlying funds will vary and the results shown are
not necessarily representative of future results.
* SECTION ONE -- PERFORMANCE FOR EXISTING FUNDS AND THEIR CORRESPONDING RETAIL
FUNDS
The Alliance Growth, MFS Total Return and Putnam Diversified Income Portfolios
of The Travelers Series Fund, Inc. each commenced operations in June 1994, prior
to the date that they became available under the Separate Account. As a result,
actual historical performance information is available for the funds. For
purposes of the hypothetical accumulation unit value performance, the fund
performance has been adjusted to reflect the contract and separate account
charges described below, as if such funds had been available through the
separate account during the periods illustrated.
Additionally, the Alliance Growth, MFS Total Return and Putnam Diversified
Income Portfolios have the same investment objectives and follow substantially
the same investment strategies as mutual funds advised by the same sub-adviser,
shares of which are sold directly to the public rather than exclusively through
a separate account (the "Corresponding Retail Funds"). Performance information
is also provided for the Corresponding Retail Funds of the Alliance Growth, MFS
Total Return and Putnam Diversified Income Portolios.
13
<PAGE> 17
The existing fund and corresponding retail fund performance figures illustrated
in each of the columns of Section One of the chart reflect the deduction of the
following charges:
Column A = fund performance (minus all contract and separate account
charges)
Column B = hypothetical accumulation unit value performance figures which
include the deduction of (1) mortality and expense risk charge; (2)
sub-account administrative charge; and (3) advisory fees and other expenses
of the fund.
Column C = hypothetical accumulation unit value performance figures which
include the deduction of (1) annual contract administrative charge; (2)
(2) mortality and expense risk charges; (3) sub-account administrative
charge; and (4) advisory fees and other expenses of the fund.
** SECTION TWO -- PERFORMANCE FOR EXISTING FUNDS ONLY
The Capital Appreciation Fund and Cash Income Trust are existing funds which
were in existence prior to the date that they became available through the
Separate Account. As a result, actual historical performance information is
available for the funds. For purposes of the hypothetical accumulation unit
value performance, the fund performance has been adjusted to reflect the
contract and separate account charges described under Section One above, as if
such funds had been available through the separate account during the periods
illustrated.
*** SECTION THREE -- PERFORMANCE FOR THE CORRESPONDING RETAIL FUNDS
The Federated High Yield, Federated Stock, Lazard International Stock, MFS
Emerging Growth, Equity Income and Large Cap Portfolios of The Travelers Series
Trust are newly created funds that were made available to the Separate Account
on July 31, 1996. As of December 31, 1995, these funds had not yet commenced
operations, and therefore, do not have their own performance record for the
periods illustrated in the following performance chart. However, these
Portfolios do have the same investment objectives and follow substantially the
same investment strategies as mutual funds advised by the same sub-adviser
(hereafter, the "Corresponding Retail Funds"), although the Corresponding Retail
Funds are sold to the public and not exclusively through a separate account.
Section Three of the chart shows performance information for the Corresponding
Retail Funds, calculated as described below.
The performance figures illustrated in each of the columns of Section Three of
the chart reflect the deduction of the following charges:
Column A = fund performance net of all contract and separate account
charges
Column B = hypothetical accumulation unit value performance figures
utilizing the actual performance history of the Corresponding Retail Funds
adjusted to reflect the deduction of (1) mortality and expense risk charge;
and (2) sub-account administrative charge. These figures also include the
advisory fees and other expenses of the Corresponding Retail Fund.
Column C = hypothetical accumulation unit value performance figures
utilizing the actual performance history of the Corresponding Retail Funds
adjusted to reflect the deduction of (1) annual contract administrative
charge; (2) mortality and expense risk charges; and (3) sub-account
administrative charge. These figures also include the advisory fees and
other expenses of the Corresponding Retail Fund.
THE CONTRACT
- --------------------------------------------------------------------------------
Purchase Payments are paid to the Company and credited to the Contract Owner's
account to accumulate until the Maturity Date. The Contract Owner assumes the
risk of gain or loss according to the performance of the Sub-Account(s). There
is generally no guarantee that the Contract Value at the Maturity Date will
equal or exceed the total Purchase Payments made under the Contract, except as
specified or elected under certain Death Benefit provisions.
14
<PAGE> 18
PURCHASE PAYMENTS
The initial Purchase Payment must be at least $5,000. Additional payments of at
least $500 may be made under the Contract at any time. Under certain
circumstances, the Company may change the size of minimum initial Purchase
Payments and subsequent payments. In some states, subsequent Purchase Payments
may not be allowed.
The Company will apply the initial Purchase Payment within two business days
after its receipt at the Company's Home Office. Subsequent Purchase Payments
will be credited to a Contract on the basis of Accumulation Unit Values next
determined after receipt of the Purchase Payment.
RIGHT TO RETURN
You may return the Contract for a full refund of the Contract Value (including
charges) within twenty days after you receive it (the "free-look period"). Where
state law requires a longer free-look period, or the return of Purchase
Payments, the Company will comply. The Contract Owner bears the investment risk
during the free-look period; therefore, the Contract Value returned may be
greater or less than your Purchase Payment. If the Contract is purchased as an
Individual Retirement Annuity, and is returned within the first seven days after
delivery, your Purchase Payment will be refunded in full; during the remainder
of the free-look period, the Contract Value (including charges) will be
refunded. All Contract Values will be determined as of the next valuation
following the Company's receipt of the Owner's written request for refund.
ACCUMULATION UNITS
The number of Accumulation Units to be credited to the Contract once a Purchase
Payment has been received by the Company is determined by dividing the amount
allocated to each Funding Option by the current applicable Accumulation Unit
Value. The value of an Accumulation Unit may increase or decrease. The value of
an Accumulation Unit on any date other than a Valuation Date will be equal to
its value as of the next succeeding Valuation Date.
The initial Accumulation Unit Value applicable to each Funding Option was
established at $1.00. The value of an Accumulation Unit on any Valuation Date
is determined by multiplying the value on the preceding Valuation Date by the
net investment factor for the Valuation Period just ended. The net investment
factor, calculated for each Funding Option takes into account the investment
performance, expenses and the deduction of certain expenses. The net investment
factor equation is described more fully in the SAI.
15
<PAGE> 19
CHARGES AND DEDUCTIONS
- -------------------------------------------------------------------------------
ADMINISTRATIVE CHARGES
CONTRACT ADMINISTRATIVE CHARGE. An administrative charge of $30 will be
deducted annually from the Contract to compensate the Company for expenses
incurred in establishing and administering the Contract. The contract
administrative charge will be deducted from the Contract Value on the fourth
Friday of each August by cancelling Accumulation Units applicable to each
Funding Option on a pro rata basis. This charge will be prorated from the date
of purchase to the next date of assessment of charge. A prorated charge will
also be assessed upon voluntary or involuntary surrender of the Contract. The
contract administrative charge will not be assessed if (1) the distribution
results from the death of the Contract Owner or the Annuitant with no Contingent
Annuitant surviving, (2) after an annuity payout has begun, or (3) if the
Contract Value is equal to or greater than $40,000 on the charge assessment
date.
SUB-ACCOUNT ADMINISTRATIVE CHARGE. An administrative charge is deducted on each
Valuation Date from amounts allocated to the variable Funding Options in order
to compensate the Company for certain related administrative and operating
expenses. The charge is equivalent, on an annual basis, to 0.15% of the daily
net asset value allocated to each of the Funding Options.
Neither administrative charge can be increased. The charges are set at a level
which does not exceed the average expected cost of the administrative services
to be provided while the Contract is in force, and the Company does not expect
to profit from these charges.
MORTALITY AND EXPENSE RISK CHARGE
A mortality and expense risk charge is deducted on each Valuation Date from
amounts held in the Separate Account. This charge is equivalent, on an annual
basis, to 1.25% of the amounts allocated to each Funding Option. The Company
reserves the right to lower this charge at any time. The mortality risk portion
compensates the Company for guaranteeing to provide Annuity Payments according
to the terms of the Contract regardless of how long the Annuitant lives and for
guaranteeing to provide the death benefit if an Annuitant dies prior to the
Maturity Date. The expense risk charge compensates the Company for the risk that
the charges under the Contract, which cannot be increased during the duration of
the Contract, will be insufficient to cover actual costs.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient,
16
<PAGE> 20
the excess will be a profit to the Company. The Company expects to make a profit
from the mortality and expense risk charge.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The administrative charges and the mortality and expense risk charge
under the Contract may be reduced or eliminated when certain sales of the
Contract result in savings or reduction of sales expenses, administrative or
mortality and expenses. The entitlement to any such a reduction will be based
on the following: (1) the size and type of group to which sales are to be made;
(2) the total amount of Purchase Payments to be received; and (3) any prior or
existing relationship with the Company. There may be other circumstances, of
which the Company is not presently aware, which could result in fewer sales
expenses, administrative charges, or mortality and expense risk charges. The
reduction or elimination of the administrative charge, or the mortality
expense charges will be permitted only where such reduction or elimination
will not be unfairly discriminatory to any person.
FUNDING OPTION CHARGES
Fund ABD II purchases shares of the Funding Options at net asset value. The net
asset value of each Funding Option reflects investment management fees and other
expenses deducted from the assets of the Funding Options. For a complete
description of these investment advisory fees and other expenses, refer to the
prospectuses for the Funding Options.
PREMIUM TAX
Certain state and local governments impose premium taxes. These taxes currently
range from 0.5% to 5.0%, depending upon jurisdiction. The Company, in its sole
discretion and in compliance with any applicable state law, will determine the
method used to recover premium tax expenses incurred. Where required, the
Company will deduct any applicable premium taxes from the Contract Value either
upon death, surrender, annuitization, or at the time Purchase Payments are made
to the Contract, but no earlier than when the Company has a tax liability under
state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains, or value of the Contract, we reserve the right to
charge proportionately for this tax.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
CONTRACT OWNER. The Contract belongs to the Contract Owner designated on the
Contract Specifications page, or to any other person subsequently named pursuant
to a valid assignment. An assignment of ownership or a collateral assignment may
be made only for nonqualified contracts. The Contract Owner has sole power
during the Annuitant's lifetime to exercise any rights and to receive all
benefits given in the contract provided the Contract Owner has not named an
irrevocable beneficiary and provided the Contract is not assigned.
The Contract Owner is the recipient of all payments while the Annuitant is alive
unless the Contract Owner directs them to an alternate recipient. An alternate
recipient under a payment direction does not become the Contract Owner.
JOINT OWNER. For nonqualified contracts only, Joint Owners (i.e., married
spouses) may be named in a written request prior to the Contract Date. Joint
Owners may independently exercise transfers allowed under the contract. All
other rights of ownership must be exercised by joint action. Joint owners own
equal shares of any benefits accruing or payments made to them. All
17
<PAGE> 21
rights of a Joint Owner end at death if the other Joint Owner survives. The
entire interest of the deceased Joint Owner in the Contract will pass to the
surviving Joint Owner.
BENEFICIARY
The Beneficiary is the party named by the Owner in a written request. The
Beneficiary has the right to receive any remaining contractual benefits upon the
death of the Annuitant or the Owner. If there is more than one Beneficiary
surviving the Annuitant, the Beneficiaries will share equally in benefits unless
different shares are recorded with the Company by written request prior to the
death of the Annuitant or Owner.
With nonqualified contracts, the Beneficiary may differ from the designated
beneficiary as defined in the Contract. The designated beneficiary may take the
contract benefits in lieu of the Beneficiary upon the death of the Contract
Owner.
Unless an irrevocable Beneficiary has been named, the Owner has the right to
change any Beneficiary by written request during the lifetime of the Annuitant
and while the Contract continues.
ANNUITANT
The Annuitant is designated on the Contract Specifications page, and is the
individual on whose life the Maturity Date and the amount of the monthly annuity
payments depend. The Annuitant may not be changed after the Contract Date.
For nonqualified contracts only, the Contract Owner may also name one individual
as a Contingent Annuitant by written request prior to the Contract Date. A
Contingent Annuitant may not be changed, deleted or added to the Contract after
the Contract Date.
If an Annuitant who is not also an Owner or a Joint Owner dies prior to the
Maturity Date while this Contract is in effect and while the Contingent
Annuitant is living:
1) the Contract Value will not be payable upon the Annuitant's death;
2) the Contingent Annuitant becomes the Annuitant; and
3) all other rights and benefits provided by this Contract will continue in
effect.
When a Contingent Annuitant becomes the Annuitant, the Maturity Date remains the
same as previously in effect, unless otherwise provided.
TRANSFERS
- --------------------------------------------------------------------------------
Prior to the Maturity Date, the Contract Owner may transfer all or part of the
Contract Value between Funding Options. There are no charges or restrictions on
the amount or frequency of transfers currently; however, the Company reserves
the right to charge a fee for any transfer request, and to limit the number of
transfers to no more than one in any six-month period. Since different Funding
Options have different expenses, a transfer of Contract Values from one Funding
Option to another could result in a Contract Owner's investment becoming subject
to higher or lower expenses.
DOLLAR COST AVERAGING (AUTOMATED TRANSFERS)
Dollar cost averaging permits the Contract Owner to transfer a fixed dollar
amount to other Sub-Accounts on a monthly or quarterly basis so that more
Accumulation Units are purchased in a Sub-Account if the value per unit is low
and less Accumulation Units are purchased if the value per unit is high.
Therefore, a lower-than-average value per unit may be achieved over the long
run.
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<PAGE> 22
You may elect automated transfers through written request or other method
acceptable to the Company. You must have a minimum total Contract Value of
$5,000 to enroll in the Dollar Cost Averaging program. The minimum total
automated transfer amount is $400.
Certain restrictions apply for automated transfers from the Fixed Account that
do not apply to automated transfers from any of the other Sub-Accounts. You may
establish automated transfers of Contract Values from the Fixed Account.
Automated transfers from the Fixed Account may not deplete your Fixed Account
Value in a period of less than twelve months from your enrollment in the Dollar
Cost Averaging program.
You may start or stop participation in the Dollar Cost Averaging program at any
time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. Automated transfers
are subject to all of the other provisions and terms of the Contract, including
provisions relating to the transfer of money between investment options. The
Company reserves the right to suspend or modify transfer privileges at any time
and to assess a processing fee for this service.
Before transferring any part of the Contract Value, Contract Owners should
consider the risks involved in switching between investments available under
this Contract. Dollar cost averaging requires regular investments regardless of
fluctuating price levels, and does not guarantee profits or prevent losses in a
declining market. Potential investors should consider their financial ability to
continue purchases through periods of low price levels.
TELEPHONE TRANSFERS
A Contract Owner may place a transfer request via telephone. The telephone
transfer privilege is available once authorized in a form acceptable to the
Company. In certain cases, the Company may authorize you to allow your agent to
make telephone transfers. All transfers must be in accordance with the terms of
the Contract. Transfer instructions are currently accepted on each Valuation
Date between 9:00 a.m. and 4:00 p.m., Eastern time. Once instructions have been
accepted, they may not be rescinded; however, new telephone instructions may be
given the following day. If the transfer instructions are not in good order,
the Company will not execute the transfer and will promptly notify the caller.
The Company will make a reasonable effort to record each telephone transfer
conversation, but in the event that no recording is effective or available, the
Contract Owner will remain liable for each telephone transfer effected.
Additionally, the Company is not liable for acting upon instructions believed to
be genuine and in accordance with the procedures described above. As a result of
this policy, the Contract Owner may bear the risk of loss in the event that the
Company follows instructions that prove to be fraudulent.
SURRENDERS AND REDEMPTIONS
- --------------------------------------------------------------------------------
A Contract Owner may redeem all or any portion of the Contract Value at any
time prior to the Maturity Date. The Contract Owner must submit a written
request specifying the investment option(s) from which the surrender is to be
made. The Contract Value will be determined as of the next valuation following
receipt of the Owner's surrender request at the Company's Home Office. The
Contract Value may be more or less than the Purchase Payments made.
The Company may defer payment of any Contract Value for a period of not more
than seven days after the request is received in the mail, but it is our intent
to pay as soon as possible. Requests for surrender that are not in good order
will not be processed until the deficiencies are corrected. The Company will
contact the Contract Owner to advise of the reason for the delay and what
is needed to act upon the surrender request.
19
<PAGE> 23
SYSTEMATIC WITHDRAWALS
Prior to the Maturity Date, a Contract Owner may elect to take systematic
withdrawals by surrendering a specified dollar amount (at least $100) on a
monthly, quarterly, semiannual or annual basis. Any applicable premium taxes
will be deducted. The minimum Contract Value required to elect systematic
withdrawals is $15,000 and the election must be made on the form provided by
the Company. The Company will process the withdrawals by surrendering on a
pro-rata basis Accumulation Units from all investment options in which the
Contract Owner has an interest, unless otherwise directed. The Contract Owner
may begin or discontinue systematic withdrawals at any time by notifying the
Company in writing, but at least 30 days' notice must be given to change any
systematic withdrawal instructions that are currently in place.
The Company reserves the right to discontinue offering systematic withdrawals or
to assess a processing fee for this service upon 30 days' written notice to
Contract Owners.
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the Contract Owner is under age 59 1/2. Contract Owners should
consult with their tax adviser regarding the tax consequences of systematic
withdrawals.
DEATH BENEFIT
- --------------------------------------------------------------------------------
Prior to the Maturity Date, a Death Benefit is payable to the Beneficiary when
either the Annuitant, you or the first of Joint Owners, dies and there is no
Contingent Annuitant. Death Benefits are payable upon the Company's receipt at
its Home Office of due proof of death. If the Company is notified of the
Annuitant's, Contract Owner's, or first of the Joint Owner's death more than six
months after the death, the Death Benefit will be the Contract Value. A
Beneficiary may request that a death benefit payable under the Contract be
applied to one of the settlement options available under the Contract. (See also
"Nonqualified Annuity Contracts.") See Appendix B for Contracts issued
in Florida.
For nonqualified contracts, if the Contract Owner (including the first of joint
owners) dies before
the Maturity Date, a distribution may be required under the minimum distribution
requirements of the federal tax law. If so required, the Company will
recalculate the value of the Death Benefit under the provisions of "Death
Proceeds Prior to the Maturity Date," below. The value of the Death Benefit, as
recalculated, will be credited to the party taking distributions upon the death
of the Contract Owner with the Annuitant or Contingent Annuitant surviving. This
will generally be the surviving joint owner or otherwise the Beneficiary in
accordance with all the circumstances and the terms of the Contract. This party
may differ from the Beneficiary who was named by the Owner in a written request
and who would receive any remaining contractual benefits upon the death of the
Annuitant. This party may be paid in a single lump sum, or by other options, but
should take distributions as required by minimum distribution requirements of
the federal tax law.
If the Contract Owner's spouse is the surviving joint owner, the spouse may
elect to continue the Contract as owner in lieu of taking a distribution under
the Contract. (See "Nonqualified Annuity Contracts.") In either case, all
references to age in the "Death Proceeds Prior to the Maturity Date" section
will be based on the Contract Owner's age rather than the Annuitant's age.
DEATH PROCEEDS PRIOR TO THE MATURITY DATE (For Contracts Sold Before State
Approval Has Been Recieved)
If the Annuitant dies before age 75 and before the Maturity Date, the Company
will pay to the Beneficiary an amount equal to the greatest of (1), (2) or (3)
below, each reduced by any applicable premium tax or prior surrenders not
previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
20
<PAGE> 24
3) the Contract Value on the latest fifth contract year anniversary
immediately preceding the date on which the Company receives due proof
of death.
If the Annuitant dies on or after age 75, but before age 85 (90 in Florida) and
before the Maturity Date, the Company will pay to the Beneficiary a death
benefit in an amount equal to the greatest of (1), (2) or (3) below, each
reduced by any applicable premium tax or prior surrenders not previously
deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
occurring on or before the Annuitant's 75th birthday.
If the Annuitant dies on or after age 85 and before the Maturity Date, the
Company will pay to the Beneficiary a death benefit in an amount equal to the
Contract Value, less any applicable premium tax. (This provision does not apply
in Florida.)
Death proceeds before the maturity date (for contracts sold once state approval
has been received)
The death benefit is calculated at the close of the business day on which the
Company's Home Office received due proof of death.
IF THE ANNUITANT DIES BEFORE AGE 80 AND BEFORE THE MATURITY DATE, the Company
will pay the beneficiary an amount equal to the greatest of (1), (2) or (3)
below, each reduced by any applicable premium tax or outstanding loans:
1) the Contract Value;
2) the total Purchase Payments made under the Contract less all partial
surrenders; or
3) the maximum of all "final death benefit values" as described below.
A separate death benefit value will be established on the Contract
Date and on each anniversary of the Contract Date which occurs on or
prior to the death report. The death benefit value established on
the Contract Date will initially equal the purchase payment. The
death benefit value established on each Contract Date anniversary
will initially equal the Contract Value on that anniversary.
Thereafter, each death benefit value will be adjusted to reflect any
purchase payments made, or any partial surrenders taken, from the
date on which a particular death benefit value was established until
the death report date. Once any adjustment has been made, a "death
benefit value" then becomes equal to the previous death benefit
value plus or minus that adjustment. Adjustments to the death
benefit values for any purchase payments or partial surrenders will
be made in the order that such purchase payments or partial
surrenders occur. For each purchase payment, death benefit values
will be increased by the amount of the purchase payment. For each
partial surrender, death benefit values will be reduced by a
"partial surrender reduction" which equals the product of (i) the
death benefit value immediately prior to the reduction of the
partial surrender, and (ii) the amount of the partial surrender
divided by the contract value immediately prior to the partial
surrender. The "final death benefit value" associated with the
Contract Date and with each Contract Date anniversary equals the
initial death benefit value plus or minus all adjustments until the
death report date.
IF THE ANNUITANT DIES ON OR AFTER AGE 80, BUT BEFORE AND 90 AND BEFORE THE
MATURITY DATE, the death benefit payable will be the greatest of (1), (2) or
(3) below. less any applicable premium tax or outstanding loans;
1) the Contract Value;
2) the total Purchase Payments made under the Contract less all partial
surrenders; or
3) the maximum of all "final death benefit value" associated with the
Contract Date or any Contract Date anniversary occurring on or before
the Annuitant's birthday.
IF THE ANNUITANT DIES ON OR AFTER AGE 90 AND BEFORE THE MATURITY DATE, the
death benefit payable will be the Contract Value, less any applicable premium
tax or outstanding loans.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the Annuitant dies on or after the Maturity Date, the Company will pay the
Beneficiary a death benefit consisting of any benefit remaining under the
Annuity or Income Option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Annuity Payments will ordinarily begin on the Maturity Date stated in the
Contract. If no Maturity Date is elected, the Maturity Date will be the
Annuitant's 70th birthday for qualified contracts and the Annuitant's 75th
birthday, or ten years after the Contract Date, if later, for nonqualified
contracts. The Maturity Date is the date on which the Company will begin paying
the first of a series of Annuity or Income Payments in accordance with the
Settlement Option selected by the Contract Owner. Annuity or Income Payments
will begin on the Maturity Date unless the Contract has been fully surrendered
or the proceeds have been paid to the Beneficiary prior to that date. The
Company may require proof that the Annuitant is alive before Annuity Payments
are made.
For nonqualified Contracts, at least 30 days before the original Maturity Date,
a Contract Owner may elect to extend the Maturity Date to any time prior to the
Annuitant's 85th birthday or, for qualified Contracts, to a later date with the
Company's consent. Certain annuity options taken at the Maturity Date may be
used to meet the minimum required distribution requirements of federal tax law,
or a program of partial surrenders may be used instead. These mandatory
distribution requirements take effect generally upon the death of the Contract
Owner, or with qualified contracts upon either the Contract Owner's attainment
of age 70 1/2 or the death of the Contract Owner. Independent tax advice should
be sought regarding the election of minimum required distributions.
See Appendix B for Contracts issued in Florida.
ALLOCATION OF ANNUITY
When an Annuity Option is elected, it may be elected as a Variable Annuity, a
Fixed Annuity, or a combination of both. If, at the time Annuity Payments begin,
no election has been made to the contrary, the Contract Value shall be applied
to provide an annuity funded by the same investment option. At least 15 days
prior to the Maturity Date, you may reallocate the Contract Value among the
investment options in order to reallocate the basis on which Annuity Payments
will be determined. (See "Transfers.")
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<PAGE> 25
VARIABLE ANNUITY
ANNUITY UNIT VALUE. The initial Annuity Unit value applicable to each Funding
Option was established at $1. An Annuity Unit Value as of any Valuation Date is
equal to (a) the value of the Annuity Unit on the immediately preceding
Valuation Date, multiplied by (b) the corresponding net investment factor for
the Valuation Period just ended, divided by (c) the assumed net investment
factor for the Valuation Period. (For example, the assumed net investment factor
based on an annual assumed net investment rate of 3.0% for a Valuation Period of
one day is 1.000081 and, for a period of two days, is 1.000081 x 1.000081.) The
value of an Annuity Unit as of any date other than a Valuation Date is equal to
its value on the next succeeding Valuation Date.
The number of Annuity Units credited to the Contract is determined by dividing
the first monthly Annuity Payment attributable to each Sub-Account by the
corresponding Annuity Unit Value as of 14 days prior to the date Annuity
Payments commence. The number of Annuity Units remains fixed during the annuity
period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly Annuity Payment. The amount applied to effect a
variable Annuity will be the value of the Sub-Accounts as of 14 days before the
date Annuity Payments commence less any applicable premium taxes not previously
deducted.
The amount of the first monthly payment depends on the Annuity Option elected. A
formula for determining the adjusted age is contained in the Contract. The total
first monthly Annuity Payment is determined by multiplying the benefit per
$1,000 of value shown in the tables of the Contract by the number of thousands
of dollars of value of the Contract applied to that Annuity Option. The Company
reserves the right to require satisfactory proof of age of any person on whose
life Annuity Payments are based before making the first payment under any of the
Settlement Options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
the second and subsequent Annuity Payments is not predetermined and may change
from month to month based on the investment experience of the applicable Funding
Option. The total amount of each Annuity Payment will be equal to the sum of the
basic payments in each Funding Option. The actual amounts of these payments are
determined by multiplying the number of Annuity Units credited to each Funding
Option by the corresponding Annuity Unit Value as of the date 14 days prior to
the date before payment is due.
See Appendix B for Contracts issued in Florida.
FIXED ANNUITY
A Fixed Annuity provides for payments which do not vary during the Annuity
period. The minimum guaranteed amount of the Fixed Annuity Payments will be
calculated as described under "Variable Annuity: Determination of First Annuity
Payment," except that the Contract Value will be determined as of the day
annuity payments commence. If it would produce a larger payment, the first Fixed
Annuity Payment will be determined using the Life Annuity Tables in effect on
the Maturity Date.
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
On the Maturity Date, or other agreed-upon date, the Company will pay the amount
due under the Contract in one lump sum, or in accordance with the payment option
selected by the Contract Owner. Election of an option must be made in writing in
a form satisfactory to the Company. Any election made during the lifetime of the
Annuitant must be made by the Contract Owner. While the Annuitant is alive, the
Contract Owner may change a Settlement Option election by written request at any
time prior to the Maturity Date. Once Annuity or Income Payments have begun, no
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further election changes are allowed. During the Annuitant's lifetime, if no
election has been made prior to the Maturity Date, the Company will pay to the
Contract Owner (or other designated Payee) the first of a series of monthly
Annuity Payments based on the life of the Annuitant, in accordance with Annuity
Option 2 (Life Annuity with 120 monthly payments assured). For certain qualified
contracts, Annuity Option 4 (Joint and Last Survivor Joint Life
Annuity -- Annuity Reduced on Death of Primary Payee) will be the automatic
option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100, the Company reserves the right to make
payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
See Appendix B for Contracts issued in Florida.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the Contract Value may be paid under one or more of the following
Annuity Options. Payments under the Annuity Options may be elected on a
monthly, quarterly, semiannual or annual basis.
OPTION 1 -- LIFE ANNUITY -- NO REFUND. The Company will make Annuity Payments
during the lifetime of the Annuitant, terminating with the last payment
preceding death. This option offers the maximum periodic payment, since there is
no assurance of a minimum number of payments or provision for a death benefit
for beneficiaries.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED. The
Company will make monthly Annuity Payments during the lifetime of the Annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months, as elected, payments will be continued
during the remainder of the period to the Beneficiary.
OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND. The Company will
make Annuity Payments during the joint lifetime of the two persons on whose
lives payments are based, and during the lifetime of the survivor. No further
payments will be made following the death of the survivor.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE. The Company will make Annuity Payments during the lifetimes of
the two persons on whose lives payments are based. One of the two persons will
be designated as the primary payee, the other will be designated as the
secondary payee. On the death of the secondary payee, if survived by the primary
payee, the Company will continue to make monthly Annuity Payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, if survived by the
secondary payee, the Company will continue to make Annuity Payments to the
secondary payee in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee. No further payments will be made
following the death of the survivor.
OPTION 5 -- OTHER ANNUITY OPTIONS. The Company will make any other arrangements
for Annuity Payments as may be mutually agreed upon.
INCOME OPTIONS
Instead of one of the Annuity Options described above, and subject to the
conditions described under "Election of Options," all or part of the Contract
Value may be paid under one or more of the following Income Options, provided
that they are consistent with federal tax law qualification requirements.
Payments under the Income Options may be elected on a monthly, quarterly,
semiannual or annual basis:
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OPTION 1 -- PAYMENTS OF A FIXED AMOUNT. The Company will make equal payments of
the amount elected until the Contract Value applied under this option has
been exhausted. The first payment and all later payments will be paid from
amounts attributable to each investment option in proportion to the Contract
Value attributable to each. The final payment will include any amount
insufficient to make another full payment.
OPTION 2 -- PAYMENTS FOR A FIXED PERIOD. The Company will make payments for the
fixed period selected, based on the Contract Value as of the date payments
commence. If at the death of the Annuitant the total number of fixed payments
has not been made, the payments will be made to the Beneficiary.
OPTION 3 -- OTHER INCOME OPTIONS. The Company will make any other arrangements
for Income Payments as may be mutually agreed upon.
The amount applied to effect an Income Option will be the Contract Value
as of the date Income Payments commence, less any applicable premium taxes not
previously deducted. The Contract Value used to determine the amount of any
Income Payment will be determined on the same basis as the Contract Value
during the Accumulation Period, including the deduction for mortality and
expense risks and the Sub-Account Administrative Charge. Income Options
differ from Annuity Options in that the amount of the payments made under
Income Options are unrelated to the length of life of any person. Although
the Company continues to deduct the charge for mortality and expense risks, it
assumes no mortality risks for amounts applied under any Income Option.
Moreover, payments are unrelated to the actual life span of any person.
Thus, the Annuitant may outlive the payment period.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
TERMINATION
No Purchase Payments after the first are required to keep the Contract in
effect. However, the Company reserves the right to terminate the Contract on any
Valuation Date if the Contract Value as of that date is less than $1,000 and no
Purchase Payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the Contract Owner at his or her
last known address and to any assignee of record. If the Contract is terminated,
the Company will pay to the Contract Owner the Contract Value less any
applicable administrative charge or premium tax.
MISSTATEMENT
If the Annuitant's or Contract Owner's sex or date of birth was misstated, all
benefits under the Contract are what the Purchase Payment paid would have
purchased at the correct sex and age. Proof of the Annuitant's or Contract
Owner's age may be filed at any time at the Company's Home Office.
REQUIRED REPORTS
As often as required by law, but at least once in each Contract Year before the
due date of the first Annuity Payment, the Company will furnish a report showing
the number of Accumulation Units credited to the Contract and the corresponding
Accumulation Unit Value(s) as of the date of the report for each Funding Option
to which the Contract Owner has allocated amounts during the applicable period.
The Company will keep all records required under federal or state laws.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment of
any benefit or values for any Valuation Period (1) when the New York Stock
Exchange ("the Exchange") is closed; (2) when trading on the Exchange is
restricted; (3) when an emergency exists as
24
<PAGE> 28
determined by the Securities and Exchange Commission so that disposal of the
securities held in the Separate Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the Separate Accounts' net
assets; or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders.
TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES
The Company may permit Contract Owners to transfer their Contract Values into
other annuities offered by the Company or its affiliated insurance Companies
under rules then in effect.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following description of the federal income tax consequences under this
Contract is not exhaustive and is not intended to cover all situations. Because
of the complexity of the law and the fact that the tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of an annuity contract and by a
Contract Owner or Beneficiary who may make elections under a contract. For
further information, a qualified tax adviser should be consulted.
GENERAL TAXATION OF ANNUITIES
Amounts credited to the Contract are not generally taxable until they are
received by the Contract Owner or the Beneficiary, either in the form of Annuity
Payments or other distributions. Distributions from annuities that include
previously taxed amounts may be taxed on either an income-first basis or an
income-last basis, or on a pro-rata basis according to the type of plan or due
to other circumstances.
TAX LAW DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
segregated asset account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how segregated asset accounts must be diversified. The
Company monitors the diversification of investments constantly and believes that
its accounts are adequately diversified. The consequence of any failure is
essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the segregated asset accounts must be owned by the Company and not by
the Contract Owner for federal income tax purposes. Otherwise, the deferral of
taxes is lost and income and gains from the accounts would be includible
annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular sub-accounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect.
25
<PAGE> 29
New regulations are generally issued with a prospective-only effect as to future
sales or as to future voluntary transactions in existing contracts. The Company
therefore reserves the right to modify the contract as necessary to attempt to
prevent Contract Owners from being considered the owner of the assets of the
accounts.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the Contract Owner has attained the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions for life or life expectancy, or
unless the distribution follows the death or disability of the Contract Owner.
Other exceptions may be available in certain tax-benefited plans.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which a participant under a
qualified plan, a Section 403(b) annuity, or an IRA attains age 70 1/2.
Distributions must also begin or be continued according to required patterns
following the death of the Owner or the Annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax law funding limits.
The Purchase Payments receive no tax benefit, deduction or deferral, but
increases in the value of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however, (e.g., by a corporation), the increases in value attributable to
Purchase Payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in the income of a Contract Owner when the
Contract Owner transfers the contract without adequate consideration.
If two or more annuity contracts are purchased from the same insurer within the
same calendar year, distributions from any of them will be taxed based upon the
amount of income in all of the same calendar year series of annuities. This will
generally have the effect of causing taxes to be paid sooner on the deferred
gain in the contracts.
Those receiving partial distributions made before the Maturity Date will
generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the Company by the other insurance company at
the time of the exchange. There is income in the contract generally to the
extent the Cash Value exceeds the investment in the contract. The investment in
the contract is equal to the amount of premiums paid less any amount received
previously which was excludable from gross income. Any direct or indirect
borrowing against the value of the contract or pledging of the contract as
security for a loan will be treated as a cash distribution under the tax law.
The federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the Contract Owner,
including the first of joint owners. Failure to meet these requirements will
cause the surviving joint owner, or the Beneficiary to lose the tax benefits
associated with annuity contracts, i.e., primarily the tax deferral prior to
distribution. The distribution required depends, among other things, upon
whether an Annuity Option is elected or whether the new Contract Owner is the
surviving spouse. Contracts will be administered by the Company in accordance
with these rules and the Company will make a notification when payments should
be commenced.
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<PAGE> 30
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase Payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $4,000.
The Code provides for the purchase of a Simplified Employee Pension (SEP) plan.
A SEP is funded through an IRA with an annual employer contribution limit of 15%
of compensation up to $30,000 for each participant.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing trust described in Section 401(a) of
the Code and exempt from tax under Section 501(a) of the Code, Purchase Payments
made by an employer are not currently taxable to the Contract Owner and
increases in the value of a contract are not subject to taxation until received
by a Contract Owner or beneficiary.
Distributions in the form of Annuity or Income Payments are taxable to the
Contract Owner or beneficiary as ordinary income in the year of receipt. Any
distribution that is considered the Contract Owner's "investment in the
contract" is treated as a return of capital and is not taxable. Payments under
Income Option 3 are taxable in full. Certain lump-sum distributions described in
Section 402 of the Code may be eligible for special ten-year forward averaging
treatment for individuals born before January 1, 1936. All individuals may be
eligible for favorable five-year forward averaging of lump-sum distributions
through 1999. Certain eligible rollover distributions including most partial and
full surrenders or term-for-years distributions of less than 10 years are
eligible for direct rollover to an eligible retirement plan or to an IRA without
federal income tax withholding.
An additional tax of 10% will apply to any taxable distribution received by the
Contract Owner before the age 59 1/2, except by reason of death, disability or
as part of a series of payments for life or life expectancy, or at early
retirement at or after the age of 55. There are other statutory exceptions.
Amounts attributable to salary reductions and income thereon may not be
withdrawn prior to attaining the age of 59 1/2, separation from service, death,
total and permanent disability, or in the case of hardship as defined by federal
tax law and regulations. Hardship withdrawals are available only to the extent
of the salary reduction contributions and not from the income attributable to
such contributions. These restrictions do not apply to assets held generally as
of December 31, 1988.
Distribution must begin in April 1st of the calendar year following the later of
the calendar year in which the Contract Owner attains the age of 70 1/2 of
retires. Certain other mandatory distribution rules apply at the death of the
Participant.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA or to another retirement plan but that
are not directly rolled over. A distribution made directly to a
participant or Beneficiary may avoid this result if:
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<PAGE> 31
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise
required by law.
A distribution including a rollover that is not a direct rollover will
be subject to the 20% withholding, and a 10% additional tax penalty may
apply to any amount not added back in the rollover. The 20% withholding
may be recovered when the participant or Beneficiary files a personal
income tax return for the year if a rollover was completed within 60
days of receipt of the funds, except to the extent that the participant
or spousal Beneficiary is otherwise underwithheld or short on estimated
taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding, if the aggregate
distributions exceed $200 for the year, unless the recipient elects not
to have taxes withheld. If no such election is made, 10% of the taxable
distribution will be withheld as federal income tax. Election forms will
be provided at the time distributions are requested. This form of
withholding applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing a completed
election form. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.
As of January 1, 1997, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total $_____
or less per year, will generally be exempt from periodic withholding.
Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient to cover tax
liabilities.
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
VOTING RIGHTS
- --------------------------------------------------------------------------------
The Contract Owner has certain voting rights in Fund ABD II and the Funding
Options. The number of votes which a Contract Owner may cast in the accumulation
period is equal to the number of Accumulation Units credited under the Contract.
During the annuity period, the Contract Owner may cast the number of votes equal
to (i) the reserve related to the Contract divided by (ii) the value of an
Accumulation Unit. A Contract Owner's voting rights will decline as the reserve
for the Contract declines.
Each person having a voting interest in Fund ABD II will receive periodic
reports relating to the Funding Options in which he or she has an interest, as
well as any proxy materials, including a form on which to give voting
instructions with respect to the proportion of the Funding Option shares held by
Fund ABD II which correspond to his or her interest in the Funding Option.
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<PAGE> 32
Upon the death of the Contract Owner, all voting rights will vest in the
Beneficiary of the Contract, except in the case of Contracts where the surviving
spouse becomes the owner.
The Company will vote shares of Funding Options held by Fund ABD II at regular
and special meetings of the Funding Option shareholders in accordance with
instructions received from persons having a voting interest in Fund ABD II. The
Company will vote shares for which it has not received instructions in the same
proportion as it votes shares for which it has received instructions. If the
1940 Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote shares of the Funding Options in its own right, it
may elect to do so.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. The Contracts will
be sold by life insurance sales agents who represent the Company, and who are
licensed registered representatives of the Company or certain other registered
broker-dealers. The compensation paid to sales representatives will not exceed
8.5% of the payments made under the Contracts.
From time to time, the Company may pay or permit other promotional incentives,
in cash, credit or other compensation.
Any sales representative or employee will have been qualified to sell Variable
Annuities under applicable federal and state laws. Each broker-dealer is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and all are members of the National Association of
Securities Dealers, Inc. Tower Square Securities, Inc., an affiliate of the
Company, is the principal underwriter for the Contracts; however, it is
currently anticipated that an affiliated broker-dealer may become the principal
underwriter for the Contracts during 1997.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered. Any
paid-up Annuity, Cash Surrender Value or death benefits that are available under
the Contract are not less than the minimum benefits required by the statutes of
the state in which the Contract is delivered. The Company may at any time make
any changes, including retroactive changes, in the Contract to the extent that
the change is required to meet the requirements of any law or regulation issued
by any governmental agency to which the Company, the Contract or the Contract
Owner is subject.
LEGAL PROCEEDINGS AND OPINIONS
- --------------------------------------------------------------------------------
There are no pending material legal proceedings affecting Fund ABD II. Legal
matters in connection with the federal laws and regulations affecting the issue
and sale of the Contract described in this Prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable annuity
contracts under Connecticut law, have been reviewed by the General Counsel of
the Life and Annuity Division of the Company.
+++
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APPENDIX A
THE FIXED ACCOUNT
- --------------------------------------------------------------------------------
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of Fund ABD II or any of the
Funding Options does not affect the Fixed Account portion of the Contract
Owner's Contract Value, or the dollar amount of fixed annuity payments made
under any payout option. The Fixed Account may not be available in some
jurisdictions.
The Company guarantees that, at any time, the Fixed Account Contract Value will
not be less than the amount of the Purchase Payments allocated to the Fixed
Account, plus interest credited as described below, less any applicable premium
taxes or prior surrenders.
Purchase Payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of the Securities Act
of 1933 or 1940 Acts. The Company will invest the assets of the Fixed Account at
its discretion. Investment income from such Fixed Account assets will be
allocated to the Company and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The amount of such investment income allocated to
the Contracts will vary from year to year in the sole discretion of the Company
at such rate or rates as the Company prospectively declares from time to time.
The initial rate for any allocations to the Fixed Account is guaranteed for one
year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. The Company also guarantees that for the
life of the Contract it will credit interest at not less than 3% per year. Any
interest credited to amounts allocated to the Fixed Account in excess of 3% per
year will be determined in the sole discretion of the company. The contract
owner assumes the risk that interest credited to the Fixed Account may not
exceed the minimum guarantee of 3% for any given year.
TRANSFERS
Transfers from the Fixed Account to any other investment options will be
permitted twice a year during the 30 days following the semiannual Contract Date
anniversary in an amount of up to 15% of the Fixed Account Value on the
semiannual Contract Date anniversary. (This restriction does not apply to
transfers from the Dollar Cost Averaging Program.) Amounts previously
transferred from the Fixed Account to the other investment option(s) may not be
transferred back to the Fixed Account for a period of at least six months from
the date of transfer. The Company reserves the right to waive either of these
restrictions in its discretion.
Automated transfers from the Fixed Account to any of the investment option(s)
may begin at any time. Automated transfers from the Fixed Account may not
deplete your Fixed Account value in a period of less than twelve months from
your enrollment in the Dollar Cost Averaging Program.
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APPENDIX B
CONTRACTS ISSUED IN THE STATE OF FLORIDA
- --------------------------------------------------------------------------------
THE ANNUITY PERIOD
MATURITY DATE
The maturity date may not be any date beyond the Annuitant's 90th birthday.
THE VARIABLE ANNUITY
Variable payouts are not permitted in Florida. Contract Owners may only have
their Contract Values applied to provide a Fixed Annuity.
Disregard the "Variable Annuity" section described on page 20.
ELECTION OF OPTIONS
ON THE MATURITY DATE, OR OTHER AGREED-UPON DATE, THE COMPANY WILL PAY AN AMOUNT
PAYABLE UNDER THE CONTRACT IN ACCORDANCE WITH THE PAYMENT OPTION SELECTED BY THE
CONTRACT OWNER. Election of an option must be made in writing in a form
satisfactory to the Company. Any election made during the lifetime of the
Annuitant must be made by the Contract Owner. While the Annuitant is alive, the
Contract Owner may change a Settlement Option election by Written Request at any
time prior to the Maturity Date. Once Annuity or Income Payments have begun, no
further election changes are allowed. During the Annuitant's lifetime, if no
election has been made prior to the Maturity Date, the Company will pay to the
Contract Owner the first of a series of monthly Annuity Payments based on the
life of the Annuitant, in accordance with Annuity Option 2 (Life Annuity with
120 monthly payments assured). For certain tax-qualified contracts, Annuity
Option 4 (Joint and Last Survivor Joint Life Annuity -- Annuity Reduced on Death
of Primary Payee) will be the automatic option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100, the Company reserves the right to make
payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
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APPENDIX C
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information and
financial statements relating to the Separate Account and The Travelers Life and
Annuity Company. A list of the contents of the Statement of Additional
Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Management Agreement
Valuation of Assets
Independent Accountants
Financial Statements
- --------------------------------------------------------------------------------
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED ______, 1997 (FORM NO.
L-______) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE CLIP THIS
COUPON ON THE DOTTED LINE ABOVE, ENTER YOUR NAME AND ADDRESS IN THE SPACES
PROVIDED BELOW, AND MAIL TO: THE TRAVELERS LIFE AND ANNUITY COMPANY, ANNUITY
INVESTOR SERVICES, ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183-9061.
Name:
- --------------------------------------------------------------------------------
Address:
================================================================================
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PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 37
STATEMENT OF ADDITIONAL INFORMATION
dated
______, 1997
for
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY COMPANY
This Statement of Additional Information ("SAI") is not a prospectus but
relates to, and should be read in conjunction with, the Individual Variable
Annuity Contract Prospectus dated ______, 1997. A copy of the Prospectus
may be obtained by writing to The Travelers Life and Annuity Company, Annuity
Services, One Tower Square, Hartford, Connecticut 06183-9061, or by calling
1-860-277-0111.
<TABLE>
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TABLE OF CONTENTS
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DISTRIBUTION AND MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL STATEMENTS (Travelers Life and Annuity Company) . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 38
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company"), a stock
insurance company chartered in 1973 in Connecticut. It is a wholly owned
subsidiary of The Travelers Insurance Company, which is indirectly owned,
through a wholly owned subsidiary, by Travelers Group Inc., a financial
services holding company.
STATE REGULATION. The Company is subject to the laws of the state of
Connecticut governing insurance companies and to regulation by the Insurance
Commissioner of the state of Connecticut. An annual statement covering the
operations of the Company for the preceding year, as well as its financial
conditions as of December 31 of such year, must be filed with the Commissioner
in a prescribed format on or before March 1 of each year. The Company's books
and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted at
least once every four years.
The Company is also subject to the insurance laws and regulations of all
other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the
jurisdiction of domicile in determining the field of permissible investments.
THE SEPARATE ACCOUNT. Fund ABD II meets the definition of a separate account
under the federal securities laws, and will comply with the provisions of the
1940 Act. Additionally, the operations of Fund ABD II are subject to the
provisions of Section 38a-433 of the Connecticut General Statutes which
authorizes the Connecticut Insurance Commissioner to adopt regulations under
it. Section 38a-433 contains no restrictions on the investments of the
Separate Account, and the Commissioner has adopted no regulations under the
Section that affect the Separate Account.
THE FIXED ACCOUNT. The Fixed Account is secured by part of the general assets
of the Company. The general assets of the Company include all assets of the
Company other than those held in Fund ABD II or any other separate account
sponsored by the Company or its affiliates.
The staff of the Securities and Exchange Commission does not generally review
the disclosure in the prospectus relating to the Fixed Account. Disclosure
regarding the Fixed Account and the general account may, however, be subject to
certain provisions of the federal securities laws relating to the accuracy and
completeness of statements made in the prospectus.
PRINCIPAL UNDERWRITER
Tower Square Securities, Inc. ("Tower Square"), an affiliate of the
Company, serves as principal underwriter for Fund ABD II and the Contracts.
The offering is continuous. Tower Square is an indirect wholly owned subsidiary
of Travelers Group Inc. and its principal executive offices are located at One
Tower Square, Hartford, Connecticut. It is anticipated that an affiliated
broker-dealer may become the principal underwriter for the Contracts in 1997
1
<PAGE> 39
DISTRIBUTION AND MANAGEMENT AGREEMENT
Under the terms of the Distribution and Management Agreement among
Fund ABD II, the Company and Tower Square, the Company provides all
administrative services and mortality and expense risk guarantees related to
variable annuity contracts sold by the Company in connection with the Fund ABD
II. Tower Square performs the sales functions related to the Contracts. The
Company reimburses Tower Square for commissions paid, other sales expenses and
certain overhead expenses connected with sales functions. The Company also
pays all costs (including costs associated with the preparation of sales
literature); all costs of qualifying the Fund ABD II and the variable annuity
contract with regulatory authorities; the costs of proxy solicitation; and all
custodian, accountant's and legal fees. The Company also provides without cost
to the Fund ABD II all necessary office space, facilities, and personnel to
manage its affairs.
VALUATION OF ASSETS
FUNDING OPTIONS: The value of the assets of each Underlying Fund is determined
on each Valuation Date as of the close of the New York Stock Exchange. Each
security traded on a national securities exchange is valued at the last
reported sale price on the Valuation Date. If there has been no sale on that
day, then the value of the security is taken to be the mean between the
reported bid and asked prices on the Valuation Date or on the basis of
quotations received from a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available
is valued at the mean between the quoted bid and asked prices on the Valuation
Date or on the basis of quotations received from a reputable broker or any
other recognized source.
Securities traded on the over-the-counter-market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by "marking to
market" (computing a market value based upon quotations from dealers or issuers
for securities of a similar type, quality and maturity.) "Marking to market"
takes in account unrealized appreciation or depreciation due to changes in
interest rates or other factors which would influence the current fair values
of such securities. Short-term investments maturing in sixty days or less for
which there is no reliable quoted market price are valued at amortized cost
which approximates market.
THE CONTRACT VALUE: The value of an Accumulation Unit on any Valuation Date is
determined by multiplying the value on the immediately preceding Valuation Date
by the net investment factor for the Valuation Period just ended. The net
investment factor is used to measure the investment performance of a Funding
Option from one Valuation Period to the next. The net investment factor for a
Funding Option for any Valuation Period is equal to the sum of 1.000000 plus
the net investment rate (the gross investment rate less any applicable Funding
Option deductions during the Valuation Period relating to
2
<PAGE> 40
the Insurance Charge and the Funding Option Administrative Charge). The gross
investment rate of a Funding Option is equal to (a) minus b), divided by c
where:
(a) = investment income plus capital gains and losses (whether realized or
unrealized);
(b) = any deduction for applicable taxes (presently zero); and
(c) = the value of the assets of the Funding Option at the beginning of the
Valuation Period.
The gross investment rate may be either positive or negative. A Funding
Option's investment income includes any distribution whose ex-dividend date
occurs during the Valuation Period.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., certified public accountants, 100 Pearl
Street, Hartford, Connecticut, are the independent auditors for Fund ABD II.
The services provided to Fund ABD II will include primarily the audit of the
Fund's financial statements. Financial Statements for Fund ABD II will
be filed by amendment.
The balance sheets of the Travelers Life and Annuity Company (the
"Company") as of December 31, 1996, 1995 and 1994 and the statements of
operations and retained earnings and cash flows for each of the years then
ended, have been included herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, and upon the authority
of said firm as experts in accounting and auditing. The report of KPMG Peat
Marwick LLP covering the December 31, 1996 financial statements of the Company
refers to a change in the accounting for investments in accordance with
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," in 1994.
3
<PAGE> 41
STATEMENT OF ADDITIONAL INFORMATION
FUND ABD II
Individual Variable Annuity Contract
issued by
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
L-_______S __/97
<PAGE> 42
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of Independent
Accountants will be provided in a subsequent Pre-Effective Amendment.
(b) Exhibits
1. Resolution of The Travelers Life and Annuity Company Board of
Directors authorizing the establishment of the Registrant.
(Incorporated herein by reference to Exhibit 1 to the
Registration Statement for Fund ABD II file nos. 33-65339;
811-07463 on Form N-4, filed December 22, 1995.)
2. Exempt.
3(a). Distribution and Management Agreement among the Registrant,
The Travelers Life and Annuity Company and Tower Square
Securities, Inc. (Incorporated herein by reference to Exhibit
3(a) to the Registration Statement for Fund ABD II file
nos. 33-65339; 811-07463 on Form N-4, filed December 22,
1995.)
3(b). Form of Selling Agreement. (Incorporated herein by reference
to Exhibit 3(b) to the Registration Statement for Fund ABD II
file nos. 33-65339; 811-07463 on Form N-4, filed December
22, 1995.)
4. Form of Variable Annuity Contract(s). (Incorporated herein by
reference to Exhibit 4 to the Registration Statement for
Fund ABD II file nos. 33-65339; 811-07463 on Form N-4, filed
June 17, 1996.)
5. None.
6(a). Charter of The Travelers Life and Annuity Company, as amended
on April 10, 1990. (Incorporated herein by reference to
Exhibit 3(a) to the Registration Statement on Form N-4, File
No. 33-58131, filed via Edgar on March 17, 1995.)
6(b). By-Laws of The Travelers Life and Annuity Company, as amended
on October 20, 1994. (Incorporated herein by reference to
Exhibit 3(b) to the Registration Statement on Form N-4, File
No. 33-58131, filed via Edgar on March 17, 1995.)
7. None.
8. None.
9. Opinion of Counsel as to the legality of securities being
registered. (Incorporated herein by reference to Form 24f-2
filed on behalf of Fund ABDII (file nos. 33-65339; 811-07463)
on February 28, 1997.)
10(a). Consent of Coopers & Lybrand L.L.P., Certified Public
Accountants. (To be filed by amendment.)
<PAGE> 43
10(b). Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants. (To be filed by amendment.)
13. Schedule for computation of each performance quotation. (To be
filed by amendment.)
15. Powers of Attorney authorizing Jay S. Fishman or Ernest J.
Wright as signatory for Michael A. Carpenter, Robert I. Lipp,
Charles O. Prince III, Marc P. Weill, Irwin R. Ettinger,
Donald T. DeCarlo and Christine B. Mead. (Incorporated herein
by reference to Exhibit 15 to the Registration Statement on
Form N-4, file nos. 33-65339; 811-07463 filed
December 22, 1995.)
15(b). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Michael A. Carpenter, Ian R. Stuart and
Katherine M. Sullivan. (Incorporated herein by reference to
Exhibit 15(b) to the Registration Statement on Form N-4,
file nos. 33-65339; 811-07463 filed June 17, 1996.)
15(c). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Jay S. Benet and George C. Kokulis.
(Incorporated herein by reference to Exhibit 15(c) to
Post-Effective Amendment No. 1 to the Registration Statement
on Form N-4,file nos. 33-65339; 811-07463 filed
August 15, 1996.)
15(d). Power of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Ian R. Stuart. (Incorporated by
reference herein to Form 24f-2 filed on behalf of Fund ABD
(file nos. 33-65339; 811-07463) on February 28, 1997.)
<PAGE> 44
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ------------------ ---------------------
<S> <C> <C>
Michael A. Carpenter* Director, Chairman of the Board ----
President and Chief Executive Officer
Jay S. Benet* Director and Senior Vice President ----
George C. Kokulis* Director and Senior Vice President ----
Robert I. Lipp* Director ----
Ian R. Stuart* Director, Senior Vice President, ----
Chief Financial Officer, Chief
Accounting Officer and Controller
Katherine M. Sullivan* Director and Senior Vice President ----
and General Counsel
Marc P. Weill** Director and Senior Vice President ----
Stuart Baritz** Senior Vice President ----
Jay S. Fishman* Senior Vice President ----
Elizabeth C. Georgakopoulos* Senior Vice President ----
Barry Jacobson* Senior Vice President ----
Russell H. Johnson* Senior Vice President ----
Warren H. May* Senior Vice President ----
Christine M. Modie* Senior Vice President ----
David A. Tyson* Senior Vice President ----
F. Denney Voss* Senior Vice President ----
Paula Burton* Vice President ----
Elizabeth Charron* Vice President ----
Charles N. Vest* Vice President and Actuary ----
Donald R. Munson, Jr.* Second Vice President ----
Ernest J. Wright* Vice President and Secretary Secretary to the
Board of Managers
Kathleen A. McGah* Assistant Secretary and Counsel Assistant Secretary to
the Board of Managers
</TABLE>
Principal Business Address:
* The Travelers Life and Annuity Company **Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013
<PAGE> 45
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
To be filed by amendment.
<PAGE> 46
Item 27. Number of Contract Owners
Not Applicable.
Item 28. Indemnification
Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding
indemnification of directors and officers of Connecticut corporations provides
in general that Connecticut corporations shall indemnify their officers,
directors and certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
in connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply unless (1)
the individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by persons specified in the statute)
that the individual acted in good faith and in the best interests of the
corporation; or (3) the court, upon application by the individual, determines in
view of all of the circumstances that such person is fairly and reasonably
entitled to be indemnified, and then for such amount as the court shall
determine. With respect to proceedings brought by or in the right of the
corporation, the statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals, against reasonable
expenses actually incurred by them in connection with such proceedings, subject
to certain limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Depositor. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the Federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liability (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 47
Item 29. Principal Underwriter
(a) In addition to The Travelers Fund ABD II for Variable Annuities, Tower
Square Securities, Inc. also serves as the principal underwriter for:
The Travelers Growth and Income Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable
Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund VA for Variable Annuities
The Travelers Fund BD for Variable Annuities
The Travelers Fund BD II for Variable Annuities
The Travelers Fund ABD for Variable Annuities
The Travelers Separate Account QP for Variable Annuities
The Travelers Separate Account QP II for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund UL II for Variable Life Insurance
The Travelers Variable Life Insurance Separate Account One
The Travelers Variable Life Insurance Separate Account Three
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ --------------------- ---------------------
<S> <C> <C>
Russell H. Johnson Chairman of the Board -----
Chief Executive Officer, President -----
and Chief Operating Officer
William F. Scully, III Member, Board of Directors, -----
Senior Vice President, Treasurer
and Chief Financial Officer
Cynthia P. Macdonald Vice President, Chief Compliance -----
Officer, and Assistant Secretary
Joanne K. Russo Member, Board of Directors -----
Senior Vice President
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Jay S. Benet Member, Board of Directors -----
George C. Kokulis Member, Board of Directors -----
Warren H. May Member, Board of Directors -----
Donald R. Munson, Jr. Senior Vice President -----
</TABLE>
<PAGE> 48
(cont'd)
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ------------------- ---------------------
<S> <C> <C>
Stuart L. Baritz Vice President -----
Michael P. Kiley Vice President -----
Tracey Kiff-Judson Second Vice President -----
Robin A. Jones Second Vice President -----
Whitney F. Burr Second Vice President -----
Marlene M. Ibsen Second Vice President -----
John J. Williams, Jr. Director and Assistant Compliance -----
Officer
Susan M. Cursio Director and Operations Manager -----
Dennis D. D'Angelo Director -----
Thomas P. Tooley Director -----
Nancy S. Waldrop Assistant Treasurer -----
</TABLE>
* Principal business address: One Tower Square, Hartford,
Connecticut 06183
(c). Not Applicable.
Item 30. Location of Accounts and Records
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for so long as payments under the variable annuity contracts
may be accepted;
<PAGE> 49
(b) To include either (1) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the prospectus
that the applicant can remove to send for a Statement of Additional
Information; and
(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) To represent to the Securities and Exchange Commission that the
aggregate charges under the Contracts of the Registrant described
herein are reasonable in relation to the services rendered, the
expenses to be incurred, and the risks assumed by the company.
<PAGE> 50
SIGNATURES
As required by the Investment Company Act of 1940, the Registrant has caused
this amendment to this Registration Statement to be signed on its behalf, in the
City of Hartford, State of Connecticut, on March 14, 1997.
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Depositor)
By: *IAN R. STUART
--------------------------------------
Ian R. Stuart
Director, Senior Vice President,
Chief Financial Officer
Chief Accounting Officer and Controller
As required by the Securities Act of 1933, this amendment to this Registration
Statement has been signed below by the following persons in the capacities on
this 14th day of March, 1997.
*MICHAEL A. CARPENTER Chairman of the Board, President
- ----------------------------- and Chief Executive Officer
(Michael A. Carpenter)
*JAY S. BENET Director
- -----------------------------
(Jay S. Benet)
*GEORGE C. KOKULIS Director
- -----------------------------
(George C. Kokulis)
*ROBERT I. LIPP Director
- -----------------------------
(Robert I. Lipp)
*KATHERINE M. SULLIVAN Director, Senior Vice President and General
- ----------------------------- Counsel
(Katherine M. Sullivan)
*IAN R. STUART Director, Senior Vice President, Chief Financial
- ----------------------------- Officer, Chief Accounting Officer and Controller
(Ian R. Stuart)
*MARC P. WEILL Director
- -----------------------------
(Marc P. Weill)
*By: Ernest J. Wright, Attorney-in-Fact
<PAGE> 51
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
1. Resolution of The Travelers Life and Annuity Company
Board of Directors authorizing the establishment
of the Registrant. (Incorporated herein by reference
to Exhibit 1 to the Registration Statement on Form N-4,
(file Nos. 33-65339 and 811-07463) filed December 22, 1995.)
3(a). Form of Distribution and Management Agreement among the
Registrant, The Travelers Life and Annuity Company and Tower
Square Securities, Inc. (Incorporated herein by reference to
Exhibit 3(a) to the Registration Statement on Form N-4, (file
Nos. 33-65339 and 811-07463) filed December 22, 1995.)
3(b). Form of Selling Agreement. (Incorporated herein by
reference to Exhibit 3(b) to the Registration Statement
on Form N-4, (file Nos. 33-65339 and 811-07463)
filed December 22, 1995.)
4. Form of Variable Annuity Contract(s). (Incorporated
herein by reference to Exhibit 4 to the Registration
Statement on Form N-4, (file Nos. 33-65339 and 811-07463)
filed June 17, 1996.)
6(a). Charter of The Travelers Life and Annuity Company, as
amended on April 10, 1990. (Incorporated herein
by reference to Exhibit 3(a) to the Registration
Statement on Form N-4, File No. 33-58131, filed via
Edgar on March 17, 1995.)
6(b). By-Laws of The Travelers Life and Annuity Company, as
amended on October 20, 1994. (Incorporated herein
by reference to Exhibit 3(b) to the Registration
Statement on Form N-4, File No. 33-58131, filed via
Edgar on March 17, 1995.)
9. Opinion of Counsel as to the legality of securities being
registered by Registrant. (Incorporated herein by
reference to Form 24f-2 filed on behalf of Fund ABD II
(file nos. 33-65339; 811-07463) on February 28, 1997.)
10(a). Consent of Coopers & Lybrand, L.L.P., Certified Public To be filed by
Accountants. amendment
10(b). Consent of KPMG Peat Marwick LLP, Independent To be filed by
Certified Public Accountants. amendment
</TABLE>
<PAGE> 52
<TABLE>
<S> <C> <C>
13. Schedule of Computation of Total Return Calculations. To be filed by
amendment.
15. Powers of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Michael A Carpenter,
Robert I. Lipp, Charles O. Prince III, Marc P. Weill,
Irwin R. Ettinger, Donald T. DeCarlo and Christine B.
Mead. (Incorporated herein by reference to Exhibit 15
to the Registration Statement on Form N-4, (file Nos.
33-65339 and 811-07436) filed December 22, 1995.)
15(b). Powers of Attorney authorizing Ernest J. Wright and
and Kathleen A. McGah as signatory for Michael A.
Carpenter, Ian R. Stuart and Katherine M. Sullivan.
(Incorporated herein by reference to Exhibit 15(b) to the
Registration Statement on Form N-4, (file Nos. 33-65339
and 811-07436) filed June 17, 1996.)
15(c). Powers of Attorney authorizing Ernest J. Wright and
Kathleen A. McGah as signatory for Jay S. Benet and
George C. Kokulis. (Incorporated herein by reference to
Exhibit 15(c) to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4, (file Nos. 33-65339
and 811-07436 filed August 15, 1996.)
15(d). Power of Attorney authorizing Ernest J. Wright and
Kathleen A. McGah as signatory for Ian R. Stuart.
(Incorporated herein by reference to Form 24f-2 filed
on behalf of Fund ABD II (file nos. 03-65339; 811-07463)
on February 28, 1997.)
</TABLE>
<PAGE> 1
EXH-15D
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, IAN R. STUART of East Hampton, Connecticut, Director,
Senior Vice President, Chief Financial Officer, Chief Accounting Officer and
Controller of The Travelers Life and Annuity Company (hereafter the "Company"),
do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said
Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either
one of them acting alone, my true and lawful attorney-in-fact, for me, and in my
name, place and stead, to sign registration statements on behalf of said Company
on Form N-4 or other appropriate form under the Securities Act of 1933 for The
Travelers Fund ABD II for Variable Annuities, a separate account of the Company
dedicated specifically to the funding of variable annuity contracts to be
offered by the Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the Company on behalf
of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day
of February, 1997.
Ian R. Stuart
Director, Senior Vice President,
Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Life and Annuity Company
