<PAGE> 1
ANNUAL REPORT
December 31, 1998
The Travelers Fund ABD
for Variable Annuities
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
THE TRAVELERS FUND ABD
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
Capital Appreciation Fund, 296,243 shares (cost $16,926,416) ............... $ 21,548,704
Delaware Group Premium Fund, Inc, 9,610 shares (cost $84,395) .............. 87,455
Dreyfus Variable Investment Fund, 112,628 shares (cost $4,147,718) ......... 4,476,552
Greenwich Street Series Fund, 977,199 shares (cost $12,876,847) ............ 13,215,431
Money Market Portfolio, 9,876,519 shares (cost $9,876,519) ................. 9,876,519
Morgan Stanley Universal Funds, Inc, 51,141 shares (cost $615,850) ......... 639,761
Salomon Brothers Variable Series Funds Inc, 192,916 shares (cost $1,965,682) 2,099,283
The Travelers Series Trust, 5,425,399 shares (cost $71,951,994) ............ 75,452,702
Travelers Series Fund Inc, 2,272,241 shares (cost $42,200,365) ............. 45,626,579
Van Kampen Life Investment Trust, 705,022 shares (cost $1,694,418) ......... 1,748,039
Warburg Pincus Trust, 19,084 shares (cost $145,404) ........................ 156,296
------------
Total Investments (cost $162,485,608) .................................... $174,927,321
Receivables:
Dividends ................................................................ 1,359,154
Purchase payments and transfers from other Travelers accounts ............ 486,020
Other assets ............................................................... 686
------------
Total Assets ............................................................. 176,773,181
------------
LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts ............ 199,699
Insurance charges ........................................................ 47,100
Administrative fees ...................................................... 5,651
------------
Total Liabilities ...................................................... 252,450
------------
NET ASSETS: ................................................................ $176,520,731
============
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 3
THE TRAVELERS FUND ABD
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................................... $ 3,703,277
EXPENSES:
Insurance charges ....................................................... $ 886,762
Administrative fees ..................................................... 106,413
------------
Total expenses ........................................................ 993,175
------------
Net investment income ............................................... 2,710,102
------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ........................................ 16,924,277
Cost of investments sold .............................................. 16,720,569
------------
Net realized gain (loss) ............................................ 203,708
Change in unrealized gain (loss) on investments:
Unrealized loss at December 31, 1997 .................................... (23,471)
Unrealized gain at December 31, 1998 .................................... 12,441,713
------------
Net change in unrealized gain (loss) for the year ..................... 12,465,184
------------
Net realized gain (loss) and change in unrealized gain (loss) ....... 12,668,892
------------
Net increase in net assets resulting from operations .................... $ 15,378,994
============
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 4
THE TRAVELERS FUND ABD
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS For
the year ended December 31, 1998 and
the period April 28, 1997 (date operations commenced)
to December 31, 1997
<TABLE>
<CAPTION>
1998 1997
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................ $ 2,710,102 $ 221,552
Net realized gain (loss) from investment transactions ........ 203,708 26,335
Net change in unrealized gain (loss) on investments .......... 12,465,184 (23,471)
------------- ------------
Net increase in net assets resulting from operations ....... 15,378,994 224,416
------------- ------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 98,127,834 and 7,859,757 units, respectively) 121,461,712 9,113,419
Participant transfers from other Travelers accounts
(applicable to 39,560,021 and 1,186,983 units, respectively) 49,991,050 1,366,418
Administrative charges
(applicable to 9,182 and 48 units, respectively) ........... (11,401) (57)
Contract surrenders
(applicable to 1,913,691 and 17,616 units, respectively) ... (2,370,182) (17,700)
Participant transfers to other Travelers accounts
(applicable to 15,448,937 and 513,616 units, respectively) . (17,368,160) (556,408)
Other payments to participants
(applicable to 535,556 units) .............................. (691,370) --
------------- ------------
Net increase in net assets resulting from unit transactions 151,011,649 9,905,672
------------- ------------
Net increase in net assets ................................. 166,390,643 10,130,088
NET ASSETS:
Beginning of period .......................................... 10,130,088 --
------------- ------------
End of period ................................................ $ 176,520,731 $ 10,130,088
============= ============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Fund ABD for Variable Annuities ("Fund ABD") is a separate account
of The Travelers Insurance Company ("The Travelers"), an indirect wholly owned
subsidiary of Citigroup Inc. (formerly Travelers Group Inc.), and is available
for funding certain variable annuity contracts issued by The Travelers. Fund ABD
is registered under the Investment Company Act of 1940, as amended, as a unit
investment trust.
Participant purchase payments applied to Fund ABD are invested in one or more
eligible funds in accordance with the selection made by the contract owner. As
of December 31, 1998, the eligible funds available under Fund ABD were: Capital
Appreciation Fund; Money Market Portfolio, (formerly Cash Income Trust);
Alliance Growth Portfolio, Putnam Diversified Income Portfolio and MFS Total
Return Portfolio of Travelers Series Fund Inc.; 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, Disciplined Mid Cap Stock Portfolio (formerly Mid Cap
Disciplined Equity Fund), MFS Mid Cap Growth Portfolio, MFS Research Portfolio,
Strategic Stock Portfolio, Disciplined Small Cap Stock Portfolio and Convertible
Bond Portfolio of The Travelers Series Trust; Diversified Strategic Income
Portfolio, Total Return Portfolio and Appreciation Portfolio of Greenwich Street
Series Fund; REIT Series of Delaware Group Premium Fund, Inc.; Capital
Appreciation Portfolio and Small Cap Portfolio of Dreyfus Variable Investment
Fund; Emerging Markets Portfolio of Warburg Pincus Trust; Mid Cap Value
Portfolio, Value Portfolio, Emerging Markets Equity Portfolio and Global Equity
Portfolio of Morgan Stanley Universal Funds, Inc.; Real Estate Securities
Portfolio, Enterprise Portfolio, Government Portfolio, Growth and Income
Portfolio, Emerging Growth Portfolio, Domestic Income Portfolio and Money Market
Portfolio of Van Kampen Life Investment Trust (formerly Van Kampen American
Capital Life Investment Trust); Salomon Brothers Variable Investors Fund,
Salomon Brothers Variable Capital Fund, Salomon Brothers Variable High Yield
Bond Fund and Salomon Brothers Variable Strategic Bond Fund of Salomon Brothers
Variable Series Funds Inc. All of the funds are Massachusetts business trusts,
except Travelers Series Fund Inc., Delaware Group Premium Fund, Inc., Salomon
Brothers Variable Series Funds, Inc., and Morgan Stanley Universal Funds, Inc.
which are incorporated under Maryland law and Van Kampen Life Investment Trust
which is a Delaware business trust. Capital Appreciation Fund, Money Market
Portfolio, Travelers Series Fund Inc., Travelers Series Trust, Greenwich Street
Series Fund, and Salomon Brothers Variable Series Funds, Inc. are managed by
affiliates of The Travelers. Not all funds may be available in all states or to
all contract owners.
The following is a summary of significant accounting policies consistently
followed by Fund ABD in the preparation of its financial statements.
SECURITY VALUATION. Investments are valued daily at the net asset values per
share of the underlying funds.
SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Dividend income is recorded on the ex-dividend date.
FEDERAL INCOME TAXES. The operations of Fund ABD form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is taxed
as a life insurance company under the Internal Revenue Code of 1986, as amended
(the "Code"). Under existing federal income tax law, no taxes are payable on the
investment income of Fund ABD. Fund ABD is not taxed as a "regulated investment
company" under Subchapter M of the Code.
OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
-4-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS - continued
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments were
$169,173,612 and $16,924,277, respectively, for the year ended December 31,
1998. Realized gains and losses from investment transactions are reported on an
identified cost basis. The cost of investments in eligible funds was
$162,485,608 at December 31, 1998. Gross unrealized appreciation for all
investments at December 31, 1998 was $13,098,847. Gross unrealized depreciation
for all investments at December 31, 1998 was $657,134.
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed by The
Travelers. These charges are equivalent to 1.25% of the average net assets of
Fund ABD on an annual basis.
Administrative fees are paid for administrative expenses incurred by The
Travelers. This charge is equivalent to 0.15% of the average net assets of Fund
ABD on an annual basis.
For contracts in the accumulation phase with a contract value less than $40,000,
an annual charge of $30 (prorated for partial periods) is deducted from
participant account balances and paid to The Travelers to cover contract
administrative charges.
No sales charge is deducted from participant purchase payments when they are
received. However, The Travelers generally assesses a contingent deferred sales
charge of up to 6% if a participant's purchase payment is surrendered within
seven years of its payment date. Contract surrender payments include $19,868 of
contingent deferred sales charges for the year ended December 31, 1998. No
deductions were taken for the period April 28, 1997 (date operations commenced)
to December 31, 1997.
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ ------ -----------
<S> <C> <C> <C>
Capital Appreciation Fund .......... 10,561,314 $2.046 $21,612,868
Delaware Group Premium Fund, Inc
REIT Series .......................... 96,983 0.901 87,429
Dreyfus Variable Investment Fund
Capital Appreciation Portfolio ....... 2,937,245 1.112 3,267,056
Small Cap Portfolio .................. 1,435,805 0.871 1,250,295
Greenwich Street Series Fund
Appreciation Portfolio ............... 3,710,315 1.283 4,758,979
Diversified Strategic Income Portfolio 7,076,327 1.100 7,782,762
Total Return Portfolio ............... 708,254 0.953 674,738
Money Market Portfolio ............. 9,244,927 1.070 9,890,840
Morgan Stanley Universal Funds, Inc
Emerging Markets Equity Portfolio .... 27,410 0.769 21,075
Global Equity Portfolio .............. 163,749 0.991 162,232
Mid Cap Value Portfolio .............. 219,618 1.042 228,903
Value Portfolio ...................... 258,345 0.880 227,370
</TABLE>
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS - continued
4. NET CONTRACT OWNERS' EQUITY (continued)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ ------ -----------
<S> <C> <C> <C>
Salomon Brothers Variable Series Funds Inc
Salomon Brothers Variable Capital Fund ....... 55,964 $1.084 $ 60,658
Salomon Brothers Variable High Yield Bond Fund 117,685 0.991 116,682
Salomon Brothers Variable Investors Fund ..... 1,764,644 1.029 1,815,052
Salomon Brothers Variable Strategic Bond Fund 127,127 1.037 131,837
The Travelers Series Trust
Equity Income Portfolio ...................... 12,301,819 1.484 18,254,264
Federated High Yield Portfolio ............... 7,715,310 1.177 9,079,709
Federated Stock Portfolio .................... 4,599,587 1.494 6,869,766
Large Cap Portfolio .......................... 6,662,550 1.665 11,091,092
Lazard International Stock Portfolio ......... 6,533,760 1.216 7,946,378
MFS Emerging Growth Portfolio ................ 5,891,811 1.587 9,349,469
MFS Mid Cap Growth Portfolio ................. 696,846 0.985 686,700
MFS Research Portfolio ....................... 149,981 1.054 158,050
Strategic Stock Portfolio .................... 13,783 0.948 13,068
Convertible Bond Portfolio ................... 458,699 1.000 458,652
Disciplined Mid Cap Stock Portfolio .......... 1,425,770 1.377 1,963,991
Disciplined Small Cap Stock Portfolio ........ 518,858 0.894 463,681
Travelers Quality Bond Portfolio ............. 9,328,606 1.131 10,552,847
Travelers Series Fund Inc
Alliance Growth Portfolio .................... 13,211,206 1.679 22,175,326
MFS Total Return Portfolio ................... 16,380,184 1.303 21,343,496
Putnam Diversified Income Portfolio .......... 1,955,397 1.062 2,076,615
Van Kampen Life Investment Trust
Real Estate Securities Portfolio ............. 66,511 0.909 60,436
Domestic Income Portfolio .................... 116,317 1.019 118,486
Emerging Growth Portfolio .................... 27,189 1.204 32,726
Enterprise Portfolio ......................... 233,972 1.083 253,407
Government Portfolio ......................... 347,758 1.052 365,841
Growth and Income Portfolio .................. 292,761 1.030 301,408
Money Market Portfolio ....................... 637,874 1.023 652,421
Warburg Pincus Trust
Emerging Markets Portfolio ................... 223,688 0.734 164,126
------------
Net Contract Owners' Equity .................... $176,520,731
============
</TABLE>
-6-
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS - continued
5. STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
--------- -----------
<S> <C> <C>
CAPITAL APPRECIATION FUND (12.3%)
Total (Cost $16,926,416) 296,243 $21,548,704
--------- -----------
DELAWARE GROUP PREMIUM FUND, INC. (0.1%)
REIT Series
Total (Cost $84,395) 9,610 87,455
--------- -----------
DREYFUS VARIABLE INVESTMENT FUND (2.6%)
Capital Appreciation Portfolio (Cost $2,978,410) 89,618 3,236,093
Small Cap Portfolio (Cost $1,169,308) 23,010 1,240,459
--------- -----------
Total (Cost $4,147,718) 112,628 4,476,552
--------- -----------
GREENWICH STREET SERIES FUND (7.5%)
Appreciation Portfolio (Cost $4,466,173) 224,972 4,760,414
Diversified Strategic Income Portfolio (Cost $7,763,525) 713,769 7,780,085
Total Return Portfolio (Cost $647,149) 38,458 674,932
--------- -----------
Total (Cost $12,876,847) 977,199 13,215,431
--------- -----------
MONEY MARKET PORTFOLIO (5.6%)
Total (Cost $9,876,519) 9,876,519 9,876,519
--------- -----------
MORGAN STANLEY UNIVERSAL FUNDS, INC. (0.4%)
Emerging Markets Equity Portfolio (Cost $20,873) 2,965 21,081
Global Equity Portfolio (Cost $156,650) 12,350 162,277
Mid Cap Value Portfolio (Cost $207,896) 15,336 228,966
Value Portfolio (Cost $230,431) 20,490 227,437
--------- -----------
Total (Cost $615,850) 51,141 639,761
--------- -----------
SALOMON BROTHERS VARIABLE SERIES FUNDS INC. (1.2%)
Salomon Brothers Variable Capital Fund (Cost $56,374) 5,137 59,433
Salomon Brothers Variable High Yield Bond Fund (Cost $114,920) 11,655 111,658
Salomon Brothers Variable Investors Fund (Cost $1,663,936) 163,703 1,802,372
Salomon Brothers Variable Strategic Bond Fund (Cost $130,452) 12,421 125,820
--------- -----------
Total (Cost $1,965,682) 192,916 2,099,283
--------- -----------
</TABLE>
-7-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS - continued
5. STATEMENT OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ ------------
<S> <C> <C>
THE TRAVELERS SERIES TRUST (43.1%)
Equity Income Portfolio (Cost $17,524,624) 1,185,573 $18,269,675
Federated High Yield Portfolio (Cost $8,936,509) 762,575 8,472,214
Federated Stock Portfolio (Cost $6,410,661) 424,197 6,642,927
Large Cap Portfolio (Cost $9,954,438) 635,079 11,069,427
Lazard International Stock Portfolio (Cost $7,638,378) 609,095 7,845,139
MFS Emerging Growth Portfolio (Cost $7,916,465) 553,850 9,343,447
MFS Mid Cap Growth Portfolio (Cost $599,242) 66,780 671,144
MFS Research Portfolio (Cost $147,651) 14,948 157,851
Strategic Stock Portfolio (Cost $12,366) 1,365 12,914
Convertible Bond Portfolio (Cost $443,186) 45,750 451,097
Disciplined Mid Cap Stock Portfolio (Cost $1,719,361) 136,998 1,964,554
Disciplined Small Cap Stock Portfolio (Cost $388,680) 48,335 428,727
Travelers Quality Bond Portfolio (Cost $10,260,433) 940,854 10,123,586
------------ ------------
Total (Cost $71,951,994) 5,425,399 75,452,702
------------ ------------
TRAVELERS SERIES FUND INC. (26.1%)
Alliance Growth Portfolio (Cost $19,335,953) 841,724 22,145,765
MFS Total Return Portfolio (Cost $20,717,775) 1,255,389 21,379,281
Putnam Diversified Income Portfolio (Cost $2,146,637) 175,128 2,101,533
------------ ------------
Total (Cost $42,200,365) 2,272,241 45,626,579
------------ ------------
VAN KAMPEN LIFE INVESTMENT TRUST (1.0%)
Real Estate Securities Portfolio (Cost $58,470) 4,393 60,452
Domestic Income Portfolio (Cost $115,079) 13,468 118,522
Emerging Growth Portfolio (Cost $29,127) 1,447 32,733
Enterprise Portfolio (Cost $227,785) 11,321 253,475
Government Portfolio (Cost $365,359) 38,160 365,953
Growth and Income Portfolio (Cost $283,186) 20,821 301,492
Money Market Portfolio (Cost $615,412) 615,412 615,412
------------ ------------
Total (Cost $1,694,418) 705,022 1,748,039
------------ ------------
WARBURG PINCUS TRUST (0.1%)
Emerging Markets Portfolio
Total (Cost $145,404) 19,084 156,296
------------ ------------
TOTAL INVESTMENT OPTIONS (100%)
(Cost $162,485,608) $174,927,321
============
</TABLE>
-8-
<PAGE> 10
This page intentionally left blank.
-9-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Fund ABD Operations and Changes in Net Assets For the year ended
December 31, 1998 and the period April 28, 1997 (date operations commenced) to
December 31, 1997
<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND REIT SERIES
------------------------------- ---------------------
1998 1997 1998 1997
------------ ----------- -------- -----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 174,080 $ 7 $ -- $ --
------------ ----------- -------- -----
EXPENSES:
Insurance charges ................................. 92,000 2,852 364 --
Administrative fees ............................... 11,040 328 44 --
------------ ----------- -------- -----
Net investment income (loss) .................... 71,040 (3,173) (408) --
------------ ----------- -------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................... 433,026 40,269 35,471 --
Cost of investments sold ......................... 363,835 35,457 37,937 --
------------ ----------- -------- -----
Net realized gain (loss) ....................... 69,191 4,812 (2,466) --
------------ ----------- -------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ....... (2,449) -- -- --
Unrealized gain (loss) end of period ............. 4,622,288 (2,449) 3,060 --
------------ ----------- -------- -----
Net change in unrealized gain (loss) for
the period 4,624,737 (2,449) 3,060 --
------------ ----------- -------- -----
Net increase (decrease) in net assets
resulting from operations ........................ 4,764,968 (810) 186 --
------------ ----------- -------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 11,963,775 1,021,535 63,769 --
Participant transfers from other Travelers accounts 4,643,134 122,922 52,111 --
Administrative charges ............................ (1,448) (7) (1) --
Contract surrenders ............................... (288,177) -- (1,269) --
Participant transfers to other Travelers accounts . (566,677) (26,493) (27,367) --
Other payments to participants .................... (19,854) -- -- --
------------ ----------- -------- -----
Net increase (decrease) in net assets
resulting from unit transactions ............... 15,730,753 1,117,957 87,243 --
------------ ----------- -------- -----
Net increase (decrease) in net assets .......... 20,495,721 1,117,147 87,429 --
NET ASSETS:
Beginning of period ............................. 1,117,147 -- -- --
------------ ----------- -------- -----
End of period ................................... $ 21,612,868 $ 1,117,147 $ 87,429 $ --
============ =========== ======== =====
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL APPRECIATION
PORTFOLIO
----------------------------
1998 1997
----------- -----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 16,186 $ --
----------- -----
EXPENSES:
Insurance charges ................................. 7,020 --
Administrative fees ............................... 842 --
----------- -----
Net investment income (loss) .................. 8,324 --
----------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 326,391 --
Cost of investments sold ........................ 329,587 --
----------- -----
Net realized gain (loss) ...................... (3,196) --
----------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... -- --
Unrealized gain (loss) end of period ............ 257,683 --
----------- -----
Net change in unrealized gain (loss) for the period 257,683 --
----------- -----
Net increase (decrease) in net assets
resulting from operations ....................... 262,811 --
----------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 2,671,544 --
Participant transfers from other Travelers accounts 495,656 --
Administrative charges ............................ (16) --
Contract surrenders ............................... (4,092) --
Participant transfers to other Travelers accounts . (158,847) --
Other payments to participants .................... -- --
----------- -----
Net increase (decrease) in net assets
resulting from unit transactions .............. 3,004,245 --
----------- -----
Net increase (decrease) in net assets ......... 3,267,056 --
NET ASSETS:
Beginning of period ............................. -- --
----------- -----
End of period .................................... $ 3,267,056 $ --
=========== =====
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
DIVERSIFIED STRATEGIC INCOME
SMALL CAP PORTFOLIO APPRECIATION PORTFOLIO PORTFOLIO TOTAL RETURN PORTFOLIO
- --------------------------- ---------------------------- ---------------------------- -------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ----------- -------- ----------- --------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10,001 $ -- $ 126,627 $ 31,923 $ 205,579 $ 56,410 $ 1,068 $ --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
3,526 -- 30,857 1,772 46,675 1,862 1,384 --
423 -- 3,703 222 5,601 221 166 --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
6,052 -- 92,067 29,929 153,303 54,327 (482) --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
53,619 -- 440,993 7,922 342,840 3,584 8,276 --
63,022 -- 426,911 7,605 359,982 3,447 9,412 --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
(9,403) -- 14,082 317 (17,142) 137 (1,136) --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
-- -- (11,471) -- (44,032) -- -- --
71,151 -- 294,241 (11,471) 16,560 (44,032) 27,783 --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
71,151 -- 305,712 (11,471) 60,592 (44,032) 27,783 --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
67,800 -- 411,861 18,775 196,753 10,432 26,165 --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
685,723 -- 3,001,222 498,794 4,981,122 498,149 551,028 --
547,820 -- 1,289,816 39,802 2,386,796 262,819 105,319 --
(9) -- (359) (3) (453) -- (2) --
(1,527) -- (174,629) (1,650) (59,416) -- (292) --
(49,512) -- (124,027) (2,930) (491,240) (2,200) (7,480) --
-- -- (197,693) -- -- -- -- --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
1,182,495 -- 3,794,330 534,013 6,816,809 758,768 648,573 --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
1,250,295 -- 4,206,191 552,788 7,013,562 769,200 674,738 --
-- -- 552,788 -- 769,200 -- -- --
- ----------- -------- ----------- --------- ----------- --------- --------- --------
$ 1,250,295 $ -- $ 4,758,979 $ 552,788 $ 7,782,762 $ 769,200 $ 674,738 $ --
=========== ======== =========== ========= =========== ========= ========= ========
</TABLE>
-11-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Fund ABD Operations and Changes in Net Assets For the year ended
December 31, 1998 and the period April 28, 1997 (date operations commenced) to
December 31, 1997 (continued)
<TABLE>
<CAPTION>
EMERGING MARKETS EQUITY
MONEY MARKET PORTFOLIO PORTFOLIO
----------------------------- -----------------------
1998 1997 1998 1997
------------ --------- ------- -----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 181,442 $ 5,361 $ 107 $ --
------------ --------- ------- -----
EXPENSES:
Insurance charges ................................. 47,233 1,279 36 --
Administrative fees ............................... 5,668 159 4 --
------------ --------- ------- -----
Net investment income (loss) ................... 128,541 3,923 67 --
------------ --------- ------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 7,518,389 374,664 34 --
Cost of investments sold ........................ 7,518,389 374,664 34 --
------------ --------- ------- -----
Net realized gain (loss) ...................... -- -- -- --
------------ --------- ------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... -- -- -- --
Unrealized gain (loss) end of period ............ -- -- 208 --
------------ --------- ------- -----
Net change in unrealized gain (loss) for the period -- -- 208 --
------------ --------- ------- -----
Net increase (decrease) in net assets
resulting from operations ....................... 128,541 3,923 275 --
------------ --------- ------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 14,599,226 668,068 20,800 --
Participant transfers from other Travelers accounts 4,002,504 75,838 -- --
Administrative charges ............................ (303) -- -- --
Contract surrenders ............................... (383,819) (1,993) -- --
Participant transfers to other Travelers accounts . (8,812,323) (388,822) -- --
Other payments to participants .................... -- -- -- --
------------ --------- ------- -----
Net increase (decrease) in net assets
resulting from unit transactions ............... 9,405,285 353,091 20,800 --
------------ --------- ------- -----
Net increase (decrease) in net assets ......... 9,533,826 357,014 21,075 --
NET ASSETS:
Beginning of period ............................. 357,014 -- -- --
------------ --------- ------- -----
End of period ................................... $ 9,890,840 $ 357,014 $21,075 $ --
============ ========= ======= =====
</TABLE>
<TABLE>
<CAPTION>
GLOBAL EQUITY PORTFOLIO
-----------------------
1998 1997
--------- -----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 1,238 $ --
--------- -----
EXPENSES:
Insurance charges ................................. 303 --
Administrative fees ............................... 36 --
--------- -----
Net investment income (loss) .................. 899 --
--------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 8,046 --
Cost of investments sold ........................ 7,805 --
--------- -----
Net realized gain (loss) ....................... 241 --
--------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... -- --
Unrealized gain (loss) end of period ............ 5,627 --
--------- -----
Net change in unrealized gain (loss) for the period 5,627 --
--------- -----
Net increase (decrease) in net assets
resulting from operations ....................... 6,767 --
--------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 130,017 --
Participant transfers from other Travelers accounts 25,898 --
Administrative charges ............................ (3) --
Contract surrenders ............................... (447) --
Participant transfers to other Travelers accounts . -- --
Other payments to participants .................... -- --
--------- -----
Net increase (decrease) in net assets
resulting from unit transactions .............. 155,465 --
--------- -----
Net increase (decrease) in net assets ......... 162,232 --
NET ASSETS:
Beginning of period ............................. -- --
--------- -----
End of period ................................... $ 162,232 $ --
========= =====
</TABLE>
-12-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
SALOMON BROTHERS VARIABLE SALOMON BROTHERS VARIABLE HIGH
MID CAP VALUE PORTFOLIO VALUE PORTFOLIO CAPITAL FUND YIELD BOND FUND
- ------------------------ ----------------------- ----------------------- ------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- --------- ------- --------- ------ ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 3,976 $ -- $ 7,229 $ -- $ 1,239 $ -- $ 5,054 $ --
- --------- ------- --------- ------ ------- ------ --------- ------
446 -- 431 -- 54 -- 146 --
53 -- 52 -- 6 -- 18 --
- --------- ------- --------- ------ ------- ------ --------- ------
3,477 -- 6,746 -- 1,179 -- 4,890 --
- --------- ------- --------- ------ ------- ------ --------- ------
8,040 -- 458 -- 31 -- 85 --
7,890 -- 488 -- 29 -- 87 --
- --------- ------- --------- ------ ------- ------ --------- ------
150 -- (30) -- 2 -- (2) --
- --------- ------- --------- ------ ------- ------ --------- ------
-- -- -- -- -- -- -- --
21,070 -- (2,994) -- 3,059 -- (3,262) --
- --------- ------- --------- ------ ------- ------ --------- ------
21,070 -- (2,994) -- 3,059 -- (3,262) --
- --------- ------- --------- ------ ------- ------ --------- ------
24,697 -- 3,722 -- 4,240 -- 1,626 --
- --------- ------- --------- ------ ------- ------ --------- ------
188,210 -- 174,213 -- 56,418 -- 105,056 --
16,000 -- 49,900 -- -- -- 10,000 --
(4) -- (3) -- -- -- -- --
-- -- (462) -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- --------- ------- --------- ------ ------- ------ --------- ------
204,206 -- 223,648 -- 56,418 -- 115,056 --
- --------- ------- --------- ------ ------- ------ --------- ------
228,903 -- 227,370 -- 60,658 -- 116,682 --
-- -- -- -- -- -- -- --
- --------- ------- --------- ------ ------- ------ --------- ------
$ 228,903 $ -- $ 227,370 $ -- $60,658 $ -- $ 116,682 $ --
========= ======= ========= ====== ======= ====== ========= ======
</TABLE>
-13-
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Fund ABD Operations and Changes in Net Assets For the year ended
December 31, 1998 and the period April 28, 1997 (date operations commenced) to
December 31, 1997 (continued)
<TABLE>
<CAPTION>
SALOMON BROTHERS VARIABLE SALOMON BROTHERS VARIABLE
INVESTORS FUND STRATEGIC BOND FUND
------------------------- ------------------------
1998 1997 1998 1997
----------- ----- --------- -----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 7,367 $ -- $ 6,055 $ --
----------- ----- --------- -----
EXPENSES:
Insurance charges ................................. 3,462 -- 271 --
Administrative fees ............................... 416 -- 33 --
----------- ----- --------- -----
Net investment income (loss) .................. 3,489 -- 5,751 --
----------- ----- --------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 75,030 -- 171,798 --
Cost of investments sold ........................ 87,898 -- 170,901 --
----------- ----- --------- -----
Net realized gain (loss) ...................... (12,868) -- 897 --
----------- ----- --------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... -- -- --
Unrealized gain (loss) end of period ............ 138,436 -- (4,632) --
----------- ----- --------- -----
Net change in unrealized gain (loss) for the period 138,436 -- (4,632) --
----------- ----- --------- -----
Net increase (decrease) in net assets
resulting from operations ....................... 129,057 -- 2,016 --
----------- ----- --------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 1,673,011 -- 119,401 --
Participant transfers from other Travelers accounts 103,388 -- 11,000 --
Administrative charges ............................ (11) -- -- --
Contract surrenders ............................... (8,328) -- (580) --
Participant transfers to other Travelers accounts . (82,065) -- -- --
Other payments to participants .................... -- -- -- --
----------- ----- --------- -----
Net increase (decrease) in net assets
resulting from unit transactions .............. 1,685,995 -- 129,821 --
----------- ----- --------- -----
Net increase (decrease) in net assets ......... 1,815,052 -- 131,837 --
NET ASSETS:
Beginning of period ......................... -- -- -- --
----------- ----- --------- -----
End of period ............................... $ 1,815,052 $ -- $ 131,837 $ --
=========== ===== ========= =====
</TABLE>
<TABLE>
<CAPTION>
EQUITY INCOME PORTFOLIO
------------------------------
1998 1997
------------ ---------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 189,324 $ 36,350
------------ ---------
EXPENSES:
Insurance charges ................................. 101,865 2,837
Administrative fees ............................... 12,224 298
------------ ---------
Net investment income (loss) .................. 75,235 33,215
------------ ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 1,174,730 50,308
Cost of investments sold ........................ 1,147,457 45,269
------------ ---------
Net realized gain (loss) ....................... 27,273 5,039
------------ ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... 3,946 --
Unrealized gain (loss) end of period ............ 745,051 3,946
------------ ---------
Net change in unrealized gain (loss) for the period 741,105 3,946
------------ ---------
Net increase (decrease) in net assets
resulting from operations ..................... 843,613 42,200
------------ ---------
UNIT TRANSACTIONS:
Participant purchase payments ..................... 11,384,641 722,562
Participant transfers from other Travelers accounts 6,712,693 144,783
Administrative charges ............................ (1,377) (8)
Contract surrenders ............................... (247,106) (3,758)
Participant transfers to other Travelers accounts . (1,211,707) (49,484)
Other payments to participants .................... (82,788) --
------------ ---------
Net increase (decrease) in net assets
resulting from unit transactions .............. 16,554,356 814,095
------------ ---------
Net increase (decrease) in net assets ......... 17,397,969 856,295
NET ASSETS:
Beginning of period .............................. 856,295 --
------------ ---------
End of period ................................... $ 18,254,264 $ 856,295
============ =========
</TABLE>
-14-
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL STOCK
FEDERATED HIGH YIELD PORTFOLIO FEDERATED STOCK PORTFOLIO LARGE CAP PORTFOLIO PORTFOLIO
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 578,389 $ 38,000 $ 249,593 $ 29,138 $ 481,163 $ 10,830 $ 88,569 $ 7,546
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
54,917 2,421 39,290 1,299 49,963 1,303 46,301 4,280
6,590 288 4,714 155 5,996 156 5,556 320
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
516,882 35,291 205,589 27,684 425,204 9,371 36,712 2,946
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
442,369 2,962 403,861 37,541 380,542 13,262 530,647 29,137
434,110 2,762 394,214 34,726 342,005 12,688 525,232 28,239
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
8,259 200 9,647 2,815 38,537 574 5,415 898
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
(11,814) -- (11,388) -- 3,031 -- (14,030) --
(464,295) (11,814) 232,266 (11,388) 1,114,989 3,031 206,761 (14,030)
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
(452,481) (11,814) 243,654 (11,388) 1,111,958 3,031 220,791 (14,030)
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
72,660 23,677 458,890 19,111 1,575,699 12,976 262,918 (10,186)
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
5,708,155 672,841 4,167,217 422,565 6,747,239 544,424 4,875,656 762,470
3,337,476 34,082 2,212,004 36,084 2,599,195 55,094 2,502,476 180,078
(742) -- (563) (10) (608) (2) (677) (12)
(174,246) (6,345) (40,399) (537) (102,921) -- (46,266) (1,901)
(562,920) (16,851) (330,410) (24,272) (246,547) -- (560,204) --
(8,078) -- (49,914) -- (93,457) -- (17,974) --
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
8,299,645 683,727 5,957,935 433,830 8,902,901 599,516 6,753,011 940,635
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
8,372,305 707,404 6,416,825 452,941 10,478,600 612,492 7,015,929 930,449
707,404 -- 452,941 -- 612,492 -- 930,449 --
- ----------- --------- ----------- --------- ------------ --------- ----------- ---------
$ 9,079,709 $ 707,404 $ 6,869,766 $ 452,941 $ 11,091,092 $ 612,492 $ 7,946,378 $ 930,449
=========== ========= =========== ========= ============ ========= =========== =========
</TABLE>
-15-
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Fund ABD Operations and Changes in Net Assets For the year ended
December 31, 1998 and the period April 28, 1997 (date operations commenced) to
December 31, 1997 (continued)
<TABLE>
<CAPTION>
MFS EMERGING GROWTH PORTFOLIO MFS MID CAP GROWTH PORTFOLIO
------------------------------ ----------------------------
1998 1997 1998 1997
----------- --------- --------- -----
<S> <C> <C> <C> <C>
Investment Income:
Dividends ......................................... $ -- $ 10,056 $ -- $ --
----------- --------- --------- -----
EXPENSES:
Insurance charges ................................. 47,319 1,509 1,699 --
Administrative fees ............................... 5,679 156 204 --
----------- --------- --------- -----
Net investment income (loss) ................... (52,998) 8,391 (1,903) --
----------- --------- --------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 359,931 49,211 22,462 --
Cost of investments sold ........................ 321,062 42,869 24,426 --
----------- --------- --------- -----
Net realized gain (loss) ...................... 38,869 6,342 (1,964) --
----------- --------- --------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... (10,447) -- -- --
Unrealized gain (loss) end of period ............ 1,426,982 (10,447) 71,902 --
----------- --------- --------- -----
Net change in unrealized gain (loss) for the period 1,437,429 (10,447) 71,902 --
----------- --------- --------- -----
Net increase (decrease) in net assets
resulting from operations ....................... 1,423,300 4,286 68,035 --
----------- --------- --------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 5,481,474 592,343 503,792 --
Participant transfers from other Travelers accounts 2,311,557 47,324 157,431 --
Administrative charges ............................ (851) (3) (12) --
Contract surrenders ............................... (71,103) -- (21,403) --
Participant transfers to other Travelers accounts . (413,032) (10,534) (21,143) --
Other payments to participants .................... (15,292) -- -- --
----------- --------- --------- -----
Net increase (decrease) in net assets
resulting from unit transactions .............. 7,292,753 629,130 618,665 --
----------- --------- --------- -----
Net increase (decrease) in net assets ......... 8,716,053 633,416 686,700 --
NET ASSETS:
Beginning of period ............................. 633,416 -- -- --
----------- --------- --------- -----
End of period ................................... $ 9,349,469 $ 633,416 $ 686,700 $ --
=========== ========= ========= =====
</TABLE>
<TABLE>
<CAPTION>
MFS RESEARCH PORTFOLIO
----------------------
1998 1997
--------- -----
<S> <C> <C>
Investment Income:
Dividends ......................................... $ 247 $ --
--------- -----
EXPENSES:
Insurance charges ................................. 830 --
Administrative fees ............................... 100 --
--------- -----
Net investment income (loss) .................. (683) --
--------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 12,018 --
Cost of investments sold ........................ 11,934 --
--------- -----
Net realized gain (loss) ...................... 84 --
--------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... -- --
Unrealized gain (loss) end of period ............ 10,200 --
--------- -----
Net change in unrealized gain (loss) for the period 10,200 --
--------- -----
Net increase (decrease) in net assets
resulting from operations ....................... 9,601 --
--------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 156,213 --
Participant transfers from other Travelers accounts 3,581 --
Administrative charges ............................ (4) --
Contract surrenders ............................... (450) --
Participant transfers to other Travelers accounts . (1,998) --
Other payments to participants .................... (8,893) --
--------- -----
Net increase (decrease) in net assets
resulting from unit transactions .............. 148,449 --
--------- -----
Net increase (decrease) in net assets ......... 158,050 --
NET ASSETS:
Beginning of period ............................. -- --
--------- -----
End of period ................................... $ 158,050 $ --
========= =====
</TABLE>
-16-
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
DISCIPLINED MID CAP STOCK DISCIPLINED SMALL CAP STOCK
STRATEGIC STOCK PORTFOLIO CONVERTIBLE BOND PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------- -------------------------- ------------------------------ -------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------- ----- --------- ----- ----------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 158 $-- $ 10,898 $-- $ 14,576 $ 9,833 $ 1,257 $--
- -------- ----- --------- ----- ----------- --------- --------- -----
101 -- 1,547 -- 10,983 308 987 --
12 -- 185 -- 1,318 39 118 --
- -------- ----- --------- ----- ----------- --------- --------- -----
45 -- 9,166 -- 2,275 9,486 152 --
- -------- ----- --------- ----- ----------- --------- --------- -----
24,864 -- 30,214 -- 355,477 433 43,240 --
24,668 -- 31,249 -- 381,793 375 45,106 --
- -------- ----- --------- ----- ----------- --------- --------- -----
196 -- (1,035) -- (26,316) 58 (1,866) --
- -------- ----- --------- ----- ----------- --------- --------- -----
-- -- -- -- (5,510) -- -- --
548 -- 7,911 -- 245,193 (5,510) 40,047 --
- -------- ----- --------- ----- ----------- --------- --------- -----
548 -- 7,911 -- 250,703 (5,510) 40,047 --
- -------- ----- --------- ----- ----------- --------- --------- -----
789 -- 16,042 -- 226,662 4,034 38,333 --
- -------- ----- --------- ----- ----------- --------- --------- -----
14,599 -- 455,886 -- 1,222,945 123,893 354,042 --
3,126 -- 32,942 -- 592,551 16,702 108,712 --
-- -- (3) -- (194) (3) (1) --
(1,491) -- (27,581) -- (4,955) -- (21,359) --
(3,955) -- (7,978) -- (217,440) (204) (16,046) --
-- -- (10,656) -- -- -- -- --
- -------- ----- --------- ----- ----------- --------- --------- -----
12,279 -- 442,610 -- 1,592,907 140,388 425,348 --
- -------- ----- --------- ----- ----------- --------- --------- -----
13,068 -- 458,652 -- 1,819,569 144,422 463,681 --
-- -- -- -- 144,422 -- -- --
- -------- ----- --------- ----- ----------- --------- --------- -----
$ 13,068 $-- $ 458,652 $-- $ 1,963,991 $ 144,422 $ 463,681 $--
======== ===== ========= ===== =========== ========= ========= =====
</TABLE>
-17-
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Fund ABD Operations and Changes in Net Assets For the year ended
December 31, 1998 and the period April 28, 1997 (date operations commenced) to
December 31, 1997 (continued)
<TABLE>
<CAPTION>
TRAVELERS QUALITY BOND PORTFOLIO ALLIANCE GROWTH PORTFOLIO
-------------------------------- -------------------------------
1998 1997 1998 1997
------------ --------- ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 429,299 $ 16,972 $ 458,988 $ --
------------ --------- ------------ -----------
EXPENSES:
Insurance charges ................................. 49,354 636 108,060 2,865
Administrative fees ............................... 5,923 76 12,967 333
------------ --------- ------------ -----------
Net investment income (loss) ................... 374,022 16,260 337,961 (3,198)
------------ --------- ------------ -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 740,716 1,454 901,699 749,839
Cost of investments sold ........................ 730,028 1,389 845,364 745,650
------------ --------- ------------ -----------
Net realized gain (loss) ...................... 10,688 65 56,335 4,189
------------ --------- ------------ -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... (12,683) -- 59,746 --
Unrealized gain (loss) end of period ............ (136,847) (12,683) 2,809,812 59,746
------------ --------- ------------ -----------
Net change in unrealized gain (loss) for the period (124,164) (12,683) 2,750,066 59,746
------------ --------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations ....................... 260,546 3,642 3,144,362 60,737
------------ --------- ------------ -----------
UNIT TRANSACTIONS:
Participant purchase payments ..................... 8,342,411 355,224 12,736,407 1,238,242
Participant transfers from other Travelers accounts 2,816,178 42,653 6,202,214 133,061
Administrative charges ............................ (301) (3) (1,499) (1)
Contract surrenders ............................... (127,582) (996) (206,881) --
Participant transfers to other Travelers accounts . (1,130,644) -- (1,045,318) (30,145)
Other payments to participants .................... (8,281) -- (55,853) --
------------ --------- ------------ -----------
Net increase (decrease) in net assets
resulting from unit transactions .............. 9,891,781 396,878 17,629,070 1,341,157
------------ --------- ------------ -----------
Net increase (decrease) in net assets ......... 10,152,327 400,520 20,773,432 1,401,894
NET ASSETS:
Beginning of period ............................. 400,520 -- 1,401,894 --
------------ --------- ------------ -----------
End of period ................................... $ 10,552,847 $ 400,520 $ 22,175,326 $ 1,401,894
============ ========= ============ ===========
</TABLE>
<TABLE>
<CAPTION>
MFS TOTAL RETURN PORTFOLIO
------------------------------
1998 1997
------------ -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 399,627 $ --
------------ -----------
EXPENSES:
Insurance charges ................................. 120,812 2,403
Administrative fees ............................... 14,498 288
------------ -----------
Net investment income (loss) .................. 264,317 (2,691)
------------ -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 1,059,668 10,193
Cost of investments sold ........................ 1,029,100 9,308
------------ -----------
Net realized gain (loss) ...................... 30,568 885
------------ -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... 32,210 --
Unrealized gain (loss) end of period ............ 661,506 32,210
------------ -----------
Net change in unrealized gain (loss) for the period 629,296 32,210
---------- -----------
Net increase (decrease) in net assets
resulting from operations ....................... 924,181 30,404
------------ -----------
UNIT TRANSACTIONS:
Participant purchase payments ..................... 14,357,688 940,526
Participant transfers from other Travelers accounts 5,776,851 172,906
Administrative charges ............................ (1,788) (5)
Contract surrenders ............................... (278,557) (520)
Participant transfers to other Travelers accounts . (501,024) (4,473)
Other payments to participants .................... (72,693) --
------------ -----------
Net increase (decrease) in net assets
resulting from unit transactions .............. 19,280,477 1,108,434
------------ -----------
Net increase (decrease) in net assets ......... 20,204,658 1,138,838
NET ASSETS:
Beginning of period ............................. 1,138,838 --
------------ -----------
End of period ................................... $ 21,343,496 $ 1,138,838
============ ===========
</TABLE>
-18-
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
PUTNAM DIVERSIFIED INCOME
PORTFOLIO REAL ESTATE SECURITIES PORTFOLIO DOMESTIC INCOME PORTFOLIO EMERGING GROWTH PORTFOLIO
- --------------------------- -------------------------------- ------------------------- -------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ----------- -------- -------- ------- --------- ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 41,909 $ -- $ -- $ -- $ -- $ -- $ -- $ --
- ----------- -------- -------- ------- --------- ----- ----------- -------
12,658 186 69 -- 413 -- 94 --
1,519 23 8 -- 50 -- 11 --
- ----------- -------- -------- ------- --------- ----- ----------- -------
27,732 (209) (77) -- (463) -- (105) --
- ----------- -------- -------- ------- --------- ----- ----------- -------
325,585 117 148 -- 427 -- 211 --
341,765 113 144 -- 421 -- 216 --
- ----------- -------- -------- ------- --------- ----- ----------- -------
(16,180) 4 4 -- 6 -- (5) --
- ----------- -------- -------- ------- --------- ----- ----------- -------
1,420 -- -- -- -- -- -- --
(45,104) 1,420 1,982 -- 3,443 -- 3,606 --
- ----------- -------- -------- ------- --------- ----- ----------- -------
(46,524) 1,420 1,982 -- 3,443 -- 3,606 --
- ----------- -------- -------- ------- --------- ----- ----------- -------
(34,972) 1,215 1,909 -- 2,986 -- 3,496 --
- ----------- -------- -------- ------- --------- ----- ----------- -------
1,873,460 51,783 58,066 -- 49,500 -- 16,797 --
413,014 2,270 900 -- 66,000 -- 12,904 --
(151) -- -- -- -- -- (7) --
(58,831) -- (439) -- -- -- (464) --
(121,229) -- -- -- -- -- -- --
(49,944) -- -- -- -- -- -- --
- ----------- -------- -------- ------- --------- ----- ----------- -------
2,056,319 54,053 58,527 -- 115,500 -- 29,230 --
- ----------- -------- -------- ------- --------- ----- ----------- -------
2,021,347 55,268 60,436 -- 118,486 -- 32,726 --
55,268 -- -- -- -- -- -- --
- ----------- -------- -------- ------- --------- ----- ----------- -------
$ 2,076,615 $ 55,268 $ 60,436 $ -- $ 118,486 $ -- $ 32,726 $ --
=========== ======== ======== ======= ========= ===== =========== =======
</TABLE>
-19-
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Fund ABD Operations and Changes in Net Assets For the year ended
December 31, 1998 and the period April 28, 1997 (date operations commenced) to
December 31, 1997 (continued)
<TABLE>
<CAPTION>
ENTERPRISE PORTFOLIO GOVERNMENT PORTFOLIO
---------------------- ----------------------
1998 1997 1998 1997
--------- ----- --------- -----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ -- $ -- $ -- $ --
--------- ----- --------- -----
EXPENSES:
Insurance charges ................................. 419 -- 957 --
Administrative fees ............................... 50 -- 115 --
--------- ----- --------- -----
Net investment income (loss) .................... (469) -- (1,072) --
--------- ----- --------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 489 -- 961 --
Cost of investments sold ........................ 547 -- 964 --
--------- ----- --------- -----
Net realized gain (loss) ...................... (58) -- (3) --
--------- ----- --------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... -- -- -- --
Unrealized gain (loss) end of period ............ 25,690 -- 594 --
--------- ----- --------- -----
Net change in unrealized gain (loss) for the period 25,690 -- 594 --
--------- ----- --------- -----
Net increase (decrease) in net assets
resulting from operations ....................... 25,163 -- (481) --
--------- ----- --------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 227,803 -- 67,500 --
Participant transfers from other Travelers accounts 902 -- 298,822 --
Administrative charges ............................ (6) -- -- --
Contract surrenders ............................... (455) -- -- --
Participant transfers to other Travelers accounts . -- -- -- --
Other payments to participants .................... -- -- -- --
--------- ----- --------- -----
Net increase (decrease) in net assets
resulting from unit transactions .............. 228,244 -- 366,322 --
--------- ----- --------- -----
Net increase (decrease) in net assets ......... 253,407 -- 365,841 --
NET ASSETS:
Beginning of period ............................. -- -- -- --
--------- ----- --------- -----
End of period ................................... $ 253,407 $ -- $ 365,841 $ --
========= ===== ========= =====
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
---------------------------
1998 1997
--------- -----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ -- $ --
--------- -----
EXPENSES:
Insurance charges ................................. 635 --
Administrative fees ............................... 76 --
--------- -----
Net investment income (loss) .................. (711) --
--------- -----
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................. 15,904 --
Cost of investments sold ........................ 15,411 --
--------- -----
Net realized gain (loss) ...................... 493 --
--------- -----
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ...... -- --
Unrealized gain (loss) end of period ............ 18,306 --
--------- -----
Net change in unrealized gain (loss) for the period 18,306 --
--------- -----
Net increase (decrease) in net assets
resulting from operations ........................ 18,088 --
--------- -----
UNIT TRANSACTIONS:
Participant purchase payments ..................... 216,321 --
Participant transfers from other Travelers accounts 67,000 --
Administrative charges ............................ (1) --
Contract surrenders ............................... -- --
Participant transfers to other Travelers accounts . -- --
Other payments to participants .................... -- --
--------- -----
Net increase (decrease) in net assets
resulting from unit transactions .............. 283,320 --
--------- -----
Net increase (decrease) in net assets ......... 301,408 --
NET ASSETS:
Beginning of period ............................. -- --
--------- -----
End of period ................................... $ 301,408 $ --
========= =====
</TABLE>
-20-
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
VAN KAMPEN MONEY MARKET PORTFOLIO EMERGING MARKETS PORTFOLIO COMBINED
- ---------------------------------- -------------------------------- ---------------------------------
1998 1997 1998 1997 1998 1997
- ----------- --------------- --------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
$ 10,945 $ -- $ 1,087 $ -- $ 3,703,277 $ 252,426
- ----------- --------------- --------- --------------- ------------- ------------
2,786 -- 495 -- 886,762 27,812
335 -- 60 -- 106,413 3,062
- ----------- --------------- --------- --------------- ------------- ------------
7,824 -- 532 -- 2,710,102 221,552
- ----------- --------------- --------- --------------- ------------- ------------
598,308 -- 77,279 -- 16,924,277 1,370,896
598,308 -- 90,838 -- 16,720,569 1,344,561
- ----------- --------------- --------- --------------- ------------- ------------
-- -- (13,559) -- 203,708 26,335
- ----------- --------------- --------- --------------- ------------- ------------
-- -- -- -- (23,471) --
-- -- 10,892 -- 12,441,713 (23,471)
- ----------- --------------- --------- --------------- ------------- ------------
-- -- 10,892 -- 12,465,184 (23,471)
- ----------- --------------- --------- --------------- ------------- ------------
7,824 -- (2,135) -- 15,378,994 224,416
- ----------- --------------- --------- --------------- ------------- ------------
1,239,392 -- 219,973 -- 121,461,712 9,113,419
-- -- 23,179 -- 49,991,050 1,366,418
(2) -- (2) -- (11,401) (57)
(10,470) -- (4,185) -- (2,370,182) (17,700)
(584,323) -- (72,704) -- (17,368,160) (556,408)
-- -- -- -- (691,370) --
- ----------- --------------- --------- --------------- ------------- ------------
644,597 -- 166,261 -- 151,011,649 9,905,672
- ----------- --------------- --------- --------------- ------------- ------------
652,421 -- 164,126 -- 166,390,643 10,130,088
-- -- -- -- 10,130,088 --
- ----------- --------------- --------- --------------- ------------- ------------
$ 652,421 $ -- $ 164,126 $ -- $ 176,520,731 $ 10,130,088
=========== =============== ========= =============== ============= ============
</TABLE>
-21-
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS - continued
7. Schedule of Accumulation Units for Fund ABD For the year ended December 31,
1998 and the period April 28, 1997 (date operations commenced) to December 31,
1997
<TABLE>
<CAPTION>
DREYFUS CAPITAL APPRECIATION
CAPITAL APPRECIATION FUND REIT SERIES PORTFOLIO
---------------------------- -------------------- ----------------------------
1998 1997 1998 1997 1998 1997
------------ --------- --------- ---- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. 870,525 -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 10,229,210 892,145 129,268 -- 3,105,269 --
Accumulation units redeemed and
transferred to other Travelers accounts (538,421) (21,620) (32,285) -- (168,024) --
----------- -------- -------- ---- ---------- ----
Accumulation units end of period ........ 10,561,314 870,525 96,983 -- 2,937,245 --
=========== ======== ======== ==== ========== ====
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED STRATEGIC INCOME
SMALL CAP PORTFOLIO APPRECIATION PORTFOLIO PORTFOLIO
---------------------- -------------------------- ------------------------------
1998 1997 1998 1997 1998 1997
---------- ---- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- 506,282 -- 733,829 --
Accumulation units purchased and
transferred from other Travelers accounts 1,501,350 -- 3,619,819 510,557 6,855,041 735,943
Accumulation units redeemed and
transferred to other Travelers accounts (65,545) -- (415,786) (4,275) (512,543) (2,114)
---------- ---- ---------- -------- ---------- --------
Accumulation units end of period ........ 1,435,805 -- 3,710,315 506,282 7,076,327 733,829
========== ==== ========== ======== ========== ========
</TABLE>
<TABLE>
<CAPTION>
EMERGING MARKETS EQUITY
TOTAL RETURN PORTFOLIO MONEY MARKET PORTFOLIO PORTFOLIO
---------------------- --------------------------- ------------------------
1998 1997 1998 1997 1998 1997
-------- ---- ----------- -------- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- 345,682 -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 716,696 -- 17,589,374 727,250 27,410 --
Accumulation units redeemed and
transferred to other Travelers accounts (8,442) -- (8,690,129) (381,568) -- --
-------- ---- ----------- -------- ------ ----
Accumulation units end of period ........ 708,254 -- 9,244,927 345,682 27,410 --
======== ==== =========== ======== ====== ====
</TABLE>
<TABLE>
<CAPTION>
GLOBAL EQUITY PORTFOLIO MID CAP VALUE PORTFOLIO VALUE PORTFOLIO
----------------------- ----------------------- --------------------
1998 1997 1998 1997 1998 1997
-------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 164,227 -- 219,623 -- 258,871 --
Accumulation units redeemed and
transferred to other Travelers accounts (478) -- (5) -- (526) --
-------- ---- -------- ---- -------- ----
Accumulation units end of period ........ 163,749 -- 219,618 -- 258,345 --
======== ==== ======== ==== ======== ====
</TABLE>
-22-
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS - continued
7. Schedule of Accumulation Units for Fund ABD For the year ended December 31,
1998 and the period April 28, 1997 (date operations commenced) to December 31,
1997 (continued)
<TABLE>
<CAPTION>
SALOMON BROTHERS VARIABLE SALOMON BROTHERS VARIABLE SALOMON BROTHERS VARIABLE
CAPITAL FUND HIGH YIELD BOND FUND INVESTORS FUND
-------------------------- ------------------------- --------------------------
1998 1997 1998 1997 1998 1997
------ ---- ------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 55,964 -- 117,685 -- 1,869,636 --
Accumulation units redeemed and
transferred to other Travelers accounts -- -- -- -- (104,992) --
------ ---- ------- ------ ---------- ------
Accumulation units end of period ........ 55,964 -- 117,685 -- 1,764,644 --
====== ==== ======= ====== ========== ======
</TABLE>
<TABLE>
<CAPTION>
SALOMON BROTHERS VARIABLE
STRATEGIC BOND FUND EQUITY INCOME PORTFOLIO FEDERATED HIGH YIELD PORTFOLIO
------------------------- --------------------------- ------------------------------
1998 1997 1998 1997 1998 1997
-------- ---- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- 639,656 -- 620,667 --
Accumulation units purchased and
transferred from other Travelers accounts 127,694 -- 12,793,027 680,203 7,735,861 641,291
Accumulation units redeemed and
transferred to other Travelers accounts (567) -- (1,130,864) (40,547) (641,218) (20,624)
-------- ---- ----------- -------- ---------- --------
Accumulation units end of period ........ 127,127 -- 12,301,819 639,656 7,715,310 620,667
======== ==== =========== ======== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FEDERATED STOCK PORTFOLIO LARGE CAP PORTFOLIO
-------------------------- --------------------------
1998 1997 1998 1997
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Accumulation units beginning of period .. 352,550 -- 491,869 --
Accumulation units purchased and
transferred from other Travelers accounts 4,564,143 372,640 6,484,501 491,871
Accumulation units redeemed and
transferred to other Travelers accounts (317,106) (20,090) (313,820) (2)
---------- -------- ---------- --------
Accumulation units end of period ........ 4,599,587 352,550 6,662,550 491,869
========== ======== ========== ========
</TABLE>
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL STOCK
PORTFOLIO
-----------------------------
1998 1997
---------- --------
<S> <C> <C>
Accumulation units beginning of period .. 849,629 --
Accumulation units purchased and
transferred from other Travelers accounts 6,246,023 851,367
Accumulation units redeemed and
transferred to other Travelers accounts (561,892) (1,738)
---------- --------
Accumulation units end of period ........ 6,533,760 849,629
========== ========
</TABLE>
<TABLE>
<CAPTION>
MFS EMERGING GROWTH
PORTFOLIO MFS MID CAP GROWTH PORTFOLIO MFS RESEARCH PORTFOLIO
-------------------------- ---------------------------- -----------------------
1998 1997 1998 1997 1998 1997
---------- -------- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. 528,553 -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 5,719,953 537,885 742,982 -- 161,382 --
Accumulation units redeemed and
transferred to other Travelers accounts (356,695) (9,332) (46,136) -- (11,401) --
---------- -------- -------- ---- -------- ----
Accumulation units end of period ........ 5,891,811 528,553 696,846 -- 149,981 --
========== ======== ======== ==== ======== ====
</TABLE>
-23-
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS - continued
7. Schedule of Accumulation Units for Fund ABD For the year ended December 31,
1998 and the period April 28, 1997 (date operations commenced) to December 31,
1997 (continued)
<TABLE>
<CAPTION>
DISCIPLINED MID CAP STOCK
STRATEGIC STOCK PORTFOLIO CONVERTIBLE BOND PORTFOLIO PORTFOLIO
------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
------- ---- -------- ---- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- -- -- 120,880 --
Accumulation units purchased and
transferred from other Travelers accounts 19,604 -- 506,502 -- 1,485,652 121,060
Accumulation units redeemed and
transferred to other Travelers accounts (5,821) -- (47,803) -- (180,762) (180)
------- ---- -------- ---- ---------- --------
Accumulation units end of period ........ 13,783 -- 458,699 -- 1,425,770 120,880
======= ==== ======== ==== ========== ========
</TABLE>
<TABLE>
<CAPTION>
DISCIPLINED SMALL CAP STOCK
PORTFOLIO TRAVELERS QUALITY BOND PORTFOLIO
--------------------------- --------------------------------
1998 1997 1998 1997
-------- ---- ----------- --------
<S> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- 378,758 --
Accumulation units purchased and
transferred from other Travelers accounts 563,196 -- 10,101,017 379,710
Accumulation units redeemed and
transferred to other Travelers accounts (44,338) -- (1,151,169) (952)
-------- ---- ----------- --------
Accumulation units end of period ........ 518,858 -- 9,328,606 378,758
======== ==== =========== ========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE GROWTH PORTFOLIO
----------------------------
1998 1997
----------- ----------
<S> <C> <C>
Accumulation units beginning of period .. 1,062,634 --
Accumulation units purchased and
transferred from other Travelers accounts 13,093,237 1,086,570
Accumulation units redeemed and
transferred to other Travelers accounts (944,665) (23,936)
----------- ----------
Accumulation units end of period ........ 13,211,206 1,062,634
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
PUTNAM DIVERSIFIED INCOME REAL ESTATE SECURITIES
MFS TOTAL RETURN PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------- ------------------------- ----------------------
1998 1997 1998 1997 1998 1997
----------- -------- ---------- ------ ------- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. 962,287 -- 51,659 -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 16,107,857 966,589 2,118,951 51,659 67,010 --
Accumulation units redeemed and
transferred to other Travelers accounts (689,960) (4,302) (215,213) -- (499) --
----------- -------- ---------- ------ ------- ----
Accumulation units end of period ........ 16,380,184 962,287 1,955,397 51,659 66,511 --
=========== ======== ========== ====== ======= ====
</TABLE>
<TABLE>
<CAPTION>
DOMESTIC INCOME PORTFOLIO EMERGING GROWTH PORTFOLIO ENTERPRISE PORTFOLIO
------------------------- ------------------------- ---------------------
1998 1997 1998 1997 1998 1997
------- ---- ------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 116,317 -- 27,664 -- 234,459 --
Accumulation units redeemed and
transferred to other Travelers accounts -- -- (475) -- (487) --
------- ---- ------- ---- -------- ----
Accumulation units end of period ........ 116,317 -- 27,189 -- 233,972 --
======= ==== ======= ==== ======== ====
</TABLE>
-24-
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS - continued
7. Schedule of Accumulation Units for Fund ABD For the year ended December 31,
1998 and the period April 28, 1997 (date operations commenced) to December 31,
1997 (continued)
<TABLE>
<CAPTION>
VAN KAMPEN MONEY MARKET
GOVERNMENT PORTFOLIO GROWTH AND INCOME PORTFOLIO PORTFOLIO
-------------------- --------------------------- -----------------------
1998 1997 1998 1997 1998 1997
------- ---- -------- ---- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts 347,758 -- 292,762 -- 1,224,036 --
Accumulation units redeemed and
transferred to other Travelers accounts -- -- (1) -- (586,162) --
------- ---- -------- ---- ---------- ----
Accumulation units end of period ........ 347,758 -- 292,761 -- 637,874 --
======= ==== ======== ==== ========== ====
</TABLE>
<TABLE>
<CAPTION>
EMERGING MARKETS PORTFOLIO COMBINED
-------------------------- ------------------------------
1998 1997 1998 1997
-------- ---- ------------ ----------
<S> <C> <C> <C> <C>
Accumulation units beginning of period .. -- -- 8,515,460 --
Accumulation units purchased and
transferred from other Travelers accounts 346,824 -- 137,687,855 9,046,740
Accumulation units redeemed and
transferred to other Travelers accounts (123,136) -- (17,907,366) (531,280)
-------- ---- ------------ ----------
Accumulation units end of period ........ 223,688 -- 128,295,949 8,515,460
======== ==== ============ ==========
</TABLE>
-25-
<PAGE> 27
Independent Auditors' Report
To the Owners of Variable Annuity Contracts of The Travelers Fund ABD for
Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Fund ABD for Variable Annuities as of December 31, 1998, and the
related statement of operations for the year then ended and the statements of
changes in net assets for the year ended December 31, 1998 and the period April
28, 1997 (date operations commenced) to December 31, 1997. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of shares owned as of December 31, 1998, by correspondence with the
underlying funds. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Travelers Fund ABD for
Variable Annuities as of December 31, 1998, the results of its operations for
the year then ended and the changes in its net assets for the year ended
December 31, 1998 and the period April 28, 1997 (date operations commenced) to
December 31, 1997, in conformity with generally accepted accounting principles.
KPMG LLP
Hartford, Connecticut
February 17, 1999
-26-
<PAGE> 28
Independent Auditors
KPMG LLP
Hartford, Connecticut
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Fund ABD for Variable Annuities or Fund
ABD's underlying funds. It should not be used in connection with any offer
except in conjunction with the Prospectus for The Travelers Fund ABD for
Variable Annuities product(s) offered by The Travelers Insurance Company and the
Prospectuses of the underlying funds, which collectively contain all
pertinent information, including the applicable sales commissions.
FNDABD (Annual) (12-98) Printed in U.S.A.
