<PAGE> 1
ANNUAL REPORT
DECEMBER 31, 1997
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
[TRAVELERS LIFE & ANNUITY LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
Managed Assets Trust, 42,275 shares (cost $722,031) ............................ $ 746,155
High Yield Bond Trust, 5,088 shares (cost $47,864) ............................ 50,321
Capital Appreciation Fund, 54,225 shares (cost $2,300,829) ..................... 2,511,718
The Travelers Series Trust, 34,491 shares (cost $516,179) ..................... 534,230
Templeton Variable Products Series Fund, 151,211 shares (cost $3,424,313) ...... 3,431,542
Fidelity's Variable Insurance Products Fund, 251,869 shares (cost $6,374,944) .. 7,111,622
Fidelity's Variable Insurance Products Fund II, 81,780 shares (cost $1,349,428) 1,472,855
Dreyfus Stock Index Fund, 98,205 shares (cost $2,324,406) ..................... 2,528,775
American Odyssey Funds, Inc., 835,675 shares (cost $11,341,190) ................ 12,135,803
Travelers Series Fund Inc., 356,375 shares (cost $2,570,737) .................. 2,822,429
-----------
Total Investments (cost $30,971,921) ...................................... $33,345,450
Receivables:
Dividends ...................................................................... 316,461
Purchase payments and transfers from other Travelers accounts .................. 902,944
Other assets ..................................................................... 457
-----------
Total Assets ............................................................... 34,565,312
-----------
LIABILITIES:
Payable for contract surrenders and transfers to other Travelers accounts ........ 11,518
Accrued liabilities .............................................................. 1,874
-----------
Total Liabilities .......................................................... 13,392
-----------
NET ASSETS: ......................................................................... $34,551,920
===========
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 3
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................... $ 683,688
EXPENSES:
Insurance charges and Administrative fees ...................... 192,744
-----------
Net investment income ...................................... 490,944
-----------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain from investment transactions:
Proceeds from investments sold ............................... $ 3,812,320
Cost of investments sold ..................................... 3,681,061
-----------
Net realized gain .......................................... 131,259
Change in unrealized gain (loss) on investments:
Unrealized loss at December 31, 1996 ........................ (97,311)
Unrealized gain at December 31, 1997 ........................ 2,373,529
-----------
Net change in unrealized gain (loss) for the year .......... 2,470,840
-----------
Net realized gain and change in unrealized gain (loss) .. 2,602,099
-----------
Net increase in net assets resulting from operations ........... $ 3,093,043
===========
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 4
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
THE PERIOD OCTOBER 8, 1996 (DATE OPERATIONS COMMENCED)
TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income .......................................... $ 490,944 $ 131,026
Net realized gain from investment transactions ................. 131,259 3,360
Net change in unrealized gain (loss) on investments ............ 2,470,840 (97,311)
------------ ------------
Net increase in net assets resulting from operations ......... 3,093,043 37,075
------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 11,435,719 and 1,381,714 units, respectively).. 13,165,340 1,397,560
Participant transfers from other Travelers accounts
(applicable to 16,386,065 and 3,880,959 units, respectively).. 18,180,870 3,970,427
Administrative and asset allocation charges
(applicable to 121,657 and 8,470 units, respectively) ....... (139,741) (8,730)
Contract surrenders
(applicable to 745,692 and 3,041 units, respectively) ....... (867,895) (3,085)
Participant transfers to other Travelers accounts
(applicable to 3,519,090 and 433,608 units, respectively) ... (3,811,813) (438,976)
Other payments to participants
(applicable to 19,258 units).................................. (22,155) --
------------ ------------
Net increase in net assets resulting from unit transactions. 26,504,606 4,917,196
------------ ------------
Net increase in net assets ............................... 29,597,649 4,954,271
NET ASSETS:
Beginning of period ............................................ 4,954,271 --
------------ ------------
End of period .................................................. $ 34,551,920 $ 4,954,271
============ ============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Separate Account QP for Variable Annuities ("Separate
Account QP") is a separate account of The Travelers Insurance Company
("The Travelers"), an indirect wholly owned subsidiary of Travelers
Group Inc., and is available for funding certain variable annuity
contracts issued by The Travelers. Separate Account QP is registered
under the Investment Company Act of 1940, as amended, as a unit
investment trust.
Participant purchase payments applied to Separate Account QP are
invested in one or more eligible funds in accordance with the selection
made by the contract owner. As of December 31, 1997, the eligible funds
available under Separate Account QP are: Managed Assets Trust; High
Yield Bond Trust; Capital Appreciation Fund; U.S. Government Securities
Portfolio, Utilities Portfolio, Social Awareness Stock Portfolio,
Travelers Quality Bond Portfolio, Lazard International Stock Portfolio,
Federated Stock Portfolio, Federated High Yield Portfolio, Large Cap
Portfolio and Equity Income Portfolio of The Travelers Series Trust;
American Odyssey Core Equity Fund, American Odyssey Emerging
Opportunities Fund, American Odyssey International Equity Fund,
American Odyssey Long-Term Bond Fund, American Odyssey
Intermediate-Term Bond Fund and American Odyssey Short-Term Bond Fund
of American Odyssey Funds, Inc.; Alliance Growth Portfolio, Smith
Barney Income and Growth Portfolio, Smith Barney High Income Portfolio,
MFS Total Return Portfolio, Smith Barney International Equity
Portfolio, Smith Barney Money Market Portfolio and Putnam Diversified
Income Portfolio of Travelers Series Fund Inc. (all of which are
managed by affiliates of The Travelers); Templeton Bond Fund (Class 1
shares), Templeton Stock Fund (Class 1 shares) and Templeton Asset
Allocation Fund (Class 1 shares) of Templeton Variable Products Series
Fund; High Income Portfolio, Growth Portfolio and Equity-Income
Portfolio of Fidelity's Variable Insurance Products Fund; Asset Manager
Portfolio of Fidelity's Variable Insurance Products Fund II; and
Dreyfus Stock Index Fund. All of the funds are Massachusetts business
trusts, except for American Odyssey Funds, Inc., Dreyfus Stock Index
Fund and Travelers Series Fund Inc. which are incorporated under
Maryland law. 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 Separate Account QP 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 Separate Account QP 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
Separate Account QP. Separate Account QP 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.
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
were $29,747,842 and $3,812,320 respectively, for the year ended
December 31, 1997. Realized gains and losses from investment
transactions are reported on an identified cost basis. The cost of
investments in eligible funds was $30,971,921 at December 31, 1997.
Gross unrealized appreciation for all investments at December 31, 1997
was $2,408,291. Gross unrealized depreciation for all investments at
December 31, 1997 was $34,762.
-4-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS - CONTINUED
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed
by The Travelers. These charges, which are negotiated on an individual
contract basis, are equivalent to 0.60%, 0.80%, 0.90%, 0.95%, 1.15% and
1.20% of the average net assets of Separate Account QP on an annual
basis. Contract owners' equity associated with each insurance charge is
identified as Price 1, Price 2, Price 3, Price 4, Price 5 and Price 6,
respectively, in Note 4. Additionally, for certain allocated contracts
in the accumulation phase, a semi-annual charge of $15 (prorated for
partial periods) is deducted from participant account balances and paid
to The Travelers to cover administrative charges.
Administrative fees are paid for administrative expenses incurred by
The Travelers. This charge is equivalent to 0.10% of the average net
assets of certain allocated contracts in Separate Account QP on an
annual basis.
No sales charge is deducted from participant purchase payments when
they are received. However, as negotiated, The Travelers may assess a
contingent deferred sales charge (up to 5% if a participant's purchase
payment is surrendered within five years of its payment date) or, as an
alternative, a surrender charge (up to 5% if a participant's purchase
payment is surrendered within eight years of its payment date.)
Contract surrender payments include $4,602 of contingent deferred sales
charges and surrender charges for the year ended December 31, 1997. No
contingent deferred sales charges or surrender charges were assessed
relating to contract activity for the period October 8, 1996 (date
operations commenced) to December 31, 1996.
Participants in American Odyssey Funds, Inc. (the "Funds"), may elect
to enter into a separate asset allocation advisory agreement with
Copeland Financial Services, Inc. ("Copeland"), an affiliate of The
Travelers. Under this arrangement, Copeland provides asset allocation
advice and charges participants an annual fee, plus a one-time set-up
fee of $30. The annual fee, which decreases as a participant's assets
in the Funds increase, is equivalent to an amount of up to 1.50% of the
participant's assets in the Funds. These fees totaled $71,285 for the
year ended December 31, 1997. No fees were paid for the period October
8, 1996 (date operations commenced) to December 31, 1996.
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ ----------- -----------
<S> <C> <C> <C>
MANAGED ASSETS TRUST
Price 1 ................................. 5,565 $ 1.258 $ 7,002
Price 3 ................................. 74,574 1.254 93,484
Price 4 ................................. 287,178 1.253 359,778
Price 5 ................................. 12,488 1.250 15,606
Price 6 ................................. 223,823 1.247 279,202
HIGH YIELD BOND TRUST
Price 1 ................................. 197 1.196 236
Price 3 ................................. 7,092 1.191 8,450
Price 4 ................................. 28,158 1.191 33,527
Price 5 ................................. 3,683 1.188 4,374
Price 6 ................................. 3,815 1.186 4,523
CAPITAL APPRECIATION FUND
Price 1 ................................. 68,643 1.290 88,563
Price 3 ................................. 126,822 1.285 163,024
Price 4 ................................. 1,445,911 1.285 1,857,500
Price 5 ................................. 58,734 1.282 75,268
Price 6 ................................. 350,624 1.279 448,498
</TABLE>
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ ----------- -----------
<S> <C> <C> <C>
THE TRAVELERS SERIES TRUST
U.S. Government Securities Portfolio
Price 3 ................................. 3,011 $ 1.145 $ 3,446
Price 4 ................................. 81,229 1.144 92,930
Price 5 ................................. 2,710 1.141 3,092
Price 6 ................................. 14,373 1.139 16,373
Utilities Portfolio
Price 1 ................................. 1,494 1.289 1,925
Price 3 ................................. 1,816 1.284 2,331
Price 4 ................................. 23,673 1.283 30,375
Price 5 ................................. 538 1.280 689
Price 6 ................................. 462 1.278 590
Social Awareness Stock Portfolio
Price 1 ................................. 1,465 1.311 1,921
Price 3 ................................. 6,831 1.307 8,926
Price 4 ................................. 124,610 1.306 162,721
Price 5 ................................. 4,603 1.303 5,995
Price 6 ................................. 58,974 1.300 76,681
Travelers Quality Bond Portfolio
Price 4 ................................. 5,949 1.020 6,070
Price 5 ................................. 9,879 1.020 10,074
Price 6 ................................. 9,055 1.019 9,229
Lazard International Stock Portfolio
Price 3 ................................. 3,686 0.979 3,610
Price 5 ................................. 896 0.978 877
Price 6 ................................. 513 0.978 501
Federated Stock Portfolio
Price 3 ................................. 21,106 1.083 22,856
Price 5 ................................. 1,133 1.082 1,225
Price 6 ................................. 205 1.081 221
Federated High Yield Portfolio
Price 3 ................................. 3,118 1.011 3,151
Price 5 ................................. 123 1.010 124
Large Cap Portfolio
Price 3 ................................. 15,144 1.028 15,564
Price 5 ................................. 3,857 1.027 3,959
Equity Income Portfolio
Price 3 ................................. 66,733 1.062 70,859
Price 5 ................................. 3,543 1.061 3,758
Price 6 ................................. 2,047 1.060 2,169
</TABLE>
-6-
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ ----------- -----------
<S> <C> <C> <C>
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton Bond Fund
Price 4 ................................. 26,610 $ 1.051 $ 27,969
Price 5 ................................. 397 1.048 417
Price 6 ................................. 6,032 1.047 6,313
Templeton Stock Fund
Price 1 ................................. 44,138 1.202 53,063
Price 4 ................................. 1,718,317 1.197 2,056,913
Price 5 ................................. 129,091 1.194 154,148
Price 6 ................................. 218,117 1.192 259,972
Templeton Asset Allocation Fund
Price 1 ................................. 7,711 1.226 9,458
Price 4 ................................. 463,517 1.221 566,042
Price 5 ................................. 23,178 1.218 28,235
Price 6 ................................. 358,096 1.216 435,424
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND
High Income Portfolio
Price 1 ................................. 921 1.186 1,092
Price 4 ................................. 320,529 1.181 378,513
Price 5 ................................. 75,810 1.178 89,305
Price 6 ................................. 40,547 1.176 47,677
Growth Portfolio
Price 1 ................................. 18,843 1.220 22,984
Price 4 ................................. 2,899,381 1.215 3,521,482
Price 5 ................................. 226,450 1.212 274,361
Price 6 ................................. 318,582 1.209 385,272
Equity-Income Portfolio
Price 1 ................................. 11,243 1.329 14,948
Price 4 ................................. 1,680,061 1.324 2,224,031
Price 5 ................................. 68,894 1.321 90,976
Price 6 ................................. 313,762 1.318 413,567
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio
Price 1 ................................. 873 1.258 1,098
Price 4 ................................. 924,065 1.253 1,157,405
Price 5 ................................. 46,494 1.249 58,090
Price 6 ................................. 244,401 1.247 304,783
DREYFUS STOCK INDEX FUND
Price 1 ................................. 13,090 1.424 18,643
Price 4 ................................. 1,416,791 1.418 2,009,054
Price 5 ................................. 87,374 1.415 123,591
Price 6 ................................. 343,089 1.412 484,390
</TABLE>
-7-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY (continued)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ ----------- -----------
<S> <C> <C> <C>
AMERICAN ODYSSEY FUNDS, INC
American Odyssey Core Equity Fund
Price 1 ................................. 1,292 $ 1.417 $ 1,831
Price 3 ................................. 185,044 1.412 261,299
Price 4 ................................. 2,781,580 1.411 3,925,450
Price 5 ................................. 95,491 1.408 134,430
Price 6 ................................. 42,002 1.405 59,019
American Odyssey Emerging Opportunities Fund
Price 1 ................................. 5,090 0.942 4,797
Price 3 ................................. 129,811 0.939 121,891
Price 4 ................................. 2,458,031 0.938 2,306,616
Price 5 ................................. 24,064 0.936 22,526
Price 6 ................................. 33,718 0.934 31,506
American Odyssey International Equity Fund
Price 1 ................................. 3,405 1.141 3,883
Price 3 ................................. 145,853 1.136 165,737
Price 4 ................................. 1,647,285 1.136 1,870,712
Price 5 ................................. 25,147 1.133 28,488
Price 6 ................................. 16,165 1.131 18,279
American Odyssey Long-Term Bond Fund
Price 3 ................................. 115,168 1.135 130,773
Price 4 ................................. 1,504,310 1.135 1,707,066
Price 5 ................................. 24,590 1.132 27,836
Price 6 ................................. 22,291 1.130 25,186
American Odyssey Intermediate-Term Bond Fund
Price 3 ................................. 58,486 1.083 63,353
Price 4 ................................. 940,500 1.083 1,018,116
Price 5 ................................. 12,156 1.080 13,126
Price 6 ................................. 10,975 1.078 11,829
American Odyssey Short-Term Bond Fund
Price 3 ................................. 29,906 1.062 31,768
Price 4 ................................. 472,674 1.062 501,806
Price 5 ................................. 4,094 1.059 4,336
Price 6 ................................. 5,622 1.057 5,943
</TABLE>
-8-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY (continued)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ ----------- -----------
<S> <C> <C> <C>
TRAVELERS SERIES FUND INC
Alliance Growth Portfolio
Price 1 ................................ 10,959 $ 1.367 $ 14,979
Price 3 ................................. 27,182 1.362 37,016
Price 4 ................................. 315,371 1.361 429,206
Price 5 ................................. 25,227 1.358 34,248
Price 6 ................................. 46,772 1.355 63,382
Smith Barney Income and Growth Portfolio
Price 1 ................................ 7,515 1.334 10,022
Price 3 ................................. 75,718 1.329 100,600
Price 4 ................................. 1,048,182 1.328 1,391,781
Price 5 ................................. 9,074 1.324 12,019
Price 6 ................................. 51,250 1.322 67,752
Smith Barney High Income Portfolio
Price 3 ................................. 3,775 1.176 4,441
Price 4 ................................. 34,790 1.176 40,901
Price 5 ................................. 2,552 1.173 2,993
Price 6 ................................. 6,261 1.171 7,330
MFS Total Return Portfolio
Price 1 ................................ 9,157 1.260 11,539
Price 3 ................................. 11,241 1.256 14,114
Price 4 ................................. 20,522 1.255 25,751
Price 5 ................................. 23,942 1.252 29,968
Price 6 ................................. 89,438 1.249 111,742
Smith Barney International Equity Portfolio
Price 1 ................................ 6,580 1.040 6,841
Price 3 ................................. 17,229 1.036 17,847
Price 4 ................................. 97,802 1.035 101,248
Price 5 ................................. 4,658 1.033 4,810
Price 6 ................................. 5,601 1.031 5,773
Smith Barney Money Market Portfolio
Price 3 ................................. 19,062 1.052 20,049
Price 4 ................................. 124,936 1.051 131,321
Price 5 ................................. 24,063 1.048 25,229
Price 6 ................................. 39,703 1.047 41,550
Putnam Diversified Income Portfolio
Price 1 ................................ 6,058 1.092 6,617
Price 3 ................................. 1,776 1.088 1,933
Price 4 ................................. 36,214 1.088 39,384
Price 5 ................................. 2,136 1.085 2,317
Price 6 ................................. 17,658 1.083 19,122
-----------
Net Contract Owners' Equity .................. $34,551,920
===========
</TABLE>
-9-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - continued
5. STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
INVESTMENT OPTIONS No. of Market
Shares Value
----------- -----------
<S> <C> <C>
MANAGED ASSETS TRUST (2.2%)
Total (Cost $722,031) 42,275 $ 746,155
----------- -----------
HIGH YIELD BOND TRUST (0.2%)
Total (Cost $47,864) 5,088 50,321
----------- -----------
CAPITAL APPRECIATION FUND (7.5%)
Total (Cost $2,300,829) 54,225 2,511,718
----------- -----------
THE TRAVELERS SERIES TRUST (1.6%)
U.S. Government Securities Portfolio (Cost $115,330) 9,921 115,584
Utilities Portfolio (Cost $29,988) 2,346 35,875
Social Awareness Stock Portfolio (Cost $241,141) 12,723 255,226
Travelers Quality Bond Portfolio (Cost $6,816) 638 6,608
Lazard International Stock Portfolio (Cost $5,000) 428 4,949
Federated Stock Portfolio (Cost $22,560) 1,570 21,719
Federated High Yield Portfolio (Cost $3,013) 254 2,881
Large Cap Portfolio (Cost $19,025) 1,415 19,106
Equity Income Portfolio (Cost $73,306) 5,196 72,282
----------- -----------
Total (Cost $516,179) 34,491 534,230
----------- -----------
TEMPLETON VARIABLE PRODUCTS SERIES FUND (10.3%)
Templeton Bond Fund (Cost $33,983) 3,137 34,691
Templeton Stock Fund (Cost $2,418,768) 104,043 2,412,755
Templeton Asset Allocation Fund (Cost $971,562) 44,031 984,096
----------- -----------
Total (Cost $3,424,313) 151,211 3,431,542
----------- -----------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (21.3%)
High Income Portfolio (Cost $456,117) 36,326 493,312
Growth Portfolio (Cost $3,577,607) 108,028 4,007,837
Equity-Income Portfolio (Cost $2,341,220) 107,515 2,610,473
----------- -----------
Total (Cost $6,374,944) 251,869 7,111,622
----------- -----------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (4.4%)
Asset Manager Portfolio
Total (Cost $1,349,428) 81,780 1,472,855
----------- -----------
DREYFUS STOCK INDEX FUND (7.6%)
Total (Cost $2,324,406) 98,205 2,528,775
----------- -----------
AMERICAN ODYSSEY FUNDS, INC. (36.4%)
American Odyssey Core Equity Fund (Cost $3,739,236) 215,963 4,304,140
American Odyssey Emerging Opportunities Fund (Cost $2,261,112) 172,272 2,468,663
American Odyssey International Equity Fund (Cost $2,032,055) 131,296 2,032,468
American Odyssey Long-Term Bond Fund (Cost $1,729,548) 165,312 1,775,455
American Odyssey Intermediate-Term Bond Fund (Cost $1,057,861) 100,981 1,041,114
American Odyssey Short-Term Bond Fund (Cost $521,378) 49,851 513,963
----------- -----------
Total (Cost $11,341,190) 835,675 12,135,803
----------- -----------
TRAVELERS SERIES FUND INC. (8.5%)
Alliance Growth Portfolio (Cost $506,235) 26,648 576,925
Smith Barney Income and Growth Portfolio (Cost $1,407,774) 82,804 1,579,076
Smith Barney High Income Portfolio (Cost $51,039) 4,086 55,077
MFS Total Return Portfolio (Cost $185,896) 12,034 192,068
Smith Barney International Equity Portfolio (Cost $138,143) 10,528 135,812
Smith Barney Money Market Portfolio (Cost $214,760) 214,760 214,760
Putnam Diversified Income Portfolio (Cost $66,890) 5,515 68,711
----------- -----------
Total (Cost $2,570,737) 356,375 2,822,429
----------- -----------
TOTAL INVESTMENT OPTIONS (100%)
(COST $30,971,921) $33,345,450
===========
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Separate Account QP Operations and Changes in Net Assets for the
year ended December 31, 1997 and the period October 8, 1996 (date operations
commenced) to December 31, 1996
<TABLE>
<CAPTION>
Managed Assets Trust High Yield Bond Trust Capital Appreciation Fund
-------------------- --------------------- -------------------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................... $ 19,890 $ 6,056 $ 31 $ 629 $ 16 $ 20,975
--------- -------- -------- ------- ----------- ---------
EXPENSES:
Insurance charges and administrative fees ............... 3,018 85 215 7 13,740 323
--------- -------- -------- ------- ----------- ---------
Net investment income (loss) ...................... 16,872 5,971 (184) 622 (13,724) 20,652
--------- -------- -------- ------- ----------- ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ...................... 32,296 -- 1,956 15 234,322 808
Cost of investments sold ............................ 29,246 -- 1,848 15 218,081 786
--------- -------- -------- ------- ----------- ---------
Net realized gain (loss) .......................... 3,050 -- 108 -- 16,241 22
--------- -------- -------- ------- ----------- ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period .......... (5,672) -- (510) -- (18,413) --
Unrealized gain (loss) end of period ................ 24,124 (5,672) 2,457 (510) 210,889 (18,413)
--------- -------- -------- ------- ----------- ---------
Net change in unrealized gain (loss) for the period. 29,796 (5,672) 2,967 (510) 229,302 (18,413)
--------- -------- -------- ------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations ......................... 49,718 299 2,891 112 231,819 2,261
--------- -------- -------- ------- ----------- ---------
UNIT TRANSACTIONS:
Participant purchase payments ........................... 208,049 14,246 32,086 1,615 1,169,906 62,054
Participant transfers from other Travelers accounts ..... 455,233 67,463 11,716 5,012 1,180,301 243,946
Administrative and asset allocation charges ............. (1,169) (144) (171) (15) (4,878) (434)
Contract surrenders ..................................... (30,110) -- (1,731) -- (71,689) --
Participant transfers to other Travelers accounts ....... (8,513) -- (405) -- (174,370) (6,063)
Other payments to participants .......................... -- -- -- -- -- --
--------- -------- -------- ------- ----------- ---------
Net increase in net assets resulting
from unit transactions ............................ 623,490 81,565 41,495 6,612 2,099,270 299,503
--------- -------- -------- ------- ----------- ---------
Net increase in net assets ........................ 673,208 81,864 44,386 6,724 2,331,089 301,764
NET ASSETS:
Beginning of period ................................. 81,864 -- 6,724 -- 301,764 --
--------- -------- -------- ------- ----------- ---------
End of period ....................................... $ 755,072 $ 81,864 $ 51,110 $ 6,724 $ 2,632,853 $ 301,764
========= ======== ======== ======= =========== =========
</TABLE>
-11-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
U.S. Government Social Awareness Travelers
Securities Portfolio Utilities Portfolio Stock Portfolio Quality Bond Portfolio
- ----------------------- --------------------- ----------------------- ------------------------
1997 1996 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 5,447 $ 3,043 $ 46 $ 657 $ -- $ 1,315 $ 281 $ --
- --------- -------- -------- ------- --------- -------- -------- ----------
906 56 342 8 1,029 29 9 --
- --------- -------- -------- ------- --------- -------- -------- ----------
4,541 2,987 (296) 649 (1,029) 1,286 272 --
- --------- -------- -------- ------- --------- -------- -------- ----------
75,257 17 27,883 239 16,419 -- -- --
71,666 16 25,293 229 14,181 -- -- --
- --------- -------- -------- ------- --------- -------- -------- ----------
3,591 1 2,590 10 2,238 -- -- --
- --------- -------- -------- ------- --------- -------- -------- ----------
(3,258) -- (626) -- (1,750) -- -- --
254 (3,258) 5,887 (626) 14,085 (1,750) (208) --
- --------- -------- -------- ------- --------- -------- -------- ----------
3,512 (3,258) 6,513 (626) 15,835 (1,750) (208) --
- --------- -------- -------- ------- --------- -------- -------- ----------
11,644 (270) 8,807 33 17,044 (464) 64 --
- --------- -------- -------- ------- --------- -------- -------- ----------
43,093 11,522 19,762 3,398 130,586 3,970 6,552 --
85,050 41,171 27,236 4,889 89,751 33,515 18,758 --
(282) (55) (171) (22) (628) (63) (1) --
(52) -- -- -- (1,822) -- -- --
(75,980) -- (27,783) (239) (15,645) -- -- --
-- -- -- -- -- -- -- --
- --------- -------- -------- ------- --------- -------- -------- ----------
51,829 52,638 19,044 8,026 202,242 37,422 25,309 --
- --------- -------- -------- ------- --------- -------- -------- ----------
63,473 52,368 27,851 8,059 219,286 36,958 25,373 --
52,368 -- 8,059 -- 36,958 -- -- --
- --------- -------- -------- ------- --------- -------- -------- ----------
$ 115,841 $ 52,368 $ 35,910 $ 8,059 $ 256,244 $ 36,958 $ 25,373 $ --
========= ======== ======== ======= ========= ======== ======== ==========
</TABLE>
-12-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - continued
6. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR THE
YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD OCTOBER 8, 1996 (DATE OPERATIONS
COMMENCED) TO DECEMBER 31, 1996 (CONTINUED)
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL FEDERATED FEDERATED
STOCK PORTFOLIO STOCK PORTFOLIO HIGH YIELD PORTFOLIO
-------------------- --------------------- ---------------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................................. $ 37 $ -- $ 1,351 $ -- $ 161 $ --
------- ---------- -------- ---------- ------- -----------
EXPENSES:
Insurance charges and administrative fees .................. 7 -- 29 -- 2 --
------- ---------- -------- ---------- ------- -----------
Net investment income (loss) ......................... 30 -- 1,322 -- 159 --
------- ---------- -------- ---------- ------- -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ......................... -- -- -- -- -- --
Cost of investments sold ............................... -- -- -- -- -- --
------- ---------- -------- ---------- ------- -----------
Net realized gain (loss) ............................. -- -- -- -- -- --
------- ---------- -------- ---------- ------- -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ............. -- -- -- -- -- --
Unrealized gain (loss) end of period ................... (51) -- (841) -- (132) --
------- ---------- -------- ---------- ------- -----------
Net change in unrealized gain (loss) for the period... (51) -- (841) -- (132) --
------- ---------- -------- ---------- ------- -----------
Net increase (decrease) in net assets
resulting from operations ............................ (21) -- 481 -- 27 --
------- ---------- -------- ---------- ------- -----------
UNIT TRANSACTIONS:
Participant purchase payments .............................. 5,009 -- 23,821 -- 3,248 --
Participant transfers from other Travelers accounts ........ -- -- -- -- -- --
Administrative and asset allocation charges ................ -- -- -- -- -- --
Contract surrenders ........................................ -- -- -- -- -- --
Participant transfers to other Travelers accounts .......... -- -- -- -- -- --
Other payments to participants ............................. -- -- -- -- -- --
------- ---------- -------- ---------- ------- -----------
Net increase in net assets resulting
from unit transactions ............................... 5,009 -- 23,821 -- 3,248 --
------- ---------- -------- ---------- ------- -----------
Net increase in net assets ........................... 4,988 -- 24,302 -- 3,275 --
NET ASSETS:
Beginning of period .................................... -- -- -- -- -- --
------- ---------- -------- ---------- ------- -----------
End of period .......................................... $ 4,988 $ -- $ 24,302 $ -- $ 3,275 $ --
======= ========== ======== ========== ======= ===========
</TABLE>
-13-
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
Large Cap Portfolio Equity Income Portfolio Templeton Bond Fund Templeton Stock Fund
- -------------------------- ---------------------------- ---------------------- --------------------------
1997 1996 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 299 $ -- $ 2,913 $ -- $ 1,317 $ -- $ 62,572 $ --
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
25 -- 85 -- 277 11 14,688 352
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
274 -- 2,828 -- 1,040 (11) 47,884 (352)
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
-- -- -- -- 21,002 -- 372,868 2,509
-- -- -- -- 21,729 -- 358,071 2,345
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
-- -- -- -- (727) -- 14,797 164
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
-- -- -- -- 196 -- 13,100 --
81 -- (1,024) -- 708 196 (6,013) 13,100
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
81 -- (1,024) -- 512 196 (19,113) 13,100
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
355 -- 1,804 -- 825 185 43,568 12,912
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
19,154 -- 74,982 -- 15,927 3,196 833,381 84,800
14 -- -- -- 23,304 12,472 1,515,316 312,745
-- -- -- -- (101) (12) (3,865) (527)
-- -- -- -- (10,143) -- (100,476) --
-- -- -- -- (10,954) -- (163,163) (10,595)
-- -- -- -- -- -- -- --
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
19,168 -- 74,982 -- 18,033 15,656 2,081,193 386,423
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
19,523 -- 76,786 -- 18,858 15,841 2,124,761 399,335
-- -- -- -- 15,841 -- 399,335 --
- ------- -------------- -------- -------------- -------- -------- ----------- ---------
$19,523 $ -- $ 76,786 $ -- $ 34,699 $ 15,841 $ 2,524,096 $ 399,335
======= ============== ======== ============== ======== ======== =========== =========
</TABLE>
-14-
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS - continued
6. Schedule of Separate Account QP Operations and Changes in Net Assets for the
year ended December 31, 1997 and the period October 8, 1996 (date operations
commenced) to December 31, 1996 (continued)
<TABLE>
<CAPTION>
TEMPLETON ASSET FIDELITY'S HIGH FIDELITY'S
ALLOCATION FUND INCOME PORTFOLIO GROWTH PORTFOLIO
---------------------- --------------------- -----------------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................... $ 9,657 $ -- $ 9,591 $ -- $ 35,243 $ --
----------- -------- --------- -------- ----------- ---------
Expenses:
Insurance charges and administrative fees ............... 5,376 49 3,108 62 24,791 846
----------- -------- --------- -------- ----------- ---------
Net investment income (loss) ...................... 4,281 (49) 6,483 (62) 10,452 (846)
----------- -------- --------- -------- ----------- ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ...................... 90,577 639 79,709 902 520,892 4,926
Cost of investments sold ............................ 87,464 606 74,248 897 491,842 4,890
----------- -------- --------- -------- ----------- ---------
Net realized gain (loss) .......................... 3,113 33 5,461 5 29,050 36
----------- -------- --------- -------- ----------- ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period .......... 1,700 -- 1,104 -- (4,458) --
Unrealized gain (loss) end of period ................ 12,534 1,700 37,195 1,104 430,230 (4,458)
----------- -------- --------- -------- ----------- ---------
Net change in unrealized gain (loss) for the period.. 10,834 1,700 36,091 1,104 434,688 (4,458)
----------- -------- --------- -------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations ......................... 18,228 1,684 48,035 1,047 474,190 (5,268)
----------- -------- --------- -------- ----------- ---------
UNIT TRANSACTIONS:
Participant purchase payments ........................... 305,884 14,826 211,121 17,467 1,352,968 190,454
Participant transfers from other Travelers accounts ..... 765,365 58,533 247,002 75,602 2,207,355 624,859
Administrative and asset allocation charges ............. (1,347) (115) (874) (117) (8,555) (1,547)
Contract surrenders ..................................... (24,470) -- (5,521) (901) (167,086) (983)
Participant transfers to other Travelers accounts ....... (99,429) -- (76,274) -- (453,384) (8,904)
Other payments to participants .......................... -- -- -- -- -- --
----------- -------- --------- -------- ----------- ---------
Net increase in net assets resulting
from unit transactions ............................ 946,003 73,244 375,454 92,051 2,931,298 803,879
----------- -------- --------- -------- ----------- ---------
Net increase in net assets ........................ 964,231 74,928 423,489 93,098 3,405,488 798,611
NET ASSETS:
Beginning of period ................................. 74,928 -- 93,098 -- 798,611 --
----------- -------- --------- -------- ----------- ---------
End of period ....................................... $ 1,039,159 $ 74,928 $ 516,587 $ 93,098 $ 4,204,099 $ 798,611
=========== ======== ========= ======== =========== =========
</TABLE>
-15-
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
FIDELITY'S EQUITY- FIDELITY'S ASSET AMERICAN ODYSSEY
INCOME PORTFOLIO MANAGER PORTFOLIO DREYFUS STOCK INDEX FUND CORE EQUITY FUND
- -------------------------- -------------------------- -------------------------- --------------------------
1997 1996 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 55,882 $ -- $ 50,090 $ -- $ 88,453 $ 2,900 $ 87,344 $ 29,964
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
14,303 493 8,923 302 12,714 190 24,279 546
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
41,579 (493) 41,167 (302) 75,739 2,710 63,065 29,418
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
138,553 49,917 232,562 3,660 46,835 194 118,791 2,856
128,051 47,243 241,650 3,478 38,298 178 103,058 2,670
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
10,502 2,674 (9,088) 182 8,537 16 15,733 186
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
6,592 -- 293 -- (2,689) -- (21,402) --
269,253 6,592 123,427 293 204,369 (2,689) 564,904 (21,402)
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
262,661 6,592 123,134 293 207,058 (2,689) 586,306 (21,402)
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
314,742 8,773 155,213 173 291,334 37 665,104 8,202
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
876,317 99,468 282,345 46,514 1,000,882 36,355 1,522,927 98,412
1,203,806 361,290 1,014,296 262,701 1,221,050 189,963 1,866,761 432,532
(5,706) (837) (2,517) (454) (6,442) (410) (31,417) (831)
(21,095) -- (83,597) (1,201) (19,567) -- (53,114) --
(59,826) (33,410) (138,539) (2,942) (71,185) (6,339) (121,293) (1,746)
-- -- (10,616) -- -- -- (3,508) --
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
1,993,496 426,511 1,061,372 304,618 2,124,738 219,569 3,180,356 528,367
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
2,308,238 435,284 1,216,585 304,791 2,416,072 219,606 3,845,460 536,569
435,284 -- 304,791 -- 219,606 -- 536,569 --
- ----------- --------- ----------- --------- ----------- --------- ----------- ---------
$ 2,743,522 $ 435,284 $ 1,521,376 $ 304,791 $ 2,635,678 $ 219,606 $ 4,382,029 $ 536,569
=========== ========= =========== ========= =========== ========= =========== =========
</TABLE>
-16-
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD OCTOBER 8, 1996
(DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1996 (CONTINUED)
<TABLE>
<CAPTION>
AMERICAN ODYSSEY AMERICAN ODYSSEY
EMERGING OPPORTUNITIES INTERNATIONAL EQUITY AMERICAN ODYSSEY
FUND FUND LONG-TERM BOND FUND
--------------------- --------------------- ---------------------
1997 1996 1997 1996 1997 1996
---------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ................................................ $ -- $ 27,579 $ 43,746 $ 6,305 $ 102,816 $ 11,487
---------- -------- ---------- -------- ---------- --------
EXPENSES:
Insurance charges and administrative fees ................ 14,620 335 12,342 240 10,585 263
---------- -------- ---------- -------- ---------- --------
Net investment income (loss) ...................... (14,620) 27,244 31,404 6,065 92,231 11,224
---------- -------- ---------- -------- ---------- --------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ....................... 121,895 1,974 96,178 2,590 55,502 4,319
Cost of investments sold ............................. 138,212 2,141 88,805 2,518 54,370 4,212
---------- -------- ---------- -------- ---------- --------
Net realized gain (loss) ........................... (16,317) (167) 7,373 72 1,132 107
---------- -------- ---------- -------- ---------- --------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ........... (38,832) -- 5,270 -- (11,169) --
Unrealized gain (loss) end of period ................. 207,551 (38,832) 413 5,270 45,907 (11,169)
---------- -------- ---------- -------- ---------- --------
Net change in unrealized gain (loss) for the period 246,383 (38,832) (4,857) 5,270 57,076 (11,169)
---------- -------- ---------- -------- ---------- --------
Net increase (decrease) in net assets
resulting from operations .......................... 215,446 (11,755) 33,920 11,407 150,439 162
---------- -------- ---------- -------- ---------- --------
UNIT TRANSACTIONS:
Participant purchase payments ............................ 925,080 90,453 891,264 60,937 780,837 64,829
Participant transfers from other Travelers accounts ...... 1,184,245 280,037 1,067,137 190,213 845,088 178,977
Administrative and asset allocation charges .............. (17,583) (749) (17,735) (515) (17,204) (549)
Contract surrenders ...................................... (54,954) -- (31,434) -- (21,340) --
Participant transfers to other Travelers accounts ........ (121,415) (73) (115,412) (1,106) (83,245) (5,242)
Other payments to participants ........................... (1,396) -- (1,577) -- (1,891) --
---------- -------- ---------- -------- ---------- --------
Net increase in net assets resulting
from unit transactions ............................. 1,913,977 369,668 1,792,243 249,529 1,502,245 238,015
---------- -------- ---------- -------- ---------- --------
Net increase in net assets ......................... 2,129,423 357,913 1,826,163 260,936 1,652,684 238,177
NET ASSETS:
Beginning of period .................................. 357,913 -- 260,936 -- 238,177 --
---------- -------- ---------- -------- ---------- --------
End of period ........................................ $2,487,336 $357,913 $2,087,099 $260,936 $1,890,861 $238,177
========== ======== ========== ======== ========== ========
</TABLE>
-17-
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
INTERMEDIATE-TERM AMERICAN ODYSSEY SMITH BARNEY INCOME
BOND FUND SHORT-TERM BOND FUND ALLIANCE GROWTH PORTFOLIO AND GROWTH PORTFOLIO
- ------------------------- ------------------------- ------------------------- -------------------------
1997 1996 1997 1996 1997 1996 1997 1996
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 64,517 $ 10,808 $ 27,623 $ 4,054 $ -- $ 1,224 $ -- $ 6,452
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
6,808 191 3,369 118 2,603 46 9,643 342
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
57,709 10,617 24,254 3,936 (2,603) 1,178 (9,643) 6,110
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
89,043 -- 48,918 -- 70,719 -- 227,536 461
89,417 -- 49,041 -- 70,689 -- 195,749 442
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(374) -- (123) -- 30 -- 31,787 19
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(10,127) -- (3,899) -- 600 -- (2,821) --
(16,747) (10,127) (7,415) (3,899) 70,690 600 171,302 (2,821)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(6,620) (10,127) (3,516) (3,899) 70,090 600 174,123 (2,821)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
50,715 490 20,615 37 67,517 1,778 196,267 3,308
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
405,434 44,746 227,183 30,759 259,629 11,043 439,570 49,120
581,132 155,208 249,308 87,106 286,871 34,916 792,742 234,450
(8,454) (367) (4,646) (274) (987) (58) (2,549) (435)
(17,956) -- (25,993) -- (18,443) -- (86,100) --
(101,432) (1,139) (38,976) (60) (63,435) -- (44,029) (170)
(1,953) -- (1,206) -- -- -- -- --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
856,771 198,448 405,670 117,531 463,635 45,901 1,099,634 282,965
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
907,486 198,938 426,285 117,568 531,152 47,679 1,295,901 286,273
198,938 -- 117,568 -- 47,679 -- 286,273 --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,106,424 $ 198,938 $ 543,853 $ 117,568 $ 578,831 $ 47,679 $ 1,582,174 $ 286,273
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
-18-
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD OCTOBER 8, 1996
(DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1996 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY HIGH MFS TOTAL SMITH BARNEY INTERNATIONAL
INCOME PORTFOLIO RETURN PORTFOLIO EQUITY PORTFOLIO
--------------------- --------------------- ---------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ................................................ $ -- $ 17 $ -- $ 74 $ -- $ 9
--------- --------- --------- --------- --------- ---------
EXPENSES:
Insurance charges and administrative fees ................ 325 -- 343 2 664 6
--------- --------- --------- --------- --------- ---------
Net investment income (loss) ...................... (325) 17 (343) 72 (664) 3
--------- --------- --------- --------- --------- ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ....................... 32,409 -- 5,982 -- 1,746 --
Cost of investments sold ............................. 30,550 -- 5,271 -- 1,711 --
--------- --------- --------- --------- --------- ---------
Net realized gain (loss) ........................... 1,859 -- 711 -- 35 --
--------- --------- --------- --------- --------- ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period ........... (12) -- (60) -- 115 --
Unrealized gain (loss) end of period ................. 4,038 (12) 6,172 (60) (2,331) 115
--------- --------- --------- --------- --------- ---------
Net change in unrealized gain (loss) for the period 4,050 (12) 6,232 (60) (2,446) 115
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations .......................... 5,584 5 6,600 12 (3,075) 118
--------- --------- --------- --------- --------- ---------
UNIT TRANSACTIONS:
Participant purchase payments ............................ 28,060 287 72,236 2,184 77,304 4,232
Participant transfers from other Travelers accounts ...... 50,144 -- 123,820 -- 55,248 4,629
Administrative and asset allocation charges .............. (101) (2) (360) (14) (242) (17)
Contract surrenders ...................................... -- -- (6,229) -- (373) --
Participant transfers to other Travelers accounts ........ (28,312) -- (5,135) -- (1,305) --
Other payments to participants ........................... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net increase in net assets resulting
from unit transactions ............................. 49,791 285 184,332 2,170 130,632 8,844
--------- --------- --------- --------- --------- ---------
Net increase in net assets ......................... 55,375 290 190,932 2,182 127,557 8,962
NET ASSETS:
Beginning of period .................................. 290 -- 2,182 -- 8,962 --
--------- --------- --------- --------- --------- ---------
End of period ........................................ $ 55,665 $ 290 $ 193,114 $ 2,182 $ 136,519 $ 8,962
========= ========= ========= ========= ========= =========
</TABLE>
-19-
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
SMITH BARNEY PUTNAM
MONEY MARKET PORTFOLIO DIVERSIFIED INCOME PORTFOLIO COMBINED
- ------------------------- ------------------------- -------------------------
1997 1996 1997 1996 1997 1996
- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 14,365 $ 2,122 $ -- $ 686 $ 683,688 $ 136,356
- ----------- ----------- ----------- ----------- ----------- -----------
3,263 417 313 11 192,744 5,330
- ----------- ----------- ----------- ----------- ----------- -----------
11,102 1,705 (313) 675 490,944 131,026
- ----------- ----------- ----------- ----------- ----------- -----------
1,041,385 339,121 11,085 -- 3,812,320 415,147
1,041,385 339,121 11,135 -- 3,681,061 411,787
- ----------- ----------- ----------- ----------- ----------- -----------
-- -- (50) -- 131,259 3,360
- ----------- ----------- ----------- ----------- ----------- -----------
-- -- (583) -- (97,311) --
-- -- 1,821 (583) 2,373,529 (97,311)
- ----------- ----------- ----------- ----------- ----------- -----------
-- -- 2,404 (583) 2,470,840 (97,311)
- ----------- ----------- ----------- ----------- ----------- -----------
11,102 1,705 2,041 92 3,093,043 37,075
- ----------- ----------- ----------- ----------- ----------- -----------
893,850 350,371 26,893 302 13,165,340 1,397,560
979,165 65,700 33,656 12,498 18,180,870 3,970,427
(1,671) (158) (85) (9) (139,741) (8,730)
(14,600) -- -- -- (867,895) (3,085)
(1,706,359) (360,948) (6,015) -- (3,811,813) (438,976)
(8) -- -- -- (22,155) --
- ----------- ----------- ----------- ----------- ----------- -----------
150,377 54,965 54,449 12,791 26,504,606 4,917,196
- ----------- ----------- ----------- ----------- ----------- -----------
161,479 56,670 56,490 12,883 29,597,649 4,954,271
56,670 -- 12,883 -- 4,954,271 --
- ----------- ----------- ----------- ----------- ----------- -----------
$ 218,149 $ 56,670 $ 69,373 $ 12,883 $34,551,920 $ 4,954,271
=========== =========== =========== =========== =========== ===========
</TABLE>
-20-
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF ACCUMULATION UNITS FOR SEPARATE ACCOUNT QP
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD OCTOBER 8, 1996
(DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
MANAGED ASSETS TRUST HIGH YIELD BOND TRUST CAPITAL APPRECIATION FUND
-------------------- --------------------- -------------------------
1997 1996 1997 1996 1997 1996
--------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .......... 78,508 -- 6,520 -- 293,629 --
Accumulation units purchased and
transferred from other Travelers accounts .... 557,506 78,645 38,412 6,534 1,967,175 300,243
Accumulation units redeemed and
transferred to other Travelers accounts ...... (32,386) (137) (1,987) (14) (210,070) (6,614)
--------- -------- -------- -------- ---------- ----------
Accumulation units end of period ................ 603,628 78,508 42,945 6,520 2,050,734 293,629
========= ======== ======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SOCIAL AWARENESS
SECURITIES PORTFOLIO UTILITIES PORTFOLIO STOCK PORTFOLIO
-------------------- ------------------- ------------------
1997 1996 1997 1996 1997 1996
--------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .......... 51,072 -- 7,796 -- 35,689 --
Accumulation units purchased and
transferred from other Travelers accounts .... 118,479 51,125 44,237 8,047 175,347 35,750
Accumulation units redeemed and
transferred to other Travelers accounts ...... (68,228) (53) (24,050) (251) (14,553) (61)
--------- -------- ------- -------- ------- --------
Accumulation units end of period ................ 101,323 51,072 27,983 7,796 196,483 35,689
========= ======== ======= ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
TRAVELERS LAZARD INTERNATIONAL
QUALITY BOND PORTFOLIO STOCK PORTFOLIO FEDERATED STOCK PORTFOLIO
---------------------- -------------------- -------------------------
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .......... -- -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts .... 24,884 -- 5,095 -- 22,444 --
Accumulation units redeemed and
transferred to other Travelers accounts ...... (1) -- -- -- -- --
-------- -------- -------- -------- ---------- ----------
Accumulation units end of period ................ 24,883 -- 5,095 -- 22,444 --
======== ======== ======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FEDERATED HIGH YIELD PORTFOLIO LARGE CAP PORTFOLIO EQUITY INCOME PORTFOLIO
------------------------------ ------------------- -----------------------
1997 1996 1997 1996 1997 1996
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period .......... -- -- -- -- -- --
Accumulation units purchased and
transferred from other Travelers accounts .... 3,241 -- 19,001 -- 72,323 --
Accumulation units redeemed and
transferred to other Travelers accounts ...... -- -- -- -- -- --
---------- ---------- -------- -------- -------- --------
Accumulation units end of period ................ 3,241 -- 19,001 -- 72,323 --
========== ========== ======== ======== ======== ========
</TABLE>
-21-
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF ACCUMULATION UNITS FOR SEPARATE ACCOUNT QP
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD OCTOBER 8, 1996
(DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1996 (CONTINUED)
<TABLE>
<CAPTION>
TEMPLETON ASSET
TEMPLETON BOND FUND TEMPLETON STOCK PORTFOLIO ALLOCATION FUND
------------------- ------------------------- -----------------
1997 1996 1997 1996 1997 1996
-------- -------- ---------- ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period ............... 15,303 -- 369,698 -- 70,211 --
Accumulation units purchased and
transferred from other Travelers accounts ......... 38,026 15,314 1,964,813 380,246 885,686 70,319
Accumulation units redeemed and
transferred to other Travelers accounts ........... (20,290) (11) (224,848) (10,548) (103,395) (108)
-------- -------- ---------- ---------- -------- ------
Accumulation units end of period ..................... 33,039 15,303 2,109,663 369,698 852,502 70,211
======== ======== ========== ========== ======== ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY'S HIGH FIDELITY'S EQUITY-
INCOME PORTFOLIO FIDELITY'S GROWTH PORTFOLIO INCOME PORTFOLIO
---------------- --------------------------- -------------------
1997 1996 1997 1996 1997 1996
------- ------ --------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period ............... 91,884 -- 804,434 -- 417,374 --
Accumulation units purchased and
transferred from other Travelers accounts ......... 417,945 92,899 3,234,083 815,967 1,723,184 450,102
Accumulation units redeemed and
transferred to other Travelers accounts ........... (72,022) (1,015) (575,261) (11,533) (66,598) (32,728)
------- ------ --------- ---------- --------- -------
Accumulation units end of period ..................... 437,807 91,884 3,463,256 804,434 2,073,960 417,374
======= ====== ========= ========== ========= =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY'S ASSET AMERICAN ODYSSEY
MANAGER PORTFOLIO DREYFUS STOCK INDEX FUND CORE EQUITY FUND
----------------------- ------------------------ -----------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period ............ 290,881 -- 204,067 -- 496,794 --
Accumulation units purchased and
transferred from other Travelers accounts ...... 1,129,722 295,230 1,731,536 210,643 2,770,285 499,139
Accumulation units redeemed and
transferred to other Travelers accounts ........ (204,770) (4,349) (75,259) (6,576) (161,670) (2,345)
---------- ---------- ---------- --------- ---------- ----------
Accumulation units end of period .................. 1,215,833 290,881 1,860,344 204,067 3,105,409 496,794
========== ========== ========== ========= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY AMERICAN ODYSSEY
EMERGING OPPORTUNITIES INTERNATIONAL EQUITY AMERICAN ODYSSEY
FUND FUND LONG-TERM BOND FUND
---------------------- -------------------- -------------------
1997 1996 1997 1996 1997 1996
--------- ---------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period ............ 404,384 -- 239,079 -- 232,943 --
Accumulation units purchased and
transferred from other Travelers accounts ...... 2,462,311 405,313 1,744,311 240,600 1,549,126 238,611
Accumulation units redeemed and
transferred to other Travelers accounts ........ (215,981) (929) (145,535) (1,521) (115,710) (5,668)
--------- ---------- --------- -------- --------- -------
Accumulation units end of period .................. 2,650,714 404,384 1,837,855 239,079 1,666,359 232,943
========= ========== ========= ======== ========= =======
</TABLE>
-22-
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF ACCUMULATION UNITS FOR SEPARATE ACCOUNT QP
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD OCTOBER 8, 1996
(DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1996 (CONTINUED)
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
INTERMEDIATE-TERM AMERICAN ODYSSEY
BOND FUND SHORT-TERM BOND FUND ALLIANCE GROWTH PORTFOLIO
-------------------- -------------------- -------------------------
1997 1996 1997 1996 1997 1996
--------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period ......... 195,701 -- 116,408 -- 44,777 --
Accumulation units purchased and
transferred from other Travelers accounts ... 949,256 197,187 464,443 116,737 457,050 44,832
Accumulation units redeemed and
transferred to other Travelers accounts ..... (122,840) (1,486) (68,555) (329) (76,316) (55)
--------- -------- -------- -------- -------- -------
Accumulation units end of period ............... 1,022,117 195,701 512,296 116,408 425,511 44,777
========= ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY INCOME SMITH BARNEY HIGH
AND GROWTH PORTFOLIO INCOME PORTFOLIO MFS TOTAL RETURN PORTFOLIO
---------------------- ----------------- --------------------------
1997 1996 1997 1996 1997 1996
---------- --------- -------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period ......... 270,469 -- 278 -- 2,087 --
Accumulation units purchased and
transferred from other Travelers accounts ... 1,027,962 271,038 72,669 280 161,844 2,100
Accumulation units redeemed and
transferred to other Travelers accounts ..... (106,692) (569) (25,569) (2) (9,631) (13)
---------- --------- -------- ------ ---------- ----------
Accumulation units end of period ............... 1,191,739 270,469 47,378 278 154,300 2,087
========== ========= ======== ====== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY INTERNATIONAL SMITH BARNEY PUTNAM
EQUITY PORTFOLIO MONEY MARKET PORTFOLIO DIVERSIFIED INCOME PORTFOLIO
-------------------------- ---------------------- ----------------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of period ....... 8,808 -- 56,124 -- 12,636 --
Accumulation units purchased and
transferred from other Travelers accounts . 124,907 8,825 1,807,351 414,303 57,130 12,644
Accumulation units redeemed and
transferred to other Travelers accounts ... (1,845) (17) (1,655,711) (358,179) (5,924) (8)
---------- ---------- ---------- -------- ---------- ----------
Accumulation units end of period ............. 131,870 8,808 207,764 56,124 63,842 12,636
========== ========== ========== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
COMBINED
-------------------------
1997 1996
----------- ----------
<S> <C> <C>
Accumulation units beginning of period ....... 4,817,554 --
Accumulation units purchased and
transferred from other Travelers accounts . 27,821,784 5,262,673
Accumulation units redeemed and
transferred to other Travelers accounts ... (4,405,697) (445,119)
=========== ==========
Accumulation units end of period ............. 28,233,641 4,817,554
=========== ==========
</TABLE>
-23-
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Owners of Variable Annuity Contracts of
The Travelers Separate Account QP for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Separate Account QP for Variable Annuities as of December 31, 1997,
and the related statement of operations for the year then ended and the
statement of changes in net assets for the year ended December 31, 1997 and the
period October 8, 1996 (date operations commenced) to December 31, 1996. 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, 1997, 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 Separate Account
QP for Variable Annuities as of December 31, 1997, the results of its operations
for the year then ended and the changes in its net assets for the year ended
December 31, 1997 and the period October 8, 1996 (date operations commenced) to
December 31, 1996, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 19, 1998
-24-
<PAGE> 26
Independent Accountants
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Separate Account QP for Variable
Annuities or Separate Account QP's underlying funds. It should not be used in
connection with any offer except in conjunction with the Prospectuses for the
Variable Annuity products offered by The Travelers Insurance Company and the
Prospectuses for the underlying funds, which collectively contain all pertinent
information, including the applicable sales commissions.
VG-QP (Annual) (12-97) Printed in U.S.A.
