<PAGE> 1
Registration Statement No. 333-00165
811-07487
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 5
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
(Exact name of Registrant)
THE TRAVELERS INSURANCE COMPANY
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (860) 277-0111
ERNEST J. WRIGHT
Vice President and Secretary
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:__________________________
It is proposed that this filing will become effective (check appropriate box):
X immediately upon filing pursuant to paragraph (b) of Rule 485.
- ---- on May 1, 2000 pursuant to paragraph (b) of Rule 485.
60 days after filing pursuant to paragraph (a)(1) of Rule 485.
- ---- on ___________ pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
- ---- a previously filed post-effective amendment.
<PAGE> 2
PART A
Information Required in a Prospectus
<PAGE> 3
GOLD TRACK
PROSPECTUS
This prospectus describes Gold Track , a flexible premium group variable annuity
contract (the "Contract") issued by The Travelers Insurance Company (the
"Company", "us" or "we").
The Contract's value will vary daily to reflect the investment experience of the
funding options you select and the interest credited to the Fixed Account. The
variable funding options available through Travelers Separate Account QP for
Variable Annuities are:
<TABLE>
<S> <C>
Capital Appreciation Fund TRAVELERS SERIES FUND INC., (CONTINUED)
Dreyfus Stock Index Fund Putnam Diversified Income Portfolio
High Yield Bond Trust Smith Barney High Income Portfolio
Managed Assets Trust Smith Barney International Equity Portfolio
AMERICAN ODYSSEY FUNDS, INC. Smith Barney Large Capitalization Growth Portfolio
Core Equity Fund Smith Barney Large Cap Value Portfolio
Emerging Opportunities Fund Smith Barney Money Market Portfolio
Global High-Yield Bond Fund THE TRAVELERS SERIES TRUST
Intermediate-Term Bond Fund Convertible Bond Portfolio
International Equity Fund Disciplined Mid Cap Stock Portfolio
Long-Term Bond Fund Disciplined Small Cap Stock Portfolio
DELAWARE GROUP PREMIUM FUND, INC. MFS Mid Cap Growth Portfolio
REIT Series MFS Research Portfolio
DREYFUS VARIABLE INVESTMENT FUND Social Awareness Stock Portfolio
Appreciation Portfolio(1) Strategic Stock Portfolio
Small Cap Portfolio Travelers Quality Bond Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS U.S. Government Securities Portfolio
TRUST(2) Utilities Portfolio
Templeton Asset Strategy Fund -- Class 1(3) VARIABLE INSURANCE PRODUCTS FUND (FIDELITY)
Templeton Global Income Securities Fund -- Equity Income Portfolio -- Initial Class
Class 1(4) Growth Portfolio -- Initial Class
Templeton Growth Securities Fund -- Class High Income Portfolio -- Initial Class
1(5) VARIABLE INSURANCE PRODUCTS FUND II (FIDELITY)
SALOMON BROTHERS VARIABLE SERIES FUND, INC. Asset Manager Portfolio -- Initial Class
Investors Fund
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio
MFS Total Return Portfolio
- ---------------
(1) Formerly offered as Capital Appreciation (4) Formerly offered as Templeton Global Bond Fund (Class 1)
Portfolio (5) Formerly offered as Templeton Global Stock Fund (Class 1)
(2) Formerly Templeton Variable Products
Series Fund
(3) Formerly offered as Templeton Global Asset
Allocation Fund (Class 1)
</TABLE>
THE FIXED ACCOUNT IS DESCRIBED IN A SEPARATE PROSPECTUS. SOME OF THE FUNDING
OPTIONS MAY NOT BE AVAILABLE IN ALL STATES. THIS PROSPECTUS MUST BE ACCOMPANIED
BY THE CURRENT PROSPECTUSES FOR SEPARATE ACCOUNT QP'S UNDERLYING FUNDS. PLEASE
READ AND RETAIN THEM FOR FUTURE REFERENCE.
This prospectus sets forth the information that you should know before
investing. You can receive additional information by requesting a Statement of
Additional Information ("SAI") dated May 1, 2000. The SAI has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated by reference
into this prospectus. To request a free copy, write to The Travelers Insurance
Company, Annuity Services, One Tower Square, Hartford, CT 06183-5030, call
1-800-842-9368, or access the SEC's website (http://www.sec.gov). See Appendix B
for the SAI's table of contents.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
PROSPECTUS DATED: MAY 1, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Index of Special Terms..................... 2
Summary.................................... 3
Fee Table.................................. 6
Condensed Financial Information............ 11
The Variable Annuity Contract.............. 11
Contract Owner Inquiries................. 11
Allocated Contracts...................... 11
Unallocated Contracts.................... 11
Purchase Payments........................ 12
Accumulation Units....................... 12
The Funding Options...................... 12
Charges and Deductions..................... 16
General.................................. 16
Withdrawal Charge........................ 16
Free Withdrawal Allowance................ 17
Mortality and Expense Risk Charge........ 17
Funding Option Expenses.................. 18
Premium Tax.............................. 18
Changes in Taxes Based upon Premium or
Value.................................. 18
Administrative Charge.................... 18
TPA Administrative Charges............... 18
Transfers.................................. 19
Dollar Cost Averaging.................... 19
Asset Allocation Advice.................. 20
Access to Your Money....................... 20
Systematic Withdrawals................... 20
Ownership Provisions....................... 20
Types of Ownership....................... 20
Contract Owner......................... 20
Beneficiary............................ 21
Annuitant.............................. 21
Death Benefit.............................. 21
Death Benefit Proceeds Prior to Maturity
Date................................... 21
Payment of Proceeds...................... 21
Death Proceeds After the Maturity Date... 23
The Annuity Period......................... 23
Maturity Date............................ 23
Allocation of Annuity.................... 24
Variable Annuity......................... 24
Fixed Annuity.............................. 25
Election of Options...................... 25
Misstatement............................. 25
Retired Life Certificate................. 25
Allocation of Cash Surrender Value During
the Annuity Period..................... 25
Annuity Options.......................... 25
Miscellaneous Contract Provisions.......... 26
Right to Return.......................... 26
Contract and Participant's Individual
Account Termination.................... 27
Contract Exchanges....................... 27
Suspension of Payments................... 27
Account Value............................ 28
The Separate Account....................... 28
Performance Information.................. 28
Standardized Method...................... 28
Nonstandardized Method................... 28
General.................................. 29
Federal Tax Considerations................. 29
General Taxation of Annuities............ 29
Tax-Free Exchanges....................... 29
Types of Contracts: Qualified or
Nonqualified........................... 29
Nonqualified Annuity Contracts........... 29
Qualified Annuity Contracts.............. 30
Penalty Tax for Premature
Distributions.......................... 30
Diversification Requirements for Variable
Annuities.............................. 30
Ownership of the Investments............. 31
Mandatory Distributions for Qualified
Plans.................................. 31
Taxation of Death Benefit Proceeds....... 31
Other Information.......................... 31
The Insurance Company.................... 31
Distribution of Variable Annuity
Contracts.............................. 32
Conformity with State and Federal Laws... 32
Voting Rights............................ 32
Contract Modification.................... 32
Legal Proceedings and Opinions........... 32
APPENDIX A: CONDENSED FINANCIAL
INFORMATION: Separate Account QP......... A-1
APPENDIX B: CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION................... B-1
</TABLE>
INDEX OF SPECIAL TERMS
The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.
<TABLE>
<S> <C>
Accumulation Unit.......................... 12
Annuitant.................................. 21
Annuity Payments........................... 11
Annuity Unit............................... 12
Cash Surrender Value....................... 20
Cash Value................................. 20
Certificate................................ 11
Contract Date.............................. 11
Contract Owner (You, Your)................. 20
Contract Year.............................. 11
Funding Option(s).......................... 12
Individual Account......................... 11
Joint Owners............................... 21
Maturity Date.............................. 11
Owner's Account............................ 11
Participant................................ 11
Purchase Payment........................... 12
Written Request............................ 11
</TABLE>
2
<PAGE> 5
SUMMARY:
TRAVELERS GOLD TRACK ANNUITY
THIS SUMMARY DETAILS SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND
CONSIDER BEFORE PURCHASING THE CONTRACT. PLEASE READ THE ENTIRE PROSPECTUS
CAREFULLY.
CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE VARIABLE ANNUITY CONTRACT? The
Contract offered by the Travelers Insurance Company is intended for retirement
savings or other long-term investment purposes. The Contract provides a death
benefit as well as guaranteed payout options. You direct your payment(s) to one
or more of the variable funding options and/or to the Fixed Account. We
guarantee money directed to the Fixed Account as to principal and interest. The
variable funding options are designed to produce a higher rate of return than
the Fixed Account; however, this is not guaranteed. You can also lose money in
the variable funding options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase
generally, under a qualified contract, your pre-tax contributions accumulate on
a tax-deferred bases and are taxed as income when you make a withdrawal,
presumably when you are in a lower tax bracket. During the accumulation phase,
under a nonqualified contract, earnings on your after-tax contributions
accumulate on a tax-deferred bases and are taxed as income when you make a
withdrawal. The payout phase occurs when you begin receiving payments from your
Contract. The amount of money you accumulate in your Contract determines the
amount of income (annuity payments) you receive during the payout phase.
During the payout phase, you may choose to receive annuity payments from the
Fixed Account or the variable funding options. If you want to receive payments
from your annuity, you can choose one of a number of annuity options.
Once you choose one of the annuity options and begin to receive payments, it
cannot be changed. During the payout phase, you have the same investment choices
you had during the accumulation phase. If amounts are directed to the variable
funding options, the dollar amount of your payments may increase or decrease.
WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with qualified retirement plans (which include contracts
qualifying under Section 401(a), 403(b), or 457 of the Internal Revenue Code
(the "Code"). The Contract may also be issued for nonqualified and unfunded
deferred compensation plans which do not qualify for special treatment under the
Code. Purchase of this Contract through a Plan does not provide any additional
tax deferral benefits beyond those provided by the Plan. Accordingly, if you are
purchasing this Contract through a Plan, you should consider purchasing the
Contract for its Death Benefit, Annuity Option Benefits or other non-tax related
benefits.
The minimum purchase payment allowed is an average of $1,000 annually per
individual certificate, or $10,000 annually per group contract.
WHO IS THE CONTRACT ISSUED TO? If a group allocated contract is purchased, we
issue certificates to the individual participants. If a group unallocated
contract is purchased, we issue only the contract. Where we refer to "you," we
are referring to the group participant.
Depending on your retirement plan provisions, certain features and/or funding
options described in this prospectus may not be available to you (for example,
dollar-cost averaging, the CHART program, etc.). Your retirement plan provisions
supercede the prospectus. If you have any questions about your specific
retirement plan, contact your plan administrators.
3
<PAGE> 6
IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you receive a full refund of the cash value (including
charges). Where state law requires a longer right to return (free look), or the
return of the purchase payments, we will comply. You bear the investment risk
during the free look period; therefore, the cash value returned to you may be
greater or less than your purchase payment. The cash value will be determined as
of the close of business on the day we receive a written request for a refund.
WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
the Fixed Account or any or all of the funding options shown on the cover page.
The funding options are described in the prospectuses for the funds. Depending
on market conditions, you may make or lose money in any of these options.
The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Standard and Nonstandard performance is shown in the Statement of
Additional Information that you may request free of charge.
You can transfer between the funding options as frequently as you wish without
any current tax implications. Currently there is no charge for transfers, nor a
limit to the number of transfers allowed. We may, in the future, charge a fee
for any transfer request, or limit the number of transfers allowed. At a
minimum, we would always allow one transfer every six months. We reserve the
right to restrict transfers that we determine will disadvantage other contract
owners.
WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. For each
allocated contract, we may deduct a semiannual administrative charge of $15. A
maximum sub-account administrative charge of .10% annually will be charged in
addition to or instead of the semiannual administrative charge, depending upon
the terms of your allocated contract. The maximum annual insurance charge is
1.20% of the amounts you direct to the variable funding options. Each funding
option also charges for management and other expenses.
If you withdraw amounts from the Contract, a surrender charge may apply. The
amount of the charge depends on a number of factors, including the length of
time the contract/certificate has been in force. If you withdraw all amounts
under the contract/certificate, or if you begin receiving annuity/income
payments, the Company may be required by your state to deduct a premium tax.
HOW WILL MY CONTRIBUTIONS AND WITHDRAWALS BE TAXED? Generally, the payments you
make to a qualified Contract during the accumulation phase are made with
before-tax dollars. You will be taxed on your purchase payments and on any
earnings when you make a withdrawal or begin receiving annuity payments. Under a
nonqualified Contract, payments to the contract are made with after-tax dollars,
and earnings will accumulate tax-deferred. You will be taxed on these earnings
when they are withdrawn from the Contract.
For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the amount
withdrawn.
HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. Withdrawal charges, income taxes, and/or a penalty tax may
apply to taxable amounts withdrawn.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? The death benefit applies upon
the first death of the owner, joint owner or annuitant. Assuming you are the
annuitant, if you die before you move
4
<PAGE> 7
to the income phase, the person you have chosen as your beneficiary will receive
a death benefit. The death benefit paid depends on your age at the time of your
death. The death benefit is calculated as of the close of the business day on
which the Home Office receives due proof of death.
Any amount paid will be reduced by any applicable premium tax, outstanding loans
or surrenders not previously deducted. Certain states may have varying age
requirements. Please refer to the Death Benefit section of the prospectus for
more details.
ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:
- DOLLAR COST AVERAGING. This is a program that allows you to invest
a fixed amount of money in funding options each month, theoretically
giving you a lower average cost per unit over time than a single
one-time purchase. Dollar Cost Averaging requires regular
investments regardless of fluctuating price levels, and does not
guarantee profits or prevent losses in a declining market. Potential
investors should consider their financial ability to continue
purchases through periods of low price levels.
- ASSET ALLOCATION ADVICE. If allowed, you may elect to enter into a
separate advisory agreement with Copeland Financial Services, Inc.
("Copeland"), an affiliate of the Company, for the purpose of
receiving asset allocation advice under Copeland's CHART Program.
The CHART Program allocates all purchase payments among the American
Odyssey Funds. The CHART Program and applicable fees are fully
described in a separate disclosure statement.
- SYSTEMATIC WITHDRAWAL OPTION. Before the maturity date, you can
arrange to have money sent to you at set intervals throughout the
year. Of course, any applicable income and penalty taxes will apply
on amounts withdrawn.
5
<PAGE> 8
FEE TABLE
- --------------------------------------------------------------------------------
MAXIMUM CONTRACT/CERTIFICATE OWNER TRANSACTION CHARGE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
YEARS SINCE
PURCHASE PAYMENT
CONTINGENT DEFERRED SALES CHARGE MADE PERCENTAGE
- -------------------------------------------------------------------------------------
<S> <C> <C>
As a percentage of purchase payments 0-5 5%
6+ 0%
OR
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
SURRENDER CHARGE CONTRACT YEAR PERCENTAGE
- -------------------------------------------------------------------------------------
<S> <C> <C>
As a percentage of amount surrendered 1-2 5%
3-4 4%
5-6 3%
7-8 2%
9+ 0%
</TABLE>
MAXIMUM CONTRACT/CERTIFICATE ADMINISTRATIVE CHARGE
<TABLE>
<S> <C> <C>
Semiannual Contract Administrative Charge (allocated
contracts only) $ 15
AND/OR
Funding Option Administrative Charge 0.10%
(As a percentage of amounts allocated to the variable
funding options under allocated contracts)
</TABLE>
MAXIMUM SEPARATE ACCOUNT ANNUAL EXPENSES
<TABLE>
<S> <C> <C>
Mortality and Expense Risk Fees 1.20%
</TABLE>
(As a percentage of average daily net assets of the Separate Account)
6
<PAGE> 9
FUNDING OPTION EXPENSES
(as a percentage of average daily net assets of the funding option as of
December 31, 1999, unless otherwise noted.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
UNDERLYING FUNDS: REIMBURSEMENT) REIMBURSEMENT) REIMBURSEMENT)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund............................ 0.75% 0.08% 0.83%
Dreyfus Stock Index Fund............................. 0.25% 0.01% 0.26%
High Yield Bond Trust................................ 0.50% 0.31% 0.81%
Managed Assets Trust................................. 0.50% 0.10% 0.60%
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund................................. 0.56% 0.08% 0.64%
Emerging Opportunities Fund...................... 0.75% 0.12% 0.87%
Global High-Yield Bond Fund...................... 0.67% 0.16% 0.83%
Intermediate-Term Bond Fund...................... 0.49% 0.10% 0.59%
International Equity Fund........................ 0.59% 0.13% 0.72%
Long-Term Bond Fund.............................. 0.50% 0.10% 0.60%
AMERICAN ODYSSEY FUNDS, INC.*
Core Equity Fund................................. 0.56% 1.33% 1.89%
Emerging Opportunities Fund...................... 0.75% 1.37% 2.12%
Global High-Yield Bond Fund...................... 0.67% 1.41% 2.08%
Intermediate-Term Bond Fund...................... 0.49% 1.35% 1.84%
International Equity Fund........................ 0.59% 1.38% 1.97%
Long-Term Bond Fund.............................. 0.50% 1.35% 1.85%
DELAWARE GROUP PREMIUM FUND
REIT Series...................................... 0.64% 0.21% 0.85%(1)
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio........................... 0.75% 0.03% 0.78%(2)
Small Cap Portfolio.............................. 0.75% 0.03% 0.78%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Templeton Asset Strategy Fund -- Class 1
(formerly offered as Templeton Asset Allocation
Fund).......................................... 0.60% 0.18% 0.78%(3)
Templeton Global Income Securities Fund -- Class
1 (formerly offered as Templeton Global Bond
Fund).......................................... 0.60% 0.05% 0.65%(4)
Templeton Growth Securities Fund -- Class 1
(formerly offered as Templeton Global Stock
Fund).......................................... 0.83% 0.05% 0.88%(5)
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Investors Fund................................... 0.53% 0.45% 0.98%(6)
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio........................ 0.80% 0.02% 0.82%(7)
MFS Total Return Portfolio....................... 0.80% 0.04% 0.84%(7)
Putnam Diversified Income Portfolio.............. 0.75% 0.08% 0.83%(7)
Smith Barney High Income Portfolio............... 0.60% 0.06% 0.66%(7)
Smith Barney International Equity Portfolio...... 0.90% 0.10% 1.00%(7)
Smith Barney Large Capitalization Growth
Portfolio...................................... 0.75% 0.11% 0.86%(7)
Smith Barney Large Cap Value Portfolio........... 0.65% 0.02% 0.67%(7)
Smith Barney Money Market Portfolio.............. 0.50% 0.04% 0.54%(7)
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio....................... 0.60% 0.20% 0.80%(8)
Disciplined Mid Cap Stock Portfolio.............. 0.70% 0.25% 0.95%(9)
Disciplined Small Cap Stock Portfolio............ 0.80% 0.20% 1.00%(8)
MFS Mid Cap Growth Portfolio..................... 0.80% 0.20% 1.00%(8)
MFS Research Portfolio........................... 0.80% 0.19% 0.99%
Social Awareness Stock Portfolio................. 0.64% 0.16% 0.80%
Strategic Stock Portfolio........................ 0.60% 0.30% 0.90%(8)
Travelers Quality Bond Portfolio................. 0.32% 0.22% 0.54%
U.S. Government Securities Portfolio............. 0.32% 0.16% 0.48%
Utilities Portfolio.............................. 0.65% 0.23% 0.88%
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio -- Initial Class......... 0.48% 0.08% 0.56%(10)
Growth Portfolio -- Initial Class................ 0.58% 0.07% 0.65%(10)
High Income Portfolio -- Initial Class........... 0.58% 0.11% 0.69%
</TABLE>
7
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<TABLE>
<CAPTION>
TOTAL ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
UNDERLYING FUNDS: REIMBURSEMENT) REIMBURSEMENT) REIMBURSEMENT)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio -- Initial Class......... 0.53% 0.09% 0.62%(10)
</TABLE>
* Includes CHART asset allocation fee of 1.25%.
NOTES:
The purpose of this Fee Table is to assist Contract Owners in understanding the
various maximum costs and expenses that Contract Owners or Participants will
bear, directly or indirectly, under the Contract. See "Charges and Deductions"
in this prospectus for additional information. Expenses shown do not include
premium taxes, which may be applicable. "Other Expenses" include operating costs
of the fund. These expenses are reflected in each funding option's net asset
value and are not deducted from the account value under the contract.
(1) The investment adviser for the REIT SERIES is Delaware Management Company
("DMC"). Effective May 1, 2000 through October 31, 2000, DMC has
voluntarily agreed to waive its management fee and reimburse the Series
for expenses to the extent that total expenses will not exceed 0.85%.
Without such and arrangement, Total Annual Operating Expenses for the fund
would have been 0.96%.
(2) Formerly Capital Appreciation Portfolio.
(3) On 2/8/00, fund shareholders approved a merger and reorganization merge
the assets of TEMPLETON GLOBAL ASSET ALLOCATION FUND into TEMPLETON ASSET
ALLOCATION FUND (which then changed its name to TEMPLETON ASSET STRATEGY
FUND), effective 5/1/00. The table shows restated total expenses based
upon the new fees and assets of Templeton Asset Allocation Fund as of
12/31/99, and not the assets of the combined fund on 5/1/00. However, if
the table reflected both the new fees and the combined assets, the fund's
expenses after 5/1/00 would be estimated as: Management Fees 0.60%, Other
Expenses 0.14% and Total Annual Operating Expenses 0.74%.
(4) On 2/8/00, a merger and reorganization was approved to merge the assets of
TEMPLETON BOND FUND into TEMPLETON GLOBAL INCOME SECURITIES FUND,
effective 5/1/00. The above table shows restated total expenses based upon
the fees and assets of TEMPLETON GLOBAL INCOME SECURITIES FUND as of
12/31/99, and not the assets of the combined fund on 5/1/00. However, if
the table reflected the combined assets, the Fund's expenses after 5/1/00
would be estimated as: Management Fees 0.60%, Other Expenses 0.04% and
Total Annual Operating Expenses 0.64%. The Fund's administration fee is
paid indirectly through the management fee.
(5) On 2/8/00, a merger and reorganization was approved that merged the assets
of TEMPLETON STOCK FUND into TEMPLETON GLOBAL GROWTH FUND (which then
changed its name to TEMPLETON GROWTH SECURITIES FUND), effective 5/1/00.
The above table shows restated total expenses based upon the new fees and
assets of TEMPLETON GLOBAL GROWTH FUND as of 12/31/99, and not the assets
of the combined fund on 5/1/00. However, if the table reflected the
combined assets, the Fund's expenses after 5/1/00 would be estimated as:
Management Fees 0.80%, Other Expenses 0.05% and Total Annual Operating
Expenses 0.85%. The Fund's administration fee is paid indirectly through
the Management Fee.
(6) The Adviser has waived all or a portion of its Management Fees for the
year ended December 31, 1999. If such fees were not waived or expenses
reimbursed, the Management fee, Other Expenses and Total Annual Operating
Expenses would have been 0.75%, 1.05% and 1.80%, respectively.
(7) Expenses are as of October 31, 1999 (the Fund's fiscal year end). There
were no fees waived or expenses reimbursed for these funds in 1999.
(8) Travelers Insurance Company has agreed to reimburse the CONVERTIBLE BOND
PORTFOLIO, the STRATEGIC STOCK PORTFOLIO, the DISCIPLINED SMALL CAP STOCK
PORTFOLIO, and the MFS MID CAP GROWTH PORTFOLIO for expenses for the
period ended December 31, 1999 which exceeded 0.80%, 0.90%, 1.00% and
1.00% respectively. Without such voluntary arrangements, the actual
annualized Total Annual Operating Expenses would have been 1.23%, 0.99%,
1.49%, and 1.07% respectively.
(9) Other Expenses reflect the current expense reimbursement arrangement with
Travelers Insurance Company. Travelers has agreed to reimburse the
Portfolio for the amount by which their aggregate expenses (including
management fees, but excluding brokerage commissions, interest charges and
taxes) exceeds 0.95%. Without such arrangements, the Total Annual
Operating Expenses for the Portfolio would have been 0.99% for the
DISCIPLINED MID CAP STOCK PORTFOLIO.
(10) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain
funds, or FMR on behalf of certain funds, custodian, credits realized as
a result of uninvested cash balances were used to reduce a portion of
each applicable fund 's expenses. Without these reductions, the total
operating expenses presented in the table would have been 0.57% for
EQUITY-INCOME PORTFOLIO, 0.66% for GROWTH PORTFOLIO, and 0.63% for ASSET
MANAGER PORTFOLIO.
8
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EXAMPLE WITH DEFERRED SALES CHARGE (PERCENTAGE OF PURCHASE PAYMENT)*
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
------------------------------------- -------------------------------------
UNDERLYING FUNDING OPTIONS: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund........................ 73 122 173 263 23 72 123 263
Dreyfus Stock Index Fund......................... 68 104 143 203 18 54 93 203
High Yield Bond Trust............................ 73 121 172 261 23 71 122 261
Managed Assets Trust............................. 71 115 161 239 21 65 111 239
AMERICAN ODYSSEY FUNDS, INC.(1)
Core Equity Fund.............................. 71 116 163 243 21 66 113 243
Emerging Opportunities Fund................... 74 123 175 267 24 73 125 267
Global High-Yield Bond Fund................... 73 122 173 263 23 72 123 263
Intermediate-Term Bond Fund................... 71 114 160 238 21 64 110 238
International Equity Fund..................... 72 118 167 252 22 68 117 252
Long-Term Bond Fund........................... 71 115 161 239 21 65 111 239
AMERICAN ODYSSEY FUNDS, INC.(2)
Core Equity Fund.............................. 84 153 225 364 34 103 175 364
Emerging Opportunities Fund................... 86 160 236 385 36 110 186 385
Global High-Yield Bond Fund................... 86 159 234 381 36 109 184 381
Intermediate-Term Bond Fund................... 83 152 222 360 33 102 172 360
International Equity Fund..................... 85 155 229 371 35 105 179 371
Long-Term Bond Fund........................... 83 152 223 361 33 102 173 361
DELAWARE GROUP PREMIUM FUND
REIT Series................................... 73 122 174 265 23 72 124 265
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio........................ 73 120 170 258 23 70 120 258
Small Cap Portfolio........................... 73 120 170 258 23 70 120 258
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS
TRUST
Templeton Asset Strategy Fund -- Class 1...... 73 120 170 258 23 70 120 258
Templeton Global Income Securities Fund --
Class 1..................................... 71 116 164 244 21 66 114 244
Templeton Growth Securities Fund -- Class 1... 74 123 175 268 24 73 125 268
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Investors Fund................................ 75 126 180 278 25 76 130 278
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio..................... 73 121 172 262 23 71 122 262
MFS Total Return Portfolio.................... 73 122 173 264 23 72 123 264
Putnam Diversified Income Portfolio........... 73 122 173 263 23 72 123 263
Smith Barney High Income Portfolio............ 72 116 164 245 22 66 114 245
Smith Barney International Equity Portfolio... 75 127 181 280 25 77 131 280
Smith Barney Large Capitalization Growth
Portfolio................................... 74 123 174 266 24 73 124 266
Smith Barney Large Cap Value Portfolio........ 72 117 165 247 22 67 115 247
Smith Barney Money Market Portfolio........... 70 113 158 233 20 63 108 233
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio.................... 73 121 171 260 23 71 121 260
Disciplined Mid Cap Stock Portfolio........... 74 125 179 275 24 75 129 275
Disciplined Small Cap Stock Portfolio......... 75 127 181 280 25 77 131 280
MFS Mid Cap Growth Portfolio.................. 75 127 181 280 25 77 131 280
MFS Research Portfolio........................ 75 126 181 279 25 76 131 279
Social Awareness Stock Portfolio.............. 73 121 171 260 23 71 121 260
Strategic Stock Portfolio..................... 74 124 176 270 24 74 126 270
Travelers Quality Bond Portfolio.............. 70 113 158 233 20 63 108 233
U.S. Government Securities Portfolio.......... 70 111 155 227 20 61 105 227
Utilities Portfolio........................... 74 123 175 268 24 73 125 268
VARIABLE INSURANCE PRODUCTS FUND
Equity -- Income Portfolio -- Initial Class... 71 113 159 235 21 63 109 235
Growth Portfolio -- Initial Class............. 71 116 164 244 21 66 114 244
High Income Portfolio -- Initial Class........ 72 117 166 249 22 67 116 249
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio -- Initial Class...... 71 115 162 241 21 65 112 241
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
EXAMPLE REFLECTS THE $15 SEMIANNUAL CONTRACT FEE AS AN ANNUAL CHARGE OF
0.163% OF ASSETS.
(1) Reflects expenses that would be incurred for those Contract Owners who DO
NOT participate in the CHART Asset Allocation program.
(2) Reflects expenses that would be incurred for those Contract Owners who DO
participate in the CHART Asset Allocation program.
9
<PAGE> 12
EXAMPLE WITH SURRENDER CHARGE (PERCENTAGE OF AMOUNT SURRENDERED)*
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
IF CONTRACT IS NOT SURRENDERED OR
IF CONTRACT IS SURRENDERED AT THE ANNUITIZED AT END OF PERIOD
END OF PERIOD SHOWN: SHOWN:
------------------------------------- -------------------------------------
UNDERLYING FUNDING OPTIONS: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund........................ 75 115 157 263 23 72 123 263
Dreyfus Stock Index Fund......................... 69 98 129 203 18 54 93 203
High Yield Bond Trust............................ 74 114 156 261 23 71 122 261
Managed Assets Trust............................. 72 108 146 239 21 65 111 239
AMERICAN ODYSSEY FUNDS, INC.(1)
Core Equity Fund.............................. 73 109 148 243 21 66 113 243
Emerging Opportunities Fund................... 75 116 159 267 24 73 125 267
Global High-Yield Bond Fund................... 75 115 157 263 23 72 123 263
Intermediate-Term Bond Fund................... 72 108 145 238 21 64 110 238
International Equity Fund..................... 74 112 152 252 22 68 117 252
Long-Term Bond Fund........................... 72 108 146 239 21 65 111 239
AMERICAN ODYSSEY FUNDS, INC.(2)
Core Equity Fund.............................. 85 145 207 364 34 103 175 364
Emerging Opportunities Fund................... 87 152 218 385 36 110 186 385
Global High-Yield Bond Fund................... 86 150 216 381 36 109 184 381
Intermediate-Term Bond Fund................... 84 144 205 360 33 102 172 360
International Equity Fund..................... 85 147 211 371 35 105 179 371
Long-Term Bond Fund........................... 84 144 205 361 33 102 173 361
DELAWARE GROUP PREMIUM FUND
REIT Series................................... 75 116 158 265 23 72 124 265
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio........................ 74 114 155 258 23 70 120 258
Small Cap Portfolio........................... 74 114 155 258 23 70 120 258
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS
TRUST
Templeton Asset Strategy Fund -- Class 1...... 74 114 155 258 23 70 120 258
Templeton Global Income Securities Fund --
Class 1..................................... 73 110 148 244 21 66 114 244
Templeton Growth Securities Fund -- Class 1... 75 116 159 268 24 73 125 268
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Investors Fund................................ 76 119 164 278 25 76 130 278
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio..................... 74 115 156 262 23 71 122 262
MFS Total Return Portfolio.................... 75 115 157 264 23 72 123 264
Putnam Diversified Income Portfolio........... 75 115 157 263 23 72 123 263
Smith Barney High Income Portfolio............ 73 110 149 245 22 66 114 245
Smith Barney International Equity Portfolio... 76 120 165 280 25 77 131 280
Smith Barney Large Capitalization Growth
Portfolio................................... 75 116 158 266 24 73 124 266
Smith Barney Large Cap Value Portfolio........ 73 110 149 247 22 67 115 247
Smith Barney Money Market Portfolio........... 72 107 143 233 20 63 108 233
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio.................... 74 114 155 260 23 71 121 260
Disciplined Mid Cap Stock Portfolio........... 76 118 163 275 24 75 129 275
Disciplined Small Cap Stock Portfolio......... 76 120 165 280 25 77 131 280
MFS Mid Cap Growth Portfolio.................. 76 120 165 280 25 77 131 280
MFS Research Portfolio........................ 76 120 165 279 25 76 131 279
Social Awareness Stock Portfolio.............. 74 114 156 260 23 71 121 260
Strategic Stock Portfolio..................... 75 117 160 270 24 74 126 270
Travelers Quality Bond Portfolio.............. 72 107 143 233 20 63 108 233
U.S. Government Securities Portfolio.......... 71 105 140 227 20 61 105 227
Utilities Portfolio........................... 75 116 159 268 24 73 125 268
VARIABLE INSURANCE PRODUCTS FUND
Equity -- Income Portfolio -- Initial Class... 72 107 144 235 21 63 109 235
Growth Portfolio -- Initial Class............. 73 110 148 244 21 66 114 244
High Income Portfolio -- Initial Class........ 73 111 150 249 22 67 116 249
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio....................... 73 109 147 241 21 65 112 241
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
EXAMPLE REFLECTS THE $15 SEMIANNUAL CONTRACT FEE AS AN ANNUAL CHARGE OF
0.163% OF ASSETS.
(1) Reflects expenses that would be incurred for those Contract Owners who DO
NOT participate in the CHART Asset Allocation program.
(2) Reflects expenses that would be incurred for those Contract Owners who DO
participate in the CHART Asset Allocation program.
10
<PAGE> 13
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
See Appendix A.
THE VARIABLE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Gold Track is designed to help you accumulate money for retirement. Certificates
are issued to individual participants under a group contract. Under the
Contract, you (the contract owner or participant, as applicable) make purchase
payments to us and we credit them to your account. We promise to pay you an
income in the form of annuity payments, beginning on a future date that you
choose, the maturity date. The purchase payments accumulate tax deferred in the
funding options that you select. You assume the risk of gain or loss according
to the performance of the funding options. The cash value is the amount of
purchase payments, plus or minus any investment experience or interest. The cash
value also reflects all withdrawals made and charges deducted. There is
generally no guarantee that at the maturity date the cash value will equal or
exceed the total purchase payments made under the Contract. The date the
Contract and its benefits became effective is referred to as the contract date.
Each 12-month period following this contract date is called a contract year. The
record of accumulation units credited to an owner is called the owner's account.
The record of accumulation units credited to a participant is called the
individual account, or participant's interest.
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to us.
The Contracts may be issued on either an allocated or an unallocated basis. Both
the allocated and unallocated contracts provide for fixed (Fixed Acccount
Option) and variable (Separate Account) accumulations and annuity payouts. The
Fixed Account Option is described in a separate prospectus.
CONTRACT OWNER INQUIRIES
Any questions you have about your Contract should be directed to the Company's
Home Office at 1-800-842-9368.
ALLOCATED CONTRACTS
A group allocated Contract will cover all present and future participants under
the Contract. A participant under an allocated Contract receives a certificate
which evidences participation in the Contract.
UNALLOCATED CONTRACTS
We offer an unallocated annuity Contract, designed for use with certain
Qualified Plans where the employer has secured the services of a Third Party
Administrator (TPA).
The Contracts will be issued to an employer or the trustee(s) or custodian of an
employer's Qualified Plan. All purchase payments are held under the Contract, as
directed by the contract owner. There are no individual accounts under the
unallocated Contracts for individual participants in the Qualified Plan.
11
<PAGE> 14
PURCHASE PAYMENTS
The minimum purchase payment allowed is an average of $1,000 annually per
individual certificate, or $10,000 annually per group contract. The initial
purchase payment is due and payable before the Contract becomes effective.
We will apply the initial purchase payment within two business days after we
receive it in good order at our Home Office. Subsequent purchase payments will
be credited to a Contract on the same business day, if received in good order by
our Home Office by 4:00 p.m. Eastern time. A business day is any day that the
New York Stock Exchange is open. Our business day ends at 4:00 p.m. Eastern time
unless we need to close earlier due to an emergency.
ACCUMULATION UNITS
The period between the contract effective date and the maturity date is the
accumulation period. During the accumulation period, an accumulation unit is
used to calculate the value of a Contract. An accumulation unit works like a
share of a mutual fund. Each funding option has a corresponding accumulation
unit value. The accumulation units are valued each business day and their values
may increase or decrease from day to day. The number of accumulation units we
will credit to your Contract once we receive a purchase payment is determined by
dividing the amount directed to each funding option by the value of its
accumulation unit. We calculate the value of an accumulation unit for each
funding option each day the New York Stock Exchange is open. The values are
calculated as of 4:00 p.m. Eastern time. After the value is calculated, we
credit your Contract. During the annuity period (i.e., after the maturity date),
you are credited with annuity units.
THE FUNDING OPTIONS
You choose which of the following variable funding options to have your purchase
payments allocated to. These funding options are subsections of the Separate
Account, which invest in the underlying mutual funds ("underlying funds"). You
will find detailed information about the options and their inherent risks in the
current prospectuses for the funding options which must accompany this
prospectus. You are not investing directly in the underlying fund. Since each
option has varying degrees of risk, please read the prospectuses carefully
before investing. Contact your registered representative or call 1-800-842-9368
to request additional copies of the prospectuses.
If any of the funding options become unavailable for allocating purchase
payments, or if we believe that further investment in a funding option is
inappropriate for the purposes of the Contract, we may substitute another
funding option. However, we will not make any substitutions without notifying
you and obtaining any state and SEC approval, if necessary. From time to time we
may make new funding options available.
The current variable funding options are listed below, along with their
investment advisers and any subadviser:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund Seeks growth of capital through the use of common Travelers Asset Management
stocks. Income is not an objective. The Fund invests International Company LLC
principally in common stocks of small to large companies ("TAMIC")
which are expected to experience wide fluctuations in Subadviser: Janus Capital
price both in rising and declining markets. Corp.
Dreyfus Stock Index Fund Seeks to provide investment results that correspond to Mellon Equity Securities
the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the
Standard & Poor's 500 Composite Stock Price Index.
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
High Yield Bond Trust* Seeks generous income. The assets of the High Yield Bond TAMIC
Trust will be invested in bonds which, as a class, sell
at discounts from par value and are typically high risk
securities.
Managed Assets Trust** Seeks high total investment return through a fully TAMIC
managed investment policy in a portfolio of equity, debt Subadviser: Travelers
and convertible securities. Investment Management
Company ("TIMCO")
AMERICAN ODYSSEY FUNDS,
INC.
Core Equity Fund Seeks maximum long-term total return by investing American Odyssey Funds
primarily in common stocks of well-established Management, Inc.
companies. Subadviser: Equinox
Capital Management, L.L.C.
Emerging Opportunities Seeks maximum long-term total return by investing American Odyssey Funds
Fund primarily in common stocks of small, rapidly growing Management, Inc.
companies. Subadviser: Cowen Asset
Management and Chartwell
Investment Partners
Global High-Yield Bond Seeks maximum long-term total return (capital American Odyssey Funds
Fund*(1) appreciation and income) by investing primarily in Management, Inc.
high-yield debt securities from the United States and Subadviser: Credit Suisse
abroad. Asset Management
Intermediate-Term Bond Seeks maximum long-term total return by investing American Odyssey Funds
Fund* primarily in intermediate-term corporate debt Management, Inc.
securities, U.S. government securities, mortgage-related Subadviser: TAMIC
securities and asset-backed securities, as well as money
market instruments.
International Equity Fund Seeks maximum long-term total return by investing American Odyssey Funds
primarily in common stocks of established non-U.S. Management, Inc.
companies. Subadviser: Bank of
Ireland Asset Management
(U.S.) Limited
Long-Term Bond Fund* Seeks maximum long-term total return by investing American Odyssey Funds
primarily in long-term corporate debt securities, U.S. Management, Inc.
government securities, mortgage-related securities, and Subadviser: Western Asset
asset-backed securities, as well as money market Management Company
instruments.
DELAWARE GROUP PREMIUM FUND
REIT Series Seeks maximum long-term total return by investing in Delaware Management
securities of companies primarily engaged in the real Company, Inc.
estate industry. Capital appreciation is a secondary Subadviser: Lincoln
objective. Investment Management,
Inc.
DREYFUS VARIABLE INVESTMENT
FUND
Appreciation Portfolio Seeks primarily to provide long-term capital growth The Dreyfus Corporation
consistent with the preservation of capital; current Subadviser: Fayez Sarofim
income is a secondary investment objective. The & Co.
portfolio invests primarily in the common stocks of
domestic and foreign issuers.
Small Cap Portfolio Seeks to maximize capital appreciation. The Dreyfus Corporation
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST
Templeton Asset Strategy Seeks a high level of total return with reduced risk Templeton Investment
Fund (Class 1)** over the long term through a flexible policy of Counsel, Inc.
investing in stocks of companies in any nation and debt
obligations of companies and governments of any nation.
Templeton Global Income Seeks high current income by investing primarily in debt Templeton Global Bond
Securities Fund (Class securities of companies, governments and government Managers
1)* agencies of various nations throughout the world.
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST
(CONT.)
Templeton Growth Seeks capital growth by investing predominantly in Templeton Global Advisors
Securities Fund (Class equity securities of companies with a favorable outlook Limited , Inc.
1) for earnings and whose rate of growth is expected to
exceed that of the U.S. economy over time. Current
income is only an incidental consideration.
SALOMON BROTHERS VARIABLE
SERIES FUND, INC.
Investors Fund Seeks long-term growth of capital, and, secondarily, Salomon Brothers Asset
current income, through investments in common stocks of Management
well-known companies.
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio Seeks long-term growth of capital. Current income is TIA
only an incidental consideration The Portfolio invests Subadviser: Alliance
predominantly in equity securities of companies with a Capital Management L.P.
favorable outlook for earnings and whose rate of growth
is expected to exceed that of the U.S. economy over
time.
MFS Total Return (a balanced portfolio) Seeks to obtain above-average TIA
Portfolio** income (compared to a portfolio entirely invested in Subadviser: Massachusetts
equity securities) consistent with the prudent Financial Services Company
employment of capital. Generally, at least 40% of the ("MFS")
Portfolio's assets are invested in equity securities.
Putnam Diversified Income Seeks high current income consistent with preservation TIA
Portfolio** of capital. The Portfolio will allocate its investments Subadviser: Putnam
among the U.S. Government Sector, the High Yield Sector, Investment Management,
and the International Sector of the fixed income Inc.
securities markets.
Smith Barney High Income Seeks high current income. Capital appreciation is a SSB Citi Fund Management
Portfolio* secondary objective. The Portfolio will invest at least LLC ("SSB Citi")
65% of its assets in high-yielding corporate debt
obligations and preferred stock.
Smith Barney Seeks total return on assets from growth of capital and SSB Citi
International Equity income by investing at least 65% of its assets in a
Portfolio diversified portfolio of equity securities of
established non-U.S. issuers.
Smith Barney Large Seeks long-term growth of capital by investing in equity SSB Citi
Capitalization Growth securities of companies with large market
Portfolio capitalizations.
Smith Barney Large Cap Seeks current income and long-term growth of income and SSB Citi
Value Portfolio capital by investing primarily, but not exclusively, in
common stocks.
Smith Barney Money Market Seeks maximum current income and preservation of SSB Citi
Portfolio* capital.
THE TRAVELERS SERIES TRUST
Convertible Bond Seeks current income and capital appreciation by TAMIC
Portfolio* investing in convertible bond securities and in
combinations of nonconvertible fixed-income securities
and warrants or call options that together resemble
convertible securities.
Disciplined Mid Cap Stock Seeks growth of capital by investing primarily in a TAMIC
Portfolio broadly diversified portfolio of common stocks. Subadviser: TIMCO
Disciplined Small Cap Seeks long term capital appreciation by investing TAMIC
Stock Portfolio primarily (at least 65% of its total assets) in the Subadviser: TIMCO
common stocks of U.S. Companies with relatively small
market capitalizations at the time of investment.
MFS Mid Cap Growth Seeks to obtain long-term growth of capital by TAMIC
Portfolio investing, under normal market conditions, at least 65% Subadviser: MFS
of its total assets in equity securities of companies
with medium market capitalization which the investment
adviser believes have above-average growth potential.
MFS Research Portfolio Seeks to provide long-term growth of capital and future TAMIC
income. Subadviser: MFS
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Social Awareness Stock Seeks long-term capital appreciation and retention of SSB Citi
Portfolio net investment income by selecting investments,
primarily common stocks, which meet the social criteria
established for the Portfolio. Social criteria currently
excludes companies that derive a significant portion of
their revenues from the production of tobacco, tobacco
products, alcohol, or military defense systems, or in
the provision of military defense related services or
gambling services.
Strategic Stock Portfolio Seeks to provide an above-average total return through a TAMIC
combination of potential capital appreciation and Subadviser: TIMCO
dividend income by investing primarily in high dividend
yielding stocks periodically selected from the companies
included in (i) the Dow Jones Industrial Average and
(ii) a subset of the S&P Industrial Index.
Travelers Quality Bond Seeks current income, moderate capital volatility and TAMIC
Portfolio* total return.
U.S. Government Seeks to select investments from the point of view of an TAMIC
Securities Portfolio* investor concerned primarily with the highest credit
quality, current income and total return. The assets of
the Portfolio will be invested in direct obligations of
the United States, its agencies and instrumentalities.
Utilities Portfolio Seeks to provide current income by investing in equity SSB Citi
and debt securities of companies in the utilities
industries.
VARIABLE INSURANCE PRODUCTS
FUND
Equity Income Seeks reasonable income by investing primarily in Fidelity Management &
Portfolio -- Initial income- producing equity securities; in choosing these Research Company ("FMR")
Class securities, the portfolio manager will also consider the
potential for capital appreciation.
Growth Seeks capital appreciation by purchasing common stocks FMR
Portfolio -- Initial of well-known, established companies, and small emerging
Class growth companies, although its investments are not
restricted to any one type of security. Capital
appreciation may also be found in other types of
securities, including bonds and preferred stocks.
High Income Portfolio* -- Seeks to obtain a high level of current income by FMR
Initial Class investing primarily in high yielding, lower -rated,
fixed-income securities, while also considering growth
of capital.
VARIABLE INSURANCE PRODUCTS
FUND II
Asset Manager Seeks high total return with reduced risk over the FMR
Portfolio** -- Initial long-term by allocating its assets among stocks, bonds
Class and short-term fixed-income instruments.
</TABLE>
(1) Formerly American Odyssey Short-Term Bond Fund. The name investment
objective and investment subadviser of this fund were changed pursuant to a
shareholder vote effective May 1, 1998.
* The funding options marked with an asterisk (*) are considered competing
funds, and may be subject to transfer restrictions. Those marked with two
asterisks (**) are not currently considered competing funds, but may be so in
the future because of an allowable change in the funding option's investment
strategy. Please refer to the contract for transfer restrictions.
15
<PAGE> 18
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts. We may also deduct a charge for taxes. Services and benefits we
provide include:
- the ability for you to make withdrawals and surrenders under the
Contracts;
- the death benefit paid on the death of the contract owner or annuitant;
- the available funding options and related programs (including dollar-cost
averaging, portfolio rebalancing, and systematic withdrawal programs);
- administration of the annuity options available under the Contracts; and
- the distribution of various reports to contract owners.
Costs and expenses we incur include:
- losses associated with various overhead and other expenses associated
with providing the services and benefits provided by the Contracts,
- sales and marketing expenses, including commission payments to your
agent, and
- other costs of doing business.
Risks we assume include:
- risks that annuitants may live longer than estimated when the annuity
factors under the Contracts were established,
- that the amount of the death benefit will be greater than the contract
value and
- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
We may reduce or eliminate the withdrawal charge, the administrative charges
and/or the mortality and expense risk charge under the Contract when certain
sales or administration of the Contract result in savings or reduced expenses
and/or risks. For certain trusts, we may change the order in which purchase
payments and earnings are withdrawn in order to determine the withdrawal charge.
We will not reduce or eliminate the withdrawal charge or the administrative
charge where such reduction or elimination would be unfairly discriminatory to
any person.
WITHDRAWAL CHARGE
Purchase payments made under the Contract are not subject to a front-end sales
load. However, when withdrawn, the Company will deduct a surrender charge or a
contingent deferred sales charge, as negotiated. Any sales charge, penalty tax
and withholding will be deducted from either the amount surrendered or from the
remaining Contract balance, as requested by the contract owner or participant.
The maximum surrender charge is 5% of the amount surrendered in the first two
contract/certificate years, up to 4% in years three and four; up to 3% in years
five and six, up to 2% in years seven and eight and 0% beginning in the ninth
year. Any applicable sales charge will not exceed 8.5% of the aggregate amount
of the purchase payments made.
16
<PAGE> 19
The sales charges can be changed if the Company anticipates it will incur
decreased sales-related expenses due to the nature of the Plan to which the
Contract is issued or the involvement of TPAs. When considering a change in the
sales charges, the Company will take into account:
(a) The expected level of initial agent or the Company involvement during
the establishment and maintenance of the Contract including the amount
of enrollment activity required, and the amount of service required by
the contract owner in support of the Plan, and
(b) Contract Owner, agent or TPA involvement in conducting ongoing
enrollment of subsequently eligible participants, and
(c) The expected level of commission the Company may pay to the agent or
TPA for distribution expenses, and
(d) Any other factors which the Company anticipates will increase or
decrease the sales-related expenses associated with the sale of the
Contract in connection with the Plan.
We may not assess a sales charge if a withdrawal is made under one of the
following circumstances:
- retirement of participant
- separation from service by participant
- loans (if available)
- hardship (as defined by the Code) suffered by the participant
- death of participant
- disability (as defined by the Code) of participant
- return of excess plan contributions
- minimum required distributions, generally when participant reaches age
70 1/2
- transfers to an Employee Stock Fund
- certain Plan expenses, as mutually agreed upon
- annuitization under this Contract or another Contract issued by us.
For Section 401(a) plans with less than 50 participants at the time of sale,
Highly Compensated Employees, as defined by the Internal Revenue Code, during
the first 5 contract years may be subject to surrender charges for all
distributions listed above except loans and return of excess plan contributions.
For unallocated Contracts, we make the deductions described above pursuant to
the terms of the various agreements among the custodian, the principal
underwriter, and us.
FREE WITHDRAWAL ALLOWANCE
For Contracts in use with deferred compensation plans, the tax deferred annuity
plans and combined qualified plans/tax-deferred annuity plans, there is
currently a 10% free withdrawal allowance available each year after the first
contract/certificate year. (If you have purchase payments no longer subject to a
withdrawal charge, the maximum you may withdraw without a withdrawal charge is
the greater of (a) the free withdrawal allowance, or (b) the total amount of
purchase payments no longer subject to a withdrawal charge. Note: Any free
withdrawal taken will reduce purchase payments no longer subject to a withdrawal
charge.) The available withdrawal amount will be calculated as of the first
valuation date of any given contract year. The free withdrawal allowance applies
to partial surrenders of any amount and to full surrenders, except those full
surrenders transferred directly to annuity contracts issued by other financial
institutions.
MORTALITY AND EXPENSE RISK CHARGE
A mortality and expense risk charge is deducted on each business day from
amounts held in the Separate Account. This charge is equivalent, on an annual
basis, to a maximum of 1.20% of the amounts allocated to each funding option.
This change compensates the Company for various risks
17
<PAGE> 20
assumed, benefits provided and expenses incurred, including the payment of
commissions to your sales agent.
FUNDING OPTION EXPENSES
The charges and expenses of the funding options are summarized in the fee table
and are described in the accompanying prospectuses.
PREMIUM TAX
Certain state and local governments charge premium taxes ranging from 0% to 5%,
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred. We
will deduct any applicable premium taxes from the cash value either upon death,
surrender, annuitization, or at the time purchase payments are made to the
Contract, but no earlier than when we have a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains or value of the contract, we reserve the right to
charge you proportionately for this tax.
ADMINISTRATIVE CHARGE
The following administrative charges may apply as described in your Contract.
SEMIANNUAL POLICY FEE. A semiannual policy fee of up to $15 may be deducted
from the value of each participant's individual account. Any such deduction will
be made pro rata from each of the funding options at the end of each 6-month
period. This fee is assessed only during the accumulation period. This charge
may apply only to allocated contracts.
ADMINISTRATIVE EXPENSE. This charge is deducted on each business day from the
variable funding options in order to compensate the Company for certain
administrative and operating expenses of the funding options. The charge is
equivalent, on an annual basis, to a maximum of 0.10% of the daily net asset
value of each funding options. This charge is assessed during the accumulation
and annuity periods.
As discussed below, the level of the administrative expense charge is subject to
negotiation. In determining the level of the administrative expense charge, we
consider certain factors including, but not limited to, the following:
(a) The size and characteristics of the Contract and the group to which it
is issued including: the annual amount of purchase payments per
participant, the expected turnover of employees, whether the contract
owner will make purchase payment allocations electronically.
(b) Determination of the Company's anticipated expenses in administering
the Contract, such as: billing for purchase payments, producing
periodic reports, providing for the direct payment of Contract charges
rather than having them deducted from Contract values.
(c) TPA and/or agent involvement.
TPA ADMINISTRATIVE CHARGES
The Company may be directed by the contract owner to deduct charges from
purchase payments or account values for payment to the contract owner and/or the
TPA. These charges are not levied by the Contract. Such charges may include
maintenance fees and transaction fees.
18
<PAGE> 21
TRANSFERS
- --------------------------------------------------------------------------------
You may transfer cash values from one or more funding options to other funding
options, subject to the terms and conditions of the Contract (and your Plan). If
authorized by the contract owner, participants under allocated Contracts may
transfer all or any of their cash value from one funding option to another up to
30 days before the due date of the first annuity payment. We reserve the right
to restrict transfers by any market timing firm or any other third party
authorized to initiate transfers on behalf of multiple contract owners. We may,
among other things, not accept: 1) the transfer instructions of any agent acting
under a power of attorney on behalf of more than one owner, or 2) the transfer
or exchange instructions of individual owners who have executed pre-authorized
transfer forms which are submitted by market timing firms or other third parties
on behalf of more than one owner. We further reserve the right to limit
transfers that we determine will disadvantage other contract owners.
DOLLAR COST AVERAGING
Dollar cost averaging or the pre-authorized transfer program (the "DCA Program")
allows you (the owner or the participant) to transfer a set dollar amount to
other funding options on a monthly or quarterly basis during the accumulation
phase of the Contract. Using this method, more accumulation units are purchased
in a funding option if the value per unit is low and fewer accumulation units
are purchased if the value per unit is high. Therefore, a lower-than-average
cost per unit may be achieved over the long run.
You may elect the DCA Program through written request or other method acceptable
to the Company. Certain minimum amounts may apply to amounts transferred and/or
to enroll in the program.
In addition to the DCA Program, Travelers may credit increased interest rates to
contract owners under an administrative Special DCA Program established at the
discretion of Travelers, depending on availability and state law. Under this
program, the contract owner may pre-authorize level transfers to any of the
funding options under either a 6 Month Program or 12 Month Program. The 6 Month
Program and the 12 Month Program will generally have different credited interest
rates. Under the 6 Month Program, the interest rate can accrue up to 6 months on
funds in the Special DCA Program and all purchase payments and accrued interest
must be transferred on a level basis to the selected funding option in 6 months.
Under the 12 Month Program, the interest rate can accrue up to 12 months on
funds in the Special DCA Program and all purchase payments and accrued interest
in this Program must be transferred on a level basis to the selected funding
options in 12 months.
The pre-authorized transfers will begin after the initial Program purchase
payment and complete enrollment instructions are received by Travelers. If
complete Program enrollment instructions are not received by the Company within
15 days of receipt of the initial Program purchase payment, the entire balance
in the Program will be credited with the non-Program interest rate then in
effect for the Fixed Account.
You may start or stop participation in the DCA Program at any time, but you must
give the Company at least 30 days' notice to change any automated transfer
instructions that are currently in place. If you stop the Special DCA Program
and elect to remain in the Fixed Account, your contract value will be credited
for the remainder of 6 or 12 months with the interest rate for non-Program
funds.
A contract owner may only have one DCA Program or Special DCA Program in place
at one time. Any subsequent purchase payments received by the Company within the
Program period selected will be allocated to the current funding options over
the remainder of that Program transfer period, unless otherwise directed by the
contract owner.
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<PAGE> 22
All provisions and terms of the Contract apply to the DCA and Special DCA
Programs, including provisions relating to the transfer of money between
investment options. We reserve the right to suspend or modify transfer
privileges at any time and to assess a processing fee for this service.
ASSET ALLOCATION ADVICE
Owners may elect to enter into a separate advisory agreement with Copeland
Financial Services, Inc. ("Copeland"), an affiliate of the Company. For a fee,
Copeland provides asset allocation advice under its CHART Program(R), which is
fully described in a separate Disclosure Statement. The CHART program may not be
available in all marketing programs through which this Contract is sold.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Before your maturity date, we will pay all or any portion of your cash surrender
value to the contract owner or to you, as provided in the plan. A contract
owner's account may be surrendered for cash without the consent of any
participant, as provided in the plan.
We may defer payment of any cash surrender value for up to seven days after we
receive the request in good order. The cash surrender value equals the Contract
or Account cash value less any applicable withdrawal charge, outstanding cash
loans, and any premium tax not previously deducted. The cash surrender value may
be more or less than the purchase payments made depending on the value of the
Contract or account at the time of surrender.
Participants in Section 403(b) tax deferred annuity plans may not withdraw
certain salary reduction amounts before reaching age 59 1/2, unless withdrawn
due to separation from service, death, disability or hardship. (See "Federal Tax
Considerations.")
SYSTEMATIC WITHDRAWALS
Before the maturity date, you may choose to withdraw a specified dollar amount
(at least $50) on a monthly, quarterly, semiannual or annual basis. Any
applicable premium taxes and withdrawal charge will be deducted. To elect
systematic withdrawals, you must have a contract value of at least $5,000 and
you must make the election on the form provided by the Company. We will
surrender accumulation units pro rata from all investment options in which you
have an interest, unless you instruct us otherwise. You may begin or discontinue
systematic withdrawals at any time by notifying us in writing, but at least 30
days' notice must be given to change any systematic withdrawal instructions that
are currently in place.
We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where allowed by state law).
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under age 59 1/2. You should consult with
your tax adviser regarding the tax consequences of systematic withdrawals.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
Contract Owner (you). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive
20
<PAGE> 23
all benefits given in the contract provided you have not named an irrevocable
beneficiary and provided the Contract is not assigned.
You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.
BENEFICIARY
You name the beneficiary in a written request. The beneficiary has the right to
receive any death benefit proceeds under the contract upon the death of the
annuitant or a contract owner. If more than one beneficiary survives the
annuitant or contract owner, they will share equally in benefits unless
different shares are recorded with the Company by written request before the
death of the annuitant or contract owner. In the case of a non-spousal
beneficiary or a spousal beneficiary who has not chosen to assume the contract,
the death benefit proceeds will be held in a fixed account until the beneficiary
elects a Settlement Option or takes a distribution.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.
ANNUITANT
The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.
DEATH BENEFIT
- --------------------------------------------------------------------------------
(This benefit is available under Allocated Contracts only.)
Before the maturity date, a death benefit is payable to the beneficiary when
either the annuitant or the participant dies. The death benefit is calculated at
the close of the business day on which the Company's home office receives due
proof of death.
DEATH BENEFIT PROCEEDS PRIOR TO MATURITY DATE
If the participant dies before the maturity date or the participant reaches age
75 (whichever occurs first), the death benefit payable will be the greater of:
(a) the cash value of the participant's individual account or
(b) the total purchase payments under that participant's individual
account, less, for each option, any applicable premium tax, minus
outstanding loan amounts and prior surrenders not previously
deducted as of the date we receive due proof of death.
If the participant dies on or after age 75 and before the maturity date, we will
pay the beneficiary the cash value of the participant's individual account, less
any applicable premium tax or outstanding loan amounts as of the date we receive
due proof of death.
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds before the maturity date under
various situations for nonqualified contracts and qualified contracts is
summarized in the charts below. As stated above, the death benefit for
unallocated contracts is available only with our consent and by endorsement to
the Contract. The charts do not encompass every situation and are merely
intended as a general guide. More detailed information is provided in your
Contract. Generally, the person(s) receiving the benefit may request that the
proceeds be paid in a lump sum, or be applied to one of the settlement options
available under the Contract.
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<PAGE> 24
NONQUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Owner or participant (who is The beneficiary (ies), Unless, the beneficiary is Yes
not the annuitant) or if none, to the the contract owner's spouse
contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Owner or participant (who is The beneficiary (ies), Unless, the beneficiary is Yes
the annuitant) or if none, to the the contract owner's spouse
contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is not the The beneficiary (ies). No
contract owner)
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is the contract See death of "owner who N/A
owner) is the annuitant" above.
- --------------------------------------------------------------------------------------------------------------
Annuitant (where owner is a The beneficiary (ies) Yes (Death of
nonnatural person/trust) (e.g. the trust). annuitant is
treated as death
of the owner in
these
circumstances.)
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Certain payout rules of the Internal Revenue Code (IRC) are triggered upon the
death of any Owner. Non-spousal Beneficiaries (as well as spousal
beneficiaries who choose not to assume the contract) must begin taking
distributions based on the Beneficiary's life expectancy within one year of
death or take a complete distribution of contract proceeds within 5 years of
death.
22
<PAGE> 25
QUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY (SEE *
ABOVE)
- --------------------------------------------------------------------------------------------------------------
Owner/Annuitant The beneficiary (ies), Yes
or if none, >to the
contract owner's estate.
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
DEATH PROCEEDS AFTER THE MATURITY DATE
If any owner or the annuitant dies on or after the maturity date, the Company
will pay the beneficiary a death benefit consisting of any benefit remaining
under the annuity or income option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Under the Contract, you can receive regular income payments (annuity payments).
You can choose the month and the year in which those payments begin (maturity
date). You can also choose among income plans (annuity options). While the
annuitant is alive, you can change your selection any time up to the maturity
date. Annuity payments will begin on the maturity date stated in the Certificate
unless it has been fully surrendered or the proceeds have been paid to the
beneficiary before that date. Annuity payments are a series of periodic payments
(a) for life; (b) for life with either a minimum number of payments or a
specific amount assured; or (c) for the joint lifetime of the annuitant and
another person, and thereafter during the lifetime of the survivor. We may
require proof that the annuitant is alive before annuity payments are made. Not
all options may be available in all states.
You may choose to annuitize at any time after you purchase the contract. Under
nonqualified contracts, unless you elect otherwise, the maturity date will be
the annuitant's 75th birthday or ten years after the effective date of the
contract, if later. Under qualified contracts, the maturity date must be before
the individual's 70th birthday, unless we consent to a later date.
At least 30 days before the original maturity date, you may extend the maturity
date to any time prior to the annuitant's 85th birthday or to a later date with
our consent. Certain annuity options taken at the maturity date may be used to
meet the minimum required distribution requirements of federal tax law, or a
program of partial surrenders may be used instead. These mandatory distribution
requirements take effect generally upon the death of the contract owner, or with
qualified contracts upon either the later of the contract owner's attainment of
age 70 1/2 or year of retirement; or the death of the contract owner. You should
seek independent tax advice regarding the election of minimum required
distributions.
23
<PAGE> 26
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. If, at the time annuity payments begin,
no election has been made to the contrary, the contract value will be applied to
provide an annuity funded by the same investment options as you have selected
during the accumulation period . At least 30 days before the maturity date, you
may transfer the contract value among the funding options in order to change the
basis on which annuity payments will be determined. (See "Transfers.")
VARIABLE ANNUITY
You may choose an annuity payout that fluctuates depending on the investment
experience of the variable funding options. The number of annuity units credited
to the Contract is determined by dividing the first monthly annuity payment
attributable to each funding option by the corresponding accumulation unit value
as of 14 days before the date annuity payments begin. An annuity unit is used to
measure the dollar value of an annuity payment. The number of annuity units (but
not their value) remains fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. If a variable annuity is elected,
the amount applied to it will be the value of the funding options as of 14 days
before the date annuity payments begin less any applicable premium taxes not
previously deducted.
The amount of the first monthly payment depends on the annuity option elected
and the annuitant's adjusted age. A formula for determining the adjusted age is
contained in the Contract. The total first monthly annuity payment is determined
by multiplying the benefit per $1,000 of value shown in the Contract tables by
the number of thousands of dollars of contract value applied to that annuity
option and factors in an assumed daily net investment factor. The Assumed Daily
Net Investment factor corresponds to an annual interest rate of 3%, used to
determine the guaranteed payout rates shown. If investment rates are higher at
the time annuitization is selected, payout rates will be higher than those
shown. The Company reserves the right to require satisfactory proof of age of
any person on whose life annuity payments are based before making the first
payment under any of the payment options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
all subsequent annuity payments changes from month to month based on the
investment experience of the applicable funding options. The total amount of
each annuity payment will be equal to the sum of the basic payments in each
funding option. The actual amounts of these payments are determined by
multiplying the number of annuity units credited to each funding option by the
corresponding annuity unit value as of the date 14 days before the date the
payment is due.
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity," except that the amount
applied to begin the annuity will be the contract value, determined as of the
date annuity payments begin. Payout rates will not be lower than those shown in
the Contract. If it would produce a larger payment, the first fixed annuity
payment will be determined using the Life Annuity Tables in effect on the
maturity date.
ELECTION OF OPTIONS
Any amount distributed from the Contract may be applied to any one of the
annuity options described below.
Election of any of these options must be made by written request to our Home
Office at least 30 days prior to the date such election is to become effective.
The form of such annuity option
24
<PAGE> 27
shall be determined by the contract owner. The following information must be
provided with any such request:
a) the participant's name, address, date of birth, social security number;
b) the amount to be distributed;
c) the annuity option which is to be purchased;
d) the date the annuity option payments are to begin;
e) if the form of the annuity provides a death benefit in the event of the
participant's death, the name, relationship and address of the
beneficiary as designated by you; and
f) any other data that we may require.
The beneficiary, as specified in item (e) above, may be changed by you or the
annuitant as long as we are notified by written request while the annuitant is
alive and before payments have begun. If the beneficiary designation is
irrevocable, such designation cannot be changed or revoked without the consent
of the beneficiary. After we receive the written request and the written consent
of the beneficiary (if required), the new beneficiary designation will take
effect as of the date the notice is signed. We have no further responsibility
for any payment we made before the written request.
MISSTATEMENT
If an annuitant's sex or age was misstated, all benefits of this Contract are
what the cash values would have purchased on the date of issue at the correct
sex and age.
RETIRED LIFE CERTIFICATE
We will issue to each person to whom annuity benefits are being paid under this
Contract a certificate setting forth a statement in substance of the benefits to
which such person is entitled under this Contract.
ALLOCATION OF CASH SURRENDER VALUE DURING THE ANNUITY PERIOD
At the time an annuity option is elected, you also may elect to have the
participant's cash surrender value applied to provide a variable annuity, a
fixed annuity, or a combination of both.
If no election is made to the contrary, the cash surrender value will provide an
annuity which varies with the investment experience of the corresponding funding
option(s) at the time of election. You or the participant, if you so authorize,
may elect to transfer cash values from one funding option to another, as
described in the provision "Transfers of Cash Value Between Funding Options," in
order to reallocate the basis on which annuity payments will be determined. Once
annuity payments have begun, no further transfers are allowed.
ANNUITY OPTIONS
OPTION 1 -- LIFE ANNUITY/NO REFUND. A life annuity is an annuity payable during
the lifetime of the annuitant and terminating with the last monthly payment
preceding the death of the annuitant.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED. An
annuity payable monthly during the lifetime of an annuitant with the provision
that if, at the death of the annuitant, payments have been made for less than
120, 180 or 240 months, as elected, then we will continue to make payments to
the designated beneficiary during the remainder of the period.
OPTION 3 -- LIFE ANNUITY -- CASH REFUND. We will make monthly annuity payments
during the lifetime of the annuitant, ceasing with the last payment due prior to
the death of the annuitant,
25
<PAGE> 28
provided that, at the death of the annuitant,the Beneficiary will receive an
additional payment equal to the dollar value, if any, of (a) minus (b) where,
for a variable annuity:
(a) is the total amount applied under the option divided by the annuity
unit value on the due date of the first annuity payment;
(b) and is
(1) the number of annuity units represented by each payment; times
(2) the number of payments made;
and for a Fixed Annuity:
(a) is the cash value applied on the maturity date under this option; and
(b) is the dollar amount of annuity payments already paid.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY. Monthly annuity payments
based upon the joint lifetime of two persons selected: payments made first to
the annuitant, and upon his/her death, paid to the survivor. No more payments
will be made after the death of the survivor.
OPTION 5 -- JOINT AND LAST SURVIVOR ANNUITY -- ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE. Monthly annuity payments to the annuitant during the joint
lifetime of the two persons selected. One of the two persons will be designated
as the primary payee. The other will be designated as the secondary payee. On
the death of the secondary payee, if survived by the primary payee, we will
continue to make monthly annuity payments to the primary payee in the same
amount that would have been payable during the joint lifetime of the two
persons.
On the death of the primary payee, if survived by the secondary payee, we will
continue to make monthly annuity payments to the secondary payee in an amount
equal to 50% of the payments which would have been made during the lifetime of
the primary payee. No further payments will be made following the death of the
survivor.
OPTION 6 -- FIXED PAYMENTS FOR A FIXED PERIOD OF 120, 180, OR 240 MONTHS. We
will make monthly payments for the period selected. If at the death of the
annuitant, payments have been made for less than 120, 180, or 240 months, as
elected, we will continue to make payments to the designated beneficiary during
the remainder of the period.
OPTION 7 -- OTHER ANNUITY OPTIONS. We will make other arrangements for annuity
payments as may be mutually agreed upon by you and us.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
For Contracts in use with deferred compensation plans, tax-deferred annuity
plans, and combined qualified plans/tax deferred annuity plans, you may return
the Contract for a full refund of the cash value (including charges) within ten
days after you receive it (the "right to return period"). Where state law
requires a longer right to return period, or the return of purchase payments,
the Company will comply. The contract owner bears the investment risk during the
right to return period; therefore, the cash value returned may be greater or
less than your purchase payment. All cash values will be determined as of the
next valuation following the Company's receipt of your written request for
refund.
26
<PAGE> 29
CONTRACT AND PARTICIPANT'S INDIVIDUAL ACCOUNT TERMINATION
Under the allocated Contracts, if the cash value in a participant's individual
account is less than the termination amount as stated in your Contract, we
reserve the right to terminate that account and move the cash value of that
participant's individual account to your account.
Any cash value to which a terminating participant is not entitled under the Plan
will be moved to your account at your direction.
You may discontinue this Contract by written request at any time for any reason.
We reserve the right to discontinue this Contract if:
a) the cash value of the Contract is less than the termination amount; or
b) We determine within our sole discretion and judgment that the Plan or
administration of the Plan is not in conformity with applicable law; or
c) We receive notice that is satisfactory to us of plan termination.
If we discontinue this Contract or we receive your written request to
discontinue the Contract, we will, in our sole discretion and judgment:
a) accept no further payments for this Contract; and
b) pay you the cash surrender value of the funding options within 7 days of
the date of our written notice to you, or distribute the cash surrender
value of each participant's individual account as described in the
settlement provisions section at your direction; and
c) pay you an amount as described in the Fixed Account prospectus.
If the Contract is discontinued, we will distribute the cash surrender value to
you no later than 7 days following our mailing the written notice of
discontinuance to you at the most current address available on our records.
Discontinuance of the Contract will not affect payments we are making under
annuity options which began before the date of discontinuance.
CONTRACT EXCHANGES
a) You may transfer all or any part of Your Account's cash surrender value from
any funding option to any contract not issued by us. Such transfers may be
subject to a sales charge, as described in the Contract. If authorized by the
contract owner, a participant may transfer all or any part of the individual
account's cash surrender value from one funding option to any contract not
issued by us.
b) Under specific conditions, we may allow you to transfer to this Contract
funds held by you in another group annuity contract issued by us or to
transfer amounts from this Contract to another Contract issued by us without
applying a sales charge to the funds being transferred. Once the transfer is
complete and we have established an account for you at your direction, a new
sales charge may apply, as described in the new Contract.
c) Under specific conditions, when authorized by state insurance law, we may
credit a Plan up to 4% of the amount transferred to us from another group
annuity not issued by us as reimbursement to the Plan for any exit penalty
assessed by the other issuer. We may recover this credit through reduced
compensation paid to the servicing agent or broker.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment or
determination of values on any business day (1) when the New York Stock Exchange
("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3)
when an emergency exists as determined by the SEC so that the sale of securities
held in the Separate Account may not reasonably occur or so that the Company may
not reasonably determine the value the Separate
27
<PAGE> 30
Account's net assets; or (4) during any other period when the SEC, by order, so
permits for the protection of security holders.
ACCOUNT VALUE
During the accumulation period, the account value can be determined by
multiplying the total number of funding option accumulation units credited to
that account by the current accumulation unit value for the appropriate funding
option and adding the sums for each funding option. There is no assurance that
the value in any of the funding options will equal or exceed the purchase
payments made to such funding options.
THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
The Travelers Separate Account QP For Variable Annuities was established on
December 26, 1995 and is registered with the SEC as a unit investment trust
(separate account) under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Separate Account assets attributable to the Contracts will be
invested exclusively in the shares of the variable funding options.
The Separate Account assets are held for the exclusive benefit of the owners of
this separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to the Separate Account
are, in accordance with the Contracts, credited to or charged against the
Separate Account without regard to other income, gains and losses of the
Company. The assets held by the Separate Account are not chargeable with
liabilities arising out of any other business which the Company may conduct.
Obligations under the Contract are obligations of the Company.
All investment income and other distributions of the funding options are payable
to the Separate Account. All such income and/or distributions are reinvested in
shares of the respective funding option at net asset value. Shares of the
funding options are currently sold only to life insurance company separate
accounts to fund variable annuity and variable life insurance contracts.
PERFORMANCE INFORMATION
From time to time, we may advertise several types of historical performance for
the Contract's funding options. We may advertise the "standardized average
annual total returns" of the funding option, calculated in a manner prescribed
by the SEC, and the "nonstandardized total return," as described below. Specific
examples of the performance information appear in the SAI.
STANDARDIZED METHOD. Quotations of average annual total returns are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the funding option, and then related to ending redeemable values over
one-, five-, and ten-year periods, or for a period covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the semi-annual
contract administrative charge is converted to a percentage of assets based on
the actual fee collected, divided by the average net assets for Contracts sold.
Each quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. Nonstandardized total returns will not reflect the
deduction of the semi-annual contract administrative charge, which, if
reflected, would decrease the level of performance shown. The withdrawal charge
is not reflected because the Contract is designed for long-term investment.
28
<PAGE> 31
For funding options that were in existence before they became available under
the Separate Account, the nonstandardized average annual total return quotations
will reflect the investment performance that such funding options would have
achieved (reduced by the applicable charges) had they been held under the
Contract for the period quoted. The total return quotations are based upon
historical earnings and are not necessarily representative of future
performance.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index, the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of the Separate Account and the variable funding
options.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.
GENERAL TAXATION OF ANNUITIES
Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (Code) governs how this money is ultimately taxed,
depending upon the type of contract, qualified or non-qualified, and the manner
in which the money is distributed, as briefly described below.
TAX-FREE EXCHANGES. The Internal Revenue Code provides that, generally, no gain
or loss is recognized when an annuity contract is received in exchange for a
life, endowment, or annuity contract. Since different annuity contracts have
different expenses, fees and benefits, a tax-free exchange could result in your
investment becoming subject to higher or lower fees and/or expenses.
TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED
If you purchase an annuity contract with proceeds of an eligible rollover
distribution from any pension plan, specially sponsored program, or individual
retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a
qualified contract. Some examples of qualified contracts are: IRAs, 403(b)
annuities, pension and profit-sharing plans (including 401(k) plans), Keogh
Plans, and certain other qualified deferred compensation plans. If you purchase
the contract on an individual basis with after-tax dollars and not under one of
the programs described above, your contract is referred to as nonqualified.
NONQUALIFIED ANNUITY CONTRACTS
As the owner of a nonqualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on purchase payments, but you will not be
taxed on increases in the value of your contract until a distribution
occurs -- either as a withdrawal (distribution made prior to the maturity date),
or as annuity payments. When a withdrawal is made, you are taxed on the amount
of the withdrawal that is considered earnings. Similarly, when you receive an
annuity payment, part
29
<PAGE> 32
of each payment is considered a return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment (i.e., any earnings) will be
considered ordinary income for tax purposes.
If a nonqualified annuity is owned by other than an individual, however, (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includible in income
annually. Furthermore, for contracts issued after April 22, 1987, if you
transfer the contract without adequate consideration all deferred increases in
value will be includible in your income at the time of the transfer.
If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includible in your income. (See "Penalty
Tax for Premature Distributions" below.) There is income in the contract to the
extent the contract value exceeds your investment in the contract. The
investment in the contract equals the total purchase payments you paid less any
amount received previously which was excludible from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.
Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.
QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the contract have not yet
been taxed, the full amount of all distributions, including lump-sum withdrawals
and annuity payments, are taxed at the ordinary income tax rate unless the
distribution is transferred to an eligible rollover account or contract. The
Contract is available as a vehicle for IRA rollovers and for other qualified
contracts. There are special rules which govern the taxation of qualified
contracts, including withdrawal restrictions, requirements for mandatory
distributions, and contribution limits. We have provided a more complete
discussion in the SAI.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions, for life or life expectancy, or
unless the distribution follows the death or disability of the contract owner.
Other exceptions may be available in certain qualified plans.
DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
separate account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how separate accounts must be diversified. The Company
monitors the diversification of investments constantly and believes that its
accounts are adequately diversified. The consequence of any failure to diversify
is essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
30
<PAGE> 33
OWNERSHIP OF THE INVESTMENTS
Assets in the separate accounts, also referred to as segregated asset accounts,
must be owned by the Company and not by the Contract Owner for federal income
tax purposes. Otherwise, the deferral of taxes is lost and income and gains from
the accounts would be includable annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent Contract Owners from
being considered the owner of the assets of the separate account.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum
distributions until the later of April 1st of the calendar year following the
calendar year in which they attain age 70 1/2 or the year of retirement.
Distributions must begin or be continued according to required patterns
following the death of the contract owner or annuitant of both qualified and
nonqualified annuities.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an owner or
annuitant. Generally, such amounts are includible in the income of the recipient
as follows: (i) if distributed in a lump sum, they are taxed in the same manner
as a full surrender of the contract; or (ii) if distributed under a payment
option, they are taxed in the same way as annuity payments.
OTHER INFORMATION
- --------------------------------------------------------------------------------
THE INSURANCE COMPANY
The Travelers Insurance Company is a stock insurance company chartered in 1864
in Connecticut and continuously engaged in the insurance business since that
time. It is licensed to conduct life insurance business in all states of the
United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British
Virgin Islands and the Bahamas. The Company is an indirect wholly owned
subsidiary of Citigroup Inc. The Company's Home Office is located at One Tower
Square, Hartford, Connecticut 06183.
31
<PAGE> 34
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. Any sales
representative or employee who sells the Contracts will be qualified to sell
variable annuities under applicable federal and state laws. Each broker-dealer
is registered with the SEC under the Securities Exchange Act of 1934, and all
are members of the NASD. The principal underwriter of the Contracts is CFBDS,
Inc., 21 Milk St., Boston, MA. CFBDS, Inc. is not affiliated with the Company or
the Separate Account. However, it is currently anticipated that Travelers
Distribution LLC, an affiliated broker-dealer, may become the principal
underwriter for the Contracts during the year 2000.
Up-front compensation paid to sales representatives will not exceed 7% of the
purchase payments made under the Contracts. If asset based compensation is paid,
it will not exceed 2% of the average account value annually. From time to time,
the Company may pay or permit other promotional incentives, in cash, credit or
other compensation.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered.
Where a state has not approved a contract feature or funding option, it will not
be available in that state. Any paid-up annuity, cash surrender value or death
benefits that are available under the Contract are not less than the minimum
benefits required by the statutes of the state in which the Contract is
delivered. We reserve the right to make any changes, including retroactive
changes, in the Contract to the extent that the change is required to meet the
requirements of any law or regulation issued by any governmental agency to which
the Company, the Contract or the contract owner is subject.
VOTING RIGHTS
The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.
CONTRACT MODIFICATION
The Company reserves the right to modify the Contract to keep it qualified under
all related law and regulations which are in effect during the term of this
Contract. We will obtain the approval of any regulatory authority needed for the
modifications.
LEGAL PROCEEDINGS AND OPINIONS
[/R]
There are no pending legal proceedings affecting the Separate Account. There is
one material pending legal proceeding, other than ordinary routine litigation
incidental to business, to which the Company is a party.
[/R]
In March 1997, a purported class action entitled Patterman v. The Travelers,
Inc., et al. was commenced in the Superior Court of Richmond County, Georgia,
alleging, among other things, violations of the Georgia RICO statute and other
state laws by an affiliate of the Company, Primerica Financial Services, Inc.
and certain of its affiliates. Plaintiffs seek unspecified compensatory and
punitive damages and other relief. In October 1997, defendants answered the
complaint, denied liability and asserted numerous affirmative defenses. In
February 1998, on defendants' motion, the Superior Court of Richmond County
transferred the lawsuit to the Superior Court of Gwinnett County, Georgia.
Plaintiffs appealed the transfer order, and in December 1998 the Court of
Appeals of the State of Georgia reversed the lower court's decision. Defendants
petitioned the
32
<PAGE> 35
Georgia Supreme Court to hear an appeal from the decision of the Court of
Appeals, and the petition was granted in May 1998. In September 1999, oral
argument on defendants' petition was heard and, on February 28, 2000, the
Georgia Supreme Court affirmed the Georgia County Appeals and remanded the
matter to the Superior Court of Richmond County. In March 2000, defendants moved
the Georgia Supreme Court to reconsider its February 28, 2000 decision, and that
motion remains pending. Proceedings in the trial court have been stayed pending
appeal. Defendants intend to vigorously contest the litigation.
Legal matters in connection with the federal laws and regulations affecting the
issue and sale of the contract described in this prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable annuity
contracts under Connecticut law, have been passed on by the General Counsel of
the Company.
33
<PAGE> 36
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 37
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1996-1997)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
For the period ended December 31, 1996, all contract owner units and values had
a mortality and expense risk charge equivalent to 0.95%.
For the fiscal year ended 1997 and thereafter, accumulation units and associated
unit values noted as P1, P2(1), P3, P4, P5 and P6 represent a mortality and
expense risk charge of 0.60%, 0.80%, 0.90%, 0.95%, 1.15% and 1.20%,
respectively.
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1996
(EFFECTIVE DATE)
PORTFOLIO NAME YEAR ENDED 1997 TO DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P3 P4 P5 P6
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.028 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.290 1.285 1.285 1.282 1.279 1.028
Number of units outstanding at
end of year.................. 68,643 126,822 1,445,911 58,734 350,624 293,629
DREYFUS STOCK INDEX FUND......... $ 1.000 $ - $ 1.076 $ 1.000 $ 1.000 $ 1.000
Unit Value at beginning of
year......................... 1.424 1.418 1.415 1.412 1.076
Unit Value at end of year......
Number of units outstanding at
end of year.................. 13,090 1,416,791 87,374 343,089 204,067
HIGH YIELD BOND TRUST
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.031 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.196 1.191 1.191 1.188 1.186 1.031
Number of units outstanding at
end of year.................. 197 7,092 28,158 3,683 3,815 6,520
MANAGED ASSETS TRUST
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.043 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.258 1.254 1.253 1.250 1.247 1.043
Number of units outstanding at
end of year.................. 5,565 74,574 287,178 12,488 223,823 78,508
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY
FUND
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.080 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.417 1.412 1.411 1.408 1.405 1.080
Number of units outstanding at
end of year.................. 1,292 185,044 2,781,580 95,491 42,002 496,794
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 0.885 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 0.942 0.939 0.938 0.936 0.934 0.885
Number of units outstanding at
end of year.................. 5,090 129,811 2,458,031 24,064 33,718 404,384
AMERICAN ODYSSEY GLOBAL HIGH-
YIELD BOND FUND**
Unit Value at beginning of
year......................... $ - $ 1.000 $ 1.010 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.062 1.062 1.059 1.057 1.010
Number of units outstanding at
end of year.................. 29,906 472,674 4,094 5,622 116,408
AMERICAN ODYSSEY INTERMEDIATE-
TERM BOND FUND
Unit Value at beginning of
year......................... $ - $ 1.000 $ 1.107 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.083 1.083 1.080 1.078 1.017
Number of units outstanding at
end of year.................. 58,486 940,500 12,156 10,975 195,701
</TABLE>
A-1
<PAGE> 38
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1996-1997)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1996
(EFFECTIVE DATE)
PORTFOLIO NAME YEAR ENDED 1997 TO DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P3 P4 P5 P6
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
AMERICAN ODYSSEY INTERNATIONAL
EQUITY FUND
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.091 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.141 1.136 1.136 1.133 1.131 1.091
Number of units outstanding at
end of year.................. 3,405 145,853 1,647,285 25,147 16,165 239,079
AMERICAN ODYSSEY LONG-TERM BOND
FUND
Unit Value at beginning of
year......................... $ - $ 1.000 $ 1.022 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.135 1.135 1.132 1.130 1.022
Number of units outstanding at
end of year.................. 115,168 1,504,310 24,590 22,291 232,943
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST
TEMPLETON ASSET ALLOCATION FUND
Unit Value at beginning of
year......................... $ 1.000 $ - $ 1.067 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.226 1.221 1.218 1.216 1.067
Number of units outstanding at
end of year.................. 7,711 463,517 23,178 358,096 70,211
TEMPLETON BOND FUND
Unit Value at beginning of
year......................... $ - $ - $ 1.035 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.051 1.048 1.047 1.035
Number of units outstanding at
end of year.................. 26,610 397 6,032 15,303
TEMPLETON STOCK FUND
Unit Value at beginning of
year......................... $ 1.000 $ - $ 1.080 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.202 1.197 1.194 1.192 1.080
Number of units outstanding at
end of year.................. 44,138 1,718,317 129,091 218,117 369,698
TRAVELERS SERIES FUND, INC.
ALLIANCE GROWTH PORTFOLIO
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.065 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.367 1.362 1.361 1.358 1.355 1.065
Number of units outstanding at
end of year.................. 10,959 27,182 315,371 25,227 46,772 44,777
MFS TOTAL RETURN PORTFOLIO
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.045 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.260 1.256 1.255 1.252 1.249 1.045
Number of units outstanding at
end of year.................. 9,157 11,241 20,522 23,942 89,438 2,087
PUTNAM DIVERSIFIED INCOME
PORTFOLIO
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.019 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.092 1.088 1.088 1.085 1.083 1.019
Number of units outstanding at
end of year.................. 6,058 1,776 36,214 2,136 17,658 12,636
SMITH BARNEY HIGH INCOME
PORTFOLIO
Unit Value at beginning of
year......................... $ - $ 1.000 $ 1.042 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.176 1.176 1.173 1.171 1.042
Number of units outstanding at
end of year.................. 3,775 34,790 2,552 6,261 278
</TABLE>
A-2
<PAGE> 39
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1996-1997)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1996
(EFFECTIVE DATE)
PORTFOLIO NAME YEAR ENDED 1997 TO DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P3 P4 P5 P6
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
SMITH BARNEY INTERNATIONAL
EQUITY PORTFOLIO
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.017 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.040 1.036 1.035 1.033 1.031 1.017
Number of Units outstanding at
end of year.................. 6,580 17,229 97,802 4,658 5,601 8,808
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.058 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.334 1.329 1.328 1.324 1.322 1.058
Number of units outstanding at
end of year.................. 7,515 75,718 1,048,182 9,074 51,250 270,469
SMITH BARNEY MONEY MARKET
PORTFOLIO
Unit Value at beginning of
year......................... $ - $ 1.000 $ 1.010 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.052 1.051 1.048 1.047 1.010
Number of units outstanding at
end of year.................. 19,062 124,936 24,063 39,703 56,124
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK
PORTFOLIO
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.036 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.311 1.307 1.306 1.303 1.300 1.036
Number of units outstanding at
end of year.................. 1,465 6,831 124,610 4,603 58,974 35,689
TRAVELERS QUALITY BOND
PORTFOLIO (9/97)*
Unit Value at beginning of
year......................... $ - $ - $ 1.000 $ 1.000 $ 1.000 n/a
Unit Value at end of year...... 1.020 1.020 1.019
Number of units outstanding at
end of year.................. 5,949 9,879 9,055
U.S. GOVERNMENT SECURITIES
PORTFOLIO
Unit Value at beginning of
year......................... $ - $ 1.000 $ 1.025 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.145 1.144 1.141 1.139 1.025
Number of units outstanding at
end of year.................. 3,011 81,229 2,710 14,373 51,072
UTILITIES PORTFOLIO
Unit Value at beginning of
year......................... $ 1.000 $ 1.000 $ 1.034 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year...... 1.289 1.284 1.283 1.280 1.278 1.034
Number of units outstanding at
end of year.................. 1,494 1,816 23,673 538 462 7,796
</TABLE>
The financial statements of Separate Account QP are contained in the Annual
Report which should be read along with this information and which is
incorporated by reference into the SAI. The consolidated financial statements of
The Travelers Insurance Company and Subsidiaries are contained in the SAI.
Funding options not listed above were not yet available through the Separate
Account as of December 31, 1997.
* Reflects date money first came into funding option through the Separate
Account.
** Formerly American Odyssey Short-Term Bond Fund. The name, investment
objective, and investment subadviser of this fund were changed pursuant to a
shareholder vote effective May 1, 1998.
(1) As of December 31, 1997 no contracts had been sold with a mortality and
expense risk charge of .80%.
(2) The .90% mortality and expense risk charge is currently sold only through
Gold Track Select Contracts.
A-3
<PAGE> 40
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND
Unit Value at beginning of
year.......................... $ 1.290 $ 1.287 $ 1.285 $ 1.285 $ 1.282 $ 1.279
Unit Value at end of year....... 2.073 2.063 2.059 2.056 2.047 2.040
Number of units outstanding at
end of year................... 413,409 241,615 2,581,625 2,358,987 429,279 961,744
DREYFUS STOCK INDEX FUND
Unit Value at beginning of
year.......................... $ 1.424 $ 1.421 $ 1.419 $ 1.418 $ 1.415 $ 1.412
Unit Value at end of year....... 1.815 1.807 1.803 1.801 1.793 1.787
Number of units outstanding at
end of year................... 138,866 33 - 2,284,987 257,393 1,121,361
HIGH YIELD BOND TRUST
Unit Value at beginning of
year.......................... $ 1.196 $ 1.193 $ 1.191 $ 1.191 $ 1.188 $ 1.186
Unit Value at end of year....... 1.267 1.261 1.258 1.257 1.251 1.247
Number of units outstanding at
end of year................... 533 3,334 255,952 54,195 33,994 28,684
MANAGED ASSETS TRUST
Unit Value at beginning of
year.......................... $ 1.258 $ 1.255 $ 1.254 $ 1.253 $ 1.250 $ 1.247
Unit Value at end of year....... 1.519 1.512 1.509 1.507 1.500 1.495
Number of units outstanding at
end of year................... 23,844 51,150 1,472,171 602,633 146,528 299,403
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY
FUND
Unit Value at beginning of
year.......................... $ 1.417 $ 1.414 $ 1.412 $ 1.411 $ 1.408 $ 1.405
Unit Value at end of year....... 1.628 1.620 1.617 1.615 1.608 1.603
Number of units outstanding at
end of year................... 58,294 1,060,046 3,149,947 3,478,529 347,272 153,298
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND
Unit Value at beginning of
year.......................... $ 0.942 $ 0.940 $ 0.939 $ 0.938 $ 0.936 $ 0.934
Unit Value at end of year....... 0.856 0.852 0.850 0.849 0.845 0.842
Number of units outstanding at
end of year................... 70,995 1,040,352 2,811,132 3,784,469 236,065 68,535
AMERICAN ODYSSEY GLOBAL HIGH-
YIELD BOND FUND**
Unit Value at beginning of
year.......................... $ 1.066 $ 1.064 $ 1.062 $ 1.062 $ 1.059 $ 1.057
Unit Value at end of year....... 1.020 1.015 1.013 1.012 1.007 1.004
Number of units outstanding at
end of year................... 3,181 320,821 770,544 1,102,248 64,167 14,668
AMERICAN ODYSSEY INTERMEDIATE-
TERM BOND FUND
Unit Value at beginning of
year.......................... $ 1.087 $ 1.085 $ 1.083 $ 1.083 $ 1.080 $ 1.078
Unit Value at end of year....... 1.172 1.167 1.164 1.163 1.158 1.154
Number of units outstanding at
end of year................... 1,407 520,065 1,072,949 1,143,580 55,670 30,548
AMERICAN ODYSSEY INTERNATIONAL
EQUITY FUND
Unit Value at beginning of
year.......................... $ 1.141 $ 1.138 $ 1.136 $ 1.136 $ 1.133 $ 1.131
Unit Value at end of year....... 1.302 1.297 1.294 1.292 1.286 1.282
Number of units outstanding at
end of year................... 20,676 791,438 2,315,866 2,595,394 210,146 35,028
</TABLE>
A-4
<PAGE> 41
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
AMERICAN ODYSSEY LONG-TERM BOND
FUND
Unit Value at beginning of
year.......................... $ 1.140 $ 1.137 $ 1.135 $ 1.135 $ 1.132 $ 1.130
Unit Value at end of year....... 1.235 1.230 1.227 1.226 1.220 1.216
Number of units outstanding at
end of year................... 6,982 872,955 2,127,335 2,268,910 154,138 50,376
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO
(7/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.077 1.076 1.076 1.075 1.074 1.074
Number of units outstanding at
end of year................... 502 60,832 18,841 6,816 1,944 -
SMALL CAP PORTFOLIO (9/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.199 1.198 1.198 1.198 1.197 1.196
Number of units outstanding at
end of year................... - 1,748 2,563 - 1,114 6,726
FIDELITY'S VARIABLE INSURANCE
PRODUCTS FUND
EQUITY-INCOME PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.329 $ 1.326 $ 1.325 $ 1.324 $ 1.321 $ 1.318
Unit Value at end of year....... 1.475 1.469 1.465 1.464 1.457 1.452
Number of units outstanding at
end of year................... 39,301 624 373 2,294,202 302,651 738,800
GROWTH PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.220 $ 1.217 $ 1.215 $ 1.215 $ 1.212 $ 1.209
Unit Value at end of year....... 1.692 1.684 1.680 1.678 1.671 1.665
Number of units outstanding at
end of year................... 77,604 431 36 3,726,583 297,359 626,091
HIGH INCOME PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.186 $ 1.183 $ 1.182 $ 1.181 $ 1.178 $ 1.176
Unit Value at end of year....... 1.128 1.122 1.120 1.119 1.114 1.110
Number of units outstanding at
end of year................... 40,705 95 - 578,543 181,391 97,958
FIDELITY'S VARIABLE INSURANCE
PRODUCTS FUND II
ASSET MANAGER PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.258 $ 1.255 $ 1.253 $ 1.253 $ 1.249 $ 1.247
Unit Value at end of year....... 1.439 1.432 1.429 1.427 1.421 1.416
Number of units outstanding at
end of year................... 32,515 188 - 1,072,725 106,115 290,394
SALOMON BROTHER'S VARIABLE SERIES
FUND, INC.
SALOMON BROTHERS VARIABLE
INVESTORS FUND (10/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.206 1.206 1.206 1.205 1.205 1.204
Number of units outstanding at
end of year................... - 1,374 - - - -
</TABLE>
A-5
<PAGE> 42
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
TEMPLETON VARIABLE PRODUCT SERIES
FUND
TEMPLETON ASSET ALLOCATION FUND
Unit Value at beginning of
year.......................... $ 1.226 $ 1.223 $ 1.222 $ 1.221 $ 1.218 $ 1.216
Unit Value at end of year....... 1.297 1.291 1.288 1.287 1.281 1.277
Number of units outstanding at
end of year................... 41,126 93 - 512,555 52,584 421,487
TEMPLETON BOND FUND
Unit Value at beginning of
year.......................... $ 1.056 $ 1.053 $ 1.052 $ 1.051 $ 1.048 $ 1.047
Unit Value at end of year....... 1.125 1.120 1.117 1.116 1.111 1.107
Number of units outstanding at
end of year................... - - - 36,290 3,185 15,040
TEMPLETON STOCK FUND
Unit Value at beginning of
year.......................... $ 1.202 $ 1.199 $ 1.198 $ 1.197 $ 1.194 $ 1.192
Unit Value at end of year....... 1.209 1.204 1.201 1.200 1.195 1.191
Number of units outstanding at
end of year................... 212,737 875 - 2,102,810 193,454 499,388
TRAVELERS SERIES FUND, INC.
ALLIANCE GROWTH PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.367 $ 1.363 $ 1.362 $ 1.361 $ 1.358 $ 1.355
Unit Value at end of year....... 1.753 1.746 1.742 1.740 1.732 1.726
Number of units outstanding at
end of year................... 32,748 66,181 1,050,338 571,621 201,618 121,866
MFS TOTAL RETURN PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.260 $ 1.257 $ 1.256 $ 1.255 $ 1.252 $ 1.249
Unit Value at end of year....... 1.399 1.393 1.390 1.388 1.382 1.377
Number of units outstanding at
end of year................... 67,299 85,454 338,122 38,600 114,873 90,723
PUTNAM DIVERSIFIED INCOME
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.092 $ 1.090 $ 1.088 $ 1.088 $ 1.085 $ 1.083
Unit Value at end of year....... 1.093 1.088 1.086 1.084 1.080 1.076
Number of units outstanding at
end of year................... 31,397 36,325 95,775 46,716 89,751 82,211
SMITH BARNEY HIGH INCOME
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.180 $ 1.178 $ 1.176 $ 1.176 $ 1.173 $ 1.171
Unit Value at end of year....... 1.179 1.173 1.171 1.170 1.165 1.161
Number of units outstanding at
end of year................... - 2,810 131,098 44,716 14,828 38,681
SMITH BARNEY INTERNATIONAL
EQUITY PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.040 $ 1.037 $ 1.036 $ 1.035 $ 1.033 $ 1.031
Unit Value at end of year....... 1.101 1.096 1.093 1.092 1.087 1.083
Number of units outstanding at
end of year................... 13,292 4,211 180,603 118,339 54,366 18,937
SMITH BARNEY LARGE
CAPITALIZATION GROWTH
PORTFOLIO (5/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.314 1.313 1.313 1.313 1.312 1.311
Number of units outstanding at
end of year................... - - 4,942 - - -
</TABLE>
A-6
<PAGE> 43
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.334 $ 1.330 $ 1.329 $ 1.328 $ 1.324 $ 1.322
Unit Value at end of year....... 1.456 1.449 1.446 1.445 1.438 1.433
Number of units outstanding at
end of year................... 21,635 7,331 509,575 1,199,090 81,366 190,418
SMITH BARNEY MONEY MARKET
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.056 $ 1.053 $ 1.052 $ 1.051 $ 1.048 $ 1.047
Unit Value at end of year....... 1.102 1.097 1.095 1.094 1.089 1.085
Number of units outstanding at
end of year................... - 2,799 296,260 433,846 371,996 237,923
THE TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK
PORTFOLIO (9/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.222 1.289 1.289 1.288 1.288 1.287
Number of units outstanding at
end of year................... 9 1,037 - - 111 -
DISCIPLINED SMALL CAP STOCK
PORTFOLIO (11/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.091 1.091 1.088 1.091 1.087 1.090
Number of units outstanding at
end of year................... - - 113 - 172 -
MFS MID CAP GROWTH PORTFOLIO
(9/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.213 1.212 1.212 1.212 1.211 1.211
Number of units outstanding at
end of year................... - 1,512 538 - - -
MFS RESEARCH PORTFOLIO (10/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.245 1.245 1.245 1.244 1.244 1.243
Number of units outstanding at
end of year................... 4,261 7,232 214 - - -
SOCIAL AWARENESS STOCK PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.311 $ 1.308 $ 1.307 $ 1.306 $ 1.303 $ 1.300
Unit Value at end of year....... 1.724 1.716 1.712 1.711 1.703 1.697
Number of units outstanding at
end of year................... 12,064 18,134 417,397 293,875 81,076 157,955
STRATEGIC STOCK PORTFOLIO
(9/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.072 1.071 1.071 1.071 1.070 1.070
Number of units outstanding at
end of year................... - - 866 - - -
TRAVELERS QUALITY BOND PORTFOLIO
(9/97)*
Unit Value at beginning of
year.......................... $ 1.021 $ 1.021 $ 1.020 $ 1.020 $ 1.020 $ 1.019
Unit Value at end of year....... 1.102 1.099 1.098 1.097 1.094 1.092
Number of units outstanding at
end of year................... 228 32 806 21,396 23,910 101,354
</TABLE>
A-7
<PAGE> 44
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.149 $ 1.146 $ 1.145 $ 1.144 $ 1.141 $ 1.139
Unit Value at end of year....... 1.259 1.253 1.250 1.249 1.243 1.239
Number of units outstanding at
end of year................... 6,143 29,647 210,497 145,195 22,572 62,648
UTILITIES PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.289 $ 1.285 $ 1.284 $ 1.283 $ 1.280 $ 1.278
Unit Value at end of year....... 1.514 1.507 1.504 1.502 1.495 1.490
Number of units outstanding at
end of year................... 6,675 1,413 77,322 43,847 15,300 6,389
</TABLE>
For 1998, unit values are shown for all morality and expense risk charges even
if there are no units outstanding. This information was not presented in prior
years.
The financial statements of Separate Account QP are contained in the Annual
Report which should be read along with this information and which is
incorporated by reference into the SAI. The consolidated financial statements of
The Travelers Insurance Company and Subsidiaries are contained in the SAI.
Funding options not listed above were not yet available through the Separate
Account as of December 31, 1998.
* Reflects date money first came into funding option through the Separate
Account.
** Formerly American Odyssey Short-Term Bond Fund. The name, investment
objective, and investment subadviser of this fund were changed pursuant to a
shareholder vote effective May 1, 1998.
(1) As of December 31, 1997 no contracts had been sold with a mortality and
expense risk charge of .80%.
(2) The .90% mortality and expense risk charge is currently sold only through
Gold Track Select Contracts.
A-8
<PAGE> 45
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND (10/96)
Unit Value at beginning of
year.......................... $ 2.073 $ 2.063 $ 2.059 $ 2.056 $ 2.047 $ 2.040
Unit Value at end of year....... 3.163 3.143 3.132 3.127 3.107 3.092
Number of units outstanding at
end of year................... 437,009 215,894 5,825,126 3,623,345 809,231 1,271,961
DREYFUS STOCK INDEX FUND (10/96)
Unit Value at beginning of
year.......................... $ 1.815 $ 1.807 $ 1.803 $ 1.801 $ 1.793 $ 1.787
Unit Value at end of year....... 2.176 2.162 2.155 2.152 2.138 2.128
Number of units outstanding at
end of year................... 243,662 33 - 3,292,693 458,187 1,399,407
HIGH YIELD BOND TRUST 10/96)
Unit Value at beginning of
year.......................... $ 1.267 $ 1.261 $ 1.258 $ 1.257 $ 1.251 $ 1.247
Unit Value at end of year....... 1.315 1.306 1.302 1.300 1.292 1.285
Number of units outstanding at
end of year................... 4,573 245,914 715,406 78,777 64,829 42,157
MANAGED ASSETS TRUST (10/96)
Unit Value at beginning of
year.......................... $ 1.519 $ 1.512 $ 1.509 $ 1.507 $ 1.500 $ 1.495
Unit Value at end of year....... 1.724 1.713 1.708 1.705 1.694 1.686
Number of units outstanding at
end of year................... 95,510 2,139,292 6,231,885 975,651 274,379 362,589
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY
FUND (10/96)
Unit Value at beginning of
year.......................... $ 1.628 $ 1.620 $ 1.617 $ 1.615 $ 1.608 $ 1.603
Unit Value at end of year....... 1.613 1.603 1.598 1.595 1.585 1.577
Number of units outstanding at
end of year................... 92,195 5,408,519 12,359,933 4,369,219 763,197 186,669
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND (10/96)
Unit Value at beginning of
year.......................... $ 0.856 $ 0.852 $ 0.850 $ 0.849 $ 0.845 $ 0.842
Unit Value at end of year....... 1.163 1.155 1.152 1.150 1.142 1.137
Number of units outstanding at
end of year................... 92,398 5,098,615 11,854,378 5,046,010 627,445 91,325
AMERICAN ODYSSEY GLOBAL HIGH-
YIELD BOND FUND** (10/96)
Unit Value at beginning of
year.......................... $ 1.020 $ 1.015 $ 1.013 $ 1.012 $ 1.007 $ 1.004
Unit Value at end of year....... 1.122 1.115 1.111 1.110 1.102 1.097
Number of units outstanding at
end of year................... 11,641 1,603,123 3,452,649 1,544,303 190,747 18,326
AMERICAN ODYSSEY INTERMEDIATE-
TERM BOND FUND (10/96)
Unit Value at beginning of
year.......................... $ 1.172 $ 1.167 $ 1.164 $ 1.163 $ 1.158 $ 1.154
Unit Value at end of year....... 1.183 1.175 1.171 1.169 1.162 1.156
Number of units outstanding at
end of year................... 17,748 2,250,902 4,575,483 1,395,719 169,831 33,765
AMERICAN ODYSSEY INTERNATIONAL
EQUITY FUND (10/96)
Unit Value at beginning of
year.......................... $ 1.302 $ 1.297 $ 1.294 $ 1.292 $ 1.286 $ 1.282
Unit Value at end of year....... 1.716 1.705 1.699 1.696 1.685 1.677
Number of units outstanding at
end of year................... 58,143 5,139,992 9,785,093 3,370,475 564,777 37,869
</TABLE>
A-9
<PAGE> 46
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
AMERICAN ODYSSEY LONG-TERM BOND
FUND (10/96)
Unit Value at beginning of
year.......................... $ 1.235 $ 1.230 $ 1.227 $ 1.226 $ 1.220 $ 1.216
Unit Value at end of year....... 1.194 1.186 1.183 1.181 1.173 1.167
Number of units outstanding at
end of year................... 8,580 4,355,250 9,288,007 2,940,609 415,013 56,766
DELAWARE GROUP PREMIUM FUND, INC.
REIT SERIES (1/99)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 0.958 0.956 0.955 0.954 0.952 0.951
Number of units outstanding at
end of year................... - 17,064 31,985 - 2,453 -
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO
(7/98)
Unit Value at beginning of
year.......................... $ 1.077 $ 1.076 $ 1.076 $ 1.075 $ 1.074 $ 1.074
Unit Value at end of year....... 1.193 1.190 1.188 1.187 1.184 1.181
Number of units outstanding at
end of year................... 3,743 6,527,393 5,775,356 67,059 100,924 26,484
SMALL CAP PORTFOLIO (9/98)
Unit Value at beginning of
year.......................... $ 1.199 $ 1.198 $ 1.198 $ 1.198 $ 1.197 $ 1.196
Unit Value at end of year....... 1.467 1.464 1.462 1.461 1.457 1.454
Number of units outstanding at
end of year................... 63,771 363,977 437,132 106,854 44,319 15,312
VARIABLE INSURANCE PRODUCTS FUND
EQUITY INCOME PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.475 $ 1.469 $ 1.465 $ 1.464 $ 1.457 $ 1.452
Unit Value at end of year....... 1.559 1.549 1.544 1.542 1.532 1.524
Number of units outstanding at
end of year................... 125,159 411 - 2,594,215 359,627 910,214
GROWTH PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.692 $ 1.684 $ 1.680 $ 1.678 $ 1.671 $ 1.665
Unit Value at end of year....... 2.311 2.296 2.289 2.285 2.270 2.259
Number of units outstanding at
end of year................... 168,043 177 - 5,002,571 838,004 873,625
HIGH INCOME PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.128 $ 1.122 $ 1.120 $ 1.119 $ 1.114 $ 1.110
Unit Value at end of year....... 1.212 1.204 1.201 1.199 1.191 1.185
Number of units outstanding at
end of year................... 46,277 95 - 680,684 249,045 121,051
VARIABLE INSURANCE PRODUCTS FUND
II
ASSET MANAGER PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.439 $ 1.432 $ 1.429 $ 1.427 $ 1.421 $ 1.416
Unit Value at end of year....... 1.589 1.578 1.573 1.571 1.561 1.553
Number of units outstanding at
end of year................... 38,657 188 - 1,051,184 476,733 431,977
SALOMON BROTHERS VARIABLE SERIES
FUNDS, INC.
INVESTORS FUND (10/98)
Unit Value at beginning of
year.......................... $ 1.206 $ 1.206 $ 1.206 $ 1.205 $ 1.205 $ 1.204
Unit Value at end of year....... 1.339 1.336 1.334 1.333 1.330 1.328
Number of units outstanding at
end of year................... 106 66,421 62,568 4,318 1,501 2,737
</TABLE>
A-10
<PAGE> 47
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
FRANKLIN TEMPLETON VARIABLE
PRODUCTS SERIES FUND
TEMPLETON ASSET ALLOCATION FUND
(10/96)
Unit Value at beginning of
year.......................... $ 1.297 $ 1.291 $ 1.288 $ 1.287 $ 1.281 $ 1.277
Unit Value at end of year....... 1.584 1.574 1.569 1.566 1.556 1.548
Number of units outstanding at
end of year................... 25,306 93 - 505,516 415,299 493,692
TEMPLETON GLOBAL BOND FUND
(10/96)
Unit Value at beginning of
year.......................... $ 1.125 $ 1.120 $ 1.117 $ 1.116 $ 1.111 $ 1.107
Unit Value at end of year....... 1.052 1.045 1.042 1.040 1.034 1.029
Number of units outstanding at
end of year................... 6,368 - - 42,558 8,106 19,551
TEMPLETON GLOBAL STOCK FUND
(10/96)
Unit Value at beginning of
year.......................... $ 1.209 $ 1.204 $ 1.201 $ 1.200 $ 1.195 $ 1.191
Unit Value at end of year....... 1.552 1.542 1.537 1.534 1.525 1.517
Number of units outstanding at
end of year................... 299,758 340 - 2,345,472 485,025 613,623
TRAVELERS SERIES FUND INC.
ALLIANCE GROWTH PORTFOLIO
(10/96)
Unit Value at beginning of
year.......................... $ 1.753 $ 1.746 $ 1.742 $ 1.740 $ 1.732 $ 1.726
Unit Value at end of year....... 2.305 2.290 2.283 2.279 2.265 2.254
Number of units outstanding at
end of year................... 99,102 3,927,438 4,335,442 776,729 300,983 182,765
MFS TOTAL RETURN PORTFOLIO
(10/96)
Unit Value at beginning of
year.......................... $ 1.399 $ 1.393 $ 1.390 $ 1.388 $ 1.382 $ 1.377
Unit Value at end of year....... 1.427 1.418 1.414 1.411 1.402 1.395
Number of units outstanding at
end of year................... 76,473 1,023,136 1,607,844 113,121 238,310 136,549
PUTNAM DIVERSIFIED INCOME
PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.093 $ 1.088 $ 1.086 $ 1.084 $ 1.080 $ 1.076
Unit Value at end of year....... 1.098 1.091 1.088 1.086 1.079 1.074
Number of units outstanding at
end of year................... 9,311 278,395 249,302 59,424 139,658 227,738
SMITH BARNEY HIGH INCOME
PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.179 $ 1.173 $ 1.171 $ 1.170 $ 1.165 $ 1.161
Unit Value at end of year....... 1.202 1.194 1.191 1.189 1.181 1.176
Number of units outstanding at
end of year................... 306 230,410 469,907 69,835 19,237 49,357
SMITH BARNEY INTERNATIONAL
EQUITY PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.101 $ 1.096 $ 1.093 $ 1.092 $ 1.087 $ 1.083
Unit Value at end of year....... 1.835 1.823 1.817 1.814 1.803 1.794
Number of units outstanding at
end of year................... 6,115 349,576 1,188,533 209,539 92,095 25,632
SMITH BARNEY LARGE
CAPITALIZATION GROWTH
PORTFOLIO (8/98)*
Unit Value at beginning of
year.......................... $ 1.314 $ 1.313 $ 1.313 $ 1.313 $ 1.312 $ 1.311
Unit Value at end of year....... 1.709 1.704 1.702 1.701 1.697 1.693
Number of units outstanding at
end of year................... - 649,086 663,945 87,242 51,499 1,853
</TABLE>
A-11
<PAGE> 48
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS SERIES FUND (CONT.)
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO (10/96)*
Unit Value at beginning of
year.......................... $ 1.456 $ 1.449 $ 1.446 $ 1.445 $ 1.438 $ 1.433
Unit Value at end of year....... 1.448 1.439 1.434 1.432 1.423 1.416
Number of units outstanding at
end of year................... 64,998 77,050 896,535 1,338,259 107,554 218,475
SMITH BARNEY MONEY MARKET
PORTFOLIO (10/96)*
Unit Value at beginning of
year.......................... $ 1.102 $ 1.097 $ 1.095 $ 1.094 $ 1.089 $ 1.085
Unit Value at end of year....... 1.148 1.141 1.137 1.135 1.128 1.122
Number of units outstanding at
end of year................... 504,494 42,339 700,936 905,258 152,444 462,445
THE TRAVELERS SERIES TRUST
CONVERTIBLE BOND PORTFOLIO
(8/99)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.100 1.099 1.098 1.098 1.097 1.097
Number of units outstanding at
end of year................... 66.449 - - 17,834 - -
DISCIPLINED MID CAP STOCK
PORTFOLIO (9/98)
Unit Value at beginning of
year.......................... $ 1.222 $ 1.289 $ 1.289 $ 1.288 $ 1.288 $ 1.287
Unit Value at end of year....... 1.454 1.451 1.449 1.448 1.444 1.442
Number of units outstanding at
end of year................... 5,028 45,075 240,631 3,806 1,943 542
DISCIPLINED SMALL CAP STOCK
PORTFOLIO (11/98)
Unit Value at beginning of
year.......................... $ 1.091 $ 1.091 $ 1.088 $ 1.091 $ 1.087 $ 1.090
Unit Value at end of year....... 1.306 1.303 1.301 1.301 1.298 1.296
Number of units outstanding at
end of year................... 515 6,963 38,065 3,028 1,707 -
MFS MID CAP GROWTH PORTFOLIO
(9/98)
Unit Value at beginning of
year.......................... $ 1.213 $ 1.212 $ 1.212 $ 1.212 $ 1.211 $ 1.211
Unit Value at end of year....... 1.979 1.974 1.972 1.971 1.966 1.962
Number of units outstanding at
end of year................... 415 233,024 154,186 9,187 1,622 -
MFS RESEARCH PORTFOLIO (10/98)
Unit Value at beginning of
year.......................... $ 1.245 $ 1.245 $ 1.245 $ 1.244 $ 1.244 $ 1.243
Unit Value at end of year....... 1.531 1.527 1.525 1.524 1.521 1.518
Number of units outstanding at
end of year................... 18,357 301,212 120,603 4,975 1,167 350
SOCIAL AWARENESS STOCK PORTFOLIO
(10/96)
Unit Value at beginning of
year.......................... $ 1.724 $ 1.716 $ 1.712 $ 1.711 $ 1.703 $ 1.697
Unit Value at end of year....... 1.985 1.972 1.966 1.963 1.950 1.941
Number of units outstanding at
end of year................... 40,351 608,076 2,313,144 497,383 139,985 229,469
STRATEGIC STOCK PORTFOLIO (9/98)
Unit Value at beginning of
year.......................... $ 1.072 $ 1.071 $ 1.071 $ 1.071 $ 1.070 $ 1.070
Unit Value at end of year....... 1.118 1.115 1.114 1.113 1.110 1.108
Number of units outstanding at
end of year................... - 4,596 324,249 5,368 1,500 334
</TABLE>
A-12
<PAGE> 49
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS QUALITY BOND PORTFOLIO
(9/97)
Unit Value at beginning of
year.......................... $ 1.102 $ 1.099 $ 1.098 $ 1.097 $ 1.094 $ 1.092
Unit Value at end of year....... 1.107 1.102 1.100 1.098 1.093 1.090
Number of units outstanding at
end of year................... 1,221 151,498 382,500 22,006 106,388 139,811
U.S. GOVERNMENT SECURITIES
PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.259 $ 1.253 $ 1.250 $ 1.249 $ 1.243 $ 1.239
Unit Value at end of year....... 1.199 1.192 1.188 1.186 1.178 1.172
Number of units outstanding at
end of year................... - 110,708 880,918 206,083 74,915 110,011
UTILITIES PORTFOLIO (10/96)
Unit Value at beginning of
year.......................... $ 1.514 $ 1.507 $ 1.504 $ 1.502 $ 1.495 $ 1.490
Unit Value at end of year....... 1.503 1.494 1.489 1.487 1.477 1.470
Number of units outstanding at
end of year................... 8,345 118,785 375,024 99,467 65,548 5,986
</TABLE>
For 1999, unit values are shown for all mortality and expense risk charges even
if there are no units outstanding.
The financial statements of Separate Account QP and the consolidated financial
statements of The Travelers Insurance Company and Subsidiaries are contained in
the SAI.
The date shown next to the name of each funding option is the date money first
came into the funding option through the Separate Account.
(1) The .90% mortality and expense risk charge is currently available only
through Gold Track Select Contracts.
A-13
<PAGE> 50
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<PAGE> 51
APPENDIX B
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information and
financial statements relating to the Separate Account and the Company. A list of
the contents of the Statement of Additional Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Principal Underwriting Agreement
Valuation of Assets
Mixed and Shared Funding
Performance Information
Federal Tax Considerations
Independent Accountants
Financial Statements
- --------------------------------------------------------------------------------
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2000 (FORM NO. L
12549S) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE COMPLETE THE
COUPON FOUND BELOW AND MAIL IT TO: THE TRAVELERS INSURANCE COMPANY, ANNUITY
SERVICES, ONE TOWER SQUARE, HARTFORD, CONNECTICUT, 06183-9061.
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-1
<PAGE> 52
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE> 53
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
L-12549-C Printed in U.S.A.
TIC Ed. 5-2000
<PAGE> 54
GOLD TRACK SELECT
PROSPECTUS
This prospectus describes Gold Track Select, a flexible premium group variable
annuity contract (the "Contract") issued by The Travelers Insurance Company (the
"Company", "us" or "we").
The Contract's value will vary daily to reflect the investment experience of the
funding options you select and the interest credited to the Fixed Account. The
variable funding options available through Travelers Separate Account QP for
Variable Annuities are:
<TABLE>
<S> <C>
High Yield Bond Trust STRONG VARIABLE INSURANCE FUNDS, INC.
Managed Assets Trust Strong Schafer Value Fund II
Money Market Portfolio TRAVELERS SERIES FUND INC.
AMERICAN ODYSSEY FUNDS, INC. Alliance Growth Portfolio
Core Equity Fund MFS Total Return Portfolio
Emerging Opportunities Fund Putnam Diversified Income Portfolio
Global High-Yield Bond Fund Smith Barney High Income Portfolio
Intermediate-Term Bond Fund Smith Barney International Equity Portfolio
International Equity Fund Smith Barney Large Capitalization Growth Portfolio
Long-Term Bond Fund THE TRAVELERS SERIES TRUST
DELAWARE GROUP PREMIUM FUND Disciplined Mid Cap Stock Portfolio
REIT Series Disciplined Small Cap Stock Portfolio
Small Cap Value Series Equity Income Portfolio
DREYFUS VARIABLE INVESTMENT FUND Federated Stock Portfolio
Appreciation Portfolio* Large Cap Portfolio
Small Cap Portfolio Lazard International Stock Portfolio
GREENWICH STREET SERIES FUND MFS Mid Cap Growth Portfolio
Equity Index Portfolio Class II MFS Research Portfolio
THE MONTGOMERY FUNDS III Social Awareness Stock Portfolio
Montgomery Variable Series: Growth Fund Strategic Stock Portfolio
OCC ACCUMULATION TRUST Travelers Quality Bond Portfolio
Equity Portfolio U.S. Government Securities Portfolio
SALOMON BROTHERS VARIABLE SERIES FUNDS, INC. Utilities Portfolio
Capital Fund WARBURG PINCUS TRUST
Total Return Fund Emerging Markets Portfolio
Investors Fund
</TABLE>
- ---------------
* Formerly Capital Appreciation Portfolio
THE FIXED ACCOUNT IS DESCRIBED IN A SEPARATE PROSPECTUS. SOME OF THE FUNDING
OPTIONS MAY NOT BE AVAILABLE IN ALL STATES. THIS PROSPECTUS MUST BE ACCOMPANIED
BY THE CURRENT PROSPECTUSES FOR SEPARATE ACCOUNT QP'S UNDERLYING FUNDS. PLEASE
READ AND RETAIN THEM FOR FUTURE REFERENCE.
This prospectus sets forth the information that you should know before
investing. You can receive additional information by requesting a Statement of
Additional Information ("SAI") dated May 1, 2000. The SAI has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated by reference
into this prospectus. To request a free copy, write to The Travelers Insurance
Company, Annuity Services, One Tower Square, Hartford, CT 06183-5030, call
1-800-842-9368, or access the SEC's website (http://www.sec.gov). See Appendix B
for the SAI's table of contents.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
PROSPECTUS DATED: MAY 1, 2000
<PAGE> 55
TABLE OF CONTENTS
<TABLE>
<S> <C>
Index of Special Terms..................... 2
Summary.................................... 3
Fee Table.................................. 6
The Variable Annuity Contract.............. 11
Contract Owner Inquiries................. 11
Allocated Contracts...................... 11
Unallocated Contracts.................... 11
Purchase Payments........................ 11
Accumulation Units....................... 12
The Funding Options...................... 12
Charges and Deductions..................... 15
General.................................. 15
Withdrawal Charge........................ 16
Free Withdrawal Allowance................ 17
Mortality and Expense Risk Charge........ 17
Funding Option Charges................... 17
Premium Tax.............................. 17
Administrative Charge.................... 18
TPA Administrative Charges............... 18
Transfers.................................. 18
Dollar Cost Averaging.................... 18
Asset Allocation Advice.................. 19
Access to Your Money....................... 19
Systematic Withdrawals................... 19
Ownership Provisions....................... 20
Types of Ownership....................... 20
Contract Owner......................... 20
Beneficiary............................ 20
Annuitant.............................. 20
Death Benefit.............................. 20
Death Benefit Proceeds Prior to Maturity
Date................................... 20
Payment of Proceeds...................... 21
Death Proceeds After the Maturity Date... 23
The Annuity Period......................... 23
Maturity Date.......................... 23
Allocation of Annuity.................. 23
Variable Annuity....................... 24
Fixed Annuity.......................... 24
Election of Options.................... 24
Misstatement........................... 25
Retired Life Certificate................. 25
Allocation of Cash Surrender Value During
the Annuity Period..................... 25
Annuity Options.......................... 25
Miscellaneous Contract Provisions.......... 26
Right to Return.......................... 26
Contract and Participant's Individual
Account Termination.................... 26
Contract Exchanges....................... 27
Suspension of Payments................... 27
Account Value............................ 27
The Separate Account....................... 27
Performance Information.................. 28
Standardized Method.................... 28
Nonstandardized Method................. 28
General................................ 28
Federal Tax Considerations................. 29
General Taxation of Annuities............ 29
Types of Contracts: Qualified or
Nonqualified........................... 29
Nonqualified Annuity Contracts........... 29
Qualified Annuity Contracts.............. 30
Penalty Tax for Premature
Distributions.......................... 30
Diversification Requirements............. 30
Ownership of the Investments............. 30
Mandatory Distributions for Qualified
Plans.................................. 31
Taxation of Death Benefit Proceeds....... 31
Other Information.......................... 31
The Insurance Company.................... 31
Distribution of Variable Annuity
Contracts.............................. 31
Conformity with State and Federal Laws... 31
Voting Rights............................ 32
Contract Modification.................... 32
Legal Proceedings........................ 32
APPENDIX A: Condensed Financial
Information: Separate Account QP......... A-1
APPENDIX B: Contents of the Statement of
Additional Information................... B-1
APPENDIX C: Texas Optional Retirement Plan
Participants............................. C-1
</TABLE>
INDEX OF SPECIAL TERMS
The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.
<TABLE>
<S> <C>
Accumulation Unit.......................... 12
Annuitant.................................. 20
Annuity Payments........................... 11
Annuity Unit............................... 12
Cash Surrender Value....................... 19
Cash Value................................. 11
Certificate................................ 11
Contract Date.............................. 11
Contract Owner (You, Your)................. 20
Contract Year.............................. 11
Funding Option(s).......................... 12
Individual Account......................... 11
Maturity Date.............................. 11
Participant................................ 11
Purchase Payment........................... 11
Underlying Fund............................ 12
Written Request............................ 11
</TABLE>
2
<PAGE> 56
SUMMARY:
TRAVELERS GOLD TRACK SELECT ANNUITY
THIS SUMMARY DETAILS SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND
CONSIDER BEFORE PURCHASING THE CONTRACT. PLEASE READ THE ENTIRE PROSPECTUS
CAREFULLY.
CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE VARIABLE ANNUITY CONTRACT? The
Contract offered by the Travelers Insurance Company is intended for retirement
savings or other long-term investment purposes. The Contract provides a death
benefit as well as guaranteed payout options. You direct your payment(s) to one
or more of the variable funding options and/or to the Fixed Account. We
guarantee money directed to the Fixed Account as to principal and interest. The
variable funding options are designed to produce a higher rate of return than
the Fixed Account; however, this is not guaranteed. You can also lose money in
the variable funding options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase
generally, under a qualified contract, your pre-tax contributions accumulate on
a tax-deferred basis and are taxed as income when you make a withdrawal,
presumably when you are in a lower tax bracket. During the accumulation phase,
under a nonqualified contract, earnings on your after-tax contributions
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The payout phase occurs when you begin receiving payments from your
Contract. The amount of money you accumulate in your Contract determines the
amount of income (annuity payments) you receive during the payout phase.
During the payout phase, you may choose to receive annuity payments from the
Fixed Account or the variable funding options. If you want to receive payments
from your annuity, you can choose one of a number of annuity options.
Once you choose one of the annuity options and begin to receive payments, it
cannot be changed. During the payout phase, you have the same investment choices
you had during the accumulation phase. If amounts are directed to the variable
funding options, the dollar amount of your payments may increase or decrease.
WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with qualified retirement plans (which include contracts
qualifying under Section 401(a), 403(b), or 457 of the Internal Revenue Code
(the "Code"). The Contract may also be issued for nonqualified and unfunded
deferred compensation plans which do not qualify for special treatment under the
Code. Purchase of this Contract through a Plan does not provide any additional
tax deferral benefits beyond those provided by the Plan. Accordingly, if you are
purchasing this Contract through a Plan, you should consider purchasing the
Contract for its Death Benefit, Annuity Option Benefits or other non-tax related
benefits.
The minimum purchase payment allowed is an average of $1,000 annually per
individual certificate, or $10,000 annually per group contract.
WHO IS THE CONTRACT ISSUED TO? If a group allocated contract is purchased, we
issue certificates to the individual participants. If a group unallocated
contract is purchased, we issue only the contract. Where we refer to "you," we
are referring to the group participant.
Depending on your retirement plan provisions, certain features and/or funding
options described in this prospectus may not be available to you (for example,
dollar-cost averaging, the CHART program, etc.). Your retirement plan provisions
supercede the prospectus. If you have any questions about your specific
retirement plan, contact your plan administrators.
3
<PAGE> 57
IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you receive a full refund of the Cash Value (including
charges). Where state law requires a longer right to return (free look), or the
return of the purchase payments, we will comply. You bear the investment risk
during the free look period; therefore, the cash value returned to you may be
greater or less than your purchase payment. The cash value will be determined as
of the close of business on the day we receive a written request for a refund.
WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
the Fixed Account or any or all of the funding options shown on the cover page.
The funding options are described in the prospectuses for the funds. Depending
on market conditions, you may make or lose money in any of these options.
The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Standard and Nonstandard performance is shown in the Statement of
Additional Information that you may request free of charge.
You can transfer between the funding options as frequently as you wish without
any current tax implications. Currently there is no charge for transfers, nor a
limit to the number of transfers allowed. We may, in the future, charge a fee
for any transfer request, or limit the number of transfers allowed. At a
minimum, we would always allow one transfer every six months. We reserve the
right to restrict transfers that we determine will disadvantage other contract
owners.
WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. A maximum
sub-account administrative charge of .10% annually will be charged, depending
upon the terms of your allocated contract. The maximum annual insurance charge
is 1.20% of the amounts you direct to the variable funding options. Each funding
option also charges for management and other expenses.
If you withdraw amounts from the Contract, a surrender charge may apply. The
amount of the charge depends on the length of time the contract/certificate has
been in force. If you withdraw all amounts under the contract/certificate, or if
you begin receiving annuity/income payments, the Company may be required by your
state to deduct a premium tax.
HOW WILL MY CONTRIBUTIONS AND WITHDRAWALS BE TAXED? Generally, the payments you
make to a qualified Contract during the accumulation phase are made with
before-tax dollars. You will be taxed on your purchase payments and on any
earnings when you make a withdrawal or begin receiving annuity payments. Under a
nonqualified Contract, payments to the contract are made with after-tax dollars,
and any credits and earnings will accumulate tax-deferred. You will be taxed on
these earnings when they are withdrawn from the Contract.
For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the amount
withdrawn.
HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. Withdrawal charges, income taxes, and/or a penalty tax may
apply to taxable amounts withdrawn.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? The death benefit applies upon
the first death of the owner or annuitant. Assuming you are the annuitant, if
you die before you move to the income phase, the person you have chosen as your
beneficiary will receive a death benefit. The death
4
<PAGE> 58
benefit paid depends on your age at the time of your death. The death benefit is
calculated as of the close of the business day on which the Home Office receives
due proof of death.
Any amount paid will be reduced by any applicable premium tax, outstanding loans
or surrenders not previously deducted. Certain states may have varying age
requirements. Please refer to the Death Benefit section of the prospectus for
more details.
ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:
- DOLLAR COST AVERAGING. This is a program that allows you to invest a
fixed amount of money in funding options each month, theoretically
giving you a lower average cost per unit over time than a single
one-time purchase. Dollar Cost Averaging requires regular investments
regardless of fluctuating price levels, and does not guarantee profits
or prevent losses in a declining market. Potential investors should
consider their financial ability to continue purchases through periods
of low price levels.
- ASSET ALLOCATION ADVICE. If allowed, you may elect to enter into a
separate advisory agreement with Copeland Financial Services LLC
("Copeland"), an affiliate of the Company, for the purpose of
receiving asset allocation advice under Copeland's CHART Program. The
CHART Program allocates all purchase payments among the American
Odyssey Funds. The CHART Program and applicable fees are fully
described in a separate disclosure statement.
- SYSTEMATIC WITHDRAWAL OPTION. Before the maturity date, you can
arrange to have money sent to you at set intervals throughout the
year. Of course, any applicable income and penalty taxes will apply on
amounts withdrawn.
5
<PAGE> 59
FEE TABLE
- --------------------------------------------------------------------------------
MAXIMUM CONTRACT/CERTIFICATE OWNER TRANSACTION CHARGE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
SURRENDER CHARGE CONTRACT/CERTIFICATE YEAR PERCENTAGE
- ----------------------------------------------------------------------------------------
<S> <C> <C>
As a percentage of amount surrendered 0-2 5%
3-4 4%
5-6 3%
7-8 2%
9+ 0%
</TABLE>
MAXIMUM SEPARATE ACCOUNT ANNUAL EXPENSES
<TABLE>
<S> <C> <C>
Mortality and Expense Risk Fees 1.20%
</TABLE>
(As a percentage of average daily net assets of the Separate Account)
MAXIMUM CONTRACT/CERTIFICATE ADMINISTRATIVE CHARGE
<TABLE>
<S> <C> <C>
Funding Option Administrative Charge 0.10%
</TABLE>
(As a percentage of amounts allocated to the variable funding options under
allocated contracts)
6
<PAGE> 60
FUNDING OPTION EXPENSES
(as a percentage of average daily net assets of the funding option as of
December 31, 1999, unless otherwise noted.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
UNDERLYING FUNDS: REIMBURSEMENT) FEES REIMBURSEMENT) REIMBURSEMENT)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Fund**.................... 0.75% 0.08% 0.83%
High Yield Bond Trust.......................... 0.50% 0.31% 0.81%
Managed Assets Trust........................... 0.50% 0.10% 0.60%
Money Market Portfolio......................... 0.32% 0.08% 0.40%(1)
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund........................... 0.56% 0.08% 0.64%
Emerging Opportunities Fund................ 0.75% 0.12% 0.87%
Global High-Yield Bond Fund................ 0.67% 0.16% 0.83%
Intermediate-Term Bond Fund................ 0.49% 0.10% 0.59%
International Equity Fund.................. 0.59% 0.13% 0.72%
Long-Term Bond Fund........................ 0.50% 0.10% 0.60%
AMERICAN ODYSSEY FUNDS, INC.*
Core Equity Fund........................... 0.56% 1.33% 1.89%
Emerging Opportunities Fund................ 0.75% 1.37% 2.12%
Global High-Yield Bond Fund................ 0.67% 1.41% 2.08%
Intermediate-Term Bond Fund................ 0.49% 1.35% 1.84%
International Equity Fund.................. 0.59% 1.38% 1.97%
Long-Term Bond Fund........................ 0.50% 1.35% 1.85%
DELAWARE GROUP PREMIUM FUND
REIT Series................................ 0.64% 0.21% 0.85%(2)
Small Cap Value Series..................... 0.75% 0.10% 0.85%
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio(3).................. 0.75% 0.03% 0.78%
Small Cap Portfolio........................ 0.75% 0.03% 0.78%
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class II
Shares................................... 0.21% 0.25% 0.05% 0.51%(4)
THE MONTGOMERY FUNDS III
Montgomery Variable Series: Growth Fund.... 0.52% 0.73% 1.25%(5)
OCC ACCUMULATION TRUST
Equity Portfolio........................... 0.80% 0.11% 0.91%
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund............................... 0.00% 1.00% 1.00%(6)
Investors Fund............................. 0.53% 0.45% 0.98%(6)
Total Return Fund.......................... 0.15% 0.85% 1.00%(6)
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II............... 1.00% 0.20% 1.20%(7)
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio.................. 0.80% 0.02% 0.82%(8)
MFS Total Return Portfolio................. 0.80% 0.04% 0.84%(8)
Putnam Diversified Income Portfolio........ 0.75% 0.08% 0.83%(8)
Smith Barney High Income Portfolio......... 0.60% 0.06% 0.66%(8)
Smith Barney International Equity
Portfolio................................ 0.90% 0.10% 1.00%(8)
Smith Barney Large Capitalization Growth
Portfolio................................ 0.75% 0.11% 0.86%(8)
Smith Barney Large Cap Value Portfolio**... 0.65% 0.02% 0.67%(8)
Smith Barney Money Market Portfolio**...... 0.50% 0.04% 0.54%(8)
</TABLE>
7
<PAGE> 61
<TABLE>
<CAPTION>
TOTAL
ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
UNDERLYING FUNDS: REIMBURSEMENT) FEES REIMBURSEMENT) REIMBURSEMENT)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio........ 0.70% 0.25% 0.95%(9)
Disciplined Small Cap Stock Portfolio...... 0.80% 0.20% 1.00%(10)
Equity Income Portfolio.................... 0.75% 0.13% 0.88%
Federated High Yield Portfolio**........... 0.65% 0.19% 0.84%
Federated Stock Portfolio.................. 0.63% 0.19% 0.82%
Large Cap Portfolio........................ 0.75% 0.12% 0.87%
Lazard International Stock Portfolio....... 0.83% 0.23% 1.06%
MFS Mid Cap Growth Portfolio............... 0.80% 0.20% 1.00%(10)
MFS Research Portfolio..................... 0.80% 0.19% 0.99%
Social Awareness Stock Portfolio........... 0.64% 0.16% 0.80%
Strategic Stock Portfolio.................. 0.60% 0.30% 0.90%(10)
Travelers Quality Bond Portfolio........... 0.32% 0.22% 0.54%
U.S. Government Securities Portfolio....... 0.32% 0.16% 0.48%
Utilities Portfolio........................ 0.65% 0.23% 0.88%
WARBURG PINCUS TRUST
Emerging Markets Portfolio................. 0.00% 1.40% 1.40%(11)
</TABLE>
* Includes CHART asset allocation fee of 1.25%.
** No longer available to new Contract Owners.
NOTES:
The purpose of this Fee Table is to assist Contract Owners in understanding the
various maximum costs and expenses that Contract Owners or Participants will
bear, directly or indirectly, under the Contract. See "Charges and Deductions"
in this prospectus for additional information. Expenses shown do not include
premium taxes, which may be applicable. "Other Expenses" include operating costs
of the fund. These expenses are reflected in each funding option's net asset
value and are not deducted from the account value under the contract.
(1) Other Expenses have been restated to reflect the current expense
reimbursement arrangement with Travelers Insurance Company. Travelers has
agreed to reimburse the Portfolio for the amount by which its aggregate
expenses (including the management fee, but excluding brokerage
commissions, interest charges and taxes) exceeds 0.40%. Without such
arrangement, Total Expenses would have been 0.50% for the MONEY MARKET
PORTFOLIO.
(2) The investment adviser for the REIT SERIES is Delaware Management Company
("DMC"). Effective May 1, 2000 through October 31, 2000, DMC has
voluntarily agreed to waive its management fee and reimburse the Series for
expenses to the extent that total expenses will not exceed 0.85%. Without
such an arrangement, Total Annual Operating Expenses for the fund would
have been 0.96%.
(3) Formerly Capital Appreciation Portfolio.
(4) The Portfolio Management Fee for EQUITY INDEX PORTFOLIO -- CLASS II
includes 0.06% for fund administration and a distribution plan or "Rule
12b-1 plan". Fees for Class II reflect the period from 3/22/99 (inception
date) to 12/31/99. On March 22, 1999, the fund adopted its current fee
structure.
(5) The investment manager of the MONTGOMERY VARIABLE SERIES: GROWTH FUND has
agreed to reduce some or all of its management fees if necessary to keep
Total Annual Operating Expenses, expressed on an annualized basis, at or
below one and one quarter percent (1.25%) of its average net assets. Absent
this waiver of fees, the Portfolio's Total Annual Operating Expenses would
equal 2.25%.
(6) The Adviser has waived all or a portion of its Management Fees for the year
ended December 31, 1999. If such fees were not waived or expenses
reimbursed, the Management Fee, Other Expenses, and Total Annual Operating
Expenses would have been as follows: 0.70%, 0.45% and 1.15% respectively
for the INVESTORS FUND; 0.85%, 1.14%, and 1.99% respectively for the
CAPITAL FUND; and 0.80%, 0.85%, and 1.65% respectively fro the TOTAL RETURN
FUND.
(7) The Adviser for STRONG SCHAFER VALUE FUND II has voluntarily agreed to cap
the Total Annual Operating Expenses at 1.20%. The adviser has no current
intention to, but may in the future, discontinue or modify any waiver of
fees or absorption of expenses at its discretion without further
notification. Absent the waiver of fees, the Total Annual Operating
Expenses would be 1.57%.
(8) Expenses are as of October 31, 1999 (the Fund's fiscal year end). There
were no fees waived or expenses reimbursed for these funds in 1999.
(9) Other Expenses reflect the current expense reimbursement arrangement with
Travelers Insurance Company. Travelers has agreed to reimburse the
Portfolio for the amount by which its aggregate expenses (including
management fees, but excluding brokerage commissions, interest charges and
taxes)
8
<PAGE> 62
exceeds 0.95%. Without such arrangements, the Total Annual Operating
Expenses for the Portfolio would have been 0.99% for the DISCIPLINED MID
CAP STOCK PORTFOLIO.
(10) Travelers Insurance Company has agreed to reimburse the STRATEGIC STOCK
PORTFOLIO, the DISCIPLINED SMALL CAP STOCK PORTFOLIO, and the MFS
MID CAP GROWTH PORTFOLIO for expenses for the period ended December 31,
1999 which exceeded 0.90%, 1.00% and 1.00% respectively. Without such
voluntary arrangements, the actual annualized Total Annual Operating
Expenses would have been 0.99%, 1.49%, and 1.07% respectively.
(11) Fee waivers, expense reimbursements, or expense credits reduced expenses
for the WARBURG PINCUS EMERGING MARKETS PORTFOLIO during 1999, but this may
be discontinued at any time. Without such arrangements, the Portfolio's
Management Fees, Other Expenses and Total Annual Operating Expenses would
equal 1.25%, 1.88% and 3.13%, respectively. The Portfolio's other expenses
are based on annualized estimates of expenses for the fiscal year ending
December 31, 1999, net of any fee waivers or expense reimbursements.
9
<PAGE> 63
EXAMPLE WITH SURRENDER CHARGES (PERCENTAGE OF AMOUNT SURRENDERED)*
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
IF CONTRACT IS NOT SURRENDERED OR
IF CONTRACT IS SURRENDERED AT THE ANNUITIZED AT END OF PERIOD
END OF PERIOD SHOWN: SHOWN:
------------------------------------- -------------------------------------
UNDERLYING FUNDING OPTIONS: 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation Fund**....................... 73 110 149 246 22 67 114 246
High Yield Bond Trust............................. 73 110 148 244 21 66 113 244
Managed Assets Trust.............................. 71 104 138 222 19 60 103 222
Money Market Portfolio............................ 69 98 128 201 17 54 92 201
AMERICAN ODYSSEY FUNDS, INC.(1)
Core Equity Fund............................... 71 105 140 226 20 61 105 226
Emerging Opportunities Fund.................... 73 111 151 250 22 68 116 250
Global High-Yield Bond Fund.................... 73 110 149 246 22 67 114 246
Intermediate-Term Bond Fund.................... 71 103 137 221 19 59 102 221
International Equity Fund...................... 72 107 144 235 21 63 109 235
Long-Term Bond Fund............................ 71 104 138 222 19 60 103 222
AMERICAN ODYSSEY FUNDS, INC. (2)
Core Equity Fund............................... 83 141 200 349 32 98 167 349
Emerging Opportunities Fund.................... 85 147 210 370 34 105 178 370
Global High-Yield Bond Fund.................... 85 146 208 367 34 104 176 367
Intermediate-Term Bond Fund.................... 83 139 197 345 32 97 164 345
International Equity Fund...................... 84 143 203 357 33 101 171 357
Long-Term Bond Fund............................ 83 139 198 346 32 97 165 346
DELAWARE GROUP PREMIUM FUND
REIT Series.................................... 73 111 150 248 22 67 115 248
Small Cap Value Series......................... 73 111 150 248 22 67 115 248
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio......................... 73 109 147 241 21 65 112 241
Small Cap Portfolio............................ 73 109 147 241 21 65 112 241
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class II Shares...... 70 101 133 213 18 57 98 213
THE MONTGOMERY FUNDS III
Montgomery Variable Series: Growth Fund........ 77 122 169 289 26 79 136 289
OCC ACCUMULATION TRUST
Equity Portfolio............................... 74 113 153 254 22 69 118 254
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund................................... 75 115 157 264 23 72 123 264
Investors Fund................................. 74 115 156 262 23 71 122 262
Total Return Fund.............................. 75 115 157 264 23 72 123 264
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II................... 77 121 167 284 25 78 133 284
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio...................... 73 110 148 245 22 66 114 245
MFS Total Return Portfolio..................... 73 111 149 247 22 67 115 247
Putnam Diversified Income Portfolio............ 73 110 149 246 22 67 114 246
Smith Barney High Income Portfolio............. 71 105 141 229 20 62 106 229
Smith Barney International Equity Portfolio.... 75 115 157 264 23 72 123 264
Smith Barney Large Capitalization Growth
Portfolio.................................... 73 111 150 249 22 68 116 249
Smith Barney Large Cap Value Portfolio**....... 72 106 141 230 20 62 106 230
Smith Barney Money Market Portfolio**.......... 70 102 135 216 19 58 100 216
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio............ 74 114 155 258 23 70 120 258
Disciplined Small Cap Stock Portfolio.......... 75 115 157 264 23 72 123 264
Equity Income Portfolio........................ 74 112 151 251 22 68 117 251
Federated High Yield Portfolio**............... 73 111 149 247 22 67 115 247
Federated Stock Portfolio...................... 73 110 148 245 22 66 114 245
Large Cap Portfolio............................ 73 111 151 250 22 68 116 250
Lazard International Stock Portfolio........... 75 117 160 270 24 74 126 270
MFS Mid Cap Growth Portfolio................... 75 115 157 264 23 72 123 264
MFS Research Portfolio......................... 75 115 157 263 23 72 123 263
Social Awareness Stock Portfolio............... 73 109 148 243 21 66 113 243
Strategic Stock Portfolio...................... 74 112 152 253 22 69 118 253
Travelers Quality Bond Portfolio............... 70 102 135 216 19 58 100 216
U.S. Government Securities Portfolio........... 70 100 132 210 18 56 97 210
Utilities Portfolio............................ 74 112 151 251 22 68 117 251
WARBURG PINCUS TRUST
Emerging Markets Portfolio..................... 78 127 177 303 27 84 143 303
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
** No longer available to new Contract Owners.
(1) Reflects expenses that would be incurred for those Contract Owners who DO
NOT participate in the CHART Asset Allocation program.
(2) Reflects expenses that would be incurred for those Contract Owners who DO
participate in the CHART Asset Allocation program.
10
<PAGE> 64
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
See Appendix A.
THE VARIABLE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Gold Track Select is designed to help you accumulate money for retirement.
Certificates are issued to individual participants under a group contract. Under
the Contract, you (the contract owner or participant, as applicable) make
purchase payments to us and we credit them to your account. We promise to pay
you an income in the form of annuity payments, beginning on a future date that
you choose, the maturity date. The purchase payments accumulate tax deferred in
the funding options that you select. You assume the risk of gain or loss
according to the performance of the funding options. The cash value is the
amount of purchase payments, plus or minus any investment experience or
interest. The cash value also reflects all withdrawals made and charges
deducted. There is generally no guarantee that at the maturity date the cash
value will equal or exceed the total purchase payments made under the Contract.
The date the Contract and its benefits became effective is referred to as the
contract date. Each 12-month period following this contract date is called a
contract year. The record of accumulation units credited to an owner is called
the owner's account. The record of accumulation units credited to a participant
is called the individual account, or participant's interest.
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to us.
The Contracts may be issued on either an allocated or an unallocated basis. Both
the allocated and unallocated contracts provide for fixed (Fixed Acccount
Option) and variable (Separate Account) accumulations and annuity payouts. The
Fixed Account Option is described in a separate prospectus.
CONTRACT OWNER INQUIRIES
Any questions you have about your Contract should be directed to the Company's
Home Office at 1-800-842-9368.
ALLOCATED CONTRACTS
A group allocated Contract will cover all present and future participants under
the Contract. A participant under an allocated Contract receives a certificate
which evidences participation in the Contract.
UNALLOCATED CONTRACTS
We offer an unallocated annuity Contract, designed for use with certain
Qualified Plans where the employer has secured the services of a Third Party
Administrator (TPA).
The Contracts will be issued to an employer or the trustee(s) or custodian of an
employer's Qualified Plan. All purchase payments are held under the Contract, as
directed by the contract owner. There are no individual accounts under the
unallocated Contracts for individual participants in the Qualified Plan.
PURCHASE PAYMENTS
The minimum purchase payment allowed is an average of $1,000 annually per
individual certificate, or $10,000 annually per group contract. The initial
purchase payment is due and payable before the Contract becomes effective.
We will apply the initial purchase payment within two business days after we
receive it in good order at our Home Office. Subsequent purchase payments will
be credited to a Contract on the same business day, if received in good order by
our Home Office by 4:00 p.m. Eastern time. A
11
<PAGE> 65
business day is any day that the New York Stock Exchange is open. Our business
day ends at 4:00 p.m. Eastern time unless we need to close earlier due to an
emergency.
ACCUMULATION UNITS
The period between the contract effective date and the maturity date is the
accumulation period. During the accumulation period, an accumulation unit is
used to calculate the value of a Contract. An accumulation unit works like a
share of a mutual fund. Each funding option has a corresponding accumulation
unit value. The accumulation units are valued each business day and their values
may increase or decrease from day to day. The number of accumulation units we
will credit to your Contract once we receive a purchase payment is determined by
dividing the amount directed to each funding option by the value of its
accumulation unit. We calculate the value of an accumulation unit for each
funding option each day the New York Stock Exchange is open. The values are
calculated as of 4:00 p.m. Eastern time. After the value is calculated, we
credit your Contract. During the annuity period (i.e., after the maturity date),
you are credited with annuity units.
THE FUNDING OPTIONS
You choose which of the following variable funding options to have your purchase
payments allocated to. These funding options are subsections of the Separate
Account, which invest in the underlying mutual funds ("underlying funds"). You
will find detailed information about the options and their inherent risks in the
current prospectuses for the funding options which must accompany this
prospectus. You are not investing directly in the underlying fund. Since each
option has varying degrees of risk, please read the prospectuses carefully
before investing. Contact your registered representative or call 1-800-842-9368
to request additional copies of the prospectuses.
If any of the funding options become unavailable for allocating purchase
payments, or if we believe that further investment in a funding option is
inappropriate for the purposes of the Contract, we may substitute another
funding option. However, we will not make any substitutions without notifying
you and obtaining any state and SEC approval, if necessary. From time to time we
may make new funding options available.
The current variable funding options are listed below, along with their
investment advisers and any subadviser:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
High Yield Bond Trust* Seeks generous income. The assets of the High Yield Bond Travelers Asset Management
Trust will be invested in bonds which, as a class, sell International Company LLC
at discounts from par value and are typically high risk ("TAMIC")
securities.
Managed Assets Trust** Seeks high total investment return through a fully TAMIC Subadviser:
managed investment policy in a portfolio of equity, debt Travelers Investment
and convertible securities. Management Company
("TIMCO")
Money Market Portfolio* Seeks high current income from short term money market TAMIC
instruments while preserving capital and maintaining a
high degree of liquidity.
AMERICAN ODYSSEY FUNDS,
INC.
Core Equity Fund Seeks maximum long-term total return by investing American Odyssey Funds
primarily in common stocks of well-established Management, Inc.
companies. Subadvisers: Equinox
Capital Management,
L.L.C.;
Putnam Investment
Management Inc.; and State
Street Global Advisors.
</TABLE>
12
<PAGE> 66
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AMERICAN ODYSSEY FUNDS,
INC., CONTINUED
Emerging Opportunities Seeks maximum long-term total return by investing American Odyssey Funds
Fund primarily in common stocks of small, rapidly growing Management, Inc.
companies. Subadvisers: Cowen Asset
Management; Chartwell
Investment Partners; and
State Street Global
Advisors.
Global High-Yield Bond Seeks maximum long-term total return (capital American Odyssey Funds
Fund*(1) appreciation and income) by investing primarily in Management, Inc.
high-yield debt securities from the United States and Subadviser: Credit Suisse
abroad. Asset Management
Intermediate-Term Bond Seeks maximum long-term total return by investing American Odyssey Funds
Fund* primarily in intermediate-term corporate debt Management, Inc.
securities, U.S. government securities, mortgage-related Subadviser: TAMIC
securities and asset-backed securities, as well as money
market instruments.
International Equity Fund Seeks maximum long-term total return by investing American Odyssey Funds
primarily in common stocks of established non-U.S. Management, Inc.
companies. Subadviser: Bank of
Ireland Asset Management
(U.S.) Limited
Long-Term Bond Fund* Seeks maximum long-term total return by investing American Odyssey Funds
primarily in long-term corporate debt securities, U.S. Management, Inc.
government securities, mortgage-related securities, and Subadviser: Western Asset
asset-backed securities, as well as money market Management Company
instruments.
DELAWARE GROUP PREMIUM FUND
REIT Series Seeks maximum long-term total return by investing in Delaware Management
securities of companies primarily engaged in the real Company, Inc.
estate industry. Subadviser: Lincoln
Investment Management,
Inc.
Small Cap Value Series Seeks capital appreciation by investing primarily in
common stocks whose market values appear low relative to
their underlying value or future potential.
DREYFUS VARIABLE INVESTMENT
FUND
Appreciation Portfolio Seeks primarily to provide long-term capital growth The Dreyfus Corporation
consistent with the preservation of capital; current Subadviser: Fayez Sarofim
income is a secondary investment objective. The & Co.
portfolio invests primarily in the common stocks of
domestic and foreign issuers.
Small Cap Portfolio Seeks to maximize capital appreciation. The Dreyfus Corporation
GREENWICH STREET SERIES
FUND
Equity Index Portfolio Seeks to replicate, before deduction of expenses, the TIMCO
Class II total return performance of the S&P 500 Index.
THE MONTGOMERY FUNDS III
Montgomery Variable Seeks capital appreciation. Under normal conditions, it Montgomery Asset
Series; Growth Fund invests at least 65% of its assets in equity securities. Management
OCC ACCUMULATION TRUST
Equity Portfolio Seeks long-term capital appreciation through investment Op Cap Advisors
in a diversified portfolio of equity securities selected
on the basis of a value oriented approach to investing.
SALOMON BROTHERS VARIABLE
SERIES FUND, INC.
Capital Fund Seeks capital appreciation through investments primarily Salomon Brothers Asset
in common stock, or securities convertible to common Management ("SBAM")
stocks, which are believed to have above-average price
appreciation potential and which may also involve above-
average risk.
Investors Fund Seeks long-term growth of capital. Current income is a SBAM
secondary objective.
</TABLE>
13
<PAGE> 67
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SALOMON BROTHERS VARIABLE
FUND, INC., CONTINUED
Total Return Fund** Seeks above-average income (compared to a portfolio SBAM
invested entirely in equity securities). Secondarily,
seeks opportunities for growth of capital and income.
STRONG VARIABLE INSURANCE
FUNDS, INC.
Strong Shafer Value Fund Seeks primarily long-term capital appreciation. Current Strong Capital Management,
II income is a secondary objective when selecting Inc.
investments. Subadviser: Shafer Capital
Management, Inc.
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio Seeks long-term growth of capital by investing Travelers Investment
predominantly in equity securities of companies with a Adviser ("TIA")
favorable outlook for earnings and whose rate of growth Subadviser: Alliance
is expected to exceed that of the U.S. economy over Capital Management L.P.
time. Current income is only an incidental
consideration.
MFS Total Return Seeks to obtain above-average income (compared to a TIA
Portfolio** portfolio entirely invested in equity securities) Subadviser: Massachusetts
consistent with the prudent employment of capital. Finance Services Company
Generally, at least 40% of the Portfolio's assets will ("MFS")
be invested in equity securities.
Putnam Diversified Income Seeks high current income consistent with preservation TIA
Portfolio** of capital. The Portfolio will allocate its investments Subadviser: Putnam
among the U.S. Government Sector, the High Yield Sector, Investment Management,
and the International Sector of the fixed income Inc.
securities markets.
Smith Barney High Income Seeks high current income. Capital appreciation is a SSB Citi Fund Management
Portfolio* secondary objective. The Portfolio will invest at least LLC. ("SSB Citi")
65% of its assets in high-yielding corporate debt
obligations and preferred stock.
Smith Barney Seeks total return on assets from growth of capital and SSB Citi
International Equity income by investing at least 65% of its assets in a
Portfolio diversified portfolio of equity securities of
established non-U.S. issuers.
Smith Barney Large Seeks long-term growth of capital by investing in equity SSB Citi
Capitalization Growth securities of companies with large market
Portfolio capitalization.
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Seeks growth of capital by investing primarily in a TAMIC
Fund broadly diversified portfolio of common stocks. Subadviser: TIMCO
Disciplined Small Cap Seeks long term capital appreciation by investing TAMIC
Fund primarily (at least 65% of its total assets) in the Subadviser: TIMCO
common stocks of U.S. Companies with relatively small
market capitalizations at the time of investment.
Equity Income Portfolio Seeks reasonable income by investing at least 65% in TAMIC
income-producing equity securities. The balance may be Subadviser: Fidelity
invested in all types of domestic and foreign Management & Research
securities, including bonds. The Portfolio seeks to Company ("FMR")
achieve a yield that exceeds that of the securities
comprising the S&P 500. The Subadviser also considers
the potential for capital appreciation.
Federated Stock Portfolio Seeks growth of income and capital by investing TAMIC
principally in a professionally managed and diversified Subadviser: Federated
portfolio of common stock of high-quality companies Investment Counseling,
(i.e., leaders in their industries and characterized by Inc.
sound management and the ability to finance expected
growth).
Large Cap Portfolio Seeks long-term growth of capital by investing primarily TAMIC
in equity securities of companies with large market Subadviser: FMR
capitalizations.
Lazard International Seeks capital appreciation by investing primarily in the TAMIC
Stock Portfolio equity securities of non-United States companies (i.e., Subadviser: Lazard Asset
incorporated or organized outside the United States). Management
</TABLE>
14
<PAGE> 68
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT INVESTMENT
OPTIONS OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THE TRAVELERS SERIES TRUST,
CONTINUED
MFS Mid Cap Growth Seeks to obtain long term growth of capital by TAMIC Subadviser: MFS
Portfolio investing, under normal market conditions, at least 65%
of its total assets in equity securities of companies
with medium market capitalization which the investment
adviser believes have above-average growth potential.
MFS Research Portfolio Seeks to provide long-term growth of capital and future TAMIC
income. Subadviser: MFS
Social Awareness Stock Seeks long-term capital appreciation and retention of SSB Citi
Portfolio net investment income by selecting investments,
primarily common stocks, which meet the social criteria
established for the Portfolio. Social criteria currently
excludes companies that derive a significant portion of
their revenues from the production of tobacco, tobacco
products, alcohol, or military defense systems, or in
the provision of military defense related services or
gambling services.
Strategic Stock Portfolio Seeks to provide an above-average total return through a TAMIC
combination of potential capital appreciation and Subadviser: TIMCO
dividend income by investing primarily in high dividend
yield stocks periodically selected from the companies
included in (i) the Dow Jones Industrial Average and
(ii) a sub-set of the Standard & Poor's Industrial
Index.
Travelers Quality Bond Seeks current income, moderate capital volatility and TAMIC
Portfolio* total return.
U.S. Government Seeks to select investments from the point of view of an TAMIC
Securities Portfolio* investor concerned primarily with highest credit
quality, current income and total return. The assets of
the U.S. Government Securities Portfolio will be
invested in direct obligations of the United States, its
agencies and instrumentalities.
Utilities Portfolio Seeks to provide current income by investing in equity SSB Citi
and debt securities of companies in the utility
industries.
WARBURG PINCUS TRUST
Emerging Markets Seeks long-term growth of capital by investing primarily Warburg Pincus Asset
Portfolio in equity securities of non-U.S. issuers consisting of Management, Inc.
companies in emerging market securities.
</TABLE>
(1) Formerly American Odyssey Short-Term Bond Fund. The name investment
objective and investment subadviser of this fund were changed pursuant to a
shareholder vote effective May 1, 1998.
* The funding options marked with an asterisk (*) are considered competing
funds, and may be subject to transfer restrictions. Those marked with two
asterisks (**) are not currently considered competing funds, but may be so in
the future because of an allowable change in the funding option's investment
strategy. Please refer to the contract for transfer restrictions.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts. We may also deduct a charge for taxes. Services and benefits we
provide include:
- the ability for you to make withdrawals and surrenders under the Contracts;
- the death benefit paid on the death of the contract owner or annuitant;
- the available funding options and related programs (including dollar-cost
averaging, portfolio rebalancing, and systematic withdrawal programs);
- administration of the annuity options available under the Contracts; and
- the distribution of various reports to contract owners.
15
<PAGE> 69
Costs and expenses we incur include:
- losses associated with various overhead and other expenses associated
with providing the services and benefits provided by the Contracts,
- sales and marketing expenses, including commission payments to your
agent, and
- other costs of doing business.
Risks we assume include:
- risks that annuitants may live longer than estimated when the annuity
factors under the Contracts were established,
- that the amount of the death benefit will be greater than the contract
value and
- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
We may reduce or eliminate the withdrawal charge, the administrative charges
and/or the mortality and expense risk charge under the Contract when certain
sales or administration of the Contract result in savings or reduced expenses
and/or risks. For certain trusts, we may change the order in which purchase
payments and earnings are withdrawn in order to determine the withdrawal charge.
We will not reduce or eliminate the withdrawal charge or the administrative
charge where such reduction or elimination would be unfairly discriminatory to
any person.
WITHDRAWAL CHARGE
Purchase payments made under the Contract are not subject to a front-end sales
load. However, when withdrawn, the Company will charge a surrender charge, as
negotiated. Any sales charge, penalty tax and withholding will be deducted from
either the amount surrendered or from the remaining Contract balance, as
requested by the contract owner or participant. The maximum surrender charge is
5% of the amount surrendered in the first two contract/certificate years, up to
4% in years three and four; up to 3% in years five and six, up to 2% in years
seven and eight and 0% beginning in the ninth year. Any applicable sales charge
will not exceed 8.5% of the aggregate amount of the purchase payments made.
The sales charges can be changed if the Company anticipates it will incur
decreased sales-related expenses due to the nature of the Plan to which the
Contract is issued or the involvement of TPAs. When considering a change in the
sales charges, the Company will take into account:
(a) The expected level of initial agent or the Company involvement during
the establishment and maintenance of the Contract including the amount
of enrollment activity required, and the amount of service required by
the contract owner in support of the Plan, and
(b) Contract Owner, agent or TPA involvement in conducting ongoing
enrollment of subsequently eligible participants, and
(c) The expected level of commission the Company may pay to the agent or
TPA for distribution expenses, and
(d) Any other factors which the Company anticipates will increase or
decrease the sales-related expenses associated with the sale of the
Contract in connection with the Plan.
We may not assess a sales charge if a withdrawal is made under one of the
following circumstances:
- retirement of participant
- separation from service by participant
- loans (if available)
- hardship (as defined by the Code) suffered by the participant
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<PAGE> 70
- death of participant
- disability (as defined by the Code) of participant
- return of excess plan contributions
- minimum required distributions, generally when participant reaches age
70 1/2
- transfers to an Employee Stock Fund
- certain Plan expenses, as mutually agreed upon
- annuitization under this Contract or another Contract issued by us.
For Section 401(a) plans with less than 50 participants at the time of sale,
Highly Compensated Employees, as defined by the Internal Revenue Code, during
the first 5 contract years may be subject to surrender charges for all
distributions listed above except loans and return of excess plan contributions.
For unallocated Contracts, we make the deductions described above pursuant to
the terms of the various agreements among the custodian, the principal
underwriter, and us.
FREE WITHDRAWAL ALLOWANCE
For Contracts in use with deferred compensation plans, the tax deferred annuity
plans and combined qualified plans/tax-deferred annuity plans, there is
currently a 10% free withdrawal allowance available each year after the first
contract/certificate year. (If you have purchase payments no longer subject to a
withdrawal charge, the maximum you may withdraw without a withdrawal charge is
the greater of (a) the free withdrawal allowance, or (b) the total amount of
purchase payments no longer subject to a withdrawal charge. Note: Any free
withdrawal taken will reduce purchase payments no longer subject to a withdrawal
charge.) The available withdrawal amount will be calculated as of the first
valuation date of any given contract year. The free withdrawal allowance applies
to partial surrenders of any amount and to full surrenders, except those full
surrenders transferred directly to annuity contracts issued by other financial
institutions.
MORTALITY AND EXPENSE RISK CHARGE
A mortality and expense risk charge is deducted on each business day from
amounts held in the Separate Account. This charge is equivalent, on an annual
basis, to a maximum of 1.20% of the amounts allocated to each funding option.
This charge compensates the Company for various risks assumed, benefits provided
and expenses incurred, including the payment of commissions to your sales agent.
FUNDING OPTION EXPENSES
The charges and expenses of the funding options are summarized in the fee table
and are described in the accompanying prospectuses.
PREMIUM TAX
Certain state and local governments charge premium taxes ranging from 0% to 5%,
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred. We
will deduct any applicable premium taxes from the cash value either upon death,
surrender, annuitization, or at the time purchase payments are made to the
Contract, but no earlier than when we have a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains or value of the contract, we reserve the right to
charge you proportionately for this tax.
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<PAGE> 71
ADMINISTRATIVE CHARGE
This charge is deducted on each business day from the variable funding options
in order to compensate the Company for certain administrative and operating
expenses of the funding options. The charge is equivalent, on an annual basis,
to a maximum of 0.10% of the daily net asset value of each funding options. This
charge is assessed during the accumulation and annuity periods.
As discussed below, the level of the administrative expense charge is subject to
negotiation. In determining the level of the administrative expense charge, we
consider certain factors including, but not limited to, the following:
(a) The size and characteristics of the Contract and the group to which it
is issued including: the annual amount of purchase payments per
participant, the expected turnover of employees, whether the contract
owner will make purchase payment allocations electronically.
(b) Determination of the Company's anticipated expenses in administering
the Contract, such as: billing for purchase payments, producing
periodic reports, providing for the direct payment of Contract charges
rather than having them deducted from Contract values.
(c) TPA and/or agent involvement.
TPA ADMINISTRATIVE CHARGES
The Company may be directed by the contract owner to deduct charges from
purchase payments or account values for payment to the contract owner and/or the
TPA. These charges are not levied by the Contract. Such charges may include
maintenance fees and transaction fees.
TRANSFERS
- --------------------------------------------------------------------------------
You may transfer cash values from one or more funding options to other funding
options, subject to the terms and conditions of the Contract (and your Plan). If
authorized by the contract owner, participants under allocated Contracts may
transfer all or any of their cash value from one funding option to another up to
30 days before the due date of the first annuity payment. We reserve the right
to restrict transfers by any market timing firm or any other third party
authorized to initiate transfers on behalf of multiple contract owners. We may,
among other things, not accept: 1) the transfer instructions of any agent acting
under a power of attorney on behalf of more than one owner, or 2) the transfer
or exchange instructions of individual owners who have executed pre-authorized
transfer forms which are submitted by market timing firms or other third parties
on behalf of more than one owner. We further reserve the right to limit
transfers that we determine will disadvantage other contract owners.
DOLLAR COST AVERAGING
Dollar cost averaging or the pre-authorized transfer program (the "DCA Program")
allows you (the owner or the participant) to transfer a set dollar amount to
other funding options on a monthly or quarterly basis during the accumulation
phase of the Contract. Using this method, more accumulation units are purchased
in a funding option if the value per unit is low and fewer accumulation units
are purchased if the value per unit is high. Therefore, a lower-than-average
cost per unit may be achieved over the long run.
You may elect the DCA Program through written request or other method acceptable
to the Company. Certain minimum amounts may apply to amounts transferred and/or
to enroll in the program.
In addition to the DCA Program, Travelers may credit increased interest rates to
contract owners under an administrative Special DCA Program established at the
discretion of Travelers, depending on availability and state law. Under this
program, the contract owner may pre-authorize level transfers to any of the
funding options under either a 6 Month Program or 12 Month Program. The 6 Month
Program and the 12 Month Program will generally have different credited interest
rates.
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<PAGE> 72
Under the 6 Month Program, the interest rate can accrue up to 6 months on funds
in the Special DCA Program and all purchase payments and accrued interest must
be transferred on a level basis to the selected funding option in 6 months.
Under the 12 Month Program, the interest rate can accrue up to 12 months on
funds in the Special DCA Program and all purchase payments and accrued interest
in this Program must be transferred on a level basis to the selected funding
options in 12 months.
The pre-authorized transfers will begin after the initial Program purchase
payment and complete enrollment instructions are received by Travelers. If
complete Program enrollment instructions are not received by the Company within
15 days of receipt of the initial Program purchase payment, the entire balance
in the Program will be credited with the non-Program interest rate then in
effect for the Fixed Account.
You may start or stop participation in the DCA Program at any time, but you must
give the Company at least 30 days' notice to change any automated transfer
instructions that are currently in place. If you stop the Special DCA Program
and elect to remain in the Fixed Account, your contract value will be credited
for the remainder of 6 or 12 months with the interest rate for non-Program
funds.
A contract owner may only have one DCA Program or Special DCA Program in place
at one time. Any subsequent purchase payments received by the Company within the
Program period selected will be allocated to the current funding options over
the remainder of that Program transfer period, unless otherwise directed by the
contract owner.
All provisions and terms of the Contract apply to the DCA and Special DCA
Programs, including provisions relating to the transfer of money between
investment options. We reserve the right to suspend or modify transfer
privileges at any time and to assess a processing fee for this service.
ASSET ALLOCATION ADVICE
Owners may elect to enter into a separate advisory agreement with Copeland
Financial Services, LLC ("Copeland"), an affiliate of the Company. For a fee,
Copeland provides asset allocation advice under its CHART Program(R), which is
fully described in a separate Disclosure Statement. The CHART program may not be
available in all marketing programs through which this Contract is sold.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Before your maturity date, we will pay all or any portion of your cash surrender
value to the contract owner or to you, as provided in the plan. A contract
owner's account may be surrendered for cash without the consent of any
participant, as provided in the plan.
We may defer payment of any cash surrender value for up to seven days after we
receive the request in good order. The cash surrender value equals the Contract
or Account cash value less any applicable withdrawal charge, outstanding cash
loans, and any premium tax not previously deducted. The cash surrender value may
be more or less than the purchase payments made depending on the value of the
Contract or account at the time of surrender.
Participants in Section 403(b) tax deferred annuity plans may not withdraw
certain salary reduction amounts before reaching age 59 1/2, unless withdrawn
due to separation from service, death, disability or hardship. (See "Federal Tax
Considerations.")
Participants in the Texas Optional Retirement Program should refer to Appendix C
for information regarding access to contract values.
SYSTEMATIC WITHDRAWALS
Before the maturity date, you may choose to withdraw a specified dollar amount
(at least $50) on a monthly, quarterly, semiannual or annual basis. Any
applicable premium taxes and withdrawal charge will be deducted. To elect
systematic withdrawals, you must have a contract value of at least $5,000 and
you must make the election on the form provided by the Company. We will
surrender accumulation units pro rata from all investment options in which you
have an interest, unless you instruct us otherwise. You may begin or discontinue
systematic withdrawals at any time
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<PAGE> 73
by notifying us in writing, but at least 30 days' notice must be given to change
any systematic withdrawal instructions that are currently in place.
We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where allowed by state law).
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under age 59 1/2. You should consult with
your tax adviser regarding the tax consequences of systematic withdrawals.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
Contract Owner (you). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive all
benefits given in the contract provided you have not named an irrevocable
beneficiary and provided the Contract is not assigned.
You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.
BENEFICIARY
You name the beneficiary in a written request. The beneficiary has the right to
receive any death benefit proceeds under the contract upon the death of the
annuitant or a contract owner. If more than one beneficiary survives the
annuitant or contract owner, they will share equally in benefits unless
different shares are recorded with the Company by written request before the
death of the annuitant or contract owner. In the case of a non-spousal
beneficiary or a spousal beneficiary who has not chosen to assume the contract,
the death benefit proceeds will be held in a fixed account until the beneficiary
elects a Settlement Option or takes a distribution.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.
ANNUITANT
The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.
DEATH BENEFIT
- --------------------------------------------------------------------------------
Before the maturity date, a death benefit is payable to the beneficiary when
either the annuitant or participant dies. The death benefit is calculated at the
close of the business day on which the Company's home office receives due proof
of death.
DEATH BENEFIT PROCEEDS PRIOR TO MATURITY DATE
ALLOCATED CONTRACT. If the participant dies before the maturity date or the
participant reaches age 75 (whichever occurs first), the death benefit payable
will be the greater of:
(a) the cash value of the participant's individual account or
(b) the total purchase payments under that participant's individual
account, less, for each option, any applicable premium tax, minus
outstanding loan amounts and prior surrenders not previously deducted
as of the date we receive due proof of death.
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<PAGE> 74
If the participant dies on or after age 75 and before the maturity date, we will
pay the beneficiary the cash value of the participant's individual account, less
any applicable premium tax or outstanding loan amounts as of the date we receive
due proof of death.
UNALLOCATED CONTRACT. (This death benefit is available only with our consent and
by endorsement to the Contract and may not be available in all jurisdictions.)
The unallocated Contract provides that, in the event the participant dies before
the selected maturity date, or the participant's attainment of age 75 (whichever
occurs first), the death benefit payable will be the greater of:
a) the cash value attributable to the participant under the Contract or
b) the total purchase payments attributable to the participant under the
contract, less any applicable premium tax, prior surrenders not
previously deducted and any outstanding loan balance (if applicable) as
of the date we receive due proof of death.
If the participant dies on or after attainment of age 75 and before the maturity
date, we will pay the beneficiary the cash value attributable to the participant
under the Contract, less any applicable premium tax, prior surrenders not
previously deducted and any outstanding loan balance (if applicable) as of the
date we receive due proof of death.
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds before the maturity date under
various situations for nonqualified contracts and qualified contracts is
summarized in the charts below. As stated above, the death benefit for
unallocated contracts is available only with our consent and by endorsement to
the Contract. The charts do not encompass every situation and are merely
intended as a general guide. More detailed information is provided in your
Contract. Generally, the person(s) receiving the benefit may request that the
proceeds be paid in a lump sum, or be applied to one of the settlement options
available under the Contract.
NONQUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Owner or participant (who is The beneficiary (ies), Unless, the beneficiary is Yes
not the annuitant) or if none, to the the contract owner's spouse
contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Owner or participant (who is The beneficiary (ies), Unless, the beneficiary is Yes
the annuitant) or if none, to the the contract owner's spouse
contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is not the The beneficiary (ies). No
contract owner)
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is the contract See death of "owner who N/A
owner) is the annuitant" above.
- --------------------------------------------------------------------------------------------------------------
Annuitant (where owner is a The beneficiary (ies) Yes (Death of
nonnatural person/trust) (e.g. the trust). annuitant is
treated as death
of the owner in
these
circumstances.)
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 75
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Certain payout rules of the Internal Revenue Code (IRC) are triggered upon the
death of any Owner. Non-spousal Beneficiaries (as well as spousal
beneficiaries who choose not to assume the contract) must begin taking
distributions based on the Beneficiary's life expectancy within one year of
death or take a complete distribution of contract proceeds within 5 years of
death.
22
<PAGE> 76
QUALIFIED CONTRACTS
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY (SEE
*ABOVE)
- --------------------------------------------------------------------------------------------------------------
Owner/Annuitant The beneficiary (ies), Yes
or if none, >to the
contract owner's estate.
- --------------------------------------------------------------------------------------------------------------
Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
Contingent Beneficiary No death proceeds are N/A
payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
DEATH PROCEEDS AFTER THE MATURITY DATE
If any owner or the annuitant dies on or after the maturity date, the Company
will pay the beneficiary a death benefit consisting of any benefit remaining
under the annuity or income option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Under the Contract, you can receive regular income payments (annuity payments).
You can choose the month and the year in which those payments begin (maturity
date). You can also choose among income plans (annuity options). While the
annuitant is alive, you can change your selection any time up to the maturity
date. Annuity payments will begin on the maturity date stated in the Certificate
unless it has been fully surrendered or the proceeds have been paid to the
beneficiary before that date. Annuity payments are a series of periodic payments
(a) for life; (b) for life with either a minimum number of payments or a
specific amount assured; or (c) for the joint lifetime of the annuitant and
another person, and thereafter during the lifetime of the survivor. We may
require proof that the annuitant is alive before annuity payments are made. Not
all options may be available in all states.
You may choose to annuitize at any time after you purchase the contract. Under
nonqualified contracts, unless you elect otherwise, the maturity date will be
the annuitant's 75th birthday or ten years after the effective date of the
contract, if later. Under qualified contracts, the maturity date must be before
the individual's 70th birthday, unless we consent to a later date.
At least 30 days before the original maturity date, you may extend the maturity
date to any time prior to the annuitant's 85th birthday or to a later date with
our consent. Certain annuity options taken at the maturity date may be used to
meet the minimum required distribution requirements of federal tax law, or a
program of partial surrenders may be used instead. These mandatory distribution
requirements take effect generally upon the death of the contract owner, or with
qualified contracts upon either the later of the contract owner's attainment of
age 70 1/2 or year of retirement; or the death of the contract owner. You should
seek independent tax advice regarding the election of minimum required
distributions.
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. If, at the time annuity payments begin,
no election has been made to the contrary, the cash surrender value will be
applied to provide an annuity funded by the same
23
<PAGE> 77
investment options as you have selected during the accumulation period . At
least 30 days before the maturity date, you may transfer the contract value
among the funding options in order to change the basis on which annuity payments
will be determined. (See "Transfers.")
VARIABLE ANNUITY
You may choose an annuity payout that fluctuates depending on the investment
experience of the variable funding options. The number of annuity units credited
to the Contract is determined by dividing the first monthly annuity payment
attributable to each funding option by the corresponding accumulation unit value
as of 14 days before the date annuity payments begin. An annuity unit is used to
measure the dollar value of an annuity payment. The number of annuity units (but
not their value) remains fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. If a variable annuity is elected,
the amount applied to it will be the value of the funding options as of 14 days
before the date annuity payments begin less any applicable premium taxes not
previously deducted.
The amount of the first monthly payment depends on the annuity option elected
and the annuitant's adjusted age. A formula for determining the adjusted age is
contained in the Contract. The total first monthly annuity payment is determined
by multiplying the benefit per $1,000 of value shown in the Contract tables by
the number of thousands of dollars of contract value applied to that annuity
option and factors in an assumed daily net investment factor. The Assumed Daily
Net Investment factor corresponds to an annual interest rate of 3%, used to
determine the guaranteed payout rates shown. If investment rates are higher at
the time annuitization is selected, payout rates will be higher than those
shown. The Company reserves the right to require satisfactory proof of age of
any person on whose life annuity payments are based before making the first
payment under any of the payment options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
all subsequent annuity payments changes from month to month based on the
investment experience of the applicable funding options. The total amount of
each annuity payment will be equal to the sum of the basic payments in each
funding option. The actual amounts of these payments are determined by
multiplying the number of annuity units credited to each funding option by the
corresponding annuity unit value as of the date 14 days before the date the
payment is due.
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity," except that the amount
applied to begin the annuity will be the cash surrender value, determined as of
the date annuity payments begin. Payout rates will not be lower than those shown
in the Contract. If it would produce a larger payment, the first fixed annuity
payment will be determined using the Life Annuity Tables in effect on the
maturity date.
ELECTION OF OPTIONS
Any amount distributed from the Contract may be applied to any one of the
annuity options described below. The minimum amount that can be placed under an
Annuity option is $2,000 unless we consent to a lesser amount. If any periodic
payments due are less than $100, we reserve the right to make payments at less
frequent intervals.
Election of any of these options must be made by written request to our Home
Office at least 30 days prior to the date such election is to become effective.
The form of such annuity option shall be determined by the contract owner. The
following information must be provided with any such request:
a) the participant's name, address, date of birth, social security number;
b) the amount to be distributed;
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<PAGE> 78
c) the annuity option which is to be purchased;
d) the date the annuity option payments are to begin;
e) if the form of the annuity provides a death benefit in the event of the
participant's death, the name, relationship and address of the
beneficiary as designated by you; and
f) any other data that we may require.
The beneficiary, as specified in item (e) above, may be changed by you or the
annuitant as long as we are notified by written request while the annuitant is
alive and before payments have begun. If the beneficiary designation is
irrevocable, such designation cannot be changed or revoked without the consent
of the beneficiary. After we receive the written request and the written consent
of the beneficiary (if required), the new beneficiary designation will take
effect as of the date the notice is signed. We have no further responsibility
for any payment we made before the written request.
MISSTATEMENT
If an annuitant's sex or age was misstated, all benefits of this Contract are
what the cash values would have purchased on the date of issue at the correct
sex and age.
RETIRED LIFE CERTIFICATE
We will issue to each person to whom annuity benefits are being paid under this
Contract a certificate setting forth a statement in substance of the benefits to
which such person is entitled under this Contract.
ALLOCATION OF CASH SURRENDER VALUE DURING THE ANNUITY PERIOD
At the time an annuity option is elected, you also may elect to have the
participant's cash surrender value applied to provide a variable annuity, a
fixed annuity, or a combination of both.
If no election is made to the contrary, the cash surrender value will provide an
annuity which varies with the investment experience of the corresponding funding
option(s) at the time of election. You or the participant, if you so authorize,
may elect to transfer cash values from one funding option to another, as
described in the provision "Transfers of Cash Value Between Funding Options," in
order to reallocate the basis on which annuity payments will be determined. Once
annuity payments have begun, no further transfers are allowed.
ANNUITY OPTIONS
OPTION 1 -- LIFE ANNUITY/NO REFUND. A life annuity is an annuity payable during
the lifetime of the annuitant and terminating with the last monthly payment
preceding the death of the annuitant.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED. An
annuity payable monthly during the lifetime of an annuitant with the provision
that if, at the death of the annuitant, payments have been made for less than
120, 180 or 240 months, as elected, then we will continue to make payments to
the designated beneficiary during the remainder of the period.
OPTION 3 -- LIFE ANNUITY -- CASH REFUND. We will make monthly annuity payments
during the lifetime of the annuitant, ceasing with the last payment due prior to
the death of the annuitant, provided that, at the death of the annuitant, the
Beneficiary will receive an additional payment equal to the dollar value, if
any, of (a) minus (b) where, for a variable annuity:
(a) is the total amount applied under the option divided by the annuity
unit value on the due date of the first annuity payment;
(b) and is
(1) the number of annuity units represented by each payment; times
(2) the number of payments made;
25
<PAGE> 79
and for a Fixed Annuity:
(a) is the cash value applied on the maturity date under this option; and
(b) is the dollar amount of annuity payments already paid.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY. Monthly annuity payments
based upon the joint lifetime of two persons selected: payments made first to
the annuitant, and upon his/her death, paid to the survivor. No more payments
will be made after the death of the survivor.
OPTION 5 -- JOINT AND LAST SURVIVOR ANNUITY -- ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE. Monthly annuity payments to the annuitant during the joint
lifetime of the two persons selected. One of the two persons will be designated
as the primary payee. The other will be designated as the secondary payee. On
the death of the secondary payee, if survived by the primary payee, we will
continue to make monthly annuity payments to the primary payee in the same
amount that would have been payable during the joint lifetime of the two
persons.
On the death of the primary payee, if survived by the secondary payee, we will
continue to make monthly annuity payments to the secondary payee in an amount
equal to 50% of the payments which would have been made during the lifetime of
the primary payee. No further payments will be made following the death of the
survivor.
OPTION 6 -- FIXED PAYMENTS FOR A FIXED PERIOD OF 120, 180, OR 240 MONTHS. We
will make monthly payments for the period selected. If at the death of the
annuitant, payments have been made for less than 120, 180, or 240 months, as
elected, we will continue to make payments to the designated beneficiary during
the remainder of the period.
OPTION 7 -- OTHER ANNUITY OPTIONS. We will make other arrangements for annuity
payments as may be mutually agreed upon by you and us.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
For Contracts in use with deferred compensation plans, tax-deferred annuity
plans, and combined qualified plans/tax deferred annuity plans, you may return
the Contract for a full refund of the cash value (including charges) within ten
days after you receive it (the "right to return period"). Where state law
requires a longer right to return period, or the return of purchase payments,
the Company will comply. The contract owner bears the investment risk during the
right to return period; therefore, the cash value returned may be greater or
less than your purchase payment. All cash values will be determined as of the
next valuation following the Company's receipt of your written request for
refund.
The right to return described above does not apply to participants in the Texas
ORP.
CONTRACT AND PARTICIPANT'S INDIVIDUAL ACCOUNT TERMINATION
Under the allocated Contracts, if the cash value in a participant's individual
account is less than the termination amount as stated in your Contract, we
reserve the right to terminate that account and move the cash value of that
participant's individual account to your account.
Any cash value to which a terminating participant is not entitled under the Plan
will be moved to your account at your direction.
You may discontinue this Contract by written request at any time for any reason.
We reserve the right to discontinue this Contract if:
a) the cash value of the Contract is less than the termination amount; or
b) We determine within our sole discretion and judgment that the Plan or
administration of the Plan is not in conformity with applicable law; or
c) We receive notice that is satisfactory to us of plan termination.
26
<PAGE> 80
If we discontinue this Contract or we receive your written request to
discontinue the Contract, we will, in our sole discretion and judgment:
a) accept no further payments for this Contract; and
b) pay you the cash surrender value of the funding options within 7 days of
the date of our written notice to you, or distribute the cash surrender
value of each participant's individual account as described in the
settlement provisions section at your direction; and
c) pay you an amount as described in the Fixed Account prospectus.
If the Contract is discontinued, we will distribute the cash surrender value to
you no later than 7 days following our mailing the written notice of
discontinuance to you at the most current address available on our records.
Discontinuance of the Contract will not affect payments we are making under
annuity options which began before the date of discontinuance.
CONTRACT EXCHANGES
a) You may transfer all or any part of Your Account's cash surrender value from
any funding option to any contract not issued by us. Such transfers may be
subject to a sales charge, as described in the Contract. If authorized by the
contract owner, a participant may transfer all or any part of the individual
account's cash surrender value from one funding option to any contract not
issued by us.
b) Under specific conditions, we may allow you to transfer to this Contract
funds held by you in another group annuity contract issued by us or to
transfer amounts from this Contract to another Contract issued by us without
applying a sales charge to the funds being transferred. Once the transfer is
complete and we have established an account for you at your direction, a new
sales charge may apply, as described in the new Contract.
c) Under specific conditions, when authorized by state insurance law, we may
credit a Plan up to 4% of the amount transferred to us from another group
annuity not issued by us as reimbursement to the Plan for any exit penalty
assessed by the other issuer. We may recover this credit through reduced
compensation paid to the servicing agent or broker.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment or
determination of values on any business day (1) when the New York Stock Exchange
("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3)
when an emergency exists as determined by the SEC so that the sale of securities
held in the Separate Account may not reasonably occur or so that the Company may
not reasonably determine the value of the Separate Account's net assets; or (4)
during any other period when the SEC, by order, so permits for the protection of
security holders.
ACCOUNT VALUE
During the accumulation period, the account value can be determined by
multiplying the total number of funding option accumulation units credited to
that account by the current accumulation unit value for the appropriate funding
option and adding the sums for each funding option. There is no assurance that
the value in any of the funding options will equal or exceed the purchase
payments made to such funding options.
THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
The Travelers Separate Account QP For Variable Annuities was established on
December 26, 1995 and is registered with the SEC as a unit investment trust
(separate account) under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Separate Account assets attributable to the Contracts will be
invested exclusively in the shares of the variable funding options.
27
<PAGE> 81
The Separate Account assets are held for the exclusive benefit of the owners of
this separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to the Separate Account
are, in accordance with the Contracts, credited to or charged against the
Separate Account without regard to other income, gains and losses of the
Company. The assets held by the Separate Account are not chargeable with
liabilities arising out of any other business which the Company may conduct.
Obligations under the Contract are obligations of the Company.
All investment income and other distributions of the funding options are payable
to the Separate Account. All such income and/or distributions are reinvested in
shares of the respective funding option at net asset value. Shares of the
funding options are currently sold only to life insurance company separate
accounts to fund variable annuity and variable life insurance contracts.
PERFORMANCE INFORMATION
From time to time, we may advertise several types of historical performance for
the Contract's funding options. We may advertise the "standardized average
annual total returns" of the funding option, calculated in a manner prescribed
by the SEC, and the "nonstandardized total return," as described below. Specific
examples of the performance information appear in the SAI.
STANDARDIZED METHOD. Quotations of average annual total returns are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the funding option, and then related to ending redeemable values over
one-, five-, and ten-year periods, or for a period covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the semi-annual
contract administrative charge is converted to a percentage of assets based on
the actual fee collected, divided by the average net assets for Contracts sold.
Each quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. Nonstandardized total returns will not reflect the
deduction of the semi-annual contract administrative charge, which, if
reflected, would decrease the level of performance shown. The withdrawal charge
is not reflected because the Contract is designed for long-term investment.
For funding options that were in existence before they became available under
the Separate Account, the nonstandardized average annual total return quotations
will reflect the investment performance that such funding options would have
achieved (reduced by the applicable charges) had they been held under the
Contract for the period quoted. The total return quotations are based upon
historical earnings and are not necessarily representative of future
performance.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index, the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of the Separate Account and the variable funding
options.
28
<PAGE> 82
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.
GENERAL TAXATION OF ANNUITIES
Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (Code) governs how this money is ultimately taxed,
depending upon the type of contract, qualified or non-qualified, and the manner
in which the money is distributed, as briefly described below.
TAX-FREE EXCHANGES. The Internal Revenue Code provides that generally, no gain
or loss is recognized when an annuity contract is received in exchange for a
life, endowment or annuity contract. Since different annuity contracts have
different expenses, fees and benefits, a tax-free exchange could result in your
investment becoming subject to higher or lower fees and/or expenses.
TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED
If you purchase an annuity contract with proceeds of an eligible rollover
distribution from any pension plan, specially sponsored program, or individual
retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a
qualified contract. Some examples of qualified contracts are: IRAs, 403(b)
annuities, pension and profit-sharing plans (including 401(k) plans), Keogh
Plans, and certain other qualified deferred compensation plans. An exception to
this is a qualified plan called a Roth IRA. Under Roth IRAs, after-tax
contributions accumulate until maturity, when amounts (including earnings) may
be withdrawn tax-free. If you purchase the contract on an individual basis with
after-tax dollars and not under one of the programs described above, your
contract is referred to as nonqualified.
NONQUALIFIED ANNUITY CONTRACTS
As the owner of a nonqualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on purchase payments, but you will not be
taxed on increases in the value of your contract until a distribution
occurs -- either as a withdrawal (distribution made prior to the maturity date),
or as annuity payments. When a withdrawal is made, you are taxed on the amount
of the withdrawal that is considered earnings. Similarly, when you receive an
annuity payment, part of each payment is considered a return of your purchase
payments and will not be taxed. The remaining portion of the annuity payment
(i.e., any earnings) will be considered ordinary income for tax purposes.
If a nonqualified annuity is owned by other than an individual, however, (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includible in income
annually. Furthermore, for contracts issued after April 22, 1987, if you
transfer the contract without adequate consideration all deferred increases in
value will be includible in your income at the time of the transfer.
If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includible in your income. (See "Penalty
Tax for Premature Distributions" below.) There is income in the contract to the
extent the contract value exceeds your investment in the contract. The
investment in the contract equals the total purchase payments you paid less any
amount received previously which was excludible from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.
29
<PAGE> 83
Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.
QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the contract have not yet
been taxed, the full amount of all distributions, including lump-sum withdrawals
and annuity payments, are taxed at the ordinary income tax rate unless the
distribution is transferred to an eligible rollover account or contract. The
Contract is available as a vehicle for IRA rollovers and for other qualified
contracts. There are special rules which govern the taxation of qualified
contracts, including withdrawal restrictions, requirements for mandatory
distributions, and contribution limits. We have provided a more complete
discussion in the SAI.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions, for life or life expectancy, or
unless the distribution follows the death or disability of the contract owner.
Other exceptions may be available in certain qualified plans.
DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
separate account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how separate accounts must be diversified. The Company
monitors the diversification of investments constantly and believes that its
accounts are adequately diversified. The consequence of any failure to diversify
is essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the separate accounts, also referred to as segregated asset accounts,
must be owned by the Company and not by the Contract Owner for federal income
tax purposes. Otherwise, the deferral of taxes is lost and income and gains from
the accounts would be includable annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the
30
<PAGE> 84
contract as necessary to attempt to prevent Contract Owners from being
considered the owner of the assets of the separate account.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum
distributions until the later of April 1st of the calendar year following the
calendar year in which they attain age 70 1/2 or the year of retirement.
Distributions must begin or be continued according to required patterns
following the death of the contract owner or annuitant of both qualified and
nonqualified annuities.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an owner or
annuitant. Generally, such amounts are includible in the income of the recipient
as follows: (i) if distributed in a lump sum, they are taxed in the same manner
as a full surrender of the contract; or (ii) if distributed under a payment
option, they are taxed in the same way as annuity payments.
OTHER INFORMATION
- --------------------------------------------------------------------------------
THE INSURANCE COMPANY
The Travelers Insurance Company is a stock insurance company chartered in 1864
in Connecticut and continuously engaged in the insurance business since that
time. It is licensed to conduct life insurance business in all states of the
United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British
Virgin Islands and the Bahamas. The Company is an indirect wholly owned
subsidiary of Citigroup Inc. The Company's Home Office is located at One Tower
Square, Hartford, Connecticut 06183.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. Any sales
representative or employee who sells the Contracts will be qualified to sell
variable annuities under applicable federal and state laws. Each broker-dealer
is registered with the SEC under the Securities Exchange Act of 1934, and all
are members of the NASD. The principal underwriter of the Contracts is CFBDS,
Inc., 21 Milk St., Boston, MA. CFBDS, Inc. is not affiliated with the Company or
the Separate Account. However, it is currently anticipated that Travelers
Distribution LLC, an affiliated broker-dealer, may become the principal
underwriter for the Contracts during the year 2000.
Up-front compensation paid to sales representatives will not exceed 7% of the
purchase payments made under the Contracts. If asset based compensation is paid,
it will not exceed 2% of the average account value annually. From time to time,
the Company may pay or permit other promotional incentives, in cash, credit or
other compensation.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered.
Where a state has not approved a contract feature or funding option, it will not
be available in that state. Any paid-up annuity, cash surrender value or death
benefits that are available under the Contract are not less than the minimum
benefits required by the statutes of the state in which the Contract is
delivered. We reserve the right to make any changes, including retroactive
changes, in the Contract to the extent that the change is required to meet the
requirements of any law or regulation issued by any governmental agency to which
the Company, the Contract or the contract owner is subject.
31
<PAGE> 85
VOTING RIGHTS
The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.
CONTRACT MODIFICATION
The Company reserves the right to modify the Contract to keep it qualified under
all related law and regulations which are in effect during the term of this
Contract. We will obtain the approval of any regulatory authority needed for the
modifications.
LEGAL PROCEEDINGS AND OPINIONS
Legal matters in connection with the federal laws and regulations affecting the
issue and sale of the contract described in this prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable annuity
contracts under Connecticut law, have been passed on by the General Counsel of
the Company.
There are no pending legal proceedings affecting the Separate Account. There is
one material pending legal proceeding, other than ordinary routine litigation
incidental to business, to which the Company is a party.
In March 1997, a purported class action entitled Patterman v. The Travelers,
Inc., et al. was commenced in the Superior Court of Richmond County, Georgia,
alleging, among other things, violations of the Georgia RICO statute and other
state laws by an affiliate of the Company, Primerica Financial Services, Inc.
and certain of its affiliates. Plaintiffs seek unspecified compensatory and
punitive damages and other relief. In October 1997, defendants answered the
complaint, denied liability and asserted numerous affirmative defenses. In
February 1998, on defendants' motion, the Superior Court of Richmond County
transferred the lawsuit to the Superior Court of Gwinnett County, Georgia.
Plaintiffs appealed the transfer order, and in December 1998 the Court of
Appeals of the State of Georgia reversed the lower court's decision. Defendants
petitioned the Georgia Supreme Court to hear an appeal from the decision of the
Court of Appeals, and the petition was granted in May 1998. In September 1999,
oral argument on defendants' petition was heard and, on February 28, 2000, the
Georgia Supreme Court affirmed the Georgia County Appeals and remanded the
matter to the Superior Court of Richmond County. In March 2000, defendants moved
the Georgia Supreme Court to reconsider its February 28, 2000 decision, and that
motion remains pending. Proceedings in the trial court have been stayed pending
appeal. Defendants intend to vigorously contest the litigation.
32
<PAGE> 86
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1996-1997)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
For the period ended December 31, 1996, all contract owner units and values had
a mortality and expense risk charge equivalent to 0.95%.
For the fiscal year ended 1997 and thereafter, accumulation units and associated
unit values noted as P1, P2(1), P3, P4, P5 and P6 represent a mortality and
expense risk charge of 0.60%, 0.80%, 0.90%, 0.95%, 1.15% and 1.20%,
respectively.
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1996
(EFFECTIVE DATE)
PORTFOLIO NAME YEAR ENDED 1997 TO DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P3 P4 P5 P6
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.028 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.290 1.285 1.285 1.282 1.279 1.028
Number of units outstanding at
end of year................... 68,643 126,822 1,445,911 58,734 350,624 293,629
HIGH YIELD BOND TRUST
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.031 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.196 1.191 1.191 1.188 1.186 1.031
Number of units outstanding at
end of year................... 197 7,092 28,158 3,683 3,815 6,520
MANAGED ASSETS TRUST
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.043 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.258 1.254 1.253 1.250 1.247 1.043
Number of units outstanding at
end of year................... 5,565 74,574 287,178 12,488 223,823 78,508
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY
FUND
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.080 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.417 1.412 1.411 1.408 1.405 1.080
Number of units outstanding at
end of year................... 1,292 185,044 2,781,580 95,491 42,002 496,794
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 0.885 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 0.942 0.939 0.938 0.936 0.934 0.885
Number of units outstanding at
end of year................... 5,090 129,811 2,458,031 24,064 33,718 404,384
AMERICAN ODYSSEY GLOBAL HIGH-
YIELD BOND FUND**
Unit Value at beginning of
year.......................... $ - $ 1.000 $ 1.010 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.062 1.062 1.059 1.057 1.010
Number of units outstanding at
end of year................... 29,906 472,674 4,094 5,622 116,408
AMERICAN ODYSSEY INTERMEDIATE-
TERM BOND FUND
Unit Value at beginning of
year.......................... $ - $ 1.000 $ 1.107 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.083 1.083 1.080 1.078 1.017
Number of units outstanding at
end of year................... 58,486 940,500 12,156 10,975 195,701
AMERICAN ODYSSEY INTERNATIONAL
EQUITY FUND
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.091 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.141 1.136 1.136 1.133 1.131 1.091
Number of units outstanding at
end of year................... 3,405 145,853 1,647,285 25,147 16,165 239,079
</TABLE>
A-1
<PAGE> 87
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1996-1997)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1996
(EFFECTIVE DATE)
PORTFOLIO NAME YEAR ENDED 1997 TO DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P3 P4 P5 P6
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
AMERICAN ODYSSEY LONG-TERM BOND
FUND
Unit Value at beginning of
year.......................... $ - $ 1.000 $ 1.022 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.135 1.135 1.132 1.130 1.022
Number of units outstanding at
end of year................... 115,168 1,504,310 24,590 22,291 232,943
TRAVELERS SERIES FUND, INC.
ALLIANCE GROWTH PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.065 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.367 1.362 1.361 1.358 1.355 1.065
Number of units outstanding at
end of year................... 10,959 27,182 315,371 25,227 46,772 44,777
MFS TOTAL RETURN PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.045 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.260 1.256 1.255 1.252 1.249 1.045
Number of units outstanding at
end of year................... 9,157 11,241 20,522 23,942 89,438 2,087
PUTNAM DIVERSIFIED INCOME
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.019 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.092 1.088 1.088 1.085 1.083 1.019
Number of units outstanding at
end of year................... 6,058 1,776 36,214 2,136 17,658 12,636
SMITH BARNEY HIGH INCOME
PORTFOLIO
Unit Value at beginning of
year.......................... $ - $ 1.000 $ 1.042 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.176 1.176 1.173 1.171 1.042
Number of units outstanding at
end of year................... 3,775 34,790 2,552 6,261 278
SMITH BARNEY INTERNATIONAL
EQUITY PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.017 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.040 1.036 1.035 1.033 1.031 1.017
Number of Units outstanding at
end of year................... 6,580 17,229 97,802 4,658 5,601 8,808
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.058 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.334 1.329 1.328 1.324 1.322 1.058
Number of units outstanding at
end of year................... 7,515 75,718 1,048,182 9,074 51,250 270,469
SMITH BARNEY MONEY MARKET
PORTFOLIO
Unit Value at beginning of
year.......................... $ - $ 1.000 $ 1.010 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.052 1.051 1.048 1.047 1.010
Number of units outstanding at
end of year................... 19,062 124,936 24,063 39,703 56,124
THE TRAVELERS SERIES TRUST
EQUITY INCOME PORTFOLIO (7/97)*
Unit Value at beginning of
year.......................... $ - $ 1.000 $ - $ 1.000 $ 1.000 n/a
Unit Value at end of year....... 1.062 1.061 1.060
Number of units outstanding at
end of year................... 66,733 3,543 2,047
</TABLE>
A-2
<PAGE> 88
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1996-1997)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1, 1996
(EFFECTIVE DATE)
PORTFOLIO NAME YEAR ENDED 1997 TO DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P3 P4 P5 P6
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
FEDERATED HIGH YIELD
PORTFOLIO(10/97)*
Unit Value at beginning of
year.......................... $ - $ 1.000 $ - $ 1.000 $ - n/a
Unit Value at end of year....... 1.011 1.010
Number of units outstanding at
end of year................... 3,118 123
FEDERATED STOCK PORTFOLIO(7/97)*
Unit Value at beginning of
year.......................... $ - $ 1.000 $ - $ 1.000 $ 1.000 n/a
Unit Value at end of year....... 1.083 1.082 1.081
Number of units outstanding at
end of year................... 21,106 1,133 205
LARGE CAP PORTFOLIO(7/97)*
Unit Value at beginning of
year.......................... $ - $ 1.000 $ - $ 1.000 $ - n/a
Unit Value at end of year....... 1.028 1.027
Number of units outstanding at
end of year................... 15,144 3,857
LAZARD INTERNATIONAL STOCK
PORTFOLIO(8/97)*
Unit Value at beginning of
year.......................... $ - $ 1.000 $ - $ 1.000 $ 1.000 n/a
Unit Value at end of year....... 0.979 0.978 0.978
Number of units outstanding at
end of year................... 3,686 896 513
SOCIAL AWARENESS STOCK PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.036 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.311 1.307 1.306 1.303 1.300 1.036
Number of units outstanding at
end of year................... 1,465 6,831 124,610 4,603 58,974 35,689
TRAVELERS QUALITY BOND PORTFOLIO
(9/97)*
Unit Value at beginning of
year.......................... $ - $ - $ 1.000 $ 1.000 $ 1.000 n/a
Unit Value at end of year....... 1.020 1.020 1.019
Number of units outstanding at
end of year................... 5,949 9,879 9,055
U.S. GOVERNMENT SECURITIES
PORTFOLIO
Unit Value at beginning of
year.......................... $ - $ 1.000 $ 1.025 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.145 1.144 1.141 1.139 1.025
Number of units outstanding at
end of year................... 3,011 81,229 2,710 14,373 51,072
UTILITIES PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.034 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.289 1.284 1.283 1.280 1.278 1.034
Number of units outstanding at
end of year................... 1,494 1,816 23,673 538 462 7,796
</TABLE>
The financial statements of Separate Account QP are contained in the Annual
Report which should be read along with this information and which is
incorporated by reference into the SAI. The consolidated financial statements of
The Travelers Insurance Company and Subsidiaries are contained in the SAI.
Funding options not listed above were not yet available through the Separate
Account as of December 31, 1997.
* Reflects date money first came into funding option through the Separate
Account.
** Formerly American Odyssey Short-Term Bond Fund. The name, investment
objective, and investment subadviser of this fund were changed pursuant to a
shareholder vote effective May 1, 1998.
(1) As of December 31, 1997 no contracts had been sold with a mortality and
expense risk charge of .80%.
(2) The .90% mortality and expense risk charge is currently sold only through
Gold Track Select Contracts.
A-3
<PAGE> 89
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND
Unit Value at beginning of
year.......................... $ 1.290 $ 1.287 $ 1.285 $ 1.285 $ 1.282 $ 1.279
Unit Value at end of year....... 2.073 2.063 2.059 2.056 2.047 2.040
Number of units outstanding at
end of year................... 413,409 241,615 2,581,625 2,358,987 429,279 961,744
DREYFUS STOCK INDEX FUND
Unit Value at beginning of
year.......................... $ 1.424 $ 1.421 $ 1.419 $ 1.418 $ 1.415 $ 1.412
Unit Value at end of year....... 1.815 1.807 1.803 1.801 1.793 1.787
Number of units outstanding at
end of year................... 138,866 33 - 2,284,987 257,393 1,121,361
HIGH YIELD BOND TRUST
Unit Value at beginning of
year.......................... $ 1.196 $ 1.193 $ 1.191 $ 1.191 $ 1.188 $ 1.186
Unit Value at end of year....... 1.267 1.261 1.258 1.257 1.251 1.247
Number of units outstanding at
end of year................... 533 3,334 255,952 54,195 33,994 28,684
MANAGED ASSETS TRUST
Unit Value at beginning of
year.......................... $ 1.258 $ 1.255 $ 1.254 $ 1.253 $ 1.250 $ 1.247
Unit Value at end of year....... 1.519 1.512 1.509 1.507 1.500 1.495
Number of units outstanding at
end of year................... 23,844 51,150 1,472,171 602,633 146,528 299,403
MONEY MARKET PORTFOLIO (9/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.013 1.012 1.012 1.012 1.011 1.011
Number of units outstanding at
end of year................... - 16,146 9,415 - 3,453 -
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY
FUND
Unit Value at beginning of
year.......................... $ 1.417 $ 1.414 $ 1.412 $ 1.411 $ 1.408 $ 1.405
Unit Value at end of year....... 1.628 1.620 1.617 1.615 1.608 1.603
Number of units outstanding at
end of year................... 58,294 1,060,046 3,149,947 3,478,529 347,272 153,298
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND
Unit Value at beginning of
year.......................... $ 0.942 $ 0.940 $ 0.939 $ 0.938 $ 0.936 $ 0.934
Unit Value at end of year....... 0.856 0.852 0.850 0.849 0.845 0.842
Number of units outstanding at
end of year................... 70,995 1,040,352 2,811,132 3,784,469 236,065 68,535
AMERICAN ODYSSEY GLOBAL HIGH-
YIELD BOND FUND**
Unit Value at beginning of
year.......................... $ 1.066 $ 1.064 $ 1.062 $ 1.062 $ 1.059 $ 1.057
Unit Value at end of year....... 1.020 1.015 1.013 1.012 1.007 1.004
Number of units outstanding at
end of year................... 3,181 320,821 770,544 1,102,248 64,167 14,668
AMERICAN ODYSSEY INTERMEDIATE-
TERM BOND FUND
Unit Value at beginning of
year.......................... $ 1.087 $ 1.085 $ 1.083 $ 1.083 $ 1.080 $ 1.078
Unit Value at end of year....... 1.172 1.167 1.164 1.163 1.158 1.154
Number of units outstanding at
end of year................... 1,407 520,065 1,072,949 1,143,580 55,670 30,548
AMERICAN ODYSSEY INTERNATIONAL
EQUITY FUND
Unit Value at beginning of
year.......................... $ 1.141 $ 1.138 $ 1.136 $ 1.136 $ 1.133 $ 1.131
Unit Value at end of year....... 1.302 1.297 1.294 1.292 1.286 1.282
Number of units outstanding at
end of year................... 20,676 791,438 2,315,866 2,595,394 210,146 35,028
</TABLE>
A-4
<PAGE> 90
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
AMERICAN ODYSSEY LONG-TERM BOND
FUND
Unit Value at beginning of
year.......................... $ 1.140 $ 1.137 $ 1.135 $ 1.135 $ 1.132 $ 1.130
Unit Value at end of year....... 1.235 1.230 1.227 1.226 1.220 1.216
Number of units outstanding at
end of year................... 6,982 872,955 2,127,335 2,268,910 154,138 50,376
DELAWARE GROUP PREMIUM FUND, INC.
SMALL CAP VALUE SERIES (9/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.121 1.120 1.119 1.120 1.120 1.119
Number of units outstanding at
end of year................... - 2,407 - 3,994 - 124
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO
(5/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.077 1.076 1.076 1.075 1.074 1.074
Number of units outstanding at
end of year................... 502 60,832 18,841 6,816 1,944 -
SMALL CAP PORTFOLIO (5/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.199 1.198 1.198 1.198 1.197 1.196
Number of units outstanding at
end of year................... - 1,748 2,563 - 1,114 6,726
MONTGOMERY FUNDS III
MONTGOMERY VARIABLE SERIES
GROWTH FUND (11/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.071 1.071 1.070 1.070 1.070 1.070
Number of units outstanding at
end of year................... - - 338 - - -
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO (5/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.146 1.145 1.145 1.145 1.144 1.144
Number of units outstanding at
end of year................... - - 2,056 - - -
SALOMON BROTHERS VARIABLE SERIES
FUNDS, INC.
SALOMON BROTHERS VARIABLE
CAPITAL FUND (10/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.147 1.146 1.146 1.146 1.146 1.145
Number of units outstanding at
end of year................... - 4,438 246 - 164 -
SALOMON BROTHERS VARIABLE
INVESTORS FUND (10/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.206 1.206 1.206 1.205 1.205 1.204
Number of units outstanding at
end of year................... - 1,374 - - - -
</TABLE>
A-5
<PAGE> 91
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
SALOMON BROTHERS VARIABLE TOTAL
RETURN FUND (9/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.060 1.059 1.059 1.059 1.058 1.058
Number of units outstanding at
end of year................... - 6,719 - - - -
STRONG VARIABLE INSURANCE FUNDS,
INC.
STRONG, SCHAFER VALUE FUND II
(5/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.291 1.291 1.290 1.290 1.289 1.289
Number of units outstanding at
end of year................... - 1,963 325 - 41 -
TRAVELERS SERIES FUND, INC.
ALLIANCE GROWTH PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.367 $ 1.363 $ 1.362 $ 1.361 $ 1.358 $ 1.355
Unit Value at end of year....... 1.753 1.746 1.742 1.740 1.732 1.726
Number of units outstanding at
end of year................... 32,748 66,181 1,050,338 571,621 201,618 121,866
MFS TOTAL RETURN PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.260 $ 1.257 $ 1.256 $ 1.255 $ 1.252 $ 1.249
Unit Value at end of year....... 1.399 1.393 1.390 1.388 1.382 1.377
Number of units outstanding at
end of year................... 67,299 85,454 338,122 38,600 114,873 90,723
PUTNAM DIVERSIFIED INCOME
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.092 $ 1.090 $ 1.088 $ 1.088 $ 1.085 $ 1.083
Unit Value at end of year....... 1.093 1.088 1.086 1.084 1.080 1.076
Number of units outstanding at
end of year................... 31,397 36,325 95,775 46,716 89,751 82,211
SMITH BARNEY HIGH INCOME
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.180 $ 1.178 $ 1.176 $ 1.176 $ 1.173 $ 1.171
Unit Value at end of year....... 1.179 1.173 1.171 1.170 1.165 1.161
Number of units outstanding at
end of year................... - 2,810 131,098 44,716 14,828 38,681
SMITH BARNEY INTERNATIONAL
EQUITY PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.040 $ 1.037 $ 1.036 $ 1.035 $ 1.033 $ 1.031
Unit Value at end of year....... 1.101 1.096 1.093 1.092 1.087 1.083
Number of units outstanding at
end of year................... 13,292 4,211 180,603 118,339 54,366 18,937
SMITH BARNEY LARGE
CAPITALIZATION GROWTH
PORTFOLIO(5/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.314 1.313 1.313 1.313 1.312 1.311
Number of units outstanding at
end of year................... - - 4,942 - - -
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO (5/98)*
Unit Value at beginning of
year.......................... $ 1.334 $ 1.330 $ 1.329 $ 1.328 $ 1.324 $ 1.322
Unit Value at end of year....... 1.456 1.449 1.446 1.445 1.438 1.433
Number of units outstanding at
end of year................... 21,635 7,331 509,575 1,199,090 81,366 190,418
</TABLE>
A-6
<PAGE> 92
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
SMITH BARNEY MONEY MARKET
PORTFOLIO (5/98)*
Unit Value at beginning of
year.......................... $ 1.056 $ 1.053 $ 1.052 $ 1.051 $ 1.048 $ 1.047
Unit Value at end of year....... 1.102 1.097 1.095 1.094 1.089 1.085
Number of units outstanding at
end of year................... - 2,799 296,260 433,846 371,996 237,923
THE TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK
PORTFOLIO(5/98)
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.222 1.289 1.289 1.288 1.288 1.287
Number of units outstanding at
end of year................... 9 1,037 - - 111 -
DISCIPLINED SMALL CAP STOCK
PORTFOLIO (5/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.091 1.091 1.088 1.091 1.087 1.090
Number of units outstanding at
end of year................... - - 113 - 172 -
EQUITY INCOME PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.063 $ 1.062 $ 1.062 $ 1.062 $ 1.061 $ 1.060
Unit Value at end of year....... 1.187 1.184 1.182 1.182 1.178 1.176
Number of units outstanding at
end of year................... - 86,915 2,633,036 - 163,749 27,697
FEDERATED HIGH YIELD PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.011 $ 1.011 $ 1.011 $ 1.011 $ 1.010 $ 1.010
Unit Value at end of year....... 1.053 1.050 1.049 1.048 1.046 1.044
Number of units outstanding at
end of year................... - 11,120 99,171 - 5,125 678
FEDERATED STOCK PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.084 $ 1.083 $ 1.083 $ 1.083 $ 1.082 $ 1.081
Unit Value at end of year....... 1.270 1.266 1.264 1.263 1.259 1.257
Number of units outstanding at
end of year................... - 8,544 591,770 - 14,772 972
LARGE CAP PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.029 $ 1.028 $ 1.028 $ 1.027 $ 1.027 $ 1.026
Unit Value at end of year....... 1.386 1.382 1.380 1.379 1.375 1.372
Number of units outstanding at
end of year................... - 10,852 520,424 - 68,162 1,349
LAZARD INTERNATIONAL STOCK
PORTFOLIO
Unit Value at beginning of
year.......................... $ 0.981 $ 0.980 $ 0.979 $ 0.979 $ 0.978 $ 0.978
Unit Value at end of year....... 1.098 1.095 1.093 1.092 1.089 1.087
Number of units outstanding at
end of year................... - 6,737 139,586 - 20,939 32,949
MFS MID CAP GROWTH PORTFOLIO
(5/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.213 1.212 1.212 1.212 1.211 1.211
Number of units outstanding at
end of year................... - 1,512 538 - - -
MFS RESEARCH PORTFOLIO (5/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.245 1.245 1.245 1.244 1.244 1.243
Number of units outstanding at
end of year................... 4,261 7,232 214 - - -
</TABLE>
A-7
<PAGE> 93
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1998)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1998
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
SOCIAL AWARENESS STOCK PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.311 $ 1.308 $ 1.307 $ 1.306 $ 1.303 $ 1.300
Unit Value at end of year....... 1.724 1.716 1.712 1.711 1.703 1.697
Number of units outstanding at
end of year................... 12,064 18,134 417,397 293,875 81,076 157,955
STRATEGIC STOCK PORTFOLIO
(5/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.072 1.071 1.071 1.071 1.070 1.070
Number of units outstanding at
end of year................... - - 866 - - -
TRAVELERS QUALITY BOND PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.021 $ 1.021 $ 1.020 $ 1.020 $ 1.020 $ 1.019
Unit Value at end of year....... 1.102 1.099 1.098 1.097 1.094 1.092
Number of units outstanding at
end of year................... 228 32 806 21,396 23,910 101,354
U.S. GOVERNMENT SECURITIES
PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.149 $ 1.146 $ 1.145 $ 1.144 $ 1.141 $ 1.139
Unit Value at end of year....... 1.259 1.253 1.250 1.249 1.243 1.239
Number of units outstanding at
end of year................... 6,143 29,647 210,497 145,195 22,572 62,648
UTILITIES PORTFOLIO
Unit Value at beginning of
year.......................... $ 1.289 $ 1.285 $ 1.284 $ 1.283 $ 1.280 $ 1.278
Unit Value at end of year....... 1.514 1.507 1.504 1.502 1.495 1.490
Number of units outstanding at
end of year................... 6,675 1,413 77,322 43,847 15,300 6,389
WARBURG PINCUS TRUST
EMERGING MARKETS PORTFOLIO
(10/98)*
Unit Value at beginning of
year.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Unit Value at end of year....... 1.080 1.079 1.079 1.079 1.079 1.078
Number of units outstanding at
end of year................... - 285 309 - - -
</TABLE>
For 1998, unit values are shown for all mortality and expense risk charges even
if there are no units outstanding. This information was not presented in prior
years.
The financial statements of Separate Account QP are contained in the Annual
Report which should be read along with this information and which is
incorporated by reference into the SAI. The consolidated financial statements of
The Travelers Insurance Company and Subsidiaries are contained in the SAI.
Funding options not listed above were not yet available through the Separate
Account as of December 31, 1998.
* Reflects date money first came into funding option through the Separate
Account.
** Formerly American Odyssey Short-Term Bond Fund. The name, investment
objective, and investment subadviser of this fund were changed pursuant to a
shareholder vote effective May 1, 1998.
A-8
<PAGE> 94
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND* (10/96)
Unit Value at beginning of year..... $ 2.073 2.063 2.059 2.056 2.047 2.040
Unit Value at end of year........... 3.163 3.143 3.132 3.127 3.107 3.092
Number of units outstanding at end
of year........................... 437,009 215,894 5,825,126 3,623,345 809,231 1,271,961
HIGH YIELD BOND TRUST (10/96)
Unit Value at beginning of year..... $ 1.267 1.261 1.258 1.257 1.251 1.247
Unit Value at end of year........... 1.315 1.306 1.302 1.300 1.292 1.285
Number of units outstanding at end
of year........................... 4,573 245,914 715,406 78,777 64,829 42,157
MANAGED ASSETS TRUST (10/96)
Unit Value at beginning of year..... $ 1.519 1.512 1.509 1.507 1.500 1.495
Unit Value at end of year........... 1.724 1.713 1.708 1.705 1.694 1.686
Number of units outstanding at end
of year........................... 95,510 2,139,292 6,231,885 975,651 274,379 362,589
MONEY MARKET PORTFOLIO (9/98)
Unit Value at beginning of year..... $ 1.013 1.012 1.012 1.012 1.011 1.011
Unit Value at end of year........... 1.057 1.054 1.053 1.052 1.049 1.047
Number of units outstanding at end
of year........................... -- 1,193,784 1,189,996 -- 41,317 108
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY FUND
(10/96)
Unit Value at beginning of year..... $ 1.628 1.620 1.617 1.615 1.608 1.603
Unit Value at end of year........... 1.613 1.603 1.598 1.595 1.585 1.577
Number of units outstanding at end
of year........................... 92,195 5,408,519 12,359,933 4,369,219 763,197 186,669
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND (10/96)
Unit Value at beginning of year..... $ 0.856 0.852 0.850 0.849 0.845 0.842
Unit Value at end of year........... 1.163 1.155 1.152 1.150 1.142 1.137
Number of units outstanding at end
of year........................... 92,398 5,098,615 11,854,378 5,046,010 627,445 91,325
AMERICAN ODYSSEY GLOBAL HIGH-YIELD
BOND FUND (10/96)
Unit Value at beginning of year..... $ 1.020 1.015 1.013 1.012 1.007 1.004
Unit Value at end of year........... 1.122 1.115 1.111 1.110 1.102 1.097
Number of units outstanding at end
of year........................... 11,641 1,603,123 3,452,649 1,544,303 190,747 18,326
AMERICAN ODYSSEY INTERMEDIATE-TERM
BOND FUND (10/96)
Unit Value at beginning of year..... $ 1.172 1.167 1.164 1.163 1.158 1.154
Unit Value at end of year........... 1.183 1.175 1.171 1.169 1.162 1.156
Number of units outstanding at end
of year........................... 17,748 2,250,902 4,575,483 1,395,719 169,831 33,765
AMERICAN ODYSSEY INTERNATIONAL
EQUITY FUND (10/96)
Unit Value at beginning of year..... $ 1.302 1.297 1.294 1.292 1.286 1.282
Unit Value at end of year........... 1.716 1.705 1.699 1.696 1.685 1.677
Number of units outstanding at end
of year........................... 58,143 5,139,992 9,785,093 3,370,475 564,777 37,869
AMERICAN ODYSSEY LONG-TERM BOND FUND
(10/96)
Unit Value at beginning of year..... $ 1.235 1.230 1.227 1.226 1.220 1.216
Unit Value at end of year........... 1.194 1.186 1.183 1.181 1.173 1.167
Number of units outstanding at end
of year........................... 8,580 4,355,250 9,288,007 2,940,609 415,013 56,766
</TABLE>
A-9
<PAGE> 95
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
DELAWARE GROUP PREMIUM FUND
REIT SERIES (1/99)
Unit Value at beginning of year..... 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year........... 0.958 0.956 0.955 0.954 0.952 0.951
Number of units outstanding at end
of year........................... -- 17,064 31,985 -- 2,453 --
SMALL CAP VALUE SERIES (9/98)
Unit Value at beginning of year..... $ 1.121 1.120 1.119 1.120 1.120 1.119
Unit Value at end of year........... 1.060 1.057 1.056 1.055 1.053 1.051
Number of units outstanding at end
of year........................... -- 86,532 128,715 -- 9,931 --
DREYFUS VARIABLE INVESTMENT FUND
APPRECIATION PORTFOLIO (7/98)(2)
Unit Value at beginning of year..... $ 1.077 1.076 1.076 1.075 1.074 1.074
Unit Value at end of year........... 1.193 1.190 1.188 1.187 1.184 1.181
Number of units outstanding at end
of year........................... 3,743 6,527,393 5,775,356 67,059 100,924 26,484
SMALL CAP PORTFOLIO (9/98)
Unit Value at beginning of year..... $ 1.199 1.198 1.198 1.198 1.197 1.196
Unit Value at end of year........... 1.467 1.464 1.462 1.461 1.457 1.454
Number of units outstanding at end
of year........................... 63,771 363,977 437,132 106,854 44,319 15,312
GREENWICH STREET SERIES FUND
EQUITY INCOME PORTFOLIO II (5/99)
Unit Value at beginning of year..... 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year........... 1.094 1.093 1.092 1.092 1.091 1.090
Number of units outstanding at end
of year........................... -- 1,014,729 1,901,306 -- 11,806 4,744
MONTGOMERY FUNDS III
MONTGOMERY VARIABLE SERIES GROWTH
FUND (11/98)
Unit Value at beginning of year..... $ 1.071 1.071 1.070 1.070 1.070 1.070
Unit Value at end of year........... 1.286 1.283 1.281 1.281 1.278 1.275
Number of units outstanding at end
of year........................... -- 38,431 77,542 -- 43 57
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO (10/98)
Unit Value at beginning of year..... $ 1.146 1.145 1.145 1.145 1.144 1.144
Unit Value at end of year........... 1.168 1.165 1.163 1.163 1.160 1.158
Number of units outstanding at end
of year........................... -- 103,534 1,085,047 -- 3,604 --
SALOMON BROTHERS VARIABLE SERIES
FUNDS, INC.
CAPITAL FUND (10/98)
Unit Value at beginning of year..... $ 1.147 1.146 1.146 1.146 1.146 1.145
Unit Value at end of year........... 1.392 1.388 1.387 1.386 1.383 1.380
Number of units outstanding at end
of year........................... -- 88,070 200,061 -- 6,664 196
INVESTORS FUND (10/98)
Unit Value at beginning of year..... $ 1.206 1.206 1.206 1.205 1.205 1.204
Unit Value at end of year........... 1.339 1.336 1.334 1.333 1.330 1.328
Number of units outstanding at end
of year........................... 106 66,421 62,568 4,318 1,501 2.737
</TABLE>
A-10
<PAGE> 96
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
SALOMON BROTHERS VARIABLE SERIES
FUNDS, INC. (CONT.)
TOTAL RETURN FUND (9/98)
Unit Value at beginning of year..... $ 1.060 1.059 1.059 1.059 1.058 1.058
Unit Value at end of year........... 1.062 1.059 1.058 1.057 1.054 1.052
Number of units outstanding at end
of year........................... -- 30,146 128,948 -- 1,458 --
STRONG VARIABLE INSURANCE FUNDS, INC.
STRONG, SCHAFER VALUE FUND II (9/98)
Unit Value at beginning of year..... $ 1.291 1.291 1.290 1.290 1.289 1.289
Unit Value at end of year........... 1.247 1.244 1.242 1.242 1.238 1.236
Number of units outstanding at end
of year........................... -- 15,579 16,658 -- 275 --
TRAVELERS SERIES FUND
ALLIANCE GROWTH PORTFOLIO (10/96)
Unit Value at beginning of year..... $ 1.753 1.746 1.742 1.740 1.732 1.726
Unit Value at end of year........... 2.305 2.290 2.283 2.279 2.265 2.254
Number of units outstanding at end
of year........................... 99,102 3,927,438 4,335,442 776,729 300,983 182,765
MFS TOTAL RETURN PORTFOLIO(10/96)
Unit Value at beginning of year..... $ 1.399 1.393 1.390 1.388 1.382 1.377
Unit Value at end of year........... 1.427 1.418 1.414 1.411 1.402 1.395
Number of units outstanding at end
of year........................... 76,473 1,023,136 1,607,844 113,121 238,310 136,549
PUTNAM DIVERSIFIED INCOME PORTFOLIO
(10/96)
Unit Value at beginning of year..... $ 1.093 1.088 1.086 1.084 1.080 1.076
Unit Value at end of year........... 1.098 1.091 1.088 1.086 1.079 1.074
Number of units outstanding at end
of year........................... 9,311 278,395 249,302 59,424 139,658 227,738
SMITH BARNEY HIGH INCOME PORTFOLIO
(10/96)
Unit Value at beginning of year..... $ 1.179 1.173 1.171 1.170 1.165 1.161
Unit Value at end of year........... 1.202 1.194 1.191 1.189 1.181 1.176
Number of units outstanding at end
of year........................... 306 230,410 469,907 69,835 19,237 49,357
SMITH BARNEY INTERNATIONAL EQUITY
PORTFOLIO
Unit Value at beginning of year..... $ 1.101 1.096 1.093 1.092 1.087 1.083
Unit Value at end of year........... 1.835 1.823 1.817 1.814 1.803 1.794
Number of units outstanding at end
of year........................... 6,115 349,576 1,188,533 209,539 92,095 25,632
SMITH BARNEY LARGE CAPITALIZATION
GROWTH PORTFOLIO(8/98)
Unit Value at beginning of year..... $ 1.314 1.313 1.313 1.313 1.312 1.311
Unit Value at end of year........... 1.709 1.704 1.702 1.701 1.697 1.693
Number of units outstanding at end
of year........................... -- 649,086 663,945 87,242 51,499 1,853
SMITH BARNEY LARGE CAP VALUE*
PORTFOLIO (10/98)
Unit Value at beginning of year..... $ 1.456 1.449 1.446 1.445 1.438 1.433
Unit Value at end of year........... 1.448 1.439 1.434 1.432 1.423 1.416
Number of units outstanding at end
of year........................... 64,998 77,050 896,535 1,338,259 107,554 218,475
</TABLE>
A-11
<PAGE> 97
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C>
SALOMON BROTHERS VARIABLE SERIES
FUNDS, INC. (CONT.)
SMITH BARNEY MONEY MARKET* PORTFOLIO
(10/98)
Unit Value at beginning of year..... $ 1.102 1.097 1.095 1.094 1.089 1.085
Unit Value at end of year........... 1.148 1.141 1.137 1.135 1.128 1.122
Number of units outstanding at end
of year........................... 504,494 42,339 700,936 905,258 152,444 462,445
THE TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK
PORTFOLIO(9/98)
Unit Value at beginning of year..... $ 1.222 1.289 1.289 1.288 1.288 1.287
Unit Value at end of year........... 1.454 1.451 1.449 1.448 1.444 1.442
Number of units outstanding at end
of year........................... 5,028 45,075 240,631 3.806 1.943 542
DISCIPLINED SMALL CAP STOCK
PORTFOLIO (11/98)
Unit Value at beginning of year..... $ 1.091 1.091 1.088 1.091 1.087 1.090
Unit Value at end of year........... 1.306 1.303 1.301 1.301 1.298 1.296
Number of units outstanding at end
of year........................... 515 6,963 38,065 3,028 1,707 --
EQUITY INCOME PORTFOLIO (7/97)
Unit Value at beginning of year..... $ 1.187 1.184 1.182 1.182 1.178 1.176
Unit Value at end of year........... 1.238 1.232 1.229 1.228 1.222 1.217
Number of units outstanding at end
of year........................... -- 2,144,584 6,669,310 -- 312,472 57,889
FEDERATED HIGH YIELD PORTFOLIO* (10/97)
Unit Value at beginning of year..... $ 1.053 1.050 1.049 1.048 1.046 1.044
Unit Value at end of year........... 1.079 1.074 1.072 1.070 1.066 1.062
Number of units outstanding at end
of year........................... -- 38,465 218,380 -- 12,756 3,860
FEDERATED STOCK PORTFOLIO (7/97)
Unit Value at beginning of year..... $ 1.270 1.266 1.264 1.263 1.259 1.257
Unit Value at end of year........... 1.329 1.323 1.320 1.318 1.311 1.307
Number of units outstanding at end
of year........................... -- 269,231 1,413,168 -- 61,526 4,170
LARGE CAP PORTFOLIO (7/97)
Unit Value at beginning of year..... $ 1.386 1.382 1.380 1.379 1.375 1.372
Unit Value at end of year........... 1.782 1.773 1.769 1.767 1.758 1.752
Number of units outstanding at end
of year........................... -- 2,550,992 4,955,852 -- 234,329 7,759
LAZARD INTERNATIONAL STOCK PORTFOLIO
(8/97)
Unit Value at beginning of year..... $ 1.098 1.095 1.093 1.092 1.089 1.087
Unit Value at end of year........... 1.328 1.322 1.319 1.317 1.311 1.306
Number of units outstanding at end
of year........................... -- 369,840 440,369 -- 65,435 36,439
MFS MID CAP GROWTH PORTFOLIO (9/98)
Unit Value at beginning of year..... $ 1.213 1.212 1.232 1.212 1.211 1.211
Unit Value at end of year........... 1.979 1.974 1.972 1.971 1.966 1.962
Number of units outstanding at end
of year........................... 415 233,024 154,186 9,187 1,622 --
MFS RESEARCH PORTFOLIO (10/98)
Unit Value at beginning of year..... $ 1.245 1.245 1.245 1.244 1.244 1.243
Unit Value at end of year........... 1.531 1.527 1.525 1.524 1.521 1.518
Number of units outstanding at end
of year........................... 18,357 301,212 120,603 4,975 1,167 350
</TABLE>
A-12
<PAGE> 98
APPENDIX A
CONDENSED FINANCIAL INFORMATION (1999)
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO NAME YEAR ENDED 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
P1 P2 P3 P4 P5 P6
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
SALOMON BROTHERS VARIABLE SERIES
FUNDS, INC. (CONT.)
SOCIAL AWARENESS STOCK PORTFOLIO
(10/96)
Unit Value at beginning of year..... $ 1.724 1.716 1.712 1.711 1.703 1.697
Unit Value at end of year........... 1.985 1.972 1.966 1.963 1.950 1.941
Number of units outstanding at end
of year........................... 40,351 608,076 2,313,144 497,383 139,985 229,469
STRATEGIC STOCK PORTFOLIO (9/98)
Unit Value at beginning of year..... $ 1.072 1.071 1.071 1.071 1.070 1.070
Unit Value at end of year........... 1.118 1.115 1.114 1.113 1.110 1.108
Number of units outstanding at end
of year........................... -- 4,596 324,249 5,368 1,500 334
TRAVELERS QUALITY BOND PORTFOLIO
(9/97)
Unit Value at beginning of year..... $ 1.102 1.099 1.098 1.097 1.094 1.092
Unit Value at end of year........... 1.107 1.102 1.100 1.098 1.093 1.090
Number of units outstanding at end
of year........................... 1,221 151,498 382,500 22,006 106,388 139,811
U.S. GOVERNMENT SECURITIES PORTFOLIO
(10/96)
Unit Value at beginning of year..... $ 1.259 1.253 1.250 1.249 1.243 1.239
Unit Value at end of year........... 1.199 1.192 1.188 1.186 1.178 1.172
Number of units outstanding at end
of year........................... -- 110,708 880,918 206,083 74,915 110,011
UTILITIES PORTFOLIO (10/96)
Unit Value at beginning of year..... $ 1.514 1.507 1.504 1.502 1.495 1.490
Unit Value at end of year........... 1.503 1.494 1.489 1.487 1.477 1.470
Number of units outstanding at end
of year........................... 8,345 118,785 375,024 99,467 65,548 5,986
WARBURG PINCUS TRUST
EMERGING MARKETS PORTFOLIO (10/98)
Unit Value at beginning of year..... $ 1.080 1.079 1.079 1.079 1.079 1.078
Unit Value at end of year........... 1.947 1.942 1.940 1.939 1.934 1.931
Number of units outstanding at end
of year........................... -- 96,131 130,887 -- 1,865 229
</TABLE>
Unit values are shown for all mortality and expense risk charges even if there
are no units outstanding.
The date next to each funding option's name reflects the date money first came
into the funding option through the Separate Account.
The financial statements of Separate Account QP and the consolidated financial
statements of The Travelers Insurance Company and Subsidiaries are contained in
the SAI.
* No longer available to new contract owners.
(1) The .95% mortality and expense risk charge is not currently available
through Gold Track Select Contracts.
(2) Formerly Capital Appreciation Portfolio
A-13
<PAGE> 99
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<PAGE> 100
APPENDIX B
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information and
financial statements relating to the Separate Account and the Company. A list of
the contents of the Statement of Additional Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Principal Underwriting Agreement
Valuation of Assets
Mixed and Shared Funding
Performance Information
Federal Tax Considerations
Independent Accountants
Financial Statements
- --------------------------------------------------------------------------------
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2000 (FORM NO. L
12549S) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE COMPLETE THE
COUPON FOUND BELOW AND MAIL IT TO: THE TRAVELERS INSURANCE COMPANY, ANNUITY
SERVICES, ONE TOWER SQUARE, HARTFORD, CONNECTICUT, 06183-9061.
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-1
<PAGE> 101
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<PAGE> 102
APPENDIX C
- --------------------------------------------------------------------------------
TEXAS OPTIONAL RETIREMENT PLAN PARTICIPANTS
As provided in the Texas Optional Retirement Program ("Texas ORP"), a
participant may not receive a loan, a surrender or payment of any annuity or any
benefit under the Contract, and may not transfer or exchange the cash surrender
value of the contract until one of the following events:
- Death
- Disability (as defined by Internal Revenue Code 72(m)(7)
- Attainment of age 70 1/2
- Retirement
- Termination of employment in all public institutions of higher education
in Texas
If the participant does not begin a second year of participation in the Texas
ORP, the Company will pay the participant's cash surrender value, as directed by
the Contract Owner.
The Company will require a written statement from the applicable institution
certifying their agreement to any withdrawals.
C-1
<PAGE> 103
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<PAGE> 104
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
L-12549-C Printed in U.S.A.
TIC Ed. 5-2000
<PAGE> 105
PART B
Information Required in a Statement of Additional Information
<PAGE> 106
GOLD TRACK
GOLD TRACK SELECT
STATEMENT OF ADDITIONAL INFORMATION
dated
May 1, 2000
for
THE TRAVELERS FUND QP FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
This Statement of Additional Information ("SAI") is not a prospectus but relates
to, and should be read in conjunction with, the Group Variable Annuity Contract
Prospectus dated May 1, 2000. A copy of the Prospectus may be obtained by
writing to The Travelers Insurance Company, Annuity Services, One Tower Square,
Hartford, Connecticut 06183-5030, or by calling 1-800-842-9368 or by accessing
the Securities and Exchange Commission's website at http://www.sec.gov.
TABLE OF CONTENTS
THE INSURANCE COMPANY ........................................ 1
PRINCIPAL UNDERWRITER ........................................ 1
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT ............ 2
VALUATION OF ASSETS .......................................... 2
MIXED AND SHARED FUNDING ..................................... 3
PERFORMANCE INFORMATION ...................................... 3
FEDERAL TAX CONSIDERATIONS ................................... 13
INDEPENDENT ACCOUNTANTS ...................................... 16
FINANCIAL STATEMENTS ......................................... F-1
<PAGE> 107
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company"), is a stock
insurance company chartered in 1864 in Connecticut and continuously engaged in
the insurance business since that time. It is licensed to conduct life insurance
business in all states of the United States, the District of Columbia, Puerto
Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company's
Home Office is located at One Tower Square, Hartford, Connecticut 06183 and its
telephone number is (860) 277-0111.
The Company is a wholly owned subsidiary of The Travelers Insurance
Group Inc., an indirect, wholly owned subsidiary of Citigroup Inc.
("Citigroup"), a diversified holding company whose businesses provide a broad
range of financial services to consumer and corporate customers around the
world. Citigroup's activities are conducted through the Global Consumer, Global
Corporate and Investment Bank, Global Investment Management and Private Banking,
and Investment Activities segments.
STATE REGULATION. The Company is subject to the laws of the state of Connecticut
governing insurance companies and to regulation by the Insurance Commissioner of
the state of Connecticut (the "Commissioner"). An annual statement covering the
operations of the Company for the preceding year, as well as its financial
conditions as of December 31 of such year, must be filed with the Commissioner
in a prescribed format on or before March 1 of each year. The Company's books
and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted at
least once every four years.
The Company is also subject to the insurance laws and regulations of
all other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the jurisdiction
of domicile in determining the field of permissible investments.
THE SEPARATE ACCOUNT. Separate Account QP meets the definition of a separate
account under the federal securities laws, and will comply with the provisions
of the 1940 Act. Additionally, the operations of Separate Account QP are subject
to the provisions of Section 38a-433 of the Connecticut General Statutes which
authorizes the Commissioner to adopt regulations under it. Section 38a-433
contains no restrictions on the investments of the Separate Account, and the
Commissioner has adopted no regulations under the Section that affect the
Separate Account.
PRINCIPAL UNDERWRITER
CFBDS, Inc. serves as principal underwriter for Separate Account QP
and the Contracts. The offering is continuous. CFBDS's principal executive
offices are located at 21 Milk Street, Boston, Massachusetts. CFBDS is not
affiliated with the Company or Separate Account QP.However, it is currently
anticipated that Travelers Distribution LLC, an affiliated broker dealer, may
become the principal underwriter for the Contracts during the year 2000.
1
<PAGE> 108
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
Under the terms of the Distribution and Principal Underwriting
Agreement among Separate Account QP, CFBDS and the Company, CFBDS acts as agent
for the distribution of the Contracts and as principal underwriter for the
Contracts. The Company reimburses CFBDS for certain sales and overhead expenses
connected with sales functions.
VALUATION OF ASSETS
FUNDING OPTIONS: The value of the assets of each Funding Option is determined at
4:00 p.m. eastern time on each business day, unless we need to close earlier due
to an emergency. A business day is any day the New York Stock Exchange is open.
Each security traded on a national securities exchange is valued at the last
reported sale price on the business day. If there has been no sale on that day,
then the value of the security is taken to be the mean between the reported bid
and asked prices on the business day or on the basis of quotations received from
a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available is
valued at the mean between the quoted bid and asked prices on the business day
or on the basis of quotations received from a reputable broker or any other
recognized source.
Securities traded on the over-the-counter-market and listed
securities with no reported sales are valued at the mean between the last
reported bid and asked prices or on the basis of quotations received from a
reputable broker or other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by "marking to
market" (computing a market value based upon quotations from dealers or issuers
for securities of a similar type, quality and maturity.) "Marking to market"
takes into account unrealized appreciation or depreciation due to changes in
interest rates or other factors which would influence the current fair values of
such securities. Short-term investments maturing in sixty days or less for which
there is no reliable quoted market price are valued at amortized cost which
approximates market.
THE CASH VALUE: The value of an Accumulation Unit on any business day is
determined by multiplying the value on the preceding business day by the net
investment factor for the valuation period just ended. The net investment factor
is used to measure the investment performance of a Funding Option from one
valuation period to the next. The net investment factor for a Funding Option for
any valuation period is equal to the sum of 1.000000 plus the net investment
rate (the gross investment rate less any applicable Funding Option deductions
during the Valuation Period relating to the expense risk charge and the Funding
Option Administrative Charge). The gross investment rate of a Funding Option is
equal to (a) minus (b), divided by (c) where:
(a) = investment income plus capital gains and losses (whether
realized or unrealized);
(b) = any deduction for applicable taxes presently zero); and
(c) = the value of the assets of the Funding Option at the beginning
of the valuation period.
2
<PAGE> 109
The gross investment rate may be either positive or negative. A
Funding Option's investment income includes any distribution whose ex-dividend
date occurs during the valuation period.
ACCUMULATION UNIT VALUE. The value of the accumulation unit for each Funding
Option was initially established at $1.00. The value of an accumulation unit on
any business day is determined by multiplying the value on the preceding
business day by the net investment factor for the valuation period just ended.
The net investment factor is calculated for each Funding Option and takes into
account the investment performance, expenses and the deduction of certain
expenses.
ANNUITY UNIT VALUE. The initial Annuity Unit Value applicable to each Funding
Option was established at $1.00. An annuity unit value as of any business day is
equal to (a) the value of the annuity unit on the preceding business day,
multiplied by (b) the corresponding net investment factor for the valuation
period just ended, divided by (c) the assumed net investment factor for the
valuation period. (For example, the assumed net investment factor based on an
annual assumed net investment rate of 3.0% for a Valuation Period of one day is
1.000081 and, for a period of two days, is 1.000081 x 1.000081.)
MIXED AND SHARED FUNDING
Certain variable annuity separate accounts and variable life
insurance separate accounts may invest in the Funding Options simultaneously
(called "mixed" and "shared" funding). It is conceivable that in the future it
may be disadvantageous to do so. Although the Company and the Funding Options do
not currently foresee any such disadvantages either to variable annuity contract
owners or variable life policy owners, each Funding Option's Board of Directors
intends to monitor events in order to identify any material conflicts between
them and to determine what action, if any, should be taken. If a Board of
Directors was to conclude that separate funds should be established for variable
life and variable annuity separate accounts, the variable annuity contract
owners would not bear any of the related expenses, but variable annuity contract
owners and variable life insurance policy owners would no longer have the
economies of scale resulting from a larger combined fund.
PERFORMANCE INFORMATION
TOTAL RETURN PERFORMANCE
From time to time, the Company may advertise several types of
historical performance for the Funding Options of Separate Account QP. The
Company may advertise the "standardized average annual total returns" of the
Funding Options, calculated in a manner prescribed by the Securities and
Exchange Commission, as well as the "nonstandardized total returns," as
described below:
STANDARDIZED METHOD. Quotations of average annual total returns are
computed according to a formula in which a hypothetical initial investment of
$1,000 is applied to the Funding Option, and then related to ending redeemable
values over one-, five-, and ten-year periods, or for a period covering the time
during which the Funding Option has been in existence if less. If a Funding
Option has been in existence for less than one year, the "since inception" total
return performance quotations are year-to-date and are not average annual total
returns. These quotations reflect the deduction of all maximum recurring charges
during each period (on a pro rata basis in the case of fractional periods). The
deduction for the semiannual account charge is converted to a percentage of
assets based on the actual fees collected, divided by the average net assets for
contracts sold under the
3
<PAGE> 110
Prospectus to which this SAI relates. Each quotation assumes a total redemption
at the end of each period with the assessment of any applicable maximum
surrender charge or deferred sales charge at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be
calculated in a similar manner based on the performance of the Funding Options
over a period of time, usually for the calendar year-to-date, and for the past
one-, three-, five- and ten-year periods. Nonstandardized total return will not
reflect the deduction of any applicable surrender or deferred sales charge or
the semiannual account charge, which, if reflected, would decrease the level of
performance shown. The surrender charge or deferred sales charge is not
reflected because the Contract is designed for long-term investment.
For Funding Options that were in existence prior to the date they
became available under the Separate Account, the nonstandardized average annual
total return quotations may be accompanied by returns showing the investment
performance that such Funding Options would have achieved (reduced by the
applicable maximum charges) had they been held under the Contract for the period
quoted. The total return quotations are based upon historical earnings and are
not necessarily representative of future performance
GENERAL. Within the guidelines prescribed by the SEC and the
National Association of Securities Dealers, Inc. ("NASD"), performance
information may be quoted numerically or may be presented in a table, graph or
other illustration. Advertisements may include data comparing performance to
well-known indices of market performance (including, but not limited to, the Dow
Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P 400
Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000
Indices, the Value Line Index, and the Morgan Stanley Capital International's
EAFE Index). Advertisements may also include published editorial comments and
performance rankings compiled by independent organizations (including, but not
limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) and
publications that monitor the performance of Fund QP and the Funding Options.
Average annual total returns for each of the Funding Options
computed according to the standardized and nonstandardized methods for the
periods ending December 31, 1999 are set forth in the following tables.
4
<PAGE> 111
<TABLE>
<CAPTION>
TRAVELERS REGISTERED GOLD TRACK
STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
- ----------------------------------------------------------------------------------------------------------------
10 Year (or Inception
STOCK ACCOUNTS: 1 Year 5 Year inception) Date #
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Growth Portfolio 23.68% - 26.68% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund* -6.78% - 13.42% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund* 27.85% - 2.34% 10/7/1996
- ----------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund* 23.92% - 15.58% 10/7/1996
- ----------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund (Janus) 43.59% - 39.73% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------
Delaware Investments REIT Series - - -9.94% 1/5/1999
- ----------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 4.20% - 8.12% 7/29/1998
- ----------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio 15.16% - 28.41% 9/21/1998
- ----------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 12.77% - 24.28% 10/1/1996
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio -0.59% - 12.21% 10/7/1996
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 28.53% - 26.75% 10/7/1996
- ----------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio 53.55% - 62.54% 9/22/1998
- ----------------------------------------------------------------------------------------------------------------
MFS Research Portfolio 15.65% - 33.76% 10/2/1998
- ----------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund 4.41% - 25.67% 10/1/1998
- ----------------------------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 56.88% - 18.03% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio 22.33% - 42.06% 8/28/1998
- ----------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Value Portfolio -6.59% - 9.51% 10/1/1996
- ----------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 8.15% - 20.82% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------
Strategic Stock Portfolio -2.01% - 3.67% 9/22/1998
- ----------------------------------------------------------------------------------------------------------------
Templeton Global Stock Fund 20.55% - 11.93% 10/7/1996
- ----------------------------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio -11.11% - 7.78% 10/29/1998
- ----------------------------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio 12.43% - 22.53% 11/18/1998
- ----------------------------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) -7.01% - 10.65% 10/8/1996
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
10 Year
(or Inception
BOND ACCOUNTS: 1 Year 5 Year inception) Date #
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
American Odyssey Global High-Yield Bond Fund 3.46% - -2.01% 5/1/1998
--------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -5.14% - 2.88% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -9.10% - 3.20% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 1.11% - 3.71% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio -5.50% - 0.44% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio -4.10% - 3.50% 10/29/1996
--------------------------------------------------------------------------------------------------------------------------------
Templeton Global Bond Fund -12.15% - -1.06% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
Travelers Convertible Bond Portfolio - - 4.04% 8/24/1999
--------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust -2.53% - 6.33% 10/8/1996
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio -5.65% - 1.26% 9/26/1997
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio -10.54% - 3.24% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
--------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 3.86% - 12.80% 10/2/1996
--------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio -4.06% - 9.19% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
Templeton Global Asset Allocation Fund 14.71% - 12.65% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
Travelers Managed Assets Trust 6.64% - 15.66% 10/8/1996
--------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
--------------------------------------------------------------------------------------------------------------------------------
Smith Barney Money Market Portfolio -2.21% - 1.77% 10/1/1996
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# The inception date used to calculate standardized performance is based on the
date that the investment option became active in the product.
* American Odyssey Funds shown above do not reflect the CHART fee of 1.25%.
5
<PAGE> 112
<TABLE>
<CAPTION>
TRAVELERS REGISTERED GOLD TRACK
NONSTANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
Cumulative Returns
-----------------------------------------------------------------------
YTD 1 YR 3YR 5YR 10YR
- ---------------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS:
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Growth Portfolio 30.55% 30.55% 111.82% 260.03% -
- ---------------------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund* -1.57% -1.57% 46.17% 143.01% -
- ---------------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund* 34.95% 34.95% 28.57% 60.44% -
- ---------------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund* 30.82% 30.82% 53.80% 117.34% -
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund (Janus) 51.54% 51.54% 201.13% 412.91% 685.62%
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Investments REIT Series -3.87% -3.87% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 10.02% 10.02% 78.76% 192.14% -
- ---------------------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio 21.56% 21.56% 33.50% 96.28% -
- ---------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 19.05% 19.05% 97.87% 223.06% 348.10%
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 4.96% 4.96% 46.28% 120.02% 239.79%
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 35.67% 35.67% 127.77% 244.59% 441.30%
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio 62.05% 62.05% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio 22.08% 22.08% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund 10.23% 10.23% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 65.58% 65.58% 76.47% 125.20% -
- ---------------------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio 29.15% 29.15% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Value Portfolio -1.23% -1.23% 33.86% 107.88% -
- ---------------------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 14.34% 14.34% 87.56% 192.46% -
- ---------------------------------------------------------------------------------------------------------------------------------
Strategic Stock Portfolio 3.61% 3.61% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Templeton Global Stock Fund 27.44% 27.44% 40.58% 109.95% 213.12%
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio 12.00% 12.00% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio 18.85% 18.85% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) -1.37% -1.37% 42.30% 92.64% -
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Returns
----------------------------------------------------------------
Inception
3YR 5YR 10YR to Date Inception Date #
- ----------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS:
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Growth Portfolio 28.43% 29.18% - 27.08% 6/20/1994
- ----------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund* 13.49% 19.42% - 14.04% 5/1/1993
- ----------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund* 8.74% 9.91% - 9.87% 5/1/1993
- ----------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund* 15.43% 16.79% - 13.70% 5/1/1993
- ----------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund (Janus) 44.41% 38.65% 22.88% 14.19% 5/26/1983
- ----------------------------------------------------------------------------------------------------------------------
Delaware Investments REIT Series - - - -8.25% 5/6/1998
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 21.37% 23.90% - 18.50% 4/5/1993
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio 10.11% 14.43% - 33.93% 8/31/1990
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 25.54% 26.42% 16.17% 15.95% 9/29/1989
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 13.52% 17.07% 13.00% 12.31% 10/9/1986
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 31.57% 28.06% 18.39% 17.24% 10/9/1986
- ----------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio - - - 30.92% 3/23/1998
- ----------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio - - - 14.92% 3/23/1998
- ----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund - - - 10.49% 2/17/1998
- ----------------------------------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 20.84% 17.62% - 14.82% 6/20/1994
- ----------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio - - - 32.64% 5/6/1998
- ----------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Value Portfolio 10.21% 15.75% - 13.74% 6/20/1994
- ----------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 23.32% 23.93% - 16.55% 5/1/1992
- ----------------------------------------------------------------------------------------------------------------------
Strategic Stock Portfolio - - - -1.91% 5/6/1998
- ----------------------------------------------------------------------------------------------------------------------
Templeton Global Stock Fund 12.02% 15.98% 12.08% 12.02% 8/31/1988
- ----------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio - - - 21.80% 4/1/1997
- ----------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio - - - 2.86% 5/1/1998
- ----------------------------------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) 12.48% 14.00% - 11.84% 2/4/1994
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
STOCK ACCOUNTS:
- ------------------------------------------------------------------------------------------
Alliance Growth Portfolio 27.39% 27.37% 27.69%
- -------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund* 14.05% 30.21% 21.55%
- -------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund* -9.83% 5.66% -4.40%
- -------------------------------------------------------------------------------------------
American Odyssey International Equity Fund* 13.39% 3.69% 20.29%
- -------------------------------------------------------------------------------------------
Capital Appreciation Fund (Janus) 59.52% 24.57% 26.54%
- -------------------------------------------------------------------------------------------
Delaware Investments REIT Series - - -
- -------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 28.52% 26.42% 23.96%
- -------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio -4.71% 15.25% 15.10%
- -------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 26.58% 31.31% 20.92%
- -------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 10.19% 26.49% 12.79%
- -------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 37.71% 21.91% 13.22%
- -------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio - - -
- -------------------------------------------------------------------------------------------
MFS Research Portfolio - - -
- -------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund - - -
- -------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 5.11% 1.39% 16.18%
- -------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio - - -
- -------------------------------------------------------------------------------------------
Smith Barney Large Cap Value Portfolio 8.41% 25.01% 18.22%
- -------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 30.53% 25.66% 18.42%
- -------------------------------------------------------------------------------------------
Strategic Stock Portfolio - - -
- -------------------------------------------------------------------------------------------
Templeton Global Stock Fund -0.11% 10.43% 20.80%
- -------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio 15.40% - -
- -------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio - - -
- -------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) 16.65% 23.68% 6.07%
- -------------------------------------------------------------------------------------------
</TABLE>
* American Odyssey Funds shown above do not reflect the CHART fee of 1.25%
6
<PAGE> 113
<TABLE>
<CAPTION>
TRAVELERS REGISTERED GOLD TRACK
NONSTANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
Cumulative Returns
-----------------------------------------------------------------------
YTD 1 YR 3YR 5YR 10YR
- ---------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Odyssey Global High-Yield Bond Fund* 9.25% 9.25% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund* 0.19% 0.19% 13.84% 32.59% -
- ---------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund* -4.00% -4.00% 14.27% 38.11% -
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 6.76% 6.76% 17.06% 56.86% 183.41%
- ---------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio -0.20% -0.20% 5.42% 30.50% -
- ---------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio 1.27% 1.27% 12.86% 48.17% -
- ---------------------------------------------------------------------------------------------------------------------------------
Templeton Global Bond Fund -7.08% -7.08% -0.55% 21.87% 57.32%
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers Convertible Bond Portfolio 17.17% 17.17% - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 3.07% 3.07% 24.74% 62.90% 123.79%
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio -0.22% -0.22% 13.06% - -
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio -5.38% -5.38% 14.43% 40.80% -
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 9.66% 9.66% 48.34% 93.73% 201.88%
- ---------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 1.31% 1.31% 33.62% 87.36% -
- ---------------------------------------------------------------------------------------------------------------------------------
Templeton Global Asset Allocation Fund 21.28% 21.28% 45.21% 106.09% 199.95%
- ---------------------------------------------------------------------------------------------------------------------------------
Travelers Managed Assets Trust 12.75% 12.75% 61.81% 127.99% 199.60%
- ---------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- ---------------------------------------------------------------------------------------------------------------------------------
Smith Barney Money Market Portfolio 3.41% 3.41% 11.24% 19.91% -
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Returns Calendar Year Returns
------------------------------------------------------------------------------------
Inception to
BOND ACCOUNTS: 3YR 5YR 10YR Date Inception Date # 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Odyssey Global High-Yield Bond Fund* - - - 1.34% 5/1/1998 -
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund* 4.42% 5.80% - 4.19% 5/1/1993 7.08%
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund* 4.55% 6.67% - 5.10% 5/1/1993 7.63%
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 5.39% 9.42% 10.97% 9.45% 9/19/1985 -5.59%
- ----------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio 1.78% 5.46% - 5.07% 6/20/1994 -0.63%
- ----------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio 4.12% 8.18% - 7.11% 6/22/1994 -0.85%
- ----------------------------------------------------------------------------------------------------------------------------------
Templeton Global Bond Fund -0.18% 4.03% 4.63% 4.77% 8/31/1988 5.79%
- ----------------------------------------------------------------------------------------------------------------------------------
Travelers Convertible Bond Portfolio - - - 9.99% 5/1/1998 -
- ----------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 7.65% 10.25% 8.38% 7.46% 6/10/1983 5.18%
- ----------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio 4.18% - - 4.70% 8/30/1996 7.14%
- ----------------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio 4.60% 7.08% - 5.33% 1/24/1992 8.78%
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 14.05% 14.13% 11.68% 11.34% 9/6/1989 13.56%
- ----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 10.14% 13.37% - 11.57% 6/20/1994 10.25%
- ----------------------------------------------------------------------------------------------------------------------------------
Templeton Global Asset Allocation Fund 13.24% 15.55% 11.60% 11.49% 8/31/1988 5.00%
- ----------------------------------------------------------------------------------------------------------------------------------
Travelers Managed Assets Trust 17.40% 17.91% 11.59% 10.18% 6/7/1983 19.87%
- ----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- ----------------------------------------------------------------------------------------------------------------------------------
Smith Barney Money Market Portfolio 3.61% 3.70% - 3.61% 6/20/1994 3.70%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Calendar Year Returns
- ------------------------------------------------------------------------
BOND ACCOUNTS: 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
American Odyssey Global High-Yield Bond Fund* - -
- ------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund* 6.12% 2.58%
- ------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund* 10.60% -0.01%
- ------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 16.14% 12.55%
- ------------------------------------------------------------------------
Putnam Diversified Income Portfolio 6.30% 6.83%
- ------------------------------------------------------------------------
Smith Barney High Income Portfolio 12.41% 11.68%
- ------------------------------------------------------------------------
Templeton Global Bond Fund 1.18% 8.02%
- ------------------------------------------------------------------------
Travelers Convertible Bond Portfolio - -
- ------------------------------------------------------------------------
Travelers High Yield Bond Trust 15.06% 14.53%
- ------------------------------------------------------------------------
Travelers Quality Bond Portfolio 5.75% -
- ------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio 11.18% 0.13%
- ------------------------------------------------------------------------
BALANCED ACCOUNTS:
- ------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 19.12% 13.12%
- ------------------------------------------------------------------------
MFS Total Return Portfolio 19.63% 13.02%
- ------------------------------------------------------------------------
Templeton Global Asset Allocation Fund 14.03% 17.32%
- ------------------------------------------------------------------------
Travelers Managed Assets Trust 19.72% 12.30%
- ------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- ------------------------------------------------------------------------
Smith Barney Money Market Portfolio 3.73% 3.60%
- ------------------------------------------------------------------------
</TABLE>
# The inception date is the date that the underlying fund commenced operations
* American Odyssey Funds shown above do not reflect the CHART fee of 1.25%.
7
<PAGE> 114
<TABLE>
<CAPTION>
TRAVELERS REGISTERED GOLD TRACK CHART PROGRAM
NON STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
CHART FEE = 1.25%
--------------------------------------------------------------------
CUMULATIVE RETURNS
--------------------------------------------------------------------
YTD 1 YR 3YR 5YR 10YR
- -----------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Odyssey Core Equity Fund -2.80% -2.80% 40.75% 128.31% -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 32.93% 32.93% 23.52% 50.38% -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 29.23% 29.23% 48.17% 103.61% -
- -----------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund 7.90% 7.90% - - -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -1.06% -1.06% 9.65% 24.57% -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -5.19% -5.19% 10.07% 29.76% -
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------ ---------------
AVERAGE ANNUAL RETURNS CALENDAR
YEAR RETURNS
------------------------------------------------------------------ ---------------
Inception to Inception
STOCK ACCOUNTS 3YR 5YR 10YR Date Date # 1998
- ------------------------------------------------------------------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
American Odyssey Core Equity Fund 12.07% 17.94% - 12.61% 5/1/93 -2.80%
- ------------------------------------------------------------------------------------------------------------------- --------------
American Odyssey Emerging Opportunities Fund 7.30% 8.50% - 8.45% 5/1/93 32.93%
- ------------------------------------------------------------------------------------------------------------------- --------------
American Odyssey International Equity Fund 14.00% 15.27% - 12.22% 5/1/93 29.23%
- ------------------------------------------------------------------------------------------------------------------- --------------
BOND ACCOUNTS
- ------------------------------------------------------------------------------------------------------------------- --------------
American Odyssey Global High -Yield Bond Fund - - - 0.02% 5/1/98 7.90%
- ------------------------------------------------------------------------------------------------------------------- --------------
American Odyssey Intermediate-Term Bond Fund 3.12% 4.49% - 2.88% 5/1/93 -1.06%
- ------------------------------------------------------------------------------------------------------------------- --------------
American Odyssey Long-Term Bond Fund 3.25% 5.35% - 3.78% 5/1/93 -5.19%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------
CALENDAR
YEAR RETURNS
- --------------------------------------------------------------------------
STOCK ACCOUNTS 1997 1996
- --------------------------------------------------------------------------
<S> <C> <C>
American Odyssey Core Equity Fund 12.62% 28.57%
- --------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund -10.95% 4.35%
- --------------------------------------------------------------------------
American Odyssey International Equity Fund 11.97% 2.40%
- --------------------------------------------------------------------------
BOND ACCOUNTS
- --------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund - -
- --------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund 5.75% 4.80%
- --------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund 6.29% 9.22%
- --------------------------------------------------------------------------
</TABLE>
# The inception date is the date that the underlying fund commenced operations.
<TABLE>
<CAPTION>
TRAVELERS REGISTERED GOLD TRACK CHART PROGRAM
STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
CHART FEE = 1.25%
---------------------------------------------------------
10 Year (or Inception
1 YR 5 YR inception) Date #
- -------------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS:
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Odyssey Core Equity Fund -7.96% - 11.59% 10/8/1996
- -------------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 25.90% - 0.78% 10/7/1996
- -------------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 22.38% - 13.74% 10/7/1996
- -------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- -------------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund 2.18% - -3.35% 5/1/1998
- -------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -6.31% - 1.37% 10/8/1996
- -------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -10.23% - 1.67% 10/8/1996
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# The inception date used to calculate standardized performance is based on the
date that the investment option became active in the product.
8
<PAGE> 115
<TABLE>
<CAPTION>
TRAVELERS GOLD TRACK SELECT CHART PROGRAM
NON STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
CHART FEE = 1.25%
CUMULATIVE RETURNS
--------------------------------------------------------------------
YTD 1 YR 3YR 5YR 10YR
- -----------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Odyssey Core Equity Fund -2.81% -2.81% 40.73% 128.28% -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 33.34% 33.34% 23.91% 50.85% -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 29.23% 29.23% 48.17% 104.28% -
- -----------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund 7.90% 7.90% - - -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -1.06% -1.06% 9.65% 24.56% -
- -----------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -5.19% -5.19% 10.07% 29.76% -
- -----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
---------------------------------------------------------------------
Inception to Inception
3YR 5YR 10YR Date Date #
---------------------------------------------------------------------
STOCK ACCOUNTS
- -------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C>
American Odyssey Core Equity Fund 12.06% 17.94% - 12.60% 5/1/93
- -------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 7.41% 8.57% - 8.50% 5/1/93
- -------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 14.01% 15.35% - 12.27% 5/1/93
- -------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- -------------------------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund - - - 0.02% 5/1/98
- -------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund 3.12% 4.49% - 2.88% 5/1/93
- -------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund 3.25% 5.35% - 3.78% 5/1/93
- -------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR RETURNS
----------------------------------------
1998 1997 1996
----------------------------------------
STOCK ACCOUNTS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
American Odyssey Core Equity Fund 12.62% 28.57% 20.05%
- --------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund -10.95% 4.35% -5.60%
- --------------------------------------------------------------------------------------
American Odyssey International Equity Fund 11.97% 2.40% 18.81%
- --------------------------------------------------------------------------------------
BOND ACCOUNTS
- --------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund - - -
- --------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund 5.75% 4.80% 1.31%
- --------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund 6.29% 9.22% -1.25%
- --------------------------------------------------------------------------------------
</TABLE>
# The inception date is the date that the underlying fund commenced operations.
<TABLE>
<CAPTION>
TRAVELERS GOLD TRACK SELECT CHART PROGRAM
STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
CHART FEE = 1.25%
-------------------------------------------------------------------
1 YR 5 YR 10 YR or Inception Inception Date#
- ----------------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS:
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Odyssey Core Equity Fund -7.67% - 12.27% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 26.68% - 1.48% 10/7/1996
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 22.77% - 14.44% 10/7/1996
- ----------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund 2.51% - -2.39% 5/1/1998
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -6.00% - 1.99% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -9.93% - 2.30% 10/8/1996
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# The inception date used to calculate standardized performance is based on the
date that the investment option became active in the product.
9
<PAGE> 116
<TABLE>
<CAPTION>
TRAVELERS GOLD TRACK SELECT
STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
- ----------------------------------------------------------------------------------------------------------------------------
10 Year (or Inception
STOCK ACCOUNTS: 1 Year 5 Year inception) Date#
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Growth Portfolio@ 24.02% - 26.99% 10/8/96
- ---------------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund@ -6.49% - 13.71% 10/8/96
- ---------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund@ 28.21% - 2.75% 10/7/96
- ---------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund@ 24.28% - 15.88% 10/7/96
- ---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund (Janus) + 43.97% - 40.05% 10/8/96
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Investments REIT Series - - -9.66% 1/5/99
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Series -10.79% - -0.15% 9/22/98
- ---------------------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 4.52% - 8.43% 7/29/98
- ---------------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio 15.48% - 28.82% 9/21/98
- ---------------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio (Fidelity) -1.62% - 6.60% 7/23/97
- ---------------------------------------------------------------------------------------------------------------------------
Equity Index Portfolio Class II * - - 3.52% 5/5/99
- ---------------------------------------------------------------------------------------------------------------------------
Federated Stock Portfolio -1.22% - 9.59% 7/11/97
- ---------------------------------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) 21.27% - 23.72% 7/23/97
- ---------------------------------------------------------------------------------------------------------------------------
Lazard International Stock Portfolio 14.13% - 9.87% 8/6/97
- ---------------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio 53.95% - 63.02% 9/22/98
- ---------------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio 15.98% - 44.19% 10/2/98
- ---------------------------------------------------------------------------------------------------------------------------
Montgomery Variable Series: Growth Fund 13.27% - 21.16% 11/3/98
- ---------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Equity Portfolio -3.85% - 9.98% 10/2/98
- ---------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund 14.49% - 31.12% 10/28/98
- ---------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund 4.72% - 26.12% 10/1/98
- ---------------------------------------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 57.30% - 18.33% 10/8/96
- ---------------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio 22.69% - 42.48% 8/28/98
- ---------------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Value Portfolio + -6.17% - 9.90% 10/1/96
- ---------------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 8.63% - 21.24% 10/8/96
- ---------------------------------------------------------------------------------------------------------------------------
Strategic Stock Portfolio -1.57% - 4.13% 9/22/98
- ---------------------------------------------------------------------------------------------------------------------------
Strong Schafer Value Fund II -8.90% - 13.40% 9/21/98
- ---------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio 6.40% - 10.24% 10/29/98
- ---------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio 12.91% - 23.09% 11/18/98
- ---------------------------------------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) -6.30% - 11.25% 10/8/96
- ---------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Markets Portfolio 70.13% - 83.44% 10/29/98
- ---------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
10 Year (or
BOND ACCOUNTS: 1 Year 5 Year inception) Inception Date#
- ----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High-Yield Bond Fund 3.79 - -1.73% 5/1/98
- ---------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -4.82% - 3.28% 10/8/96
---------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -8.80% - 3.59% 10/8/96
---------------------------------------------------------------------------------------------------------------------------
Federated High Yield Portfolio + -3.32% - 0.90% 10/22/97
---------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio -5.19% - 0.95% 10/8/96
---------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio -3.79% - 3.89% 10/29/96
---------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust -2.08% - 6.72% 10/8/96
---------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio -5.21% - 2.01% 9/26/97
---------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio -10.11% - 3.73% 10/8/96
---------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
---------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio -3.76% - 9.47% 10/8/96
---------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund -5.49% - -0.03% 9/21/98
---------------------------------------------------------------------------------------------------------------------------
Travelers Managed Assets Trust 7.11% - 16.07% 10/8/96
---------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
---------------------------------------------------------------------------------------------------------------------------
Smith Barney Money Market Portfolio + -1.76% - 2.32% 10/1/96
---------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio -1.56% - -0.39% 9/10/98
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Certain funds offer multiple classes of shares. The performance above may
reflect the fees and performance of another class of the same fund for periods
before the current class existed. If the current class's 12b-1 fee and other
expenses were higher, the performance shown would be lower. # The inception date
used to calculate standardized performance is based on the date that the
investment option became active in the product. + Indicates funds that are no
longer available for sale in this product as of May 1, 1998
@ American Odyssey Funds shown above do not reflect the CHART fee of 1.25%
* American Odyssey Funds shown above do not reflect the CHART fee of 1.25%
10
<PAGE> 117
TRAVELERS GOLD TRACK SELECT
NON STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
<TABLE>
<CAPTION>
Cumulative Returns
---------------------------------------------------------
YTD 1 YR 3YR 5YR 10YR
- ---------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS:
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Growth Portfolio 30.55% 30.55% 111.8% 260.0% -
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund* -1.57% -1.57% 46.2% 143.0% -
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund* 34.95% 34.95% 28.6% 60.4% -
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund* 30.82% 30.82% 53.8% 117.3% -
- ---------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund (Janus) + 51.54% 51.54% 201.13% 412.91% 685.62%
- ---------------------------------------------------------------------------------------------------------------------
Delaware Investments REIT Series -3.87% -3.87% - - -
- ---------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Series -6.09% -6.09% 15.8% 67.6% -
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 10.02% 10.02% 78.8% 192.1% -
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio 21.56% 21.56% 33.5% 96.3% -
- ---------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio (Fidelity) 3.56% 3.56% 49.3% - -
- ---------------------------------------------------------------------------------------------------------------------
Equity Index Portfolio Class II * 19.04% 19.04% 99.0% 230.1% -
- ---------------------------------------------------------------------------------------------------------------------
Federated Stock Portfolio 3.98% 3.98% 59.2% - -
- ---------------------------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) 27.65% 27.65% 105.6% - -
- ---------------------------------------------------------------------------------------------------------------------
Lazard International Stock Portfolio 20.14% 20.14% 42.7% - -
- ---------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio 62.05% 62.05% - - -
- ---------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio 22.08% 22.08% - - -
- ---------------------------------------------------------------------------------------------------------------------
Montgomery Variable Series: Growth Fund 19.23% 19.23% 53.7% - -
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Equity Portfolio 1.22% 1.22% 39.7% 133.3% 276.7%
- ---------------------------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund 20.51% 20.51% - - -
- ---------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund 10.23% 10.23% - - -
- ---------------------------------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 65.58% 65.58% 76.5% 125.2% -
- ---------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio 29.15% 29.15% - - -
- ---------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Value Portfolio + -1.23% -1.23% 33.9% 107.9% -
- ---------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 14.34% 14.34% 87.6% 192.5% -
- ---------------------------------------------------------------------------------------------------------------------
Strategic Stock Portfolio 3.61% 3.61% - - -
- ---------------------------------------------------------------------------------------------------------------------
Strong Schafer Value Fund II -4.10% -4.10% - - -
- ---------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio 12.00% 12.00% - - -
- ---------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio 18.85% 18.85% - - -
- ---------------------------------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) -1.37% -1.37% 42.3% 92.6% -
- ---------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Markets Portfolio 79.09% 79.09% - - -
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Returns
---------------------------------------------------
Inception to Inception
STOCK ACCOUNTS: 3YR 5YR 10YR Date Date#
- ------------------------------------------------ ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Growth Portfolio 28.43% 29.18% - 27.08% 6/20/94
- ------------------------------------------------ ----------------------------------------------------------------
American Odyssey Core Equity Fund* 13.49% 19.42% - 14.04% 5/1/93
- ------------------------------------------------ ----------------------------------------------------------------
American Odyssey Emerging Opportunities Fund* 8.74% 9.91% - 9.87% 5/1/93
- ------------------------------------------------ ----------------------------------------------------------------
American Odyssey International Equity Fund* 15.43% 16.79% - 13.70% 5/1/93
- ------------------------------------------------ ----------------------------------------------------------------
Capital Appreciation Fund (Janus) + 44.41% 38.65% 22.88% 14.19% 5/26/83
- ------------------------------------------------ ----------------------------------------------------------------
Delaware Investments REIT Series - - - -8.25% 5/6/98
- ------------------------------------------------ ----------------------------------------------------------------
Delaware Small Cap Value Series 5.01% 10.87% - 9.23% 12/23/93
- ------------------------------------------------ ----------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 21.37% 23.90% - 18.50% 4/5/93
- ------------------------------------------------ ----------------------------------------------------------------
Dreyfus Small Cap Portfolio 10.11% 14.43% - 33.93% 8/31/90
- ------------------------------------------------ ----------------------------------------------------------------
Equity Income Portfolio (Fidelity) 14.29% - - 16.41% 8/30/96
- ------------------------------------------------ ----------------------------------------------------------------
Equity Index Portfolio Class II * 25.79% 26.96% - 19.66% 11/30/91
- ------------------------------------------------ ----------------------------------------------------------------
Federated Stock Portfolio 16.77% - - 18.96% 8/30/96
- ------------------------------------------------ ----------------------------------------------------------------
Large Cap Portfolio (Fidelity) 27.16% - - 28.67% 8/30/96
- ------------------------------------------------ ----------------------------------------------------------------
Lazard International Stock Portfolio 12.58% - - 13.33% 8/1/96
- ------------------------------------------------ ----------------------------------------------------------------
MFS Mid Cap Growth Portfolio - - - 30.92% 3/23/98
- ------------------------------------------------ ----------------------------------------------------------------
MFS Research Portfolio - - - 14.92% 3/23/98
- ------------------------------------------------ ----------------------------------------------------------------
Montgomery Variable Series: Growth Fund 15.41% - - 18.46% 2/9/96
- ------------------------------------------------ ----------------------------------------------------------------
OCC Accumulation Trust Equity Portfolio 11.79% 18.45% 14.18% 14.35% 8/1/88
- ------------------------------------------------ ----------------------------------------------------------------
Salomon Brothers Capital Fund - - - 20.07% 2/17/98
- ------------------------------------------------ ----------------------------------------------------------------
Salomon Brothers Investors Fund - - - 10.49% 2/17/98
- ------------------------------------------------ ----------------------------------------------------------------
Smith Barney International Equity Portfolio 20.84% 17.62% - 14.82% 6/20/94
- ------------------------------------------------ ----------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio - - - 32.64% 5/6/98
- ------------------------------------------------ ----------------------------------------------------------------
Smith Barney Large Cap Value Portfolio + 10.21% 15.75% - 13.74% 6/20/94
- ------------------------------------------------ ----------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 23.32% 23.93% - 16.55% 5/1/92
- ------------------------------------------------ ----------------------------------------------------------------
Strategic Stock Portfolio - - - -1.91% 5/6/98
- ------------------------------------------------ ----------------------------------------------------------------
Strong Schafer Value Fund II - - - -2.13% 10/10/97
- ------------------------------------------------ ----------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio - - - 21.80% 4/1/97
- ------------------------------------------------ ----------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio - - - 2.86% 5/1/98
- ------------------------------------------------ ----------------------------------------------------------------
Utilities Portfolio (Smith Barney) 12.48% 14.00% - 11.84% 2/4/94
- ------------------------------------------------ ----------------------------------------------------------------
Warburg Pincus Emerging Markets Portfolio - - - 21.76% 12/31/97
- ------------------------------------------------ ----------------------------------------------------------------
<CAPTION>
Calendar Year Returns
--------------------------------------
STOCK ACCOUNTS: 1998 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Growth Portfolio 27.39% 27.37% 27.69%
- --------------------------------------------------------------------------------------
American Odyssey Core Equity Fund* 14.05% 30.21% 21.55%
- --------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund* -9.83% 5.66% -4.40%
- --------------------------------------------------------------------------------------
American Odyssey International Equity Fund* 13.39% 3.69% 20.29%
- --------------------------------------------------------------------------------------
Capital Appreciation Fund (Janus) + 59.52% 24.57% 26.54%
- --------------------------------------------------------------------------------------
Delaware Investments REIT Series - - -
- --------------------------------------------------------------------------------------
Delaware Small Cap Value Series -6.05% 31.23% 20.97%
- --------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 28.52% 26.42% 23.96%
- --------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio -4.71% 15.25% 15.10%
- --------------------------------------------------------------------------------------
Equity Income Portfolio (Fidelity) 10.91% 29.99% -
- --------------------------------------------------------------------------------------
Equity Index Portfolio Class II * 26.94% 31.72% 21.90%
- --------------------------------------------------------------------------------------
Federated Stock Portfolio 16.26% 31.72% -
- --------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) 33.75% 20.43% -
- --------------------------------------------------------------------------------------
Lazard International Stock Portfolio 11.17% 6.84% -
- --------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio - - -
- --------------------------------------------------------------------------------------
MFS Research Portfolio - - -
- --------------------------------------------------------------------------------------
Montgomery Variable Series: Growth Fund 1.59% 26.93% -
- --------------------------------------------------------------------------------------
OCC Accumulation Trust Equity Portfolio 10.39% 25.02% 21.79%
- --------------------------------------------------------------------------------------
Salomon Brothers Capital Fund - - -
- --------------------------------------------------------------------------------------
Salomon Brothers Investors Fund - - -
- --------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 5.11% 1.39% 16.18%
- --------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio - - -
- --------------------------------------------------------------------------------------
Smith Barney Large Cap Value Portfolio + 8.41% 25.01% 18.22%
- --------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 30.53% 25.66% 18.42%
- --------------------------------------------------------------------------------------
Strategic Stock Portfolio - - -
- --------------------------------------------------------------------------------------
Strong Schafer Value Fund II 0.69% - -
- --------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio 15.40% - -
- --------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio - - -
- --------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) 16.65% 23.68% 6.07%
- --------------------------------------------------------------------------------------
Warburg Pincus Emerging Markets Portfolio -17.22% - -
- --------------------------------------------------------------------------------------
</TABLE>
* American Odyssey Funds shown above do not reflect the CHART fee of 1.25%
11
<PAGE> 118
<TABLE>
<CAPTION>
TRAVELERS GOLD TRACK SELECT
NONSTANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
Cumulative Returns
-----------------------------------------------------------------
YTD 1 YR 3YR 5YR 10YR
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High-Yield Bond Fund@ 9.25% 9.25% - - -
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund@ 0.19% 0.19% 13.8% 32.6% -
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund@ -4.00% -4.00% 14.3% 38.1% -
- ------------------------------------------------------------------------------------------------------------------------------------
Federated High Yield Portfolio + 1.76% 1.76% 19.8% - -
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio -0.20% -0.20% 5.4% 30.5% -
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio 1.27% 1.27% 12.9% 48.2% -
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 3.07% 3.07% 24.7% 62.9% 123.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio -0.22% -0.22% 13.1% - -
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio -5.38% -5.38% 14.4% 40.8% -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 1.31% 1.31% 33.6% 87.4% -
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund -0.52% -0.52% - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Managed Assets Trust 12.75% 12.75% 61.8% 128.0% 199.6%
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney Money Market Portfolio + 3.41% 3.41% 11.2% 19.9% -
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 3.62% 3.62% 11.4% 17.9% 38.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Average Annual Returns Calendar Year Returns
---------------------------------------------------------------------------------
Inception to Inception
3YR 5YR 10YR Date Date# 1998 1997 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High-Yield Bond Fund@ - - - 1.34% 5/1/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund@ 4.42% 5.80% - 4.19% 5/1/93 7.08% 6.12% 2.58%
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund@ 4.55% 6.67% - 5.10% 5/1/93 7.63% 10.60% -0.01%
- ------------------------------------------------------------------------------------------------------------------------------------
Federated High Yield Portfolio + 6.22% - - 7.78% 8/30/96 3.36% 13.94% -
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio 1.78% 5.46% - 5.07% 6/20/94 -0.63% 6.30% 6.83%
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio 4.12% 8.18% - 7.11% 6/22/94 -0.85% 12.41% 11.68%
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 7.65% 10.25% 8.38% 7.46% 6/10/83 5.18% 15.06% 14.53%
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio 4.18% - - 4.70% 8/30/96 7.14% 5.75% -
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio 4.60% 7.08% - 5.33% 1/24/92 8.78% 11.18% 0.13%
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS: 10.14% 13.37% - 11.57% 6/20/94 10.25% 19.63% 13.02%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio - - - 2.17% 2/17/98 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund 17.40% 17.91% 11.59% 10.18% 6/7/83 19.87% 19.72% 12.30%
- --------------------------------------------------- --------------------------------------------------------------------------------
Travelers Managed Assets Trust 3.61% 3.70% - 3.61% 6/20/94 3.70% 3.73% 3.60%
- --------------------------------------------------- --------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS: 3.67% 3.34% 3.28% 3.72% 12/31/87 3.69% 3.70% 2.82%
- --------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
* Certain funds offer multiple classes of shares. The performance above may
reflect the fees and performance of another class of the same fund for periods
before the current class existed. If the current class's 12b-1 fee and other
expenses were higher, the performance shown would be lower. # The inception date
is the date that the underlying fund commenced operations. + Indicates funds
that are no longer available for sale in this product as of May 1, 1998
@ American Odyssey Funds shown above do not reflect the CHART fee of 1.25%
12
<PAGE> 119
FEDERAL TAX CONSIDERATIONS
The following description of the federal income tax consequences
under this Contract is not exhaustive and is not intended to cover all
situations. Because of the complexity of the law and the fact that the tax
results will vary according to the factual status of the individual involved,
tax advice may be needed by a person contemplating purchase of an annuity
contract and by a contract owner or beneficiary who may make elections under a
contract. For further information, please consult a qualified tax adviser.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law generally requires that minimum annual distributions
begin by April 1st of the calendar year following the calendar year in which a
participant under a qualified plan, a Section 403(b) annuity, or an IRA attains
age 701/2. Distributions must also begin or be continued according to required
patterns following the death of the contract owner or the annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax law
funding limits. The purchase payments receive no tax benefit, deduction or
deferral, but increases in the value of the contract are generally deferred from
tax until distribution. If a nonqualified annuity is owned by other than an
individual, however, (e.g., by a corporation), the increases in value
attributable to purchase payments made after February 28, 1986 are includable in
income annually. Furthermore, for contracts issued after April 22, 1987, all
deferred increases in value will be includable in the income of a contract owner
when the contract owner transfers the contract without adequate consideration.
If two or more annuity contracts are purchased from the same
insurer within the same calendar year, distributions from any of them
will be taxed based upon the amount of income in all of the same calendar year
series of annuities. This will generally have the effect of causing taxes to be
paid sooner on the deferred gain in the contracts.
Those receiving partial distributions made before the maturity date
will generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the Company by the other insurance company at
the time of the exchange. There is income in the contract generally to the
extent the cash value exceeds the investment in the contract. The investment in
the contract is equal to the amount of premiums paid less any amount received
previously which was excludable from gross income. Any direct or indirect
borrowing against the value of the contract or pledging of the contract as
security for a loan will be treated as a cash distribution under the tax law.
The federal tax law requires that nonqualified annuity contracts
meet minimum mandatory distribution requirements upon the death of the contract
owner, including the first of joint owners. Failure to meet these requirements
will cause the surviving joint owner, or the beneficiary to lose the tax
benefits associated with annuity contracts, i.e., primarily the tax deferral
prior to distribution. The distribution required depends, among other things,
upon whether an annuity option is elected or whether the new contract owner is
the surviving spouse. Contracts will be administered by the
13
<PAGE> 120
Company in accordance with these rules and the Company will make a notification
when payments should be commenced.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000
per individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $4,000.
The Code provides for the purchase of a Simplified Employee Pension
(SEP) plan. A SEP is funded through an IRA with an annual employer
contribution limit of 15% of compensation up to $30,000 for each participant.
SIMPLE Plan IRA Form
Effective January 1, 1997, employers may establish a savings
incentive match plan for employees ("SIMPLE plan") under which employees can
make elective salary reduction contributions to an IRA based on a percentage of
compensation of up to $6,000. (Alternatively, the employer can establish a
SIMPLE cash or deferred arrangement under IRS Section 401(k)). Under a SIMPLE
plan IRA, the employer must either make a matching contribution of 100% on the
first 3% or 7% contribution for all eligible employees. Early withdrawals are
subject to the 10% early withdrawal penalty generally applicable to IRAs, except
that an early withdrawal by an employee under a SIMPLE plan IRA, within the
first two years of participation, shall be subject to a 25% early withdrawal
tax.
ROTH IRAS
Effective January 1, 1998, Section 408A of the Code permits certain
individuals to contribute to a Roth IRA. Eligibility to make contributions is
based upon income, and the applicable limits vary based on marital status and/or
whether the contribution is a rollover contribution from another IRA or an
annual contribution. Contributions to a Roth IRA, which are subject to certain
limitations ($2,000 per year for annual contributions), are not deductible and
must be made in cash or as a rollover or transfer from another Roth IRA or other
IRA. A conversion of a "traditional" IRA to a Roth IRA may be subject to tax and
other special rules apply. You should consult a tax adviser before combining any
converted amounts with other Roth IRA contributions, including any other
conversion amounts from other tax years.
Qualified distributions from a Roth IRA are tax-free. A qualified
distribution requires that the Roth IRA has been held for at least 5 years, and
the distribution is made after age 59 1/2, on death or disability of the owner,
or for a limited amount ($10,000) for a qualified first time home purchase for
the owner or certain relatives. Income tax and a 10% penalty tax may apply to
distributions made (1) before age 59 1/2 (subject to certain exceptions) or (2)
during five taxable years starting with the year in which the first contribution
is made to the Roth IRA.
14
<PAGE> 121
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, purchase payments
made by an employer are not currently taxable to the participant and increases
in the value of a contract are not subject to taxation until received by a
participant or beneficiary.
Distributions are taxable to the participant or beneficiary as
ordinary income in the year of receipt. Any distribution that is considered the
participant's "investment in the contract" is treated as a return of capital and
is not taxable. Certain lump-sum distributions may be eligible for special
forward averaging tax treatment for certain classes of individuals.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the
recipient will be subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that
are eligible for rollover to an IRA or to another retirement plan but that are
not directly rolled over. A distribution made directly to a participant or
beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise required by law.
A distribution including a rollover that is not a direct rollover
will be subject to the 20% withholding, and a 10% additional tax penalty may
apply to any amount not added back in the rollover. The 20% withholding may be
recovered when the participant or beneficiary files a personal income tax return
for the year if a rollover was completed within 60 days of receipt of the funds,
except to the extent that the participant or spousal beneficiary is otherwise
underwithheld or short on estimated taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above,
the portion of a non-periodic distribution which constitutes taxable income will
be subject to federal income tax withholding, if the aggregate distributions
exceed $200 for the year, unless the recipient elects not to have taxes
withheld. If no such election is made, 10% of the taxable distribution will be
withheld as federal income tax. Election forms will be provided at the time
distributions are requested. This form of withholding applies to all annuity
programs.
15
<PAGE> 122
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR)
The portion of a periodic distribution which constitutes taxable
income will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three exemptions. A
recipient may elect not to have income taxes withheld or have income taxes
withheld at a different rate by providing a completed election form. Election
forms will be provided at the time distributions are requested. This form of
withholding applies to all annuity programs. As of January 1, 1999, a recipient
receiving periodic payments (e.g., monthly or annual payments under an annuity
option) which total $14,850 or less per year, will generally be exempt from
periodic withholding.
Recipients who elect not to have withholding made are liable for
payment of federal income tax on the taxable portion of the distribution. All
recipients may also be subject to penalties under the estimated tax payment
rules if withholding and estimated tax payments are not sufficient to cover tax
liabilities.
Recipients who do not provide a social security number or other
taxpayer identification number will not be permitted to elect out of
withholding. Additionally, U.S citizens residing outside of the country, or
U.S. legal residents temporarily residing outside the country, are not
permitted to elect out of withholding.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of The Travelers Insurance
Company and subsidiaries as of December 31, 1999 and 1998, and for each of the
years in the three-year period ended December 31, 1999, included herein, and
the financial statements of Separate Account QP as of and for the year ended
December 31, 1999, also included herein, have been included in reliance upon
the reports of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
16
<PAGE> 123
ANNUAL REPORT
DECEMBER 31, 1999
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> 124
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
American Odyssey Funds, Inc., 8,822,343 shares (cost $126,396,415)................ $133,216,313
Capital Appreciation Fund, 350,142 shares (cost $23,777,393)...................... 38,095,439
Delaware Group Premium Fund, Inc., 21,164 shares (cost $291,226).................. 287,118
Dreyfus Stock Index Fund, 301,035 shares (cost $8,967,384)........................ 11,574,791
Dreyfus Variable Investment Fund, 395,581 shares (cost $15,581,952)............... 16,373,744
Fidelity's Variable Insurance Products Fund, 640,232 shares (cost $18,396,913).... 23,144,875
Fidelity's Variable Insurance Products Fund II, 167,559 shares (cost $2,844,721).. 3,128,318
Greenwich Street Series Fund, 89,492 shares (cost $2,991,807)..................... 3,204,700
High Yield Bond Trust, 158,325 shares (cost $1,539,507)........................... 1,499,338
Managed Assets Trust, 815,156 shares (cost $15,963,459)........................... 17,216,091
Money Market Portfolio, 2,562,304 shares (cost $2,562,304)........................ 2,562,304
OCC Accumulation Trust, 37,055 shares (cost $1,479,339)........................... 1,391,795
Salomon Brothers Variable Series Funds Inc., 65,870 shares (cost $790,989)........ 815,468
Strong Variable Insurance Funds, Inc., 4,432 shares (cost $43,083)................ 40,421
Templeton Variable Products Series Fund, 339,105 shares (cost $7,289,664)......... 8,058,398
Montgomery Funds III, 8,092 shares (cost $139,704)................................ 148,806
The Travelers Series Trust, 2,366,746 shares (cost $40,013,428)................... 42,251,962
Travelers Series Fund Inc., 4,759,096 shares (cost $36,442,124)................... 41,427,490
Warburg Pincus Trust, 31,367 shares (cost $368,554)............................... 444,786
----------------
Total Investments (cost $305,879,966)........................................... $344,882,157
Receivables:
Dividends......................................................................... 12,257
Purchase payments and transfers from other Travelers accounts..................... 155,668
Other assets....................................................................... 523
------------
Total Assets.................................................................... 345,050,605
------------
LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts..................... 152,647
Insurance charges................................................................. 75,606
Administrative fees............................................................... 406
Accrued liabilities................................................................ 2,574
------------
Total Liabilities............................................................... 231,233
------------
NET ASSETS: $344,819,372
============
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 125
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............................................................. $12,496,931
EXPENSES:
Insurance charges...................................................... $1,866,921
Administrative fees.................................................... 12,829
-------------
Total expenses......................................................... 1,879,750
-----------
Net investment income............................................... 10,617,181
-----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold........................................ 36,478,696
Cost of investments sold.............................................. 34,599,068
-------------
Net realized gain (loss)............................................ 1,879,628
Change in unrealized gain (loss) on investments:
Unrealized gain at December 31, 1998.................................. 10,461,469
Unrealized gain at December 31, 1999.................................. 39,002,191
-------------
Net change in unrealized gain (loss) for the year................... 28,540,722
-----------
Net realized gain (loss) and change in unrealized gain (loss)...... 30,420,350
-----------
Net increase in net assets resulting from operations................... $41,037,531
===========
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 126
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income........................................................ $ 10,617,181 $ 2,710,639
Net realized gain (loss) from investment transactions........................ 1,879,628 660,607
Net change in unrealized gain (loss) on investments.......................... 28,540,722 8,087,940
----------------- -------------
Net increase in net assets resulting from operations........................ 41,037,531 11,459,186
----------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 85,773,040 and 44,678,313 units, respectively)............... 118,744,191 56,161,812
Participant transfers from other Travelers accounts
(applicable to 97,681,269 and 12,816,931 units, respectively)............... 132,882,866 16,698,425
Administrative and asset allocation charges
(applicable to 613,835 and 283,872 units, respectively)..................... (784,492) (349,434)
Contract surrenders
(applicable to 8,407,364 and 2,279,007 units, respectively)................. (11,791,356) (3,036,942)
Participant transfers to other Travelers accounts
(applicable to 30,625,012 and 8,454,330 units, respectively)................ (39,873,280) (10,408,149)
Other payments to participants
(applicable to 261,611 and 33,572 units, respectively)...................... (428,408) (44,498)
----------------- -------------
Net increase in net assets resulting from unit transactions................. 198,749,521 59,021,214
----------------- -------------
Net increase in net assets................................................ 239,787,052 70,480,400
NET ASSETS
Beginning of year............................................................ 105,032,320 34,551,920
----------------- -------------
End of year.................................................................. $ 344,819,372 $105,032,320
================= =============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 127
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 Citigroup 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. Fund QP is
comprised of the Registered Gold Track and Registered Gold Track Select
products.
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, 1999, the eligible funds available
under Separate Account QP were: Managed Assets Trust; High Yield Bond
Trust; Capital Appreciation Fund; Money Market Portfolio; 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, Equity Income Portfolio, Disciplined Mid Cap Stock
Portfolio, Convertible Bond Portfolio, Disciplined Small Cap Stock
Portfolio, MFS Mid Cap Growth Portfolio, MFS Research Portfolio and
Strategic Stock 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 Global
High-Yield Bond Fund of American Odyssey Funds, Inc.; Alliance Growth
Portfolio, Smith Barney Large Cap Value Portfolio, Smith Barney High
Income Portfolio, MFS Total Return Portfolio, Smith Barney International
Equity Portfolio, Smith Barney Money Market Portfolio, Putnam Diversified
Income Portfolio and Smith Barney Large Capitalization Growth Portfolio of
Travelers Series Fund Inc.; Salomon Brothers Variable Investors Fund,
Salomon Brothers Variable Total Return Fund and Salomon Brothers Variable
Capital Fund of Salomon Brothers Variable Series Funds Inc.; Equity Index
Portfolio Class II of Greenwich Street Series Fund (all of which are
managed by affiliates of The Travelers); Templeton Bond Fund (Class 1),
Templeton Stock Fund (Class 1) and Templeton Asset Allocation Fund (Class
1) 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; Dreyfus Stock Index Fund; Small Cap Portfolio
and Capital Appreciation Portfolio of Dreyfus Variable Investment Fund;
REIT Series and Small Cap Value Series of Delaware Group Premium Fund,
Inc; Montgomery Variable Series: Growth Fund of Montgomery Funds III;
Equity Portfolio of OCC Accumulation Trust; Strong Schafer Value Fund II
of Strong Variable Insurance Funds, Inc. and Emerging Markets Portfolio of
Warburg Pincus Trust. All of the funds are Massachusetts business trusts,
except for American Odyssey Funds, Inc., Dreyfus Stock Index Fund,
Travelers Series Fund Inc., Salomon Brothers Variable Series Funds Inc.
and Delaware Group Premium Fund, Inc. which are incorporated under
Maryland law; Strong Variable Insurance Funds, Inc. which is a Wisconsin
corporation and Montgomery Funds III which is a Delaware business trust.
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.
-4-
<PAGE> 128
NOTES TO FINANCIAL STATEMENTS - CONTINUED
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
were $246,590,143 and $36,478,696 respectively, for the year ended
December 31, 1999. Realized gains and losses from investment transactions
are reported on an average cost basis. The cost of investments in eligible
funds was $305,879,966 at December 31, 1999. Gross unrealized appreciation
for all investments at December 31, 1999 was $44,562,887. Gross unrealized
depreciation for all investments at December 31, 1999 was $5,560,696.
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. Each business day, The Travelers deducts a mortality and
expense risk charge which is reflected in the calculation of accumulation
and annuity unit values. These charges which are negotiated on an
individual contract basis, equal on an annual basis, 0.60%, 0.80%, 0.95%,
1.15%, 1.20% and 0.90% of the amounts held in each funding option.
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 5. 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. This fee is also
deducted each business day and reflected in the calculation of
accumulation and annuity unit values. This charge equals, on an annual
basis, 0.10% of the amounts held in each funding option of certain
allocated contracts. Contract owner's equity associated with this charge
is identified as Price 5 in Note 5.
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 $89,365 and $21,351 of contingent deferred
sales charges and surrender charges for the years ended December 31, 1999
and 1998, respectively.
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 $740,873 and $239,556 for the
years ended December 31, 1999 and 1998, respectively.
4. CHANGE IN ACCOUNTING
On January 1, 1999, in conjunction with the implementation of a new
system, Separate Account QP changed its basis of reporting realized gains
and losses for investment transactions from an identified cost basis to an
average cost basis. The accounting change had no effect on net assets.
-5-
<PAGE> 129
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund
Price 1........................................ 92,195 - $1.613 $ 148,753
Price 2........................................ 5,408,519 - 1.603 8,670,272
Price 3........................................ 4,369,219 - 1.595 6,970,358
Price 4........................................ 763,197 - 1.585 1,209,725
Price 5........................................ 186,669 - 1.577 294,456
Price 6........................................ 12,330,782 29,151 1.598 19,750,097
American Odyssey Emerging Opportunities Fund
Price 1........................................ 92,398 - 1.163 107,458
Price 2........................................ 5,098,615 - 1.155 5,891,361
Price 3........................................ 5,046,010 - 1.150 5,802,310
Price 4........................................ 627,445 - 1.142 716,834
Price 5........................................ 91,325 - 1.137 103,835
Price 6........................................ 11,826,052 28,326 1.152 13,653,349
American Odyssey Global High-Yield Bond Fund
Price 1........................................ 11,641 - 1.122 13,063
Price 2........................................ 1,603,123 - 1.115 1,787,297
Price 3........................................ 1,544,303 - 1.110 1,713,444
Price 4........................................ 190,747 - 1.102 210,269
Price 5........................................ 18,326 - 1.097 20,104
Price 6........................................ 3,452,649 - 1.111 3,836,844
American Odyssey Intermediate-Term Bond Fund
Price 1........................................ 17,748 - 1.183 20,991
Price 2........................................ 2,250,902 - 1.175 2,645,031
Price 3........................................ 1,395,719 - 1.169 1,632,198
Price 4........................................ 169,831 - 1.162 197,326
Price 5........................................ 33,765 - 1.156 39,042
Price 6........................................ 4,524,941 50,542 1.171 5,359,322
American Odyssey International Equity Fund
Price 1........................................ 58,143 - 1.716 99,752
Price 2........................................ 5,139,992 - 1.705 8,761,457
Price 3........................................ 3,370,475 - 1.696 5,717,483
Price 4........................................ 564,777 - 1.685 951,883
Price 5........................................ 37,869 - 1.677 63,518
Price 6........................................ 9,767,304 17,789 1.699 16,625,649
American Odyssey Long-Term Bond Fund
Price 1........................................ 8,580 - 1.194 10,246
Price 2........................................ 4,355,250 - 1.186 5,167,447
Price 3........................................ 2,940,609 - 1.181 3,472,038
Price 4........................................ 415,013 - 1.173 486,867
Price 5........................................ 56,766 - 1.167 66,272
Price 6........................................ 9,219,413 68,594 1.183 10,984,563
</TABLE>
-6-
<PAGE> 130
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
Capital Appreciation Fund
Price 1........................................ 437,009 - $3.163 $ 1,382,202
Price 2........................................ 215,894 - 3.143 678,453
Price 3........................................ 3,623,345 - 3.127 11,331,456
Price 4........................................ 809,231 - 3.107 2,514,491
Price 5........................................ 1,271,961 - 3.092 3,933,207
Price 6........................................ 5,825,126 - 3.132 18,246,737
Delaware Group Premium Fund, Inc.
REIT Series
Price 1........................................ - - 0.958 -
Price 2........................................ 17,064 - 0.956 16,308
Price 3........................................ - - 0.954 -
Price 4........................................ 2,453 - 0.952 2,336
Price 5........................................ - - 0.951 -
Price 6........................................ 31,985 - 0.955 30,538
Small Cap Value Series
Price 1........................................ - - 1.060 -
Price 2........................................ 86,532 - 1.057 91,497
Price 3........................................ - - 1.055 -
Price 4........................................ 9,931 - 1.053 10,454
Price 5........................................ - - 1.051 -
Price 6........................................ 128,715 - 1.056 135,928
Dreyfus Stock Index Fund
Price 1........................................ 243,662 - 2.176 530,314
Price 2........................................ 33 - 2.162 72
Price 3........................................ 3,292,693 - 2.152 7,085,438
Price 4........................................ 458,187 - 2.138 979,574
Price 5........................................ 1,399,407 - 2.128 2,977,286
Price 6........................................ - - 2.155 -
Dreyfus Variable Investment Fund
Capital Appreciation Portfolio
Price 1........................................ 3,743 - 1.193 4,466
Price 2........................................ 6,527,393 - 1.190 7,766,034
Price 3........................................ 67,059 - 1.187 79,615
Price 4........................................ 100,924 - 1.184 119,479
Price 5........................................ 26,484 - 1.181 31,286
Price 6........................................ 5,775,356 - 1.188 6,861,581
Small Cap Portfolio
Price 1........................................ 63,771 - 1.467 93,579
Price 2........................................ 363,977 - 1.464 532,751
Price 3........................................ 106,854 - 1.461 156,101
Price 4........................................ 44,319 - 1.457 64,580
Price 5........................................ 15,312 - 1.454 22,270
Price 6........................................ 437,132 - 1.462 639,006
</TABLE>
-7-
<PAGE> 131
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
Fidelity's Variable Insurance Products Fund
Equity-Income Portfolio
Price 1........................................ 125,159 - $1.559 $ 195,152
Price 2........................................ 411 - 1.549 636
Price 3........................................ 2,594,215 - 1.542 3,999,509
Price 4........................................ 359,627 - 1.532 550,871
Price 5........................................ 910,214 - 1.524 1,387,504
Price 6........................................ - - 1.544 -
Growth Portfolio
Price 1........................................ 168,043 - 2.311 388,355
Price 2........................................ 177 - 2.296 407
Price 3........................................ 5,002,571 - 2.285 11,431,258
Price 4........................................ 838,004 - 2.270 1,902,576
Price 5........................................ 873,625 - 2.259 1,973,835
Price 6........................................ - - 2.289 -
High Income Portfolio
Price 1........................................ 46,277 - 1.212 56,097
Price 2........................................ 95 - 1.204 115
Price 3........................................ 680,684 - 1.199 815,844
Price 4........................................ 249,045 - 1.191 296,576
Price 5........................................ 121,051 - 1.185 143,458
Price 6........................................ - - 1.201 -
Fidelity's Variable Insurance Products Fund II
Asset Manager Portfolio
Price 1........................................ 38,657 - 1.589 61,414
Price 2........................................ 188 - 1.578 296
Price 3........................................ 1,051,184 - 1.571 1,651,144
Price 4........................................ 476,733 - 1.561 743,983
Price 5........................................ 431,977 - 1.553 670,867
Price 6........................................ - - 1.573 -
Greenwich Street Series Fund
Equity Index Portfolio Class II
Price 1........................................ - - 1.094 -
Price 2........................................ 1,014,729 - 1.093 1,109,198
Price 3........................................ - - 1.092 -
Price 4........................................ 11,806 - 1.091 12,877
Price 5........................................ 4,744 - 1.090 5,170
Price 6........................................ 1,901,306 - 1.092 2,077,022
</TABLE>
-8-
<PAGE> 132
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
High Yield Bond Trust
Price 1........................................ 4,573 - $1.315 $ 6,012
Price 2........................................ 245,914 - 1.306 321,224
Price 3........................................ 78,777 - 1.300 102,403
Price 4........................................ 64,829 - 1.292 83,729
Price 5........................................ 42,157 - 1.285 54,184
Price 6........................................ 715,406 - 1.302 931,455
Managed Assets Trust
Price 1........................................ 95,510 - 1.724 164,697
Price 2........................................ 2,139,292 - 1.713 3,665,269
Price 3........................................ 975,651 - 1.705 1,663,522
Price 4........................................ 274,379 - 1.694 464,813
Price 5........................................ 362,589 - 1.686 611,283
Price 6........................................ 6,231,885 - 1.708 10,642,667
Money Market Portfolio
Price 1........................................ - - 1.057 -
Price 2........................................ 1,193,784 - 1.054 1,258,345
Price 3........................................ - - 1.052 -
Price 4........................................ 41,317 - 1.049 43,352
Price 5........................................ 108 - 1.047 113
Price 6........................................ 1,189,996 - 1.053 1,252,720
OCC Accumulation Trust
Equity Portfolio
Price 1........................................ - - 1.168 -
Price 2........................................ 103,534 - 1.165 120,604
Price 3........................................ - - 1.163 -
Price 4........................................ 3,604 - 1.160 4,180
Price 5........................................ - - 1.158 -
Price 6........................................ 1,085,047 - 1.163 1,262,378
</TABLE>
-9-
<PAGE> 133
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
Salomon Brothers Variable Series Funds Inc.
Salomon Brothers Variable Capital Fund
Price 1........................................ - - $1.392 $ -
Price 2........................................ 88,070 - 1.388 122,266
Price 3........................................ - - 1.386 -
Price 4........................................ 6,664 - 1.383 9,213
Price 5........................................ 196 - 1.380 270
Price 6........................................ 200,061 - 1.387 277,418
Salomon Brothers Variable Investors Fund
Price 1........................................ 106 - 1.339 142
Price 2........................................ 66,421 - 1.336 88,728
Price 3........................................ 4,318 - 1.333 5,757
Price 4........................................ 1,501 - 1.330 1,996
Price 5........................................ 2,737 - 1.328 3,633
Price 6........................................ 62,568 - 1.334 83,476
Salomon Brothers Variable Total Return Fund
Price 1........................................ - - 1.062 -
Price 2........................................ 30,146 - 1.059 31,923
Price 3........................................ - - 1.057 -
Price 4........................................ 1,458 - 1.054 1,537
Price 5........................................ - - 1.052 -
Price 6........................................ 128,948 - 1.058 136,375
Strong Variable Insurance Funds, Inc.
Strong Schafer Value Fund II
Price 1........................................ - - 1.247 -
Price 2........................................ 15,579 - 1.244 19,378
Price 3........................................ - - 1.242 -
Price 4........................................ 275 - 1.238 341
Price 5........................................ - - 1.236 -
Price 6........................................ 16,658 - 1.242 20,695
Templeton Variable Products Series Fund
Templeton Asset Allocation Fund (Class 1)
Price 1........................................ 25,306 - 1.584 40,080
Price 2........................................ 93 - 1.574 146
Price 3........................................ 505,516 - 1.566 791,649
Price 4........................................ 415,299 - 1.556 646,175
Price 5........................................ 493,692 - 1.548 764,442
Price 6........................................ - - 1.569 -
</TABLE>
-10-
<PAGE> 134
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
Templeton Variable Products Series Fund (continued)
Templeton Bond Fund (Class 1)
Price 1........................................ 6,368 - $1.052 $ 6,701
Price 2........................................ - - 1.045 -
Price 3........................................ 42,558 - 1.040 44,278
Price 4........................................ 8,106 - 1.034 8,379
Price 5........................................ 19,551 - 1.029 20,112
Price 6........................................ - - 1.042 -
Templeton Stock Fund (Class 1)
Price 1........................................ 299,758 - 1.552 465,209
Price 2........................................ 340 - 1.542 525
Price 3........................................ 2,345,472 - 1.534 3,599,107
Price 4........................................ 485,025 - 1.525 739,467
Price 5........................................ 613,623 - 1.517 931,006
Price 6........................................ - - 1.537 -
Montgomery Funds III
Montgomery Variable Series: Growth Fund
Price 1........................................ - - 1.286 -
Price 2........................................ 38,431 - 1.283 49,298
Price 3........................................ - - 1.281 -
Price 4........................................ 43 - 1.278 54
Price 5........................................ 57 - 1.275 73
Price 6........................................ 77,542 - 1.281 99,351
The Travelers Series Trust
Equity Income Portfolio
Price 1........................................ - - 1.238 -
Price 2........................................ 2,144,584 - 1.232 2,642,953
Price 3........................................ - - 1.228 -
Price 4........................................ 312,472 - 1.222 381,813
Price 5........................................ 57,889 - 1.217 70,476
Price 6........................................ 6,669,310 - 1.229 8,199,107
Federated High Yield Portfolio
Price 1........................................ - - 1.079 -
Price 2........................................ 38,465 - 1.074 41,310
Price 3........................................ - - 1.070 -
Price 4........................................ 12,756 - 1.066 13,595
Price 5........................................ 3,860 - 1.062 4,101
Price 6........................................ 218,380 - 1.072 234,021
</TABLE>
-11-
<PAGE> 135
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
The Travelers Series Trust (continued)
Federated Stock Portfolio
Price 1........................................ - - $1.329 $ -
Price 2........................................ 269,231 - 1.323 356,146
Price 3........................................ - - 1.318 -
Price 4........................................ 61,526 - 1.311 80,688
Price 5........................................ 4,170 - 1.307 5,448
Price 6........................................ 1,413,168 - 1.320 1,864,766
Large Cap Portfolio
Price 1........................................ - - 1.782 -
Price 2........................................ 2,550,992 - 1.773 4,522,953
Price 3........................................ - - 1.767 -
Price 4........................................ 234,329 - 1.758 411,939
Price 5........................................ 7,759 - 1.752 13,591
Price 6........................................ 4,955,852 - 1.769 8,765,407
Lazard International Stock Portfolio
Price 1........................................ - - 1.328 -
Price 2........................................ 369,840 - 1.322 488,824
Price 3........................................ - - 1.317 -
Price 4........................................ 65,435 - 1.311 85,764
Price 5........................................ 36,439 - 1.306 47,588
Price 6........................................ 440,369 - 1.319 580,651
MFS Mid Cap Growth Portfolio
Price 1........................................ 415 - 1.979 822
Price 2........................................ 233,024 - 1.974 460,061
Price 3........................................ 9,187 - 1.971 18,104
Price 4........................................ 1,622 - 1.966 3,189
Price 5........................................ - - 1.962 -
Price 6........................................ 154,186 - 1.972 304,024
MFS Research Portfolio
Price 1........................................ 18,357 - 1.531 28,106
Price 2........................................ 301,212 - 1.527 460,048
Price 3........................................ 4,975 - 1.524 7,585
Price 4........................................ 1,167 - 1.521 1,775
Price 5........................................ 350 - 1.518 532
Price 6........................................ 120,603 - 1.525 183,970
</TABLE>
-12-
<PAGE> 136
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
The Travelers Series Trust (continued)
Social Awareness Stock Portfolio
Price 1........................................ 40,351 - $1.985 $ 80,096
Price 2........................................ 608,076 - 1.972 1,199,274
Price 3........................................ 497,383 - 1.963 976,223
Price 4........................................ 139,985 - 1.950 272,983
Price 5........................................ 229,469 - 1.941 445,326
Price 6........................................ 2,313,144 - 1.966 4,547,419
Strategic Stock Portfolio
Price 1........................................ - - 1.118 -
Price 2........................................ 4,596 - 1.115 5,126
Price 3........................................ 5,368 - 1.113 5,977
Price 4........................................ 1,500 - 1.110 1,666
Price 5........................................ 334 - 1.108 370
Price 6........................................ 324,249 - 1.114 361,227
Convertible Bond Portfolio
Price 1........................................ 66,449 - 1.100 73,062
Price 2........................................ - - 1.099 -
Price 3........................................ 17,834 - 1.098 19,584
Price 4........................................ - - 1.097 -
Price 5........................................ - - 1.097 -
Price 6........................................ - - 1.098 -
Disciplined Mid Cap Stock Portfolio
Price 1........................................ 5,028 - 1.454 7,312
Price 2........................................ 45,075 - 1.451 65,393
Price 3........................................ 3,806 - 1.448 5,512
Price 4........................................ 1,943 - 1.444 2,806
Price 5........................................ 542 - 1.442 781
Price 6........................................ 240,631 - 1.449 348,656
Disciplined Small Cap Stock Portfolio
Price 1........................................ 515 - 1.306 672
Price 2........................................ 6,963 - 1.303 9,072
Price 3........................................ 3,028 - 1.301 3,938
Price 4........................................ 1,707 - 1.298 2,215
Price 5........................................ - - 1.296 -
Price 6........................................ 38,065 - 1.301 49,540
</TABLE>
-13-
<PAGE> 137
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
The Travelers Series Trust (continued)
Travelers Quality Bond Portfolio
Price 1........................................ 1,221 - $1.107 $ 1,352
Price 2........................................ 151,498 - 1.102 166,968
Price 3........................................ 22,006 - 1.098 24,172
Price 4........................................ 106,388 - 1.093 116,328
Price 5........................................ 139,811 - 1.090 152,354
Price 6........................................ 382,500 - 1.100 420,605
U.S. Government Securities Portfolio
Price 1........................................ - - 1.199 -
Price 2........................................ 110,708 - 1.192 131,910
Price 3........................................ 206,083 - 1.186 244,366
Price 4........................................ 74,915 - 1.178 88,261
Price 5........................................ 110,011 - 1.172 128,981
Price 6........................................ 880,918 - 1.188 1,046,240
Utilities Portfolio
Price 1........................................ 8,345 - 1.503 12,547
Price 2........................................ 118,785 - 1.494 177,440
Price 3........................................ 99,467 - 1.487 147,864
Price 4........................................ 65,548 - 1.477 96,814
Price 5........................................ 5,986 - 1.470 8,798
Price 6........................................ 375,024 - 1.489 558,401
Travelers Series Fund Inc.
Alliance Growth Portfolio
Price 1........................................ 99,102 - 2.305 228,439
Price 2........................................ 3,927,438 - 2.290 8,994,810
Price 3........................................ 776,729 - 2.279 1,770,320
Price 4........................................ 300,983 - 2.265 681,582
Price 5........................................ 182,765 - 2.254 411,878
Price 6........................................ 4,335,442 - 2.283 9,897,290
MFS Total Return Portfolio
Price 1........................................ 76,473 - 1.427 109,150
Price 2........................................ 1,023,136 - 1.418 1,450,902
Price 3........................................ 113,121 - 1.411 159,643
Price 4........................................ 238,310 - 1.402 334,148
Price 5........................................ 136,549 - 1.395 190,539
Price 6........................................ 1,607,844 - 1.414 2,272,759
Putnam Diversified Income Portfolio
Price 1........................................ 9,311 - 1.098 10,228
Price 2........................................ 278,395 - 1.091 303,840
Price 3........................................ 59,424 - 1.086 64,541
Price 4........................................ 139,658 - 1.079 150,709
Price 5........................................ 227,738 - 1.074 244,569
Price 6........................................ 249,302 - 1.088 271,209
</TABLE>
-14-
<PAGE> 138
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
Travelers Series Fund Inc. (continued)
Smith Barney International Equity Portfolio
Price 1........................................ 6,115 - $1.835 $ 11,221
Price 2........................................ 349,576 - 1.823 637,344
Price 3........................................ 209,539 - 1.814 380,186
Price 4........................................ 92,095 - 1.803 166,022
Price 5........................................ 25,632 - 1.794 45,984
Price 6........................................ 1,188,533 - 1.817 2,159,939
Smith Barney Money Market Portfolio
Price 1........................................ 504,494 - 1.148 579,172
Price 2........................................ 42,339 - 1.141 48,291
Price 3........................................ 905,258 - 1.135 1,027,517
Price 4........................................ 152,444 - 1.128 171,909
Price 5........................................ 462,445 - 1.122 518,967
Price 6........................................ 700,936 - 1.137 796,892
Smith Barney High Income Portfolio
Price 1........................................ 306 - 1.202 367
Price 2........................................ 230,410 - 1.194 275,197
Price 3........................................ 69,835 - 1.189 83,013
Price 4........................................ 19,237 - 1.181 22,723
Price 5........................................ 49,357 - 1.176 58,024
Price 6........................................ 469,907 - 1.191 559,470
Smith Barney Large Capitalization Growth Portfolio
Price 1........................................ - - 1.709 -
Price 2........................................ 649,086 - 1.704 1,106,365
Price 3........................................ 87,242 - 1.701 148,404
Price 4........................................ 51,499 - 1.697 87,368
Price 5........................................ 1,853 - 1.693 3,138
Price 6........................................ 663,945 - 1.702 1,130,178
Smith Barney Large Cap Value Portfolio
Price 1........................................ 64,998 - 1.448 94,130
Price 2........................................ 77,050 - 1.439 110,860
Price 3........................................ 1,338,259 - 1.432 1,916,149
Price 4........................................ 107,554 - 1.423 152,999
Price 5........................................ 218,475 - 1.416 309,279
Price 6........................................ 896,535 - 1.434 1,285,757
</TABLE>
-15-
<PAGE> 139
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- -------
<S> <C> <C> <C> <C>
Warburg Pincus Trust
Emerging Markets Portfolio
Price 1........................................ - - $1.947 $ -
Price 2........................................ 96,131 - 1.942 186,718
Price 3........................................ - - 1.939 -
Price 4........................................ 1,865 - 1.934 3,608
Price 5........................................ 229 - 1.931 443
Price 6........................................ 130,887 - 1.940 253,927
------------
Net Contract Owners' Equity $344,819,372
============
</TABLE>
-16-
<PAGE> 140
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
------------------- -----------------
<S> <C> <C>
AMERICAN ODYSSEY FUNDS, INC. (38.6%)
American Odyssey Core Equity Fund (Cost $40,568,660) 2,103,956 $37,050,664
American Odyssey Emerging Opportunities Fund (Cost $21,381,336) 1,600,987 26,288,199
American Odyssey Global High-Yield Bond Fund (Cost $7,425,314) 736,316 7,584,060
American Odyssey Intermediate-Term Bond Fund (Cost $10,133,830) 955,228 9,896,161
American Odyssey International Equity Fund (Cost $25,731,700) 1,442,140 32,202,997
American Odyssey Long-Term Bond Fund (Cost $21,155,575) 1,983,716 20,194,232
------------------- -----------------
Total (Cost $126,396,415) 8,822,343 133,216,313
------------------- -----------------
CAPITAL APPRECIATION FUND (11.1%)
Total (Cost $23,777,393) 350,142 38,095,439
------------------- -----------------
DELAWARE GROUP PREMIUM FUND, INC. (0.1%)
REIT Series (Cost $49,772) 5,674 49,193
Small Cap Value Series (Cost $241,454) 15,490 237,925
------------------- -----------------
Total (Cost $291,226) 21,164 287,118
------------------- -----------------
DREYFUS STOCK INDEX FUND (3.4%)
Total (Cost $8,967,384) 301,035 11,574,791
------------------- -----------------
DREYFUS VARIABLE INVESTMENT FUND (4.7%)
Capital Appreciation Portfolio (Cost $14,254,186) 372,841 14,865,174
Small Cap Portfolio (Cost $1,327,766) 22,740 1,508,570
------------------- -----------------
Total (Cost $15,581,952) 395,581 16,373,744
------------------- -----------------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (6.7%)
Equity-Income Portfolio (Cost $5,663,558) 238,240 6,125,139
Growth Portfolio (Cost $11,347,964) 28952 15,707,319
High Income Portfolio (Cost $1,385,391) 116,040 1,312,417
------------------- -----------------
Total (Cost $18,396,913) 640,232 23,144,875
------------------- -----------------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (1.0%)
Asset Manager Portfolio
Total (Cost $2,844,721) 167,559 3,128,318
------------------- -----------------
GREENWICH STREET SERIES FUND (1.0%)
Equity Index Portfolio Class II
Total (Cost $2,991,807) 89,492 3,204,700
------------------- -----------------
HIGH YIELD BOND TRUST (0.4%)
Total (Cost $1,539,507) 158,325 1,499,338
------------------- -----------------
MANAGED ASSETS TRUST (5.0%)
Total (Cost $15,963,459) 815,156 17,216,091
------------------- -----------------
MONEY MARKET PORTFOLIO (0.7%)
Total (Cost $2,562,304) 2,562,304 2,562,304
------------------- -----------------
</TABLE>
-17-
<PAGE> 141
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------------- -----------------
<S> <C> <C>
OCC ACCUMULATION TRUST (0.4%)
Equity Portfolio
Total (Cost1,479,339) 37,055 $ 1,391,795
------------------- -----------------
SALOMON BROTHERS VARIABLE SERIES FUNDS INC. (0.2%)
Salomon Brothers Variable Total Return Fund (Cost $174,987) 16,608 169,900
Salomon Brothers Variable Capital Fund (Cost $386,781) 29,921 409,025
Salomon Brothers Variable Investors Fund (Cost $229,221) 19,341 236,543
------------------- -----------------
Total (Cost $790,989) 65,870 815,468
------------------- -----------------
STRONG VARIABLE INSURANCE FUNDS, INC. (0.0%)
Strong Schafer Value Fund II
Total (Cost $43,083) 4,432 40,421
------------------- -----------------
TEMPLETON VARIABLE PRODUCTS SERIES FUND (2.3%)
Templeton Asset Allocation Fund (Class 1) (Cost $2,069,331) 95,863 2,240,309
Templeton Bond Fund (Class 1) (Cost $84,013) 7,957 79,490
Templeton Stock Fund (Class 1) (Cost $5,136,320) 235,285 5,738,599
------------------- -----------------
Total (Cost $7,289,664) 339,105 8,058,398
------------------- -----------------
MONTGOMERY FUNDS III (0.0%)
Montgomery Variable Series: Growth Fund
Total (Cost $139,704) 8,092 148,806
------------------- -----------------
THE TRAVELERS SERIES TRUST (12.3%)
Equity Income Portfolio (Cost $11,582,378) 750,688 11,297,855
Federated High Yield Portfolio (Cost $293,802) 25,620 293,092
Federated Stock Portfolio (Cost $2,248,308) 141,221 2,307,544
Large Cap Portfolio (Cost $12,377,457) 647,541 13,669,586
Lazard International Stock Portfolio (Cost $1,047,240) 76,924 1,203,088
MFS Mid Cap Growth Portfolio (Cost $591,590) 47,861 786,356
MFS Research Portfolio (Cost $582,298) 52,232 682,150
Social Awareness Stock Portfolio (Cost $6,745,072) 255,764 7,524,580
Strategic Stock Portfolio (Cost $398,023) 37,709 374,449
Convertible Bond Portfolio (Cost $90,135) 7,926 92,660
Disciplined Mid Cap Stock Portfolio (Cost $384,044) 27,582 430,551
Disciplined Small Cap Stock Portfolio (Cost $55,513) 6,128 65,451
Travelers Quality Bond Portfolio (Cost $878,680) 81,518 882,028
U.S. Government Securities Portfolio (Cost $1,693,898) 145,049 1,640,506
Utilities Portfolio (Cost $1,044,990) 62,983 1,002,066
------------------- -----------------
Total (Cost $40,013,428) 2,366,746 42,251,962
------------------- -----------------
</TABLE>
-18-
<PAGE> 142
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------------- -----------------
<S> <C> <C>
TRAVELERS SERIES FUND INC. (12.0%)
Alliance Growth Portfolio (Cost $18,233,442) 668,355 $ 21,975,501
MFS Total Return Portfolio (Cost $4,679,828) 278,363 4,517,836
Putnam Diversified Income Portfolio (Cost $1,077,522) 91,292 1,045,294
Smith Barney International Equity Portfolio (Cost $2,269,023) 148,164 3,403,328
Smith Barney Money Market Portfolio (Cost $3,136,826) 3,136,826 3,136,826
Smith Barney High Income Portfolio (Cost $1,026,294) 82,700 999,016
Smith Barney Large Capitalization Growth Portfolio (Cost $2,199,668) 154,847 2,476,005
Smith Barney Large Cap Value Portfolio (Cost $3,819,521) 198,549 3,873,684
------------------- -----------------
Total (Cost $36,442,124) 4,759,096 41,427,490
------------------- -----------------
WARBURG PINCUS TRUST (0.1%)
Emerging Markets Portfolio
Total (Cost $368,554) 31,367 444,786
------------------- -----------------
TOTAL INVESTMENT OPTIONS (100%)
(COST $305,879,966) $ 344,882,157
=================
</TABLE>
-19-
<PAGE> 143
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
AMERICAN ODYSSEY CORE EQUITY FUND
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................... $ 3,492,710 $ 778,884
------------------- -------------------
EXPENSES:
Insurance charges ............................................. 221,131 74,543
Administrative fees ........................................... 274 -
------------------- -------------------
Net investment income (loss) ............................ 3,271,305 704,341
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .............................. 737,403 532,980
Cost of investments sold .................................... 667,372 410,739
------------------- -------------------
Net realized gain (loss) ................................ 70,031 122,241
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .................... 845,305 564,904
Unrealized gain (loss) end of year .......................... (3,517,996) 845,305
------------------- -------------------
Net change in unrealized gain (loss) for the year ....... (4,363,301) 280,401
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ............................... (1,021,965) 1,106,983
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................... 15,272,980 8,607,345
Participant transfers from other Travelers accounts ............. 12,902,577 835,387
Administrative and asset allocation charges ..................... (218,131) (85,560)
Contract surrenders ............................................. (1,325,081) (314,411)
Participant transfers to other Travelers accounts ............... (1,876,341) (1,200,115)
Other payments to participants .................................. (18,328) (3,708)
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions .......................... 24,737,676 7,838,938
------------------- -------------------
Net increase (decrease) in net assets ..................... 23,715,711 8,945,921
NET ASSETS:
Beginning of year ............................................. 13,327,950 4,382,029
------------------- -------------------
End of year ................................................... $ 37,043,661 $ 13,327,950
=================== ===================
<CAPTION>
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ....................................................... $ 1,145,686 $ -
------------------- --------------------
EXPENSES:
Insurance charges ............................................... 125,564 38,386
Administrative fees ............................................. 70 -
------------------- --------------------
Net investment income (loss) .............................. 1,020,052 (38,386)
------------------- --------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................ 474,780 79,470
Cost of investments sold ...................................... 438,733 89,144
------------------- --------------------
Net realized gain (loss) .................................. 36,047 (9,674)
------------------- --------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ...................... 75,743 207,551
Unrealized gain (loss) end of year ............................ 4,906,862 75,743
------------------- --------------------
Net change in unrealized gain (loss) for the year ......... 4,831,119 (131,808)
------------------- --------------------
Net increase (decrease) in net assets
resulting from operations ................................. 5,887,218 (179,868)
------------------- --------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................. 8,127,199 4,653,864
Participant transfers from other Travelers accounts ............ 7,467,270 570,915
Administrative and asset allocation charges .................... (134,383) (48,757)
Contract surrenders ............................................ (828,590) (148,363)
Participant transfers to other Travelers accounts .............. (1,041,508) (525,891)
Other payments to participants ................................. (9,321) (1,974)
------------------- --------------------
Net increase (decrease) in net assets
resulting from unit transactions ......................... 13,580,667 4,499,794
------------------- --------------------
Net increase (decrease) in net assets .................... 19,467,885 4,319,926
NET ASSETS:
Beginning of year ............................................. 6,807,262 2,487,336
------------------- --------------------
End of year ................................................... $ 26,275,147 $ 6,807,262
=================== ====================
<CAPTION>
AMERICAN ODYSSEY GLOBAL HIGH-YIELD
BOND FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ....................................................... $ 273,311 $ 320
------------------- -------------------
EXPENSES:
Insurance charges ............................................... 41,533 12,102
Administrative fees ............................................. 18 -
------------------- -------------------
Net investment income (loss) .............................. 231,760 (11,782)
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................ 204,213 13,974
Cost of investments sold ...................................... 198,879 14,480
------------------- -------------------
Net realized gain (loss)................................... 5,334 (506)
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ...................... (51,386) (7,415)
Unrealized gain (loss) end of year ............................ 158,746 (51,386)
------------------- -------------------
Net change in unrealized gain (loss) for the year ......... 210,132 (43,971)
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ................................. 447,226 (56,259)
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................... 3,060,644 1,550,136
Participant transfers from other Travelers accounts ............. 2,416,394 633,063
Administrative and asset allocation charges ..................... (49,378) (17,800)
Contract surrenders ............................................. (256,158) (48,798)
Participant transfers to other Travelers accounts ............... (338,867) (299,413)
Other payments to participants .................................. (3,382) (240)
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions .......................... 4,829,253 1,816,948
------------------- -------------------
Net increase (decrease) in net assets ..................... 5,276,479 1,760,689
NET ASSETS:
Beginning of year ............................................. 2,304,542 543,853
------------------- -------------------
End of year ................................................... $ 7,581,021 $ 2,304,542
=================== ===================
</TABLE>
-20-
<PAGE> 144
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND AMERICAN ODYSSEY INTERNATIONAL EQUITY
FUND FUND AMERICAN ODYSSEY LONG-TERM BOND FUND
- ----------------------------------------- ---------------------------------------- ---------------------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 468,038 $ 8,054 $ - $ 217,795 $ 1,042,592 $ 64,308
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
55,042 18,258 153,652 40,662 113,312 35,885
39 - 51 - 64 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
412,957 (10,204) (153,703) 177,133 929,216 28,423
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
276,162 142,913 3,837,315 37,449 470,268 67,489
272,122 142,881 3,510,666 32,718 468,916 64,476
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
4,040 32 326,649 4,731 1,352 3,013
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
135,827 (16,747) 468,089 413 330,349 45,907
(237,668) 135,827 6,471,298 468,089 (961,344) 330,349
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(373,495) 152,574 6,003,209 467,676 (1,291,693) 284,442
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
43,502 142,402 6,176,155 649,540 (361,125) 315,878
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
4,469,025 2,304,161 10,170,649 5,123,803 9,108,825 4,728,497
3,092,281 316,929 16,000,169 403,511 6,654,864 486,012
(59,242) (22,311) (157,515) (55,952) (139,486) (53,795)
(282,211) (67,704) (1,083,584) (130,464) (593,354) (112,099)
(652,121) (484,991) (6,587,283) (358,805) (1,193,818) (531,508)
(5,284) (6,950) (16,844) (737) (11,065) (1,254)
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
6,562,448 2,039,134 18,325,592 4,981,356 13,825,966 4,515,853
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
6,605,950 2,181,536 24,501,747 5,630,896 13,464,841 4,831,731
3,287,960 1,106,424 7,717,995 2,087,099 6,722,592 1,890,861
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
$ 9,893,910 $ 3,287,960 $ 32,219,742 $ 7,717,995 $ 20,187,433 $ 6,722,592
==================== =================== =================== ==================== =================== ===================
<CAPTION>
CAPITAL APPRECIATION FUND
----------------------------------------
1999 1998
---- ----
<C> <C>
$ 560,543 $ 188,889
------------------- -------------------
223,013 67,205
2,633 -
------------------- -------------------
334,897 121,684
------------------- -------------------
2,539,095 164,935
1,840,902 113,843
------------------- -------------------
698,193 51,092
------------------- -------------------
3,890,529 210,889
14,318,045 3,890,529
------------------- -------------------
10,427,516 3,679,640
------------------- -------------------
11,460,606 3,852,416
------------------- -------------------
9,807,471 6,056,836
7,614,526 2,589,399
(6,093) (9,991)
(1,236,727) (331,368)
(3,763,165) (421,978)
(152,887) (5,352)
------------------- -------------------
12,263,125 7,877,546
------------------- -------------------
23,723,731 11,729,962
14,362,815 2,632,853
------------------- -------------------
$ 38,086,546 $ 14,362,815
=================== ===================
</TABLE>
-21-
<PAGE> 145
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
REIT SERIES
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................... $ 9 $ -
-------------------- -------------------
EXPENSES:
Insurance charges ............................................. 238 -
Administrative fees ........................................... - -
-------------------- -------------------
Net investment income (loss) .............................. (229) -
-------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .............................. 135,141 -
Cost of investments sold .................................... 136,164 -
-------------------- -------------------
Net realized gain (loss) .................................. (1,023) -
-------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .................... - -
Unrealized gain (loss) end of year .......................... (579) -
-------------------- -------------------
Net change in unrealized gain (loss) for the year ......... (579) -
-------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ................................. (1,831) -
-------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................. 40,322 -
Participant transfers from other Travelers accounts ........... 81,767 -
Administrative and asset allocation charges ................... (5) -
Contract surrenders ........................................... (844) -
Participant transfers to other Travelers accounts ............. (70,227) -
Other payments to participants ................................ - -
-------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions .......................... 51,013 -
-------------------- -------------------
Net increase (decrease) in net assets ..................... 49,182 -
NET ASSETS:
Beginning of year ........................................... - -
-------------------- -------------------
End of year ................................................. $ 49,182 $ -
==================== ===================
<CAPTION>
SMALL CAP VALUE SERIES
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................... $ 588 $ -
------------------- -------------------
EXPENSES:
Insurance charges ............................................. 859 9
Administrative fees ........................................... - -
------------------- -------------------
Net investment income (loss) ................................ (271) (9)
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .............................. 23,361 1
Cost of investments sold .................................... 23,284 1
------------------- -------------------
Net realized gain (loss) ................................... 77 -
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .................... 694 -
Unrealized gain (loss) end of year .......................... (3,529) 694
------------------- -------------------
Net change in unrealized gain (loss) for the year .......... (4,223) 694
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .................................. (4,417) 685
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................. 112,836 6,487
Participant transfers from other Travelers accounts ........... 143,624 138
Administrative and asset allocation charges ................... - (1)
Contract surrenders ........................................... (2,654) -
Participant transfers to other Travelers accounts (18,819) -
Other payments to participants ................................ - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions .......................... 234,987 6,624
------------------- -------------------
Net increase (decrease) in net assets ....................... 230,570 7,309
NET ASSETS:
Beginning of year ........................................... 7,309 -
------------------- -------------------
End of year ................................................. $ 237,879 $ 7,309
=================== ===================
<CAPTION>
DREYFUS STOCK INDEX FUND
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................... $ 189,559 $ 79,896
------------------- -------------------
EXPENSES:
Insurance charges ............................................. 91,810 49,821
Administrative fees ........................................... 2,431 -
------------------- -------------------
Net investment income (loss) ................................ 95,318 30,075
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .............................. 659,233 583,574
Cost of investments sold .................................... 540,780 431,835
------------------- -------------------
Net realized gain (loss) ................................ 118,453 151,739
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .................... 1,152,271 204,369
Unrealized gain (loss) end of year .......................... 2,607,408 1,152,271
------------------- -------------------
Net change in unrealized gain (loss) for the year ....... 1,455,137 947,902
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ............................... 1,668,908 1,129,716
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................. 2,737,855 2,003,579
Participant transfers from other Travelers accounts ........... 1,493,612 1,982,993
Administrative and asset allocation charges ................... (4,356) (11,560)
Contract surrenders ........................................... (410,639) (266,362)
Participant transfers to other Travelers accounts ............. (746,063) (640,642)
Other payments to participants ................................ - (35)
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ........................ 3,070,409 3,067,973
------------------- -------------------
Net increase (decrease) in net assets ................... 4,739,317 4,197,689
NET ASSETS:
Beginning of year ........................................... 6,833,367 2,635,678
------------------- -------------------
End of year ................................................. $ 11,572,684 $ 6,833,367
=================== ===================
</TABLE>
-22-
<PAGE> 146
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
DREYFUS CAPITAL APPRECIATION
PORTFOLIO DREYFUS SMALL CAP PORTFOLIO FIDELITY'S EQUITY-INCOME PORTFOLIO
- ----------------------------------------- ---------------------------------------- ---------------------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 133,560 $ 472 $ 82 $ - $ 239,206 $ 185,248
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
52,890 137 4,815 17 56,680 40,227
9 - 14 - 1,221 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
80,661 335 (4,747) (17) 181,305 145,021
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
956,524 2,378 136,859 - 688,256 424,549
941,589 2,754 135,533 - 620,935 371,238
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
14,935 (376) 1,326 - 67,321 53,311
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
9,344 - 1,321 - 439,040 269,253
610,987 9,344 180,804 1,321 461,581 439,040
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
601,643 9,344 179,483 1,321 22,541 169,787
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
697,239 9,303 176,062 1,304 271,167 368,119
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
5,202,296 79,471 582,740 6,079 1,523,662 1,388,924
9,739,222 6,910 975,897 7,162 412,176 1,022,092
(37) (3) (48) (1) (2,737) (8,526)
(237,365) - (41,727) - (278,201) (201,484)
(634,502) - (199,181) - (622,511) (378,363)
(73) - - - (101,455) (2,713)
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
14,069,541 86,378 1,317,681 13,240 930,934 1,819,930
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
14,766,780 95,681 1,493,743 14,544 1,202,101 2,188,049
95,681 - 14,544 - 4,931,571 2,743,522
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
$ 14,862,461 $ 95,681 $ 1,508,287 $ 14,544 $ 6,133,672 $ 4,931,571
==================== =================== =================== ==================== =================== ===================
<CAPTION>
GROWTH PORTFOLIO
----------------------------------------
1999 1998
---- ----
<C> <C>
$ 946,093 $ 599,838
------------------- -------------------
107,972 56,749
1,369 -
------------------- -------------------
836,752 543,089
------------------- -------------------
1,456,616 867,644
1,211,083 747,632
------------------- -------------------
245,533 120,012
------------------- -------------------
1,707,028 430,230
4,359,355 1,707,028
------------------- -------------------
2,652,327 1,276,798
------------------- -------------------
3,734,612 1,939,899
------------------- -------------------
2,536,549 1,771,297
3,687,326 1,171,473
(4,264) (11,315)
(357,748) (341,990)
(1,825,957) (807,183)
(367) -
------------------- -------------------
4,035,539 1,782,282
------------------- -------------------
7,770,151 3,722,181
7,926,280 4,204,099
------------------- -------------------
$ 15,696,431 $ 7,926,280
=================== ===================
</TABLE>
-23-
<PAGE> 147
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
HIGH INCOME PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ........................................................ $ 95,959 $ 68,817
------------------- -------------------
EXPENSES:
Insurance charges ................................................ 11,805 8,145
Administrative fees .............................................. 120 -
------------------- -------------------
Net investment income (loss) ............................... 84,034 60,672
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................. 149,108 77,977
Cost of investments sold ....................................... 161,408 79,839
------------------- -------------------
Net realized gain (loss) ................................... (12,300) (1,862)
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ....................... (75,002) 37,195
Unrealized gain (loss) end of year ............................. (72,974) (75,002)
------------------- -------------------
Net change in unrealized gain (loss) for the year .......... 2,028 (112,197)
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .................................. 73,762 (53,387)
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................... 305,625 374,465
Participant transfers from other Travelers accounts .............. 124,659 280,978
Administrative and asset allocation charges ...................... (461) (1,352)
Contract surrenders .............................................. (46,741) (31,080)
Participant transfers to other Travelers accounts ................ (148,770) (82,195)
Other payments to participants ................................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ........................... 234,312 540,816
------------------- -------------------
Net increase (decrease) in net assets ...................... 308,074 487,429
NET ASSETS:
Beginning of year .............................................. 1,004,016 516,587
------------------- -------------------
End of year .................................................... $ 1,312,090 $ 1,004,016
=================== ===================
<CAPTION>
ASSET MANAGER PORTFOLIO
----------------------------------------
1999 1998
---- ----
INVESTMENT INCOME:
<S> <C> <C>
Dividends ........................................................ $ 160,732 $ 194,693
------------------- -------------------
EXPENSES:
Insurance charges ................................................ 25,757 18,903
Administrative fees .............................................. 527 -
------------------- -------------------
Net investment income (loss) ............................... 134,448 175,790
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................. 442,916 517,835
Cost of investments sold ....................................... 423,255 488,475
------------------- -------------------
Net realized gain (loss) ................................... 19,661 29,360
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ....................... 163,275 123,427
Unrealized gain (loss) end of year ............................. 283,597 163,275
------------------- -------------------
Net change in unrealized gain (loss) for the year .......... 120,322 39,848
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .................................. 274,431 244,998
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................... 482,223 397,327
Participant transfers from other Travelers accounts .............. 714,149 392,233
Administrative and asset allocation charges ...................... (868) (2,963)
Contract surrenders .............................................. (246,385) (62,702)
Participant transfers to other Travelers accounts ................ (236,132) (349,983)
Other payments to participants ................................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ........................... 712,987 373,912
------------------- -------------------
Net increase (decrease) in net assets ...................... 987,418 618,910
NET ASSETS:
Beginning of year .............................................. 2,140,286 1,521,376
------------------- -------------------
End of year .................................................... $ 3,127,704 $ 2,140,286
=================== ===================
<CAPTION>
EQUITY INDEX PORTFOLIO
CLASS II
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ........................................................ $ 86 $ -
------------------- --------------------
EXPENSES:
Insurance charges ................................................ 5,499 -
Administrative fees .............................................. 2 -
------------------- --------------------
Net investment income (loss) ................................ (5,415) -
------------------- --------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................. 244,033 -
Cost of investments sold ....................................... 245,041 -
------------------- --------------------
Net realized gain (loss) ................................... (1,008) -
------------------- --------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ....................... - -
Unrealized gain (loss) end of year ............................. 212,893 -
------------------- --------------------
Net change in unrealized gain (loss) for the year .......... 212,893 -
------------------- --------------------
Net increase (decrease) in net assets
resulting from operations .................................. 206,470 -
------------------- --------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................... 707,182 -
Participant transfers from other Travelers accounts .............. 2,309,040 -
Administrative and asset allocation charges ...................... (3) -
Contract surrenders .............................................. (4,819) -
Participant transfers to other Travelers accounts ................ (13,603) -
Other payments to participants ................................... - -
------------------- --------------------
Net increase (decrease) in net assets
resulting from unit transactions ........................... 2,997,797 -
------------------- --------------------
Net increase (decrease) in net assets ...................... 3,204,267 -
NET ASSETS:
Beginning of year .............................................. - -
------------------- --------------------
End of year .................................................... $ 3,204,267 $ -
=================== ====================
</TABLE>
-24-
<PAGE> 148
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
HIGH YIELD BOND TRUST MANAGED ASSETS TRUST MONEY MARKET PORTFOLIO
- ----------------------------------------- ---------------------------------------- ---------------------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 70,140 $ 14,615 $ 523,655 $ 127,211 $ 92,687 $ 370
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
8,854 2,370 82,062 19,693 15,969 66
44 - 519 - - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
61,242 12,245 441,074 107,518 76,718 304
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
256,025 19,130 145,019 86,231 9,971,687 5,317
261,050 17,052 138,703 76,610 9,971,687 5,317
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(5,025) 2,078 6,316 9,621 - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(475) 2,457 318,679 24,124 - -
(40,168) (475) 1,252,633 318,679 - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(39,693) (2,932) 933,954 294,555 - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
16,524 11,391 1,381,344 411,694 76,718 304
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
740,019 422,549 6,712,016 2,555,096 5,427,902 34,223
605,834 8,496 6,435,462 450,844 8,124,642 2,726
(110) (232) (1,289) (2,014) - -
(54,093) (3,320) (545,868) (64,887) (1,013,219) -
(282,472) (16,689) (679,638) (195,581) (10,090,874) (7,892)
- - - - - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,009,178 410,804 11,920,683 2,743,458 2,448,451 29,057
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,025,702 422,195 13,302,027 3,155,152 2,525,169 29,361
473,305 51,110 3,910,224 755,072 29,361 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
$ 1,499,007 $ 473,305 $ 17,212,251 $ 3,910,224 $ 2,554,530 $ 29,361
==================== =================== =================== ==================== =================== ===================
<CAPTION>
EQUITY PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C>
$ 576 $ -
------------------- -------------------
7,582 1
- -
------------------- -------------------
(7,006) (1)
------------------- -------------------
875,348 -
869,415 -
------------------- -------------------
5,933 -
------------------- -------------------
60 -
(87,544) 60
------------------- -------------------
(87,604) 60
------------------- -------------------
(88,677) 59
------------------- -------------------
200,166 1,584
1,364,774 711
(8) -
(52,656) -
(38,791) -
- -
------------------- -------------------
1,473,485 2,295
------------------- -------------------
1,384,808 2,354
2,354 -
------------------- -------------------
$ 1,387,162 $ 2,354
=================== ===================
</TABLE>
-25-
<PAGE> 149
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
SALOMON BROTHERS VARIABLE TOTAL
RETURN FUND
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 4,065 $ 123
------------------- --------------------
EXPENSES:
Insurance charges ............................................ 504 15
Administrative fees .......................................... - -
Net investment income (loss) ........................... 3,561 108
------------------- --------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................. 15,828 12
Cost of investments sold ................................... 15,924 12
------------------- --------------------
Net realized gain (loss) ................................ (96) -
------------------- --------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ................... 300 -
Unrealized gain (loss) end of year ......................... (5,086) 300
------------------- --------------------
Net change in unrealized gain (loss) for the year ...... (5,386) 300
------------------- --------------------
Net increase (decrease) in net assets
resulting from operations .............................. (1,921) 408
------------------- --------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................ 128,684 6,708
Participant transfers from other Travelers accounts .......... 36,432 -
Administrative and asset allocation charges .................. - -
Contract surrenders .......................................... (167) -
Participant transfers to other Travelers accounts ............ (309) -
Other payments to participants ............................... - -
------------------- --------------------
Net increase (decrease) in net assets
resulting from unit transactions ....................... 164,640 6,708
------------------- --------------------
Net increase (decrease) in net assets .................. 162,719 7,116
NET ASSETS:
Beginning of year .......................................... 7,116 -
------------------- --------------------
End of year ................................................ $ 169,835 $ 7,116
=================== ====================
<CAPTION>
SALOMON BROTHERS VARIABLE
CAPITAL FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 13,077 $ 114
------------------- -------------------
EXPENSES:
Insurance charges ............................................ 1,161 6
Administrative fees .......................................... - -
Net investment income (loss) ........................... 11,916 108
-------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................. 9,391 1
Cost of investments sold ................................... 8,864 1
------------------- -------------------
Net realized gain (loss) ............................... 527 -
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ................... 529 -
Unrealized gain (loss) end of year ......................... 22,244 529
------------------- -------------------
Net change in unrealized gain (loss) for the year ...... 21,715 529
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .............................. 34,158 637
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................ 137,132 4,920
Participant transfers from other Travelers accounts .......... 241,797 -
Administrative and asset allocation charges .................. - -
Contract surrenders .......................................... (140) -
Participant transfers to other Travelers accounts ............ (9,337) -
Other payments to participants ............................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ....................... 369,452 4,920
------------------- -------------------
Net increase (decrease) in net assets .................. 403,610 5,557
NET ASSETS:
Beginning of year .......................................... 5,557 -
------------------- -------------------
End of year ................................................ $ 409,167 $ 5,557
=================== ===================
<CAPTION>
SALOMON BROTHERS VARIABLE
INVESTORS FUND
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 1,195 $ 7
------------------- -------------------
EXPENSES:
Insurance charges ............................................ 470 3
Administrative fees .......................................... 2 -
Net investment income (loss) ........................... 723 4
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................. 87,575 3
Cost of investments sold ................................... 87,244 3
------------------- -------------------
Net realized gain (loss) ............................... 331 -
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ................... 279 -
Unrealized gain (loss) end of year ......................... 7,322 279
------------------- -------------------
Net change in unrealized gain (loss) for the year ...... 7,043 279
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .............................. 8,097 283
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................ 88,166 1,374
Participant transfers from other Travelers accounts .......... 230,519 -
Administrative and asset allocation charges .................. (5) -
Contract surrenders .......................................... (30,225) -
Participant transfers to other Travelers accounts ............ (114,477) -
Other payments to participants ............................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ....................... 173,978 1,374
------------------- -------------------
Net increase (decrease) in net assets .................. 182,075 1,657
NET ASSETS:
Beginning of year .......................................... 1,657 -
------------------- -------------------
End of year ................................................ $ 183,732 $ 1,657
=================== ===================
</TABLE>
-26-
<PAGE> 150
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
TEMPLETON ASSET ALLOCATION TEMPLETON BOND
STRONG SCHAFER VALUE FUND II FUND (CLASS 1) FUND (CLASS 1)
- ----------------------------------------- ---------------------------------------- ---------------------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C>
$ 1,514 $ 6 $ 199,362 $ 56,623 $ 2,582 $ 2,680
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
130 4 17,149 12,529 707 505
- - 629 - 19 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,384 2 181,584 44,094 1,856 2,175
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
- 1 339,078 277,034 12,479 4,190
- 1 352,700 251,707 13,270 3,994
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
- - (13,622) 25,327 (791) 196
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
521 - (5,070) 12,534 1,285 708
(2,662) 521 170,978 (5,070) (4,523) 1,285
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(3,183) 521 176,048 (17,604) (5,808) 577
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(1,799) 523 344,010 51,817 (4,743) 2,948
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
24,435 2,483 379,885 419,275 28,854 25,355
14,772 - 575,398 172,095 7,828 2,096
- - (573) (1,833) (29) (91)
- - (72,844) (88,444) (7,190) (311)
- - (208,546) (267,679) (5,932) (4,014)
- - (93,321) (5,907) - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
39,207 2,483 579,999 227,507 23,531 23,035
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
37,408 3,006 924,009 279,324 18,788 25,983
3,006 - 1,318,483 1,039,159 60,682 34,699
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
$ 40,414 $ 3,006 $ 2,242,492 $ 1,318,483 $ 79,470 $ 60,682
==================== =================== =================== ==================== =================== ===================
<CAPTION>
TEMPLETON STOCK FUND
(CLASS 1)
----------------------------------------
1999 1998
---- ----
<S> <C>
$ 370,246 $ 294,581
------------------- -------------------
42,338 31,169
732 -
------------------- -------------------
327,176 263,412
------------------- -------------------
457,878 685,171
489,801 715,644
------------------- -------------------
(31,923) (30,473)
------------------- -------------------
(255,809) (6,013)
602,279 (255,809)
------------------- -------------------
858,088 (249,796)
------------------- -------------------
1,153,341 (16,857)
------------------- -------------------
991,754 1,163,126
581,479 883,961
(1,388) (5,125)
(181,607) (237,897)
(415,463) (701,931)
- (2,175)
------------------- -------------------
974,775 1,099,959
------------------- -------------------
2,128,116 1,083,102
3,607,198 2,524,096
------------------- -------------------
$ 5,735,314 $ 3,607,198
=================== ===================
</TABLE>
-27-
<PAGE> 151
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
MONTGOMERY VARIABLE SERIES:
GROWTH FUND
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................... $ 1,400 $ 2
------------------- --------------------
EXPENSES:
Insurance charges .............................................. 279 1
Administrative fees ............................................ - -
------------------- --------------------
Net investment income (loss) ............................. 1,121 1
------------------- --------------------
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 year ..................... 14 -
Unrealized gain (loss) end of year ........................... 9,102 14
------------------- --------------------
Net change in unrealized gain (loss) for the year ........ 9,088 14
------------------- --------------------
Net increase (decrease) in net assets
resulting from operations ................................ 10,209 15
------------------- --------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................. 41,043 346
Participant transfers from other Travelers accounts ............ 97,601 -
Administrative and asset allocation charges .................... - -
Contract surrenders ............................................ (73) -
Participant transfers to other Travelers accounts .............. (365) -
Other payments to participants ................................. - -
------------------- --------------------
Net increase (decrease) in net assets
resulting from unit transactions ......................... 138,206 346
------------------- --------------------
Net increase (decrease) in net assets .................... 148,415 361
NET ASSETS:
Beginning of year ............................................ 361 -
------------------- --------------------
End of year .................................................. $ 148,776 $ 361
=================== ====================
<CAPTION>
EQUITY INCOME PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................... $ 711,147 $ 35,271
------------------- -------------------
EXPENSES:
Insurance charges .............................................. 62,980 14,011
Administrative fees ............................................ 49 -
------------------- -------------------
Net investment income (loss) ............................. 648,118 21,260
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................... 343,085 82,193
Cost of investments sold ..................................... 312,337 81,964
------------------- -------------------
Net realized gain (loss) ................................. 30,748 229
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ..................... 165,001 (1,024)
Unrealized gain (loss) end of year ........................... (284,522) 165,001
------------------- -------------------
Net change in unrealized gain (loss) for the year ........ (449,523) 166,025
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ................................ 229,343 187,514
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................. 4,868,301 3,275,299
Participant transfers from other Travelers accounts ............ 3,874,192 33,809
Administrative and asset allocation charges .................... - -
Contract surrenders ............................................ (372,301) (12,634)
Participant transfers to other Travelers accounts .............. (746,762) (119,198)
Other payments to participants ................................. - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ......................... 7,623,430 3,177,276
------------------- -------------------
Net increase (decrease) in net assets .................... 7,852,773 3,364,790
NET ASSETS:
Beginning of year ............................................ 3,441,576 76,786
------------------- -------------------
End of year .................................................. $ 11,294,349 $ 3,441,576
=================== ===================
<CAPTION>
FEDERATED HIGH YIELD PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................... $ 346 $ 7,706
------------------- -------------------
EXPENSES:
Insurance charges .............................................. 2,361 478
Administrative fees ............................................ 3 -
------------------- -------------------
Net investment income (loss) .............................. (2,018) 7,228
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................... 51,196 10,006
Cost of investments sold ..................................... 50,962 10,126
------------------- -------------------
Net realized gain (loss) ................................. 234 (120)
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ..................... (5,718) (132)
Unrealized gain (loss) end of year ........................... (710) (5,718)
------------------- -------------------
Net change in unrealized gain (loss) for the year ........ 5,008 (5,586)
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ................................ 3,224 1,522
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................. 95,290 126,467
Participant transfers from other Travelers accounts ............ 113,948 2,616
Administrative and asset allocation charges .................... - -
Contract surrenders ............................................ (28,954) (3,199)
Participant transfers to other Travelers accounts .............. (12,240) (8,922)
Other payments to participants ................................. - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ......................... 168,044 116,962
------------------- -------------------
Net increase (decrease) in net assets .................... 171,268 118,484
NET ASSETS:
Beginning of year ............................................ 121,759 3,275
------------------- -------------------
End of year .................................................. $ 293,027 $ 121,759
=================== ===================
</TABLE>
-28-
<PAGE> 152
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
LAZARD INTERNATIONAL STOCK
FEDERATED STOCK PORTFOLIO LARGE CAP PORTFOLIO PORTFOLIO
- ----------------------------------------- ---------------------------------------- ---------------------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 12,872 $ 27,639 $ 645,998 $ 35,965 $ 1,288 $ 2,386
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
13,140 3,098 49,416 3,100 5,399 812
3 - 7 - 40 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(271) 24,541 596,575 32,865 (4,151) 1,574
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
111,796 2,845 2,066,673 9,677 97,294 2,994
109,479 2,981 1,971,989 8,598 89,059 2,988
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
2,317 (136) 94,684 1,079 8,235 6
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
33,275 (841) 87,395 81 7,688 (51)
59,235 33,275 1,292,130 87,395 155,847 7,688
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
25,960 34,116 1,204,735 87,314 148,159 7,739
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
28,006 58,521 1,895,994 121,258 152,243 9,319
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,082,149 699,318 3,974,527 698,561 524,618 200,117
642,011 5,035 7,768,688 16,471 413,942 8,340
- - (17) - - -
(109,688) (2,123) (444,102) (7,630) (17,012) (494)
(112,870) (6,451) (309,986) (19,072) (89,558) (3,676)
(1,162) - - (325) - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,500,440 695,779 10,989,110 688,005 831,990 204,287
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,528,446 754,300 12,885,104 809,263 984,233 213,606
778,602 24,302 828,786 19,523 218,594 4,988
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
$ 2,307,048 $ 778,602 $ 13,713,890 $ 828,786 $ 1,202,827 $ 218,594
==================== =================== =================== ==================== =================== ===================
<CAPTION>
MFS MID CAP GROWTH PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C>
$ 100 $ -
------------------- -------------------
1,292 3
- -
------------------- -------------------
(1,192) (3)
------------------- -------------------
22,232 -
18,737 -
------------------- -------------------
3,495 -
------------------- -------------------
297 -
194,766 297
------------------- -------------------
194,469 297
------------------- -------------------
196,772 294
------------------- -------------------
116,399 2,191
491,915 -
(1) -
(4,286) -
(17,084) -
- -
------------------- -------------------
586,943 2,191
------------------- -------------------
783,715 2,485
2,485 -
------------------- -------------------
$ 786,200 $ 2,485
=================== ===================
</TABLE>
-29-
<PAGE> 153
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
MFS RESEARCH PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................... $ - $ 23
------------------- -------------------
EXPENSES:
Insurance charges .............................................. 2,146 16
Administrative fees ............................................ - -
------------------- -------------------
Net investment income (loss) ............................. (2,146) 7
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................... 56,766 3
Cost of investments sold ..................................... 53,906 3
------------------- -------------------
Net realized gain (loss) ................................. 2,860 -
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ..................... 1,838 -
Unrealized gain (loss) end of year ........................... 99,852 1,838
------------------- -------------------
Net change in unrealized gain (loss) for the year ........ 98,014 1,838
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ................................ 98,728 1,845
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................. 250,357 7,730
Participant transfers from other Travelers accounts ............ 367,176 5,000
Administrative and asset allocation charges .................... (4) -
Contract surrenders ............................................ (6,332) -
Participant transfers to other Travelers accounts .............. (42,484) -
Other payments to participants ................................. - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ......................... 568,713 12,730
------------------- -------------------
Net increase (decrease) in net assets .................... 667,441 14,575
NET ASSETS:
Beginning of year ............................................ 14,575 -
------------------- -------------------
End of year .................................................. $ 682,016 $ 14,575
=================== ===================
<CAPTION>
SOCIAL AWARENESS STOCK PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................... $ 75,208 $ 19,662
------------------- -------------------
EXPENSES:
Insurance charges .............................................. 37,925 8,672
Administrative fees ............................................ 329 -
------------------- -------------------
Net investment income (loss) ............................. 36,954 10,990
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................... 149,502 14,800
Cost of investments sold ..................................... 128,772 11,286
------------------- -------------------
Net realized gain (loss) ................................. 20,730 3,514
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ..................... 246,812 14,085
Unrealized gain (loss) end of year ........................... 779,508 246,812
------------------- -------------------
Net change in unrealized gain (loss) for the year ........ 532,696 232,727
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ................................ 590,380 247,231
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................. 2,807,839 969,060
Participant transfers from other Travelers accounts ............ 2,855,099 266,786
Administrative and asset allocation charges .................... (712) (1,403)
Contract surrenders ............................................ (146,982) (31,250)
Participant transfers to other Travelers accounts .............. (259,819) (29,363)
Other payments to participants ................................. - (1,789)
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ......................... 5,255,425 1,172,041
------------------- -------------------
Net increase (decrease) in net assets ........................ 5,845,805 1,419,272
NET ASSETS:
Beginning of year ............................................ 1,675,516 256,244
------------------- -------------------
End of year .................................................. $ 7,521,321 $ 1,675,516
=================== ===================
<CAPTION>
STRATEGIC STOCK PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................... $ 3 $ 11
------------------- --------------------
EXPENSES:
Insurance charges .............................................. 2,266 1
Administrative fees ............................................ - -
------------------- --------------------
Net investment income (loss) ............................. (2,263) 10
------------------- --------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................... 478,415 -
Cost of investments sold ..................................... 483,090 -
------------------- --------------------
Net realized gain (loss) ................................. (4,675) -
------------------- --------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ..................... 28 -
Unrealized gain (loss) end of year ........................... (23,575) 28
------------------- --------------------
Net change in unrealized gain (loss) for the year ........ (23,603) 28
------------------- --------------------
Net increase (decrease) in net assets
resulting from operations ................................ (30,541) 38
------------------- --------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................. 69,218 890
Participant transfers from other Travelers accounts ............ 571,881 -
Administrative and asset allocation charges .................... (7) -
Contract surrenders ............................................ (119,535) -
Participant transfers to other Travelers accounts .............. (117,578) -
Other payments to participants ................................. - -
------------------- --------------------
Net increase (decrease) in net assets
resulting from unit transactions ......................... 403,979 890
------------------- --------------------
Net increase (decrease) in net assets ........................ 373,438 928
NET ASSETS:
Beginning of year ............................................ 928 -
------------------- --------------------
End of year .................................................. $ 374,366 $ 928
=================== ====================
</TABLE>
-30-
<PAGE> 154
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
DISCIPLINED MID CAP STOCK DISCIPLINED SMALL CAP STOCK
CONVERTIBLE BOND PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------- ---------------------------------------- ---------------------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ - $ - $ 5,225 $ - $ - $ 1
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
40 - 1,501 2 310 -
- - - - - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(40) - 3,724 (2) (310) 1
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
107 - 11,164 - 12,472 -
105 - 10,897 - 11,782 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
2 - 267 - 690 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
- - 267 - 19 -
2,525 - 46,507 267 9,939 19
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
2,525 - 46,240 267 9,920 19
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
2,487 - 50,231 265 10,300 20
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
3,571 - 124,700 1,226 25,354 290
86,678 - 263,488 - 29,584 -
(1) - (5) - (1) -
(89) - (7,962) - - -
- - (1,483) - (110) -
- - - - - -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
90,159 - 378,738 1,226 54,827 290
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
92,646 - 428,969 1,491 65,127 310
- - 1,491 - 310 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
$ 92,646 $ - $ 430,460 $ 1,491 $ 65,437 $ 310
==================== =================== =================== ==================== =================== ===================
<CAPTION>
TRAVELERS QUALITY BOND PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C>
$ 2,392 $ 7,185
------------------- -------------------
4,765 1,157
136 -
------------------- -------------------
(2,509) 6,028
------------------- -------------------
61,610 10,533
61,418 10,305
------------------- -------------------
192 228
------------------- -------------------
772 (208)
3,347 772
------------------- -------------------
2,575 980
------------------- -------------------
258 7,236
------------------- -------------------
283,881 19,533
470,717 129,190
(16) (32)
(16,867) (3,811)
(17,683) (16,000)
- -
------------------- -------------------
720,032 128,880
------------------- -------------------
720,290 136,116
161,489 25,373
------------------- -------------------
$ 881,779 $ 161,489
=================== ===================
</TABLE>
-31-
<PAGE> 155
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES
PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 82 $ 47,770
------------------- -------------------
EXPENSES:
Insurance charges ............................................ 10,139 3,181
Administrative fees .......................................... 103 -
------------------- -------------------
Net investment income (loss) ........................... (10,160) 44,589
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................. 191,943 111,137
Cost of investments sold ................................... 200,886 103,302
------------------- -------------------
Net realized gain (loss) ............................... (8,943) 7,835
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ..................... (26,997) 254
Unrealized gain (loss) end of year ........................... (53,392) (26,997)
------------------- -------------------
Net change in unrealized gain (loss) for the year ...... (26,395) (27,251)
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .............................. (45,498) 25,173
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................ 986,154 375,616
Participant transfers from other Travelers accounts .......... 375,762 210,689
Administrative and asset allocation charges .................. (260) (381)
Contract surrenders .......................................... (66,393) (70,608)
Participant transfers to other Travelers accounts ............ (205,074) (61,263)
Other payments to participants ............................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ....................... 1,090,189 454,053
------------------- -------------------
Net increase (decrease) in net assets .................. 1,044,691 479,226
NET ASSETS:
Beginning of year .......................................... 595,067 115,841
------------------- -------------------
End of year ................................................ $ 1,639,758 $ 595,067
=================== ===================
<CAPTION>
UTILITIES PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 44,881 $ 6,310
------------------- -------------------
EXPENSES:
Insurance charges ............................................ 6,027 1,263
Administrative fees .......................................... 11 -
------------------- -------------------
Net investment income (loss) ........................... 38,843 5,047
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................. 254,447 37,853
Cost of investments sold ................................... 255,423 28,794
------------------- -------------------
Net realized gain (loss) ............................... (976) 9,059
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ................... 16,679 5,887
Unrealized gain (loss) end of year ......................... (42,924) 16,679
------------------- -------------------
Net change in unrealized gain (loss) for the year ...... (59,603) 10,792
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .............................. (21,736) 24,898
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................ 595,536 158,667
Participant transfers from other Travelers accounts .......... 374,650 22,503
Administrative and asset allocation charges .................. (198) (296)
Contract surrenders .......................................... (40,111) (4,654)
Participant transfers to other Travelers accounts ............ (133,037) (10,268)
Other payments to participants ............................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ....................... 796,840 165,952
------------------- -------------------
Net increase (decrease) in net assets .................. 775,104 190,850
NET ASSETS:
Beginning of year .......................................... 226,760 35,910
------------------- -------------------
End of year ................................................ $ 1,001,864 $ 226,760
=================== ===================
<CAPTION>
ALLIANCE GROWTH PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 435,013 $ 91,534
------------------- -------------------
EXPENSES:
Insurance charges ............................................ 87,424 16,055
Administrative fees .......................................... 285 -
------------------- -------------------
Net investment income (loss) ........................... 347,304 75,479
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ............................. 647,937 223,653
Cost of investments sold ................................... 562,431 163,151
------------------- -------------------
Net realized gain (loss) ............................... 85,506 60,502
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ..................... 504,729 70,690
Unrealized gain (loss) end of year ........................... 3,742,058 504,729
------------------- -------------------
Net change in unrealized gain (loss) for the year ...... 3,237,329 434,039
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .............................. 3,670,139 570,020
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ................................ 7,135,173 2,282,713
Participant transfers from other Travelers accounts .......... 8,830,894 555,866
Administrative and asset allocation charges .................. (824) (2,166)
Contract surrenders .......................................... (496,505) (59,650)
Participant transfers to other Travelers accounts ............ (710,655) (368,240)
Other payments to participants ............................... (275) (1,002)
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ....................... 14,757,808 2,407,521
------------------- -------------------
Net increase (decrease) in net assets .................. 18,427,947 2,977,541
NET ASSETS:
Beginning of year .......................................... 3,556,372 578,831
------------------- -------------------
End of year ................................................ $ 21,984,319 $ 3,556,372
=================== ===================
</TABLE>
-32-
<PAGE> 156
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
SMITH BARNEY INTERNATIONAL EQUITY
MFS TOTAL RETURN PORTFOLIO PUTNAM DIVERSIFIED INCOME PORTFOLIO PORTFOLIO
- ----------------------------------------- ---------------------------------------- ---------------------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 193,702 $ 15,595 $ 38,349 $ 8,700 $ 5,220 $ -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
23,093 4,642 6,994 2,197 13,331 2,467
161 - 208 - 26 -
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
170,448 10,953 31,147 6,503 (8,137) (2,467)
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
832,589 94,451 95,449 7,216 558,478 42,495
794,094 89,153 97,275 6,806 535,889 39,601
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
38,495 5,298 (1,826) 410 22,589 2,894
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
45,757 6,172 (6,575) 1,821 5,160 (2,331)
(161,993) 45,757 (32,228) (6,575) 1,134,306 5,160
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(207,750) 39,585 (25,653) (8,396) 1,129,146 7,491
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,193 55,836 3,668 (1,483) 1,143,598 7,918
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
1,728,413 815,728 487,265 323,880 639,514 329,933
2,077,383 147,496 247,710 33,098 1,394,475 20,658
(203) (250) (48) (158) (165) (453)
(138,807) (24,031) (24,505) (1,348) (78,852) (29,196)
(171,209) (167,522) (82,839) (9,517) (123,388) (39,709)
- - - - - (156)
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
3,495,577 771,421 627,583 345,955 1,831,584 281,077
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
3,496,770 827,257 631,251 344,472 2,975,182 288,995
1,020,371 193,114 413,845 69,373 425,514 136,519
- -------------------- ------------------- ------------------- -------------------- ------------------- -------------------
$ 4,517,141 $ 1,020,371 $ 1,045,096 $ 413,845 $ 3,400,696 $ 425,514
==================== =================== =================== ==================== =================== ===================
<CAPTION>
SMITH BARNEY MONEY MARKET PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C>
$ 100,547 $ 54,916
------------------- -------------------
20,731 11,384
328 -
------------------- -------------------
79,488 43,532
------------------- -------------------
4,146,849 1,643,216
4,146,849 1,643,216
------------------- -------------------
- -
------------------- -------------------
- -
- -
------------------- -------------------
- -
------------------- -------------------
79,488 43,532
------------------- -------------------
1,507,460 804,734
4,689,748 2,617,012
(554) (1,700)
(230,714) (261,349)
(4,353,279) (1,955,135)
(14,644) -
------------------- -------------------
1,598,017 1,203,562
------------------- -------------------
1,677,505 1,247,094
1,465,243 218,149
------------------- -------------------
$ 3,142,748 $ 1,465,243
=================== ===================
</TABLE>
-33-
<PAGE> 157
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT QP OPERATIONS AND CHANGES IN NET ASSETS FOR
THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY HIGH INCOME PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ........................................................ $ 47,115 $ 10,154
------------------- -------------------
EXPENSES:
Insurance charges ................................................ 6,041 1,677
Administrative fees .............................................. 52 -
------------------- -------------------
Net investment income (loss) ............................... 41,022 8,477
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................. 324,154 29,681
Cost of investments sold ....................................... 332,877 29,649
------------------- -------------------
Net realized gain (loss) ................................... (8,723) 32
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ....................... (8,459) 4,038
Unrealized gain (loss) end of year ............................. (27,278) (8,459)
------------------- -------------------
Net change in unrealized gain (loss) for the year .......... (18,819) (12,497)
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations .................................. 13,480 (3,988)
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................... 410,273 241,432
Participant transfers from other Travelers accounts .............. 463,829 10,208
Administrative and asset allocation charges ...................... (93) (245)
Contract surrenders .............................................. (59,990) (432)
Participant transfers to other Travelers accounts ................ (99,990) (31,355)
Other payments to participants ................................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ........................... 714,029 219,608
------------------- -------------------
Net increase (decrease) in net assets ...................... 727,509 215,620
NET ASSETS:
Beginning of year .............................................. 271,285 55,665
------------------- -------------------
End of year .................................................... $ 998,794 $ 271,285
=================== ===================
<CAPTION>
SMITH BARNEY LARGE CAPITALIZATION
GROWTH PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ........................................................ $ 5,252 $ 4
------------------- -------------------
EXPENSES:
Insurance charges ................................................ 6,418 6
Administrative fees .............................................. 1 -
------------------- -------------------
Net investment income (loss) ............................... (1,167) (2)
------------------- -------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................. 9,207 -
Cost of investments sold ....................................... 8,553 -
------------------- -------------------
Net realized gain (loss) ................................... 654 -
------------------- -------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ....................... 813 -
Unrealized gain (loss) end of year ............................. 276,337 813
------------------- -------------------
Net change in unrealized gain (loss) for the year .......... 275,524 813
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ................................... 275,011 811
------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................... 601,381 5,234
Participant transfers from other Travelers accounts .............. 1,635,731 443
Administrative and asset allocation charges ...................... (25) -
Contract surrenders .............................................. (19,388) -
Participant transfers to other Travelers accounts ................ (23,745) -
Other payments to participants ................................... - -
------------------- -------------------
Net increase (decrease) in net assets
resulting from unit transactions ........................... 2,193,954 5,677
------------------- -------------------
Net increase (decrease) in net assets ...................... 2,468,965 6,488
NET ASSETS:
Beginning of year .............................................. 6,488 -
------------------- -------------------
End of year .................................................... $ 2,475,453 $ 6,488
=================== ===================
<CAPTION>
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO
----------------------------------------
1999 1998
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ........................................................ $ 126,654 $ 79,547
------------------- --------------------
EXPENSES:
Insurance charges ................................................ 33,628 21,657
Administrative fees .............................................. 300 -
------------------- --------------------
Net investment income (loss) ............................... 92,726 57,890
------------------- --------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................................. 349,126 209,343
Cost of investments sold ....................................... 312,329 169,428
------------------- --------------------
Net realized gain (loss) ................................... 36,797 39,915
------------------- --------------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ....................... 239,938 171,302
Unrealized gain (loss) end of year ............................. 54,163 239,938
------------------- --------------------
Net change in unrealized gain (loss) for the year .......... (185,775) 68,636
------------------- --------------------
Net increase (decrease) in net assets
resulting from operations .................................. (56,252) 166,441
------------------- --------------------
UNIT TRANSACTIONS:
Participant purchase payments .................................... 1,203,653 1,133,256
Participant transfers from other Travelers accounts .............. 415,105 393,081
Administrative and asset allocation charges ...................... (949) (3,168)
Contract surrenders .............................................. (171,071) (72,849)
Participant transfers to other Travelers accounts ................ (422,461) (287,605)
Other payments to participants ................................... - (10,181)
------------------- --------------------
Net increase (decrease) in net assets
resulting from unit transactions ........................... 1,024,277 1,152,534
------------------- --------------------
Net increase (decrease) in net assets ...................... 968,025 1,318,975
NET ASSETS:
Beginning of year .............................................. 2,901,149 1,582,174
------------------- --------------------
End of year .................................................... $ 3,869,174 $ 2,901,149
=================== ====================
</TABLE>
-34-
<PAGE> 158
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
EMERGING MARKETS PORTFOLIO COMBINED
- ----------------------------------------- ------------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
$ 16,284 $ 4 $ 12,496,931 $ 3,333,929
- -------------------- ------------------- -------------------- --------------------
777 - 1,866,921 623,290
- - 12,829 -
- -------------------- ------------------- -------------------- --------------------
15,507 4 10,617,181 2,710,639
- -------------------- ------------------- -------------------- --------------------
4,614 - 36,478,696 7,122,354
4,609 - 34,599,068 6,461,747
- -------------------- ------------------- -------------------- --------------------
5 - 1,879,628 660,607
- -------------------- ------------------- -------------------- --------------------
10 - 10,461,469 2,373,529
76,232 10 39,002,191 10,461,469
- -------------------- ------------------- -------------------- --------------------
76,222 10 28,540,722 8,087,940
- -------------------- ------------------- -------------------- --------------------
91,734 14 41,037,531 11,459,186
- -------------------- ------------------- -------------------- --------------------
75,026 627 118,744,191 56,161,812
282,169 - 132,882,866 16,698,425
- - (784,492) (349,434)
- - (11,791,356) (3,036,942)
(4,874) - (39,873,280) (10,408,149)
- - (428,408) (44,498)
- -------------------- ------------------- -------------------- --------------------
352,321 627 198,749,521 59,021,214
- -------------------- ------------------- -------------------- --------------------
444,055 641 239,787,052 70,480,400
641 - 105,032,320 34,551,920
- -------------------- ------------------- -------------------- --------------------
$ 444,696 $ 641 $ 344,819,372 $ 105,032,320
==================== =================== ==================== ====================
</TABLE>
-35-
<PAGE> 159
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR SEPARATE ACCOUNT QP FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
AMERICAN ODYSSEY CORE EQUITY
FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 8,247,386 3,105,409
Accumulation units purchased and
transferred from other Travelers accounts ........... 17,024,417 6,195,417
Accumulation units redeemed and
transferred to other Travelers accounts ............. (2,091,667) (1,053,440)
Annuity units ......................................... (404) -
------------------- -------------------
Accumulation and annuity units
end of year ......................................... 23,179,732 8,247,386
=================== ===================
<CAPTION>
AMERICAN ODYSSEY INTERMEDIATE-
TERM BOND FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 2,824,219 1,022,117
Accumulation units purchased and
transferred from other Travelers accounts ........... 6,475,542 2,322,437
Accumulation units redeemed and
transferred to other Travelers accounts ............. (855,612) (520,335)
Annuity units ......................................... (701) -
------------------- -------------------
Accumulation and annuity units
end of year ......................................... 8,443,448 2,824,219
=================== ===================
<CAPTION>
CAPITAL APPRECIATION FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 6,986,659 2,050,734
Accumulation units purchased and
transferred from other Travelers accounts ........... 7,318,166 5,427,762
Accumulation units redeemed and
transferred to other Travelers accounts ............. (2,122,259) (491,837)
Annuity units ......................................... - -
------------------- -------------------
Accumulation and annuity units
end of year ......................................... 12,182,566 6,986,659
=================== ===================
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY EMERGING
OPPORTUNITIES FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 8,011,548 2,650,714
Accumulation units purchased and
transferred from other Travelers accounts ........... 16,954,494 6,202,256
Accumulation units redeemed and
transferred to other Travelers accounts ............. (2,155,477) (841,422)
Annuity units ......................................... (394) -
------------------- -------------------
Accumulation and annuity units
end of year ......................................... 22,810,171 8,011,548
=================== ===================
<CAPTION>
AMERICAN ODYSSEY INTERNATIONAL
EQUITY FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 5,968,548 1,837,855
Accumulation units purchased and
transferred from other Travelers accounts ........... 18,461,136 4,573,172
Accumulation units redeemed and
transferred to other Travelers accounts ............. (5,473,088) (442,479)
Annuity units ......................................... (247) -
-------------------- -------------------
Accumulation and annuity units
end of year ......................................... 18,956,349 5,968,548
=================== ===================
<CAPTION>
REIT SERIES
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... - -
Accumulation units purchased and
transferred from other Travelers accounts ........... 120,053 -
Accumulation units redeemed and
transferred to other Travelers accounts ............. (68,551) -
Annuity units ......................................... - -
------------------- -------------------
Accumulation and annuity units
end of year ......................................... 51,502 -
=================== ===================
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY GLOBAL HIGH-
YIELD BOND FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 2,275,629 512,296
Accumulation units purchased and
transferred from other Travelers accounts ........... 5,151,425 2,110,059
Accumulation units redeemed and
transferred to other Travelers accounts ............. (606,265) (346,726)
Annuity units ......................................... - -
------------------ -------------------
Accumulation and annuity units
end of year ......................................... 6,820,789 2,275,629
================== ===================
<CAPTION>
AMERICAN ODYSSEY LONG-TERM
BOND FUND
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 5,480,696 1,666,359
Accumulation units purchased and
transferred from other Travelers accounts ........... 13,212,756 4,406,484
Accumulation units redeemed and
transferred to other Travelers accounts ............. (1,628,276) (592,147)
Annuity units ......................................... (951) -
------------------ -------------------
Accumulation and annuity units
end of year ......................................... 17,064,225 5,480,696
================== ===================
<CAPTION>
SMALL CAP VALUE SERIES
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................... 6,525 -
Accumulation units purchased and
transferred from other Travelers accounts ........... 238,326 6,526
Accumulation units redeemed and
transferred to other Travelers accounts ............. (19,673) (1)
Annuity units ......................................... - -
------------------ -------------------
Accumulation and annuity units
end of year ......................................... 225,178 6,525
================== ===================
</TABLE>
-36-
<PAGE> 160
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR SEPARATE ACCOUNT QP FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
DREYFUS STOCK INDEX FUND
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 3,802,640 1,860,344
Accumulation units purchased and
transferred from other Travelers accounts ......... 2,189,307 2,520,515
Accumulation units redeemed and
transferred to other Travelers accounts ........... (597,965) (578,219)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 5,393,982 3,802,640
==================== ====================
<CAPTION>
FIDELITY'S EQUITY-INCOME PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 3,375,951 2,073,960
Accumulation units purchased and
transferred from other Travelers accounts ......... 1,257,433 1,730,725
Accumulation units redeemed and
transferred to other Travelers accounts ........... (643,758) (428,734)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 3,989,626 3,375,951
==================== ====================
<CAPTION>
ASSET MANAGER PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 1,501,937 1,215,833
Accumulation units purchased and
transferred from other Travelers accounts ......... 822,231 604,885
Accumulation units redeemed and
transferred to other Travelers accounts ........... (325,429) (318,781)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 1,998,739 1,501,937
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL APPRECIATION
PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 88,935 -
Accumulation units purchased and
transferred from other Travelers accounts ......... 13,174,729 88,937
Accumulation units redeemed and
transferred to other Travelers accounts ........... (762,705) (2)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 12,500,959 88,935
==================== ====================
<CAPTION>
GROWTH PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 4,728,104 3,463,256
Accumulation units purchased and
transferred from other Travelers accounts ......... 3,296,725 2,104,492
Accumulation units redeemed and
transferred to other Travelers accounts ........... (1,142,409) (839,644)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 6,882,420 4,728,104
==================== ====================
<CAPTION>
EQUITY INDEX PORTFOLIO
CLASS II
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. - -
Accumulation units purchased and
transferred from other Travelers accounts ......... 2,951,121 -
Accumulation units redeemed and
transferred to other Travelers accounts ........... (18,536) -
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 2,932,585 -
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS SMALL CAP PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 12,151 -
Accumulation units purchased and
transferred from other Travelers accounts ......... 1,203,425 12,152
Accumulation units redeemed and
transferred to other Travelers accounts ........... (184,211) (1)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 1,031,365 12,151
==================== ====================
<CAPTION>
HIGH INCOME PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 898,692 437,807
Accumulation units purchased and
transferred from other Travelers accounts ......... 365,984 559,925
Accumulation units redeemed and
transferred to other Travelers accounts ........... (167,524) (99,040)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 1,097,152 898,692
==================== ====================
<CAPTION>
HIGH YIELD BOND TRUST
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ................................. 376,692 42,945
Accumulation units purchased and
transferred from other Travelers accounts ......... 1,034,068 349,942
Accumulation units redeemed and
transferred to other Travelers accounts ........... (259,104) (16,195)
Annuity units ....................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ....................................... 1,151,656 376,692
==================== ====================
</TABLE>
-37-
<PAGE> 161
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR SEPARATE ACCOUNT QP FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
MANAGED ASSETS TRUST
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 2,595,729 603,628
Accumulation units purchased and
transferred from other Travelers accounts ....... 8,254,947 2,188,495
Accumulation units redeemed and
transferred to other Travelers accounts ......... (771,370) (196,394)
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 10,079,306 2,595,729
==================== ====================
<CAPTION>
SALOMON BROTHERS VARIABLE TOTAL
RETURN FUND
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 6,719 -
Accumulation units purchased and
transferred from other Travelers accounts ....... 154,279 6,719
Accumulation units redeemed and
transferred to other Travelers accounts ......... (446) -
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 160,552 6,719
==================== ====================
<CAPTION>
STRONG SCHAFER VALUE FUND II
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 2,329 -
Accumulation units purchased and
transferred from other Travelers accounts ....... 30,183 2,329
Accumulation units redeemed and
transferred to other Travelers accounts ......... - -
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 32,512 2,329
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 29,014 -
Accumulation units purchased and
transferred from other Travelers accounts ....... 13,101,649 36,825
Accumulation units redeemed and
transferred to other Travelers accounts ......... (10,705,458) (7,811)
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 2,425,205 29,014
==================== ====================
<CAPTION>
SALOMON BROTHERS VARIABLE
CAPITAL FUND
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 4,848 -
Accumulation units purchased and
transferred from other Travelers accounts ....... 297,241 4,848
Accumulation units redeemed and
transferred to other Travelers accounts ......... (7,098) -
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 294,991 4,848
==================== ====================
<CAPTION>
TEMPLETON ASSET ALLOCATION FUND
(CLASS 1)
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 1,027,845 852,502
Accumulation units purchased and
transferred from other Travelers accounts ....... 684,865 464,060
Accumulation units redeemed and
transferred to other Travelers accounts ......... (272,804) (288,717)
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 1,439,906 1,027,845
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 2,056 -
Accumulation units purchased and
transferred from other Travelers accounts ....... 1,265,709 2,056
Accumulation units redeemed and
transferred to other Travelers accounts ......... (75,580) -
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 1,192,185 2,056
==================== ====================
<CAPTION>
SALOMON BROTHERS VARIABLE
INVESTORS FUND
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 1,374 -
Accumulation units purchased and
transferred from other Travelers accounts ....... 247,488 1,374
Accumulation units redeemed and
transferred to other Travelers accounts ......... (111,211) -
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 137,651 1,374
==================== ====================
<CAPTION>
TEMPLETON BOND FUND
(CLASS 1)
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year ............................... 54,515 33,039
Accumulation units purchased and
transferred from other Travelers accounts ....... 34,615 25,634
Accumulation units redeemed and
transferred to other Travelers accounts ......... (12,547) (4,158)
Annuity units ..................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year ..................................... 76,583 54,515
==================== ====================
</TABLE>
-38-
<PAGE> 162
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR SEPARATE ACCOUNT QP FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
TEMPLETON STOCK FUND (CLASS 1)
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 3,009,264 2,109,663
Accumulation units purchased and
transferred from other Travelers accounts ............ 1,197,562 1,674,723
Accumulation units redeemed and
transferred to other Travelers accounts .............. (462,608) (775,122)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 3,744,218 3,009,264
==================== ====================
<CAPTION>
FEDERATED HIGH YIELD PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 116,094 3,241
Accumulation units purchased and
transferred from other Travelers accounts ............ 195,356 124,777
Accumulation units redeemed and
transferred to other Travelers accounts .............. (37,989) (11,924)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 273,461 116,094
==================== ====================
<CAPTION>
LAZARD INTERNATIONAL STOCK
PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 200,211 5,095
Accumulation units purchased and
transferred from other Travelers accounts ............ 801,891 199,148
Accumulation units redeemed and
transferred to other Travelers accounts .............. (90,019) (4,032)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 912,083 200,211
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
MONTGOMERY VARIABLE SERIES:
GROWTH FUND
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 338 -
Accumulation units purchased and
transferred from other Travelers accounts ............ 116,098 338
Accumulation units redeemed and
transferred to other Travelers accounts .............. (363) -
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 116,073 338
==================== ====================
<CAPTION>
FEDERATED STOCK PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 616,058 22,444
Accumulation units purchased and
transferred from other Travelers accounts ............ 1,304,089 601,139
Accumulation units redeemed and
transferred to other Travelers accounts .............. (172,052) (7,525)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 1,748,095 616,058
==================== ====================
<CAPTION>
MFS MID CAP GROWTH PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 2,050 -
Accumulation units purchased and
transferred from other Travelers accounts ............ 409,114 2,050
Accumulation units redeemed and
transferred to other Travelers accounts .............. (12,730) -
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 398,434 2,050
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
EQUITY INCOME PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 2,911,397 72,323
Accumulation units purchased and
transferred from other Travelers accounts ............ 7,194,622 2,961,496
Accumulation units redeemed and
transferred to other Travelers accounts .............. (921,764) (122,422)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 9,184,255 2,911,397
==================== ====================
<CAPTION>
LARGE CAP PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 600,787 19,001
Accumulation units purchased and
transferred from other Travelers accounts ............ 7,641,026 604,105
Accumulation units redeemed and
transferred to other Travelers accounts .............. (492,881) (22,319)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 7,748,932 600,787
==================== ====================
<CAPTION>
MFS RESEARCH PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 11,707 -
Accumulation units purchased and
transferred from other Travelers accounts ............ 471,399 11,707
Accumulation units redeemed and
transferred to other Travelers accounts .............. (36,442) -
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 446,664 11,707
==================== ====================
</TABLE>
-39-
<PAGE> 163
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR SEPARATE ACCOUNT QP FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
SOCIAL AWARENESS STOCK PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 980,501 196,483
Accumulation units purchased and
transferred from other Travelers accounts .......... 3,068,858 826,615
Accumulation units redeemed and
transferred to other Travelers accounts ............ (220,951) (42,597)
Annuity units ........................................ - -
------------------- -------------------
Accumulation and annuity units
end of year ........................................ 3,828,408 980,501
=================== ===================
<CAPTION>
DISCIPLINED MID CAP STOCK
PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 1,157 -
Accumulation units purchased and
transferred from other Travelers accounts .......... 303,419 1,157
Accumulation units redeemed and
transferred to other Travelers accounts ............ (7,551) -
Annuity units ........................................ - -
------------------- -------------------
Accumulation and annuity units
end of year ........................................ 297,025 1,157
=================== ===================
<CAPTION>
U.S. GOVERNMENT SECURITIES
PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 476,702 101,323
Accumulation units purchased and
transferred from other Travelers accounts .......... 1,130,669 483,527
Accumulation units redeemed and
transferred to other Travelers accounts ............ (224,736) (108,148)
Annuity units ........................................ - -
------------------- -------------------
Accumulation and annuity units
end of year ........................................ 1,382,635 476,702
=================== ===================
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC STOCK PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 866 -
Accumulation units purchased and
transferred from other Travelers accounts .......... 539,890 866
Accumulation units redeemed and
transferred to other Travelers accounts ............ (204,709) -
Annuity units ........................................ - -
------------------- -------------------
Accumulation and annuity units
end of year ........................................ 336,047 866
=================== ===================
<CAPTION>
DISCIPLINED SMALL CAP STOCK
PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 285 -
Accumulation units purchased and
transferred from other Travelers accounts .......... 50,088 285
Accumulation units redeemed and
transferred to other Travelers accounts ............ (95) -
Annuity units ........................................ - -
------------------- -------------------
Accumulation and annuity units
end of year ........................................ 50,278 285
=================== ===================
<CAPTION>
UTILITIES PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 150,946 27,983
Accumulation units purchased and
transferred from other Travelers accounts .......... 636,265 130,433
Accumulation units redeemed and
transferred to other Travelers accounts ............ (114,056) (7,470)
Annuity units ........................................ - -
------------------- -------------------
Accumulation and annuity units
end of year ........................................ 673,155 150,946
=================== ===================
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE BOND PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. - -
Accumulation units purchased and
transferred from other Travelers accounts .......... 84,372 -
Accumulation units redeemed and
transferred to other Travelers accounts ............ (89) -
Annuity units ........................................ - -
------------------ -------------------
Accumulation and annuity units
end of year ........................................ 84,283 -
================== ===================
<CAPTION>
TRAVELERS QUALITY BOND PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 147,726 24,883
Accumulation units purchased and
transferred from other Travelers accounts .......... 687,185 141,286
Accumulation units redeemed and
transferred to other Travelers accounts ............ (31,487) (18,443)
Annuity units ........................................ - -
------------------ -------------------
Accumulation and annuity units
end of year ........................................ 803,424 147,726
================== ===================
<CAPTION>
ALLIANCE GROWTH PORTFOLIO
---------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................. 2,044,372 425,511
Accumulation units purchased and
transferred from other Travelers accounts .......... 8,210,314 1,912,035
Accumulation units redeemed and
transferred to other Travelers accounts ............ (632,227) (293,174)
Annuity units ........................................ - -
------------------ -------------------
Accumulation and annuity units
end of year ........................................ 9,622,459 2,044,372
================== ===================
</TABLE>
-40-
<PAGE> 164
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR SEPARATE ACCOUNT QP FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)
<TABLE>
<CAPTION>
MFS TOTAL RETURN PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 735,071 154,300
Accumulation units purchased and
transferred from other Travelers accounts ............ 2,678,892 729,253
Accumulation units redeemed and
transferred to other Travelers accounts .............. (218,530) (148,482)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 3,195,433 735,071
==================== ====================
<CAPTION>
SMITH BARNEY MONEY MARKET
PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 1,342,824 207,764
Accumulation units purchased and
transferred from other Travelers accounts ............ 5,546,827 3,180,140
Accumulation units redeemed and
transferred to other Travelers accounts .............. (4,121,735) (2,045,080)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 2,767,916 1,342,824
==================== ====================
<CAPTION>
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 2,009,415 1,191,739
Accumulation units purchased and
transferred from other Travelers accounts ............ 1,089,138 1,092,689
Accumulation units redeemed and
transferred to other Travelers accounts .............. (395,682) (275,013)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 2,702,871 2,009,415
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
PUTNAM DIVERSIFIED INCOME
PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 382,175 63,842
Accumulation units purchased and
transferred from other Travelers accounts ............ 681,005 328,250
Accumulation units redeemed and
transferred to other Travelers accounts .............. (99,352) (9,917)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 963,828 382,175
==================== ====================
<CAPTION>
SMITH BARNEY HIGH INCOME
PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 232,133 47,378
Accumulation units purchased and
transferred from other Travelers accounts ............ 742,814 213,574
Accumulation units redeemed and
transferred to other Travelers accounts .............. (135,895) (28,819)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 839,052 232,133
==================== ====================
<CAPTION>
EMERGING MARKETS PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 594 -
Accumulation units purchased and
transferred from other Travelers accounts ............ 231,966 594
Accumulation units redeemed and
transferred to other Travelers accounts .............. (3,448) -
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 229,112 594
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY INTERNATIONAL
EQUITY PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 389,748 131,870
Accumulation units purchased and
transferred from other Travelers accounts ............ 1,642,286 322,089
Accumulation units redeemed and
transferred to other Travelers accounts .............. (160,544) (64,211)
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 1,871,490 389,748
==================== ====================
<CAPTION>
SMITH BARNEY LARGE
CAPITALIZATION GROWTH PORTFOLIO
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 4,942 -
Accumulation units purchased and
transferred from other Travelers accounts ............ 1,476,850 4,942
Accumulation units redeemed and
transferred to other Travelers accounts .............. (28,167) -
Annuity units .......................................... - -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 1,453,625 4,942
==================== ====================
<CAPTION>
COMBINED
-----------------------------------------
1999 1998
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year .................................... 74,678,104 28,233,641
Accumulation units purchased and
transferred from other Travelers accounts ............ 183,454,309 57,495,244
Accumulation units redeemed and
transferred to other Travelers accounts .............. (39,905,125) (11,050,781)
Annuity units .......................................... (2,697) -
-------------------- --------------------
Accumulation and annuity units
end of year .......................................... 218,224,591 74,678,104
==================== ====================
</TABLE>
-41-
<PAGE> 165
INDEPENDENT AUDITORS' REPORT
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, 1999,
and the related statement of operations for the year then ended and the
statement of changes in net assets for each of the two years in the period then
ended. 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 audit 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, 1999, 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, 1999, the results of its operations
for the year then ended and the changes in its net assets for each of the two
years in the period then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Hartford, Connecticut
February 18, 2000
-42-
<PAGE> 166
This page intentionally left blank
<PAGE> 167
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 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 Prospectus for The
Travelers Separate Account QP for Variable Annuities product(s) 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) (12-99) Printed in U.S.A.
<PAGE> 168
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
The Travelers Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of The Travelers
Insurance Company and Subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, changes in retained earnings and
accumulated other changes in equity from non-owner sources and cash flows for
each of the years in the three-year period ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 audit 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. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Travelers
Insurance Company and Subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
January 18, 2000
F-1
<PAGE> 169
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in millions)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
REVENUES
Premiums $1,738 $1,740 $1,583
Net investment income 2,506 2,185 2,037
Realized investment gains 113 149 199
Other revenues 521 440 354
- -------------------------------------------------------------------------------------------------- ------------- -------------
Total Revenues 4,878 4,514 4,173
- -------------------------------------------------------------------------------------------------- ------------- -------------
BENEFITS AND EXPENSES
Current and future insurance benefits 1,515 1,475 1,341
Interest credited to contractholders 937 876 829
Amortization of deferred acquisition costs 315 275 252
General and administrative expenses 519 505 468
- -------------------------------------------------------------------------------------------------- ------------- -------------
Total Benefits and Expenses 3,286 3,131 2,890
- -------------------------------------------------------------------------------------------------- ------------- -------------
Income from continuing operations before federal income taxes 1,592 1,383 1,283
- -------------------------------------------------------------------------------------------------- ------------- -------------
Federal income tax expense
Current 409 442 434
Deferred 136 39 10
- -------------------------------------------------------------------------------------------------- ------------- -------------
Total Federal Income Taxes 545 481 444
- -------------------------------------------------------------------------------------------------- ------------- -------------
Net income $1,047 $902 $839
================================================================================================== ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE> 170
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in millions)
<TABLE>
<CAPTION>
DECEMBER 31, 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at fair value (cost, $24,500, $22,973) $23,866 $23,893
Equity securities, at fair value (cost, $691, $474) 784 518
Mortgage loans 2,285 2,606
Real estate held for sale 236 143
Policy loans 1,258 1,857
Short-term securities 1,283 1,098
Trading securities, at market value 1,678 1,186
Other invested assets 2,098 2,251
- ----------------------------------------------------------------------------------------------------------------------------
Total Investments 33,488 33,552
- ----------------------------------------------------------------------------------------------------------------------------
Cash 85 65
Investment income accrued 395 393
Premium balances receivable 178 99
Reinsurance recoverables 3,234 3,387
Deferred acquisition costs 2,688 2,317
Separate and variable accounts 22,199 15,313
Other assets 1,264 1,422
- ----------------------------------------------------------------------------------------------------------------------------
Total Assets $63,531 $56,548
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Contractholder funds $17,567 $16,739
Future policy benefits and claims 12,563 12,326
Separate and variable accounts 22,194 15,305
Deferred federal income taxes 23 422
Trading securities sold not yet purchased, at market value 1,098 873
Other liabilities 2,466 2,783
- ----------------------------------------------------------------------------------------------------------------------------
Total Liabilities 55,911 48,448
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $2.50; 40 million shares authorized, issued and outstanding 100 100
Additional paid-in capital 3,819 3,800
Retained earnings 4,099 3,602
Accumulated other changes in equity from non-owner sources (398) 598
- ----------------------------------------------------------------------------------------------------------------------------
Total Shareholder's Equity 7,620 8,100
- ----------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholder's Equity $63,531 $56,548
============================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 171
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS AND
ACCUMULATED OTHER CHANGES IN EQUITY FROM NON-OWNER SOURCES
($ in millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN RETAINED EARNINGS 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $3,602 $2,810 $2,471
Net income 1,047 902 839
Dividends to parent 550 110 500
- -----------------------------------------------------------------------------------------------------------
Balance, end of year $4,099 $3,602 $2,810
===========================================================================================================
- -----------------------------------------------------------------------------------------------------------
STATEMENTS OF ACCUMULATED OTHER CHANGES
IN EQUITY FROM NON-OWNER SOURCES
- -----------------------------------------------------------------------------------------------------------
Balance, beginning of year $598 $535 $223
Unrealized gains (losses), net of tax (996) 62 313
Foreign currency translation, net of tax 0 1 (1)
- -----------------------------------------------------------------------------------------------------------
Balance, end of year $(398) $598 $535
===========================================================================================================
- -----------------------------------------------------------------------------------------------------------
SUMMARY OF CHANGES IN EQUITY
FROM NON-OWNER SOURCES
- -----------------------------------------------------------------------------------------------------------
Net Income $1,047 $902 $839
Other changes in equity from non-owner sources (996) 63 312
- -----------------------------------------------------------------------------------------------------------
Total changes in equity from non-owner sources $51 $965 $1,151
===========================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 172
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
($ in millions)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Premiums collected $1,715 $1,763 $1,519
Net investment income received 2,365 2,021 2,059
Other revenues received 537 419 373
Benefits and claims paid (1,094) (1,127) (1,230)
Interest credited to contractholders (958) (918) (853)
Operating expenses paid (1,013) 751) (638)
Income taxes paid (393) (506) (368)
Trading account investments purchases, net (80) (38) (54)
Other (104) 12 18
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 975 875 826
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 4,103 2,608 2,259
Mortgage loans 662 722 663
Proceeds from sales of investments
Fixed maturities 12,562 13,390 7,592
Equity securities 100 212 341
Mortgage loans - - 207
Real estate held for sale 219 53 169
Purchases of investments
Fixed maturities (18,129) (18,072) (11,143)
Equity securities (309) (194) (483)
Mortgage loans (470) 457) (771)
Policy loans, net 599 15 38
Short-term securities (purchases) sales, net 316 495) (2)
Other investments purchases, net (413) (550) (260)
Securities transactions in course of settlement, net (463) 192 311
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (1,223) (2,576) (1,079)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of commercial paper, net - - (50)
Contractholder fund deposits 5,764 4,383 3,544
Contractholder fund withdrawals (4,946) (2,565) (2,757)
Dividends to parent company (550) (110) (500)
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 268 1,708 237
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 20 7 (16)
- ---------------------------------------------------------------------------------------------------------------------
Cash at December 31, $85 $65 $58
====================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 173
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies used in the preparation of the accompanying
financial statements follow.
Basis of Presentation
The Travelers Insurance Company (TIC), together with its subsidiaries (the
Company), is a wholly owned subsidiary of The Travelers Insurance Group
Inc. (TIGI), an indirect wholly owned subsidiary of Citigroup Inc.
(Citigroup). The consolidated financial statements include the accounts of
the Company and its insurance and non-insurance subsidiaries on a fully
consolidated basis. The primary insurance entities of the Company are TIC
and its subsidiaries, The Travelers Life and Annuity Company (TLAC),
Primerica Life Insurance Company (Primerica Life), and its subsidiaries,
Primerica Life Insurance Company of Canada and National Benefit Life
Insurance Company (NBL).
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 benefits and
expenses during the reporting period. Actual results could differ from
those estimates.
Certain prior year amounts have been reclassified to conform to the 1999
presentation.
ACCOUNTING CHANGES
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (FAS 125). This
statement establishes accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. These
standards are based on an approach that focuses on control. Under this
approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been surrendered
and derecognizes liabilities when extinguished. FAS 125 provides standards
for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. Effective January 1, 1998, the
Company adopted the collateral provisions of FAS 125 that were not
effective until 1998 in accordance with Statement of Financial Accounting
Standards No. 127, "Deferral of the Effective Date of Certain Provisions of
SFAS 125." The adoption of the collateral provisions of FAS 125 created
additional assets and liabilities on the Company's consolidated statement
of financial position related to the recognition of securities provided and
received as collateral. There was no impact on the Company's results of
operations from the adoption of the collateral provisions of FAS 125.
F-6
<PAGE> 174
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use During the third quarter of 1998, the Company adopted
(effective January 1, 1998) the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants' Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for
internal use and for determining when specific costs should be capitalized
or expensed. The adoption of SOP 98-1 did not have a material impact on the
Company's financial condition, results of operations or liquidity.
Accounting by Insurance and Other Enterprises for Insurance - Related
Assessments
In January 1999, the Company adopted (effective January 1, 1999) Statement
of Position 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" (SOP 97-3). SOP 97-3 provides guidance for
determining when an entity should recognize a liability for guaranty-fund
and other insurance-related assessments, how to measure that liability, and
when an asset may be recognized for the recovery of such assessments
through premium tax offsets or policy surcharges. The adoption of this SOP
had no impact on the Company's financial condition, results of operations
or liquidity.
ACCOUNTING POLICIES
Investments
Fixed maturities include bonds, notes and redeemable preferred stocks. Fair
values of investments in fixed maturities are based on quoted market prices
or dealer quotes or, if these are not available, discounted expected cash
flows using market rates commensurate with the credit quality and maturity
of the investment. Also included in fixed maturities are loan-backed and
structured securities, which are amortized using the retrospective method.
The effective yield used to determine amortization is calculated based upon
actual historical and projected future cash flows, which are obtained from
a widely-accepted securities data provider. Fixed maturities are classified
as "available for sale" and are reported at fair value, with unrealized
investment gains and losses, net of income taxes, charged or credited
directly to shareholder's equity.
Equity securities, which include common and nonredeemable preferred stocks,
are classified as "available for sale" and carried at fair value based
primarily on quoted market prices. Changes in fair values of equity
securities are charged or credited directly to shareholder's equity, net of
income taxes.
Mortgage loans are carried at amortized cost. A mortgage loan is considered
impaired when it is probable that the Company will be unable to collect
principal and interest amounts due. For mortgage loans that are determined
to be impaired, a reserve is established for the difference between the
amortized cost and fair market value of the underlying collateral. In
estimating fair value, the Company uses interest rates reflecting the
higher returns required in the current real estate financing market.
Impaired loans were insignificant at December 31, 1999 and 1998.
F-7
<PAGE> 175
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Real estate held for sale is carried at the lower of cost or fair value
less estimated cost to sell. Fair value of foreclosed properties is
established at the time of foreclosure by internal analysis or external
appraisers, using discounted cash flow analyses and other accepted
techniques. Thereafter, an allowance for losses on real estate held for
sale is established if the carrying value of the property exceeds its
current fair value less estimated costs to sell. There was no such
allowance at December 31, 1999 and 1998.
Trading securities and related liabilities are normally held for periods
less than six months. These investments are marked to market with the
change recognized in net investment income during the current period.
Short-term securities, consisting primarily of money market instruments and
other debt issues purchased with a maturity of less than one year, are
carried at amortized cost which approximates market.
Other invested assets include partnership investments and real estate joint
ventures accounted for on the equity method of accounting. Undistributed
income is reported in net investment income.
Accrual of income is suspended on fixed maturities or mortgage loans that
are in default, or on which it is likely that future payments will not be
made as scheduled. Interest income on investments in default is recognized
only as payment is received.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments, including financial
futures contracts, options, forward contracts, interest rate swaps,
currency swaps, and equity swaps, as a means of hedging exposure to
interest rate and foreign currency risk. Hedge accounting is used to
account for derivatives. To qualify for hedge accounting the changes in
value of the derivative must be expected to substantially offset the
changes in value of the hedged item. Hedges are monitored to ensure that
there is a high correlation between the derivative instruments and the
hedged investment.
Gains and losses arising from financial futures contracts are used to
adjust the basis of hedged investments and are recognized in net investment
income over the life of the investment.
Payments to be received or made under interest rate swaps are accrued and
recognized in net investment income. Swaps hedging investments are carried
at fair value with unrealized gains and losses, net of taxes, charged or
credited directly to shareholder's equity. Interest rate and currency swaps
hedging liabilities are off-balance sheet.
Forward contracts, interest rate options and equity swaps were not
significant at December 31, 1999 and 1998. Information concerning
derivative financial instruments is included in Note 5.
INVESTMENT GAINS AND LOSSES
Realized investment gains and losses are included as a component of pre-tax
revenues based upon specific identification of the investments sold on the
trade date. Also included are gains and losses arising from the
remeasurement of the local currency value of foreign investments to U.S.
dollars, the functional currency of the Company. The foreign exchange
effects of Canadian operations are included in unrealized gains and losses.
F-8
<PAGE> 176
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
POLICY LOANS
Policy loans are carried at the amount of the unpaid balances that are not
in excess of the net cash surrender values of the related insurance
policies. The carrying value of policy loans, which have no defined
maturities, is considered to be fair value.
DEFERRED ACQUISITION COSTS
Costs of acquiring individual life insurance, annuities and long-term care
business, principally commissions and certain expenses related to policy
issuance, underwriting and marketing, all of which vary with and are
primarily related to the production of new business, are deferred.
Acquisition costs relating to traditional life insurance, including term
insurance and long-term care insurance, are amortized in relation to
anticipated premiums; universal life in relation to estimated gross
profits; and annuity contracts employing a level yield method. For life
insurance, a 15 to 20-year amortization period is used; for long-term care
business, a 10 to 20-year period is used, and a seven to 20-year period is
employed for annuities. Deferred acquisition costs are reviewed
periodically for recoverability to determine if any adjustment is required.
Adjustments, if any, are charged to income.
VALUE OF INSURANCE IN FORCE
The value of insurance in force is an asset recorded at the time of
acquisition of an insurance company. It represents the actuarially
determined present value of anticipated profits to be realized from life
insurance, annuities and health contracts at the date of acquisition using
the same assumptions that were used for computing related liabilities where
appropriate. The value of insurance in force was the actuarially determined
present value of the projected future profits discounted at interest rates
ranging from 14% to 18%. Traditional life insurance and guaranteed
renewable health policies are amortized in relation to anticipated
premiums; universal life is amortized in relation to estimated gross
profits; and annuity contracts are amortized employing a level yield
method. The value of insurance in force is reviewed periodically for
recoverability to determine if any adjustment is required. Adjustments, if
any, are charged to income.
SEPARATE AND VARIABLE ACCOUNTS
Separate and variable accounts primarily represent funds for which
investment income and investment gains and losses accrue directly to, and
investment risk is borne by, the contractholders. Each account has specific
investment objectives. The assets of each account are legally segregated
and are not subject to claims that arise out of any other business of the
Company. The assets of these accounts are carried at market value. Certain
other separate accounts provide guaranteed levels of return or benefits and
the assets of these accounts are primarily carried at market value. Amounts
assessed to the contractholders for management services are included in
revenues. Deposits, net investment income and realized investment gains and
losses for these accounts are excluded from revenues, and related liability
increases are excluded from benefits and expenses.
GOODWILL
Goodwill represents the cost of acquired businesses in excess of net assets
and is being amortized on a straight-line basis principally over a 40-year
period. The carrying amount is regularly reviewed for indication of
impairment in value that in the view of management would be other than
temporary. If it is determined that goodwill is unlikely to be recovered,
impairment is recognized on a discounted cash flow basis.
F-9
<PAGE> 177
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
CONTRACTHOLDER FUNDS
Contractholder funds represent receipts from the issuance of universal
life, corporate owned life insurance, pension investment and certain
deferred annuity contracts. Contractholder fund balances are increased by
such receipts and credited interest and reduced by withdrawals, mortality
charges and administrative expenses charged to the contractholders.
Interest rates credited to contractholder funds range from 3.5% to 10.0%.
FUTURE POLICY BENEFITS
Future policy benefits represent liabilities for future insurance policy
benefits. Benefit reserves for life insurance and annuities have been
computed based upon mortality, morbidity, persistency and interest
assumptions applicable to these coverages, which range from 2.5% to 10.0%,
including adverse deviation. These assumptions consider Company experience
and industry standards. The assumptions vary by plan, age at issue, year of
issue and duration. Appropriate recognition has been given to experience
rating and reinsurance.
OTHER LIABILITIES
Included in Other Liabilities is the Company's estimate of its liability
for guaranty fund and other insurance-related assessments. State guaranty
fund assessments are based upon the Company's share of premium written or
received in one or more years prior to an insolvency occurring in the
industry. Once an insolvency has occurred, the Company recognizes a
liability for such assessments if it is probable that an assessment will be
imposed and the amount of the assessment can be reasonably estimated. At
December 31, 1999, the Company had a liability of $21.9 million for
guaranty fund assessments and a related premium tax offset recoverable of
$4.7 million. The assessments are expected to be paid over a period of
three to five years and the premium tax offsets are expected to be realized
over a period of 10 to 15 years.
SECURITIES LOANED
Securities loaned are recorded at the amount of cash received as
collateral. The Company receives cash collateral in an amount in excess of
the market value of securities loaned. The Company monitors the market
value of securities loaned on a daily basis with additional collateral
obtained as necessary.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company's insurance subsidiaries, domiciled principally in Connecticut
and Massachusetts, prepare statutory financial statements in accordance
with the accounting practices prescribed or permitted by the insurance
departments of the states of domicile. Prescribed statutory accounting
practices include certain publications of the National Association of
Insurance Commissioners (NAIC) as well as state laws, regulations, and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The impact of any
permitted accounting practices on statutory surplus of the Company is not
material.
The NAIC recently completed a process intended to codify statutory
accounting practices for certain insurance enterprises. As a result of this
process, the NAIC will issue a revised statutory Accounting Practices and
Procedures Manual - version effective January 1, 2001 (the revised Manual)
that will be effective for years beginning January 1, 2001. It is expected
that the State of Connecticut will require that, effective January 1, 2001,
insurance companies domiciled in Connecticut prepare their statutory basis
financial statements in accordance with the revised Manual subject to any
deviations prescribed or permitted
F-10
<PAGE> 178
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
by the Connecticut insurance commissioner. The Company has not yet
determined the impact that this change will have on the statutory capital
and surplus of its insurance subsidiaries.
PREMIUMS
Premiums are recognized as revenues when due. Reserves are established for
the portion of premiums that will be earned in future periods and for
deferred profits on limited-payment policies that are being recognized in
income over the policy term.
OTHER REVENUES
Other revenues include management fees for variable annuity separate
accounts; surrender, mortality and administrative charges and fees earned
on investment, universal life and other insurance contracts; and revenues
of non-insurance subsidiaries.
CURRENT AND FUTURE INSURANCE BENEFITS
Current and future insurance benefits represent charges for mortality and
morbidity related to fixed annuities, universal life, term life and health
insurance benefits.
INTEREST CREDITED TO CONTRACTHOLDERS
Interest credited to contractholders represents amounts earned by universal
life, corporate owned life insurance, pension investment and certain
deferred annuity contracts in accordance with contract provisions.
FEDERAL INCOME TAXES
The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income
taxes arise from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and liabilities.
A deferred federal income tax asset is recognized to the extent that future
realization of the tax benefit is more likely than not, with a valuation
allowance for the portion that is not likely to be recognized.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). In June 1999, the
FASB issued Statement of Financial Standards No. 137 "Deferral of the
Effective Date of FASB Statement No. 133" (FAS 137) which allows entities
which have not adopted FAS 133 to defer its effective date to all fiscal
quarters of all fiscal years beginning after June 15, 2000. FAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the consolidated balance sheet and measure those instruments
at fair value. If certain conditions are met, a derivative may be
specifically designated as (a) a hedge of the exposure to changes in the
fair value of a recognized asset or liability or an unrecognized firm
commitment, (b) a hedge of the exposure to variable cash flows of a
recognized asset or liability or of a forecasted transaction, or (c) a
hedge of the foreign currency exposure of a net investment in a foreign
F-11
<PAGE> 179
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
operation, an unrecognized firm commitment, an available-for-sale security,
or a foreign-currency-denominated forecasted transaction. The accounting
for changes in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and the resulting
designation. Upon initial application of FAS 133, hedging relationships
must be designated anew and documented pursuant to the provisions of this
statement. The Company adopted the deferral provisions of FAS 137,
effective January 1, 2000 and has not yet determined the impact that FAS
133 will have on its consolidated financial statements.
2. COMMERCIAL PAPER AND LINES OF CREDIT
TIC has issued commercial paper directly to investors in prior years. No
commercial paper was outstanding at December 31, 1999 or December 31, 1998.
TIC must maintain bank lines of credit at least equal to the amount of the
outstanding commercial paper. Citigroup and TIC have an agreement with a
syndicate of banks to provide $1.0 billion of revolving credit, to be
allocated to Citigroup or the Company. TIC's participation in this
agreement is limited to $250 million. The agreement consists of a five-year
revolving credit facility that expires in June 2001. At December 31, 1999
and 1998, no credit under this agreement was allocated to TIC. Under this
facility the Company is required to maintain certain minimum equity and
risk-based capital levels. At December 31, 1999, the Company was in
compliance with these provisions. If TIC had borrowings outstanding on this
facility, the interest rate would be based upon LIBOR plus a contractually
negotiated margin.
3. REINSURANCE
The Company participates in reinsurance in order to limit losses, minimize
exposure to large risks, provide additional capacity for future growth and
to effect business-sharing arrangements. Reinsurance is accomplished
through various plans of reinsurance, primarily yearly renewable term
coinsurance and modified coinsurance. The Company remains primarily liable
as the direct insurer on all risks reinsured.
Since 1997 universal life business was reinsured under an 80%/20% quota
share reinsurance program and term life business was reinsured under a
90%/10% quota share reinsurance program. Prior to 1997, the Company
reinsured all of its life business via first dollar quota share treaties on
an 80%/20% basis. Maximum retention of $1.5 million is generally reached on
policies in excess of $7.5 million. For other plans of insurance, it is the
policy of the Company to obtain reinsurance for amounts above certain
retention limits on individual life policies, which limits vary with age
and underwriting classification. Generally, the maximum retention on an
ordinary life risk is $1.5 million. Total inforce business ceded under
reinsurance contracts is $222.5 billion and $201.3 billion at December 31,
1999 and 1998.
The Company writes workers' compensation business through its Accident
Department. This business is ceded 100% to an affiliate, The Travelers
Indemnity Company.
F-12
<PAGE> 180
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
A summary of reinsurance financial data reflected within the consolidated
statements of income and balance sheets is presented below ($ in millions):
<TABLE>
<CAPTION>
WRITTEN PREMIUMS 1999 1998 1997
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Direct $2,274 $2,310 $2,148
Assumed from:
Non-affiliated companies - - 1
Ceded to:
Affiliated companies (206) (242) (280)
Non-affiliated companies (322) (317) (273)
------------------------------------------------------------------------------------------------------
Total Net Written Premiums $1,746 $1,751 $1,596
======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
EARNED PREMIUMS 1999 1998 1997
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Direct $2,248 $1,949 $2,170
Assumed from:
Non-affiliated companies - - 1
Ceded to:
Affiliated companies (193) (251) (321)
Non-affiliated companies (327) (308) (291)
------------------------------------------------------------------------------------------------------
Total Net Earned Premiums $1,728 $1,390 $1,559
======================================================================================================
</TABLE>
Reinsurance recoverables at December 31, 1999 and 1998 include amounts
recoverable on unpaid and paid losses and were as follows ($ in millions):
<TABLE>
<CAPTION>
REINSURANCE RECOVERABLES 1999 1998
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Life and Accident and Health Business:
Non-affiliated companies $1,221 $1,297
Property-Casualty Business:
Affiliated companies 2,013 2,090
------------------------------------------------------------------------------------------------------
Total Reinsurance Recoverables $3,234 $3,387
======================================================================================================
</TABLE>
Total reinsurance recoverables at December 31, 1999 and 1998 include $569
million and $640 million, respectively, from The Metropolitan Life
Insurance Company in connection with the sale of the Company's group life
insurance and related businesses in 1995.
F-13
<PAGE> 181
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. SHAREHOLDER'S EQUITY
Shareholder's Equity and Dividend Availability
The Company's statutory net income, which includes the statutory net income
of all insurance subsidiaries, was $890 million, $702 million and $754
million for the years ended December 31, 1999, 1998 and 1997, respectively.
The Company's statutory capital and surplus was $5.03 billion and $4.95
billion at December 31, 1999 and 1998, respectively.
The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to its parent
without prior approval of insurance regulatory authorities. Statutory
surplus of $679 million is available in 2000 for dividend payments by the
Company without prior approval of the Connecticut Insurance Department. In
addition, under a revolving credit facility, the Company is required to
maintain certain minimum equity and risk-based capital levels. The Company
was in compliance with these covenants at December 31, 1999 and 1998. The
Company paid dividends of $550 million, $110 million and $500 million in
1999, 1998 and 1997, respectively.
F-14
<PAGE> 182
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. SHAREHOLDER'S EQUITY (continued)
Accumulated Other Changes in Equity from Non-Owner Sources, Net of Tax
Changes in each component of Accumulated Other Changes in Equity from Non-Owner
Sources were as follows:
<TABLE>
<CAPTION>
ACCUMULATED OTHER
NET UNREALIZED FOREIGN CHANGES IN EQUITY FROM
GAIN (LOSS) ON CURRENCY NON-OWNER SOURCES
INVESTMENT SECURITIES TRANSLATION
($ in millions) ADJUSTMENTS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $232 $(9) $223
Unrealized gain on investment securities,
net of tax of $239 442 - 442
Less: reclassification adjustment for gains
included in net income, net of tax of $70 129 - 129
Foreign currency translation adjustment,
net of tax of $0 - (1) (1)
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE 313 (1) 312
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 545 (10) 535
Unrealized gains on investment securities,
net of tax of $85 159 - 159
Less: reclassification adjustment for gains
included in net income, net of tax of $52 97 - 97
Foreign currency translation adjustment,
net of tax of $2 - 1 1
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE 62 1 63
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 607 (9) 598
Unrealized losses on investment securities,
net of tax of $497 (923) - (923)
Less: reclassification adjustment for gains
included in net income, net of tax of $40 73 - 73
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE (996) - (996)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $(389) $(9) $(398)
===============================================================================================================================
</TABLE>
F-15
<PAGE> 183
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivative Financial Instruments
The Company uses derivative financial instruments, including financial
futures, interest rate swaps, currency swaps, options and forward contracts
as a means of hedging exposure to interest rate, equity price, and foreign
currency risk on anticipated transactions or existing assets and
liabilities. The Company, through a subsidiary that is a broker/dealer,
Tribeca Investments LLC (Tribeca) holds and issues derivative instruments
for trading purposes. All of these derivative financial instruments have
off-balance sheet risk. Financial instruments with off-balance sheet risk
involve, to varying degrees, elements of credit and market risk in excess
of the amount recognized in the balance sheet. The contract or notional
amounts of these instruments reflect the extent of involvement the Company
has in a particular class of financial instrument. However, the maximum
loss of cash flow associated with these instruments can be less than these
amounts. For interest rate swaps, currency swaps, options and forward
contracts, credit risk is limited to the amount that it would cost the
Company to replace the contracts. Financial futures contracts and purchased
listed option contracts have little credit risk since organized exchanges
are the counterparties. The Company as a writer of option contracts has no
credit risk since the counterparty has no performance obligation after it
has paid a cash premium.
The Company monitors creditworthiness of counterparties to these financial
instruments by using criteria of acceptable risk that are consistent with
on-balance sheet financial instruments. The controls include credit
approvals, limits and other monitoring procedures.
The Company uses exchange-traded financial futures contracts to manage its
exposure to changes in interest rates which arise from the sale of certain
insurance and investment products, or the need to reinvest proceeds from
the sale or maturity of investments. To hedge against adverse changes in
interest rates, the Company enters long or short positions in financial
futures contracts which offset asset price changes resulting from changes
in market interest rates until an investment is purchased or a product is
sold.
Margin payments are required to enter a futures contract and contract gains
or losses are settled daily in cash. The contract amount of futures
contracts represents the extent of the Company's involvement, but not
future cash requirements, as open positions are typically closed out prior
to the delivery date of the contract.
At December 31, 1999 and 1998, the Company held financial futures contracts
with notional amounts of $255 million and $459 million, respectively. These
financial futures had a deferred gain of $1.8 million and a deferred loss
of $.5 million in 1999, and a deferred gain of $3.3 million and a deferred
loss of $.1 million in 1998. Total gains of $6.9 million and $1.5 million
from financial futures were deferred at December 31, 1999 and 1998,
respectively, relating to anticipated investment purchases and investment
product sales, and are reported as other liabilities. At December 31, 1999
and 1998, the Company's futures contracts had no fair value because these
contracts were marked to market and settled in cash daily.
F-16
<PAGE> 184
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company enters into interest rate swaps in connection with other
financial instruments to provide greater risk diversification and better
match assets and liabilities. Under interest rate swaps, the Company agrees
with other parties to exchange, at specified intervals, the difference
between fixed-rate and floating-rate interest amounts calculated by
reference to an agreed notional principal amount. The Company also enters
into basis swaps in which both legs of the swap are floating with each
based on a different index. Generally, no cash is exchanged at the outset
of the contract and no principal payments are made by either party. A
single net payment is usually made by one counterparty at each due date.
Swap agreements are not exchange-traded so they are subject to the risk of
default by the counterparty.
At December 31, 1999 and 1998, the Company held interest rate swap
contracts with notional amounts of $1,498.2 million and $1,077.9 million,
respectively. The fair value of these financial instruments was $25.3
million (gain position) and $26.3 million (loss position) at December 31,
1999 and was $5.6 million (gain position) and $19.6 million (loss position)
at December 31, 1998. The fair values were determined using the discounted
cash flow method. At December 31, 1999, the Company held swap contracts
with affiliate counterparties with a notional amount of $207.5 million and
a fair value of $22.6 million (loss position).
The Company enters into currency swaps in connection with other financial
instruments to provide greater risk diversification and better match assets
purchased in U.S. Dollars with corresponding funding agreements issued in
foreign currencies. Under currency swaps, the Company agrees with other
parties to exchange, at specified intervals, foreign currency for U.S.
Dollars based upon interest amounts calculated by reference to an agreed
notional principal amount. Generally, there is an exchange of foreign
currency for U.S. Dollars at the outset of the contract based upon the
prevailing foreign exchange rate. Swap agreements are not exchange traded
so they are subject to the risk of default by the counterparty.
At December 31, 1999 and 1998, the Company held currency swap contracts
with notional amounts of $732.7 million and $10.0 million, respectively.
The fair value of these financial instruments was $59.2 million (loss
position) at December 31, 1999 and $.4 million (gain position) at December
31, 1998. The fair values were determined using the discounted cash flow
method.
The Company uses equity option contracts to manage its exposure to changes
in equity market prices that arise from the sale of certain insurance
products. To hedge against adverse changes in the equity market prices, the
Company enters long positions in equity option contracts with major
financial institutions. These contracts allow the Company, for a fee, the
right to receive a payment if the Standard and Poor's 500 Index falls below
agreed upon strike prices.
At December 31, 1999 and 1998, the Company held equity options with
notional amounts of $275.4 million and zero, respectively. The fair value
of these financial instruments was $32.6 million (gain position) at
December 31, 1999. The fair value of these contracts represent the
estimated replacement cost as quoted by independent third party brokers.
The off-balance sheet risks of interest rate options, equity swaps and
forward contracts were not significant at December 31, 1999 and 1998.
The off-balance sheet risk of derivative instruments held for trading
purposes was not significant at December 31, 1999 and 1998.
F-17
<PAGE> 185
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Financial Instruments with Off-Balance Sheet Risk
In the normal course of business, the Company issues fixed and variable
rate loan commitments and has unfunded commitments to partnerships. The
off-balance sheet risk of these financial instruments was not significant
at December 31, 1999 and 1998. The Company had unfunded commitments to
partnerships with a value of $459.7 million at December 31, 1999.
Fair Value of Certain Financial Instruments
The Company uses various financial instruments in the normal course of its
business. Certain insurance contracts are excluded by Statement of
Financial Accounting Standards No. 107, "Disclosure about Fair Value of
Financial Instruments", and therefore are not included in the amounts
discussed.
At December 31, 1999 and 1998, investments in fixed maturities had a
carrying value and a fair value of $23.9 billion and $23.9 billion,
respectively. See Notes 1 and 12.
At December 31, 1999 mortgage loans had a carrying value of $2.3 billion
and a fair value of $2.3 billion and in 1998 had a carrying value of $2.6
billion and a fair value of $2.8 billion. In estimating fair value, the
Company used interest rates reflecting the current real estate financing
market.
Citigroup Preferred Stock included in other invested assets had a carrying
value and fair value of $987 million at December 31, 1999 and 1998.
At December 31, 1999, contractholder funds with defined maturities had a
carrying value of $5.0 billion and a fair value of $4.7 billion, compared
with a carrying value and a fair value of $3.3 billion at December 31,
1998. The fair value of these contracts is determined by discounting
expected cash flows at an interest rate commensurate with the Company's
credit risk and the expected timing of cash flows. Contractholder funds
without defined maturities had a carrying value of $10.1 billion and a fair
value of $9.9 billion at December 31, 1999, compared with a carrying value
of $10.4 billion and a fair value of $10.2 billion at December 31, 1998.
These contracts generally are valued at surrender value.
The carrying values of $228 million and $144 million of financial
instruments classified as other assets approximated their fair values at
December 31, 1999 and 1998, respectively. The carrying values of $1.2
billion and $2.3 billion of financial instruments classified as other
liabilities also approximated their fair values at December 31, 1999 and
1998, respectively. Fair value is determined using various methods,
including discounted cash flows, as appropriate for the various financial
instruments.
The assets of separate accounts providing a guaranteed return had a
carrying value and a fair value of $251 million at December 31, 1999,
compared with a carrying value and a fair value of $235 million at December
31, 1998. The liabilities of separate accounts providing a guaranteed
return had a carrying value and a fair value of $251 million at December
31, 1999, compared with a carrying value and a fair value of $209 million
and $206 million, respectively, at December 31, 1998.
The carrying values of cash, trading securities and trading securities sold
not yet purchased are carried at fair value. The carrying values of
short-term securities and investment income accrued approximated their fair
values.
The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.
F-18
<PAGE> 186
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance Sheet Risk
See Note 5 for a discussion of financial instruments with off-balance sheet
risk.
Litigation
In March 1997, a purported class action entitled Patterman v. The
Travelers, Inc., et al. was commenced in the Superior Court of Richmond
County, Georgia, alleging, among other things, violations of the Georgia
RICO statute and other state laws by an affiliate of the Company, Primerica
Financial Services, Inc. and certain of its affiliates. Plaintiffs seek
unspecified compensatory and punitive damages and other relief. In October
1997, defendants answered the complaint, denied liability and asserted
numerous affirmative defenses. In February 1998, on defendants' motion, the
Superior Court of Richmond County transferred the lawsuit to the Superior
Court of Gwinnett County, Georgia. Plaintiffs appealed the transfer order,
and in December 1998 the Court of Appeals of the State of Georgia reversed
the lower court's decision. Defendants petitioned the Georgia Supreme Court
to hear an appeal from the decision of the Court of Appeals, and the
petition was granted in May 1998. In September 1999, oral argument on
defendants' petition was heard and, on February 28, 2000, the Georgia
Supreme Court affirmed the Georgia Court of Appeals and remanded the matter
to the Superior Court of Richmond County. In March 2000, defendants moved
the Georgia Supreme Court to reconsider its February 28, 2000 decision, and
that motion remains pending. Proceedings in the trial court have been
stayed pending appeal. Defendants intend to vigorously contest the
litigation.
The Company is also a defendant or co-defendant in various other litigation
matters in the normal course of business. Although there can be no
assurances, as of December 31, 1999, the Company believes, based on
information currently available, that the ultimate resolution of these
legal proceedings would not be likely to have a material adverse effect on
its results of operations, financial condition or liquidity.
7. BENEFIT PLANS
Pension and Other Postretirement Benefits
The Company participates in a qualified, noncontributory defined benefit
pension plan sponsored by Citigroup. In addition, the Company provides
certain other postretirement benefits to retired employees through a plan
sponsored by TIGI. The Company's share of net expense for the qualified
pension and other postretirement benefit plans was not significant for
1999, 1998 and 1997. Through plans sponsored by TIGI, the Company also
provides defined contribution pension plans for certain agents. Company
contributions are primarily a function of production. The expense for these
plans was not significant in 1999, 1998 and 1997.
401(k) Savings Plan
Substantially all of the Company's employees are eligible to participate in
a 401(k) savings plan sponsored by Citigroup. Effective January 1, 1997,
the Company discontinued matching contributions for the majority of its
employees. The Company's expenses in connection with the 401(k) savings
plan were not significant in 1999, 1998 and 1997.
F-19
<PAGE> 187
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
8. RELATED PARTY TRANSACTIONS
The principal banking functions, including payment of salaries and
expenses, for certain subsidiaries and affiliates of TIGI are handled by
two companies. The Company handles banking functions for the life and
annuity operations of Travelers Life & Annuity and some of its
non-insurance affiliates. The Travelers Indemnity Company handles banking
functions for the property-casualty operations, including most of its
property-casualty insurance and non-insurance affiliates. Settlements
between companies are made at least monthly. The Company provides various
employee benefits coverages to employees of certain subsidiaries of TIGI.
The premiums for these coverages were charged in accordance with cost
allocation procedures based upon salaries or census. In addition,
investment advisory and management services, data processing services and
claims processing services are shared with affiliated companies. Charges
for these services are shared by the companies on cost allocation methods
based generally on estimated usage by department.
The Company maintains a short-term investment pool in which its insurance
affiliates participate. The position of each company participating in the
pool is calculated and adjusted daily. At December 31, 1999 and 1998, the
pool totaled approximately $2.6 billion and $2.3 billion, respectively. The
Company's share of the pool amounted to $1.0 billion and $793 million at
December 31, 1999 and 1998, respectively, and is included in short-term
securities in the consolidated balance sheet.
Included in short-term investments at December 31, 1998 was a 90-day
variable rate note receivable from Citigroup. The rate was based upon the
AA financial commercial paper rate plus 14 basis points. The rate at
December 31, 1998 was 5.47%. The balance, which was $500 million at
December 31, 1998, was paid in full on February 25, 1999. Interest accrued
at December 31, 1998 was $2.2 million. Interest earned was $3.9 million and
$9.4 million in 1999 and 1998, respectively.
The Company markets deferred annuity products and life and health insurance
through its affiliate, Salomon Smith Barney Financial Consultants (SSB).
Premiums and deposits related to these products were $1.4 billion, $1.3
billion, and $1.0 billion in 1999, 1998 and 1997, respectively.
At December 31, 1999 and 1998 the Company had outstanding loaned securities
to SSB for $123.0 million and $39.7 million, respectively.
Included in other invested assets is a $987 million investment in Citigroup
preferred stock at December 31, 1999 and 1998, carried at cost.
The Company sells structured settlement annuities to the insurance
subsidiaries of Travelers Property Casualty Corp. (TAP) in connection with
the settlement of certain policyholder obligations. Such premiums and
deposits were $156 million, $104 million, and $88 million for 1999, 1998
and 1997, respectively. Reserves and contractholder funds related to these
annuities amounted to $798 million and $787 million in 1999 and 1998,
respectively.
In the ordinary course of business, the Company purchases and sells
securities through affiliated broker-dealers. These transactions are
conducted on an arm's length basis.
F-20
<PAGE> 188
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Primerica Life has entered into a General Agency Agreement with Primerica
Financial Services, Inc. (Primerica), that provides that Primerica will be
Primerica Life's general agent for marketing all insurance of Primerica
Life. In consideration of such services, Primerica Life agreed to pay
Primerica marketing fees of no less than $10 million based upon U.S. gross
direct premiums received by Primerica Life. In each of 1999 and 1998 the
fees paid by Primerica Life were $12.5 million.
In 1998 Primerica became a distributor of products for Travelers Life &
Annuity. Primerica sold $903 million and $256 million of deferred annuities
in 1999 and 1998, respectively.
The Company participates in a stock option plan sponsored by Citigroup that
provides for the granting of stock options in Citigroup common stock to
officers and key employees. To further encourage employee stock ownership,
during 1997 Citigroup introduced the WealthBuilder stock option program.
Under this program, all employees meeting certain requirements have been
granted Citigroup stock options.
The Company applies Accounting Principles Board Opinion No. 25 (APB 25) and
related interpretations in accounting for stock options. Since stock
options under the Citigroup plans are issued at fair market value on the
date of award, no compensation cost has been recognized for these awards.
FAS 123 provides an alternative to APB 25 whereby fair values may be
ascribed to options using a valuation model and amortized to compensation
cost over the vesting period of the options.
Had the Company applied FAS 123 in accounting for Citigroup stock options,
net income would have been the pro forma amounts indicated below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income, as reported $1,047 $902 $839
FAS 123 pro forma adjustments, after tax (16) (13) (9)
------------------------------------------------------------------------------------------------------
Net income, pro forma $1,031 $889 $830
------------------------------------------------------------------------------------------------------
</TABLE>
F-21
<PAGE> 189
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9. LEASES
Most leasing functions for TIGI and its subsidiaries are administered by
TAP. Rent expense related to all leases is shared by the companies on a
cost allocation method based generally on estimated usage by department.
Net rent expense was $30 million, $24 million, and $15 million in 1999,
1998 and 1997, respectively.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
YEAR ENDING DECEMBER 31, MINIMUM OPERATING RENTAL
($ in millions) PAYMENTS
--------------------------------------------------------------------------
<S> <C>
2000 $38
2001 42
2002 41
2003 41
2004 41
Thereafter 273
--------------------------------------------------------------------------
Total Rental Payments $476
=========================================================================
</TABLE>
Future sublease rental income of approximately $79 million will partially
offset these commitments. Also, the Company will be reimbursed for 50% of
the rental expense for a particular lease totaling $195 million, by an
affiliate. Minimum future capital lease payments are not significant.
The Company is reimbursed for use of furniture and equipment through cost
sharing agreements by its affiliates.
F-22
<PAGE> 190
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
10. FEDERAL INCOME TAXES
EFFECTIVE TAX RATE
<TABLE>
<CAPTION>
($ in millions)
--------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Before Federal Income Taxes $1,592 $1,383 $1,283
Statutory Tax Rate 35% 35% 35%
--------------------------------------------------------------------------------------------------------
Expected Federal Income Taxes 557 484 449
Tax Effect of:
Non-taxable investment income (19) (5) (4)
Other, net 7 2 (1)
--------------------------------------------------------------------------------------------------------
Federal Income Taxes $ 545 $ 481 $ 444
========================================================================================================
Effective Tax Rate 34% 35% 35%
--------------------------------------------------------------------------------------------------------
</TABLE>
COMPOSITION OF FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
Current:
<S> <C> <C> <C>
United States $377 $418 $410
Foreign 32 24 24
--------------------------------------------------------------------------------------------------------
Total 409 442 434
--------------------------------------------------------------------------------------------------------
Deferred:
United States 143 40 10
Foreign (7) (1) --
--------------------------------------------------------------------------------------------------------
Total 136 39 10
--------------------------------------------------------------------------------------------------------
Federal Income Taxes $545 $481 $444
========================================================================================================
</TABLE>
Additional tax benefits attributable to employee stock plans allocated
directly to shareholder's equity were $17 million for each of the years
ended December 31, 1999, 1998 and 1997.
F-23
<PAGE> 191
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The net deferred tax liabilities at December 31, 1999 and 1998 were
comprised of the tax effects of temporary differences related to the
following assets and liabilities:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
($ in millions) 1999 1998
---- ----
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets:
Benefit, reinsurance and other reserves $ 645 $ 616
Operating lease reserves 70 76
Investments, net 11 --
Other employee benefits 106 103
Other 142 135
-----------------------------------------------------------------------------------------------------------------
Total 974 930
-----------------------------------------------------------------------------------------------------------------
Deferred Tax Liabilities:
Deferred acquisition costs and value of insurance in force (773) (673)
Investments, net -- (489)
Other (124) (90)
-----------------------------------------------------------------------------------------------------------------
Total (897) (1,252)
-----------------------------------------------------------------------------------------------------------------
Net Deferred Tax (Liability) Asset Before Valuation Allowance 77 (322)
Valuation Allowance for Deferred Tax Assets (100) (100)
-----------------------------------------------------------------------------------------------------------------
Net Deferred Tax Liability After Valuation Allowance $ (23) $ (422)
-----------------------------------------------------------------------------------------------------------------
</TABLE>
The Company and its life insurance subsidiaries file a consolidated federal
income tax return. Federal income taxes are allocated to each member of the
consolidated group on a separate return basis adjusted for credits and
other amounts required by the consolidation process. Any resulting
liability will be paid currently to the Company. Any credits for losses
will be paid by the Company to the extent that such credits are for tax
benefits that have been utilized in the consolidated federal income tax
return.
The $100 million valuation allowance is sufficient to cover any capital
losses on investments that may exceed the capital gains able to be
generated in the life insurance group's consolidated federal income tax
return based upon management's best estimate of the character of the
reversing temporary differences. Reversal of the valuation allowance is
contingent upon the recognition of future capital gains or a change in
circumstances that causes the recognition of the benefits to become more
likely than not. There was no change in the valuation allowance during
1999. The initial recognition of any benefit produced by the reversal of
the valuation allowance will be recognized by reducing goodwill.
At December 31, 1999, the Company had no ordinary or capital loss
carryforwards.
F-24
<PAGE> 192
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The policyholders surplus account, which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account is
approximately $932 million. Income taxes are not provided for on this
amount because under current U.S. tax rules such taxes will become payable
only to the extent such amounts are distributed as a dividend or exceed
limits prescribed by federal law. Distributions are not contemplated from
this account. At current rates the maximum amount of such tax would be
approximately $326 million.
11. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GROSS INVESTMENT INCOME
Fixed maturities $1,806 $1,598 $1,460
Mortgage loans 235 295 291
Joint ventures and partnerships 141 74 55
Trading 141 43 57
Other, including policy loans 287 240 263
------------------------------------------------------------------------------------------------------
2,610 2,250 2,126
------------------------------------------------------------------------------------------------------
Investment expenses 104 65 89
------------------------------------------------------------------------------------------------------
Net investment income $2,506 $2,185 $2,037
------------------------------------------------------------------------------------------------------
</TABLE>
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) for the periods were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REALIZED INVESTMENT GAINS
Fixed maturities $(23) $111 $ 71
Equity securities 7 6 (9)
Mortgage loans 29 21 59
Real estate held for sale 108 16 67
Other (8) (5) 11
------------------------------------------------------------------------------------------------------
Total Realized Investment Gains $113 $149 $199
------------------------------------------------------------------------------------------------------
</TABLE>
F-25
<PAGE> 193
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Changes in net unrealized investment gains (losses) that are reported as
accumulated other changes in equity from non-owner sources or unrealized
gains on Citigroup stock in shareholder's equity were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNREALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $(1,554) $ 91 $ 446
Equity securities 49 13 25
Other (30) (169) 520
-------------------------------------------------------------------------------------------------------------
Total Unrealized Investment Gains (Losses) (1,535) (65) 991
-------------------------------------------------------------------------------------------------------------
Related taxes (539) (20) 350
-------------------------------------------------------------------------------------------------------------
Change in unrealized investment gains (losses) (996) (45) 641
Transferred to paid in capital, net of tax -- (585) --
Balance beginning of year 598 1,228 587
-------------------------------------------------------------------------------------------------------------
Balance End of Year $ (398) $ 598 $1,228
-------------------------------------------------------------------------------------------------------------
</TABLE>
Included in Other in 1998 is the unrealized loss on Citigroup common stock
of $167 million prior to the conversion to preferred stock. Also included
in Other were unrealized gains of $506 million, which were reported in
1997, related to appreciation of Citigroup common stock.
F-26
<PAGE> 194
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Fixed Maturities
The amortized cost and fair value of investments in fixed maturities were
as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
GROSS GROSS
DECEMBER 31, 1999 AMORTIZED UNREALIZED UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 5,081 $ 22 $ 224 $ 4,879
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,032 14 53 993
Obligations of states, municipalities and
political subdivisions 214 -- 31 183
Debt securities issued by foreign governments 811 35 10 836
All other corporate bonds 13,938 69 384 13,623
Other debt securities 3,319 30 99 3,250
Redeemable preferred stock 105 4 7 102
-------------------------------------------------------------------------------------------------------------------
Total Available For Sale $24,500 $ 174 $ 808 $23,866
-------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
GROSS GROSS
DECEMBER 31, 1998 AMORTIZED UNREALIZED UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 4,717 $ 147 $ 11 $ 4,853
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,563 186 3 1,746
Obligations of states, municipalities and
political subdivisions 239 18 -- 257
Debt securities issued by foreign governments 634 41 3 672
All other corporate bonds 13,025 532 57 13,500
Other debt securities 2,709 106 38 2,777
Redeemable preferred stock 86 3 1 88
------------------------------------------------------------------------------------------------------------------
Total Available For Sale $22,973 $ 1,033 $ 113 $23,893
------------------------------------------------------------------------------------------------------------------
</TABLE>
F-27
<PAGE> 195
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Proceeds from sales of fixed maturities classified as available for sale
were $12.6 billion, $13.4 billion and $7.6 billion in 1999, 1998 and 1997,
respectively. Gross gains of $200 million, $314 million and $170 million
and gross losses of $223 million, $203 million and $99 million in 1999,
1998 and 1997, respectively, were realized on those sales.
Fair values of investments in fixed maturities are based on quoted market
prices or dealer quotes or, if these are not available, discounted expected
cash flows using market rates commensurate with the credit quality and
maturity of the investment. The fair value of investments for which a
quoted market price or dealer quote are not available amounted to $4.8
billion and $4.8 billion at December 31, 1999 and 1998, respectively.
The amortized cost and fair value of fixed maturities at December 31, 1999,
by contractual maturity, are shown below. Actual maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
AMORTIZED
($ in millions) COST FAIR VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
MATURITY:
Due in one year or less $1,624 $1,622
Due after 1 year through 5 years 6,633 6,599
Due after 5 years through 10 years 5,257 5,132
Due after 10 years 5,905 5,634
--------------------------------------------------------------------------------------
19,419 18,987
--------------------------------------------------------------------------------------
Mortgage-backed securities 5,081 4,879
--------------------------------------------------------------------------------------
Total Maturity $24,500 $23,866
--------------------------------------------------------------------------------------
</TABLE>
The Company makes investments in collateralized mortgage obligations
(CMOs). CMOs typically have high credit quality, offer good liquidity, and
provide a significant advantage in yield and total return compared to U.S.
Treasury securities. The Company's investment strategy is to purchase CMO
tranches which are protected against prepayment risk, including planned
amortization class (PAC) tranches. Prepayment protected tranches are
preferred because they provide stable cash flows in a variety of interest
rate scenarios. The Company does invest in other types of CMO tranches if a
careful assessment indicates a favorable risk/return tradeoff. The Company
does not purchase residual interests in CMOs.
At December 31, 1999 and 1998, the Company held CMOs classified as
available for sale with a fair value of $3.8 billion and $3.4 billion,
respectively. Approximately 52% and 54%, respectively, of the Company's CMO
holdings are fully collateralized by GNMA, FNMA or FHLMC securities at
December 31, 1999 and 1998. In addition, the Company held $1.1 billion and
$1.4 billion of GNMA, FNMA or FHLMC mortgage-backed pass-through securities
at December 31, 1999 and 1998, respectively. Virtually all of these
securities are rated AAA.
F-28
<PAGE> 196
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Equity Securities
The cost and fair values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
GROSS GROSS
EQUITY SECURITIES: UNREALIZED UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
Common stocks $195 $123 $ 4 $314
Non-redeemable preferred stocks 496 15 41 470
-------------------------------------------------------------------------------------------------------------------
Total Equity Securities $691 $138 $45 $784
-------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
Common stocks $129 $44 $ 3 $170
Non-redeemable preferred stocks 345 10 7 348
-------------------------------------------------------------------------------------------------------------------
Total Equity Securities $474 $54 $10 $518
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $100 million, $212 million
and $341 million in 1999, 1998 and 1997, respectively. Gross gains of $15
million, $30 million and $53 million and gross losses of $8 million, $24
million and $62 million in 1999, 1998 and 1997, respectively, were realized
on those sales.
Mortgage Loans and Real Estate Held For Sale
At December 31, 1999 and 1998, the Company's mortgage loan and real estate
held for sale portfolios consisted of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
($ in millions) 1999 1998
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Mortgage Loans $2,228 $2,370
Underperforming Mortgage Loans 57 236
--------------------------------------------------------------------------------------------------
Total Mortgage Loans 2,285 2,606
--------------------------------------------------------------------------------------------------
Real Estate Held For Sale - Foreclosed 223 112
Real Estate Held For Sale - Investment 13 31
--------------------------------------------------------------------------------------------------
Total Real Estate 236 143
--------------------------------------------------------------------------------------------------
Total Mortgage Loans and Real Estate Held for Sale $2,521 $2,749
==================================================================================================
</TABLE>
Underperforming mortgage loans include delinquent mortgage loans, loans in
the process of foreclosure, foreclosed loans and loans modified at interest
rates below market.
F-29
<PAGE> 197
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Aggregate annual maturities on mortgage loans at December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
YEAR ENDING DECEMBER 31,
($ in millions)
-----------------------------------------------------------------------
<S> <C>
Past Maturity $ 39
2000 162
2001 172
2002 137
2003 131
2004 140
Thereafter 1,504
-----------------------------------------------------------------------
Total $2,285
=======================================================================
</TABLE>
Trading Securities
Trading securities of the Company are held in Tribeca.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
($ in millions) 1999 1998
-------------------------------------------------------------------------------------------
TRADING SECURITIES OWNED
<S> <C> <C>
Convertible bond arbitrage $1,045 $754
Merger arbitrage 421 427
Other 212 5
-------------------------------------------------------------------------------------------
Total $1,678 $1,186
-------------------------------------------------------------------------------------------
TRADING SECURITIES SOLD NOT YET PURCHASED
Convertible bond arbitrage $799 $521
Merger arbitrage 299 352
-------------------------------------------------------------------------------------------
Total $1,098 $873
-------------------------------------------------------------------------------------------
</TABLE>
The Company's trading portfolio investments and related liabilities are
normally held for periods less than six months. Therefore, expected future
cash flows for these assets and liabilities are expected to be realized in
less than one year.
F-30
<PAGE> 198
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Concentrations
At December 31, 1999 and 1998, the Company had an investment in Citigroup
Preferred Stock of $987 million. See Note 8.
The Company maintains a short-term investment pool for its insurance
affiliates in which the Company also participates. See Note 8.
The Company had concentrations of investments, primarily fixed maturities,
in the following industries:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
($ in millions) 1999 1998
--------------------------------------------------------------------------
<S> <C> <C>
Banking $1,906 $2,131
Electric Utilities 1,653 1,513
Finance 1,571 1,346
--------------------------------------------------------------------------
</TABLE>
The Company held investments in Foreign Banks in the amount of $1,012
million and $997 million at December 31, 1999 and 1998, respectively, which
are included in the table above. Also, below investment grade assets
included in the preceding table were not significant.
Included in fixed maturities are below investment grade assets totaling
$2.2 billion and $2.1 billion at December 31, 1999 and 1998, respectively.
The Company defines its below investment grade assets as those securities
rated "Ba1" or below by external rating agencies, or the equivalent by
internal analysts when a public rating does not exist. Such assets include
publicly traded below investment grade bonds and certain other privately
issued bonds and notes that are classified as below investment grade.
Mortgage loan investments are relatively evenly dispersed throughout the
United States, with no significant holdings in any one state. Also, there
is no significant mortgage loan investment in a particular property type.
F-31
<PAGE> 199
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often includes
pledges of assets, including stock and other assets, guarantees and letters
of credit. The Company's underwriting standards with respect to new
mortgage loans generally require loan to value ratios of 75% or less at the
time of mortgage origination.
Non-Income Producing Investments
Investments included in the consolidated balance sheets that were
non-income producing for the preceding 12 months were insignificant.
Restructured Investments
The Company had mortgage loans and debt securities that were restructured
at below market terms at December 31, 1999 and 1998. The balances of the
restructured investments were insignificant. The new terms typically defer
a portion of contract interest payments to varying future periods. The
accrual of interest is suspended on all restructured assets, and interest
income is reported only as payment is received. Gross interest income on
restructured assets that would have been recorded in accordance with the
original terms of such loans was insignificant in 1999 and in 1998.
Interest on these assets, included in net investment income was
insignificant in 1999 and 1998.
13. DEPOSIT FUNDS AND RESERVES
At December 31, 1999, the Company had $27.0 billion of life and annuity
deposit funds and reserves. Of that total, $13.8 billion is not subject to
discretionary withdrawal based on contract terms. The remaining $13.2
billion is for life and annuity products that are subject to discretionary
withdrawal by the contractholder. Included in the amount that is subject to
discretionary withdrawal is $2.1 billion of liabilities that are
surrenderable with market value adjustments. Also included are an
additional $4.9 billion of life insurance and individual annuity
liabilities which are subject to discretionary withdrawals, and have an
average surrender charge of 4.6%. In the payout phase, these funds are
credited at significantly reduced interest rates. The remaining $6.2
billion of liabilities are surrenderable without charge. More than 12.7% of
these relate to individual life products. These risks would have to be
underwritten again if transferred to another carrier, which is considered a
significant deterrent against withdrawal by long-term policyholders.
Insurance liabilities that are surrendered or withdrawn are reduced by
outstanding policy loans and related accrued interest prior to payout.
F-32
<PAGE> 200
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
The following table reconciles net income to net cash provided by operating
activities:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income From Continuing Operations $ 1,047 $ 902 $ 839
Adjustments to reconcile net income to net cash provided by
operating activities:
Realized gains (113) (149) (199)
Deferred federal income taxes 136 39 10
Amortization of deferred policy acquisition costs 315 275 252
Additions to deferred policy acquisition costs (686) (566) (471)
Investment income (221) (202) (32)
Premium balances (23) 23 (64)
Insurance reserves and accrued expenses 421 348 111
Other 99 205 380
---------------------------------------------------------------------------------------------------------------------
Net cash provided by operations $ 975 $ 875 $ 826
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
15. NON-CASH INVESTING AND FINANCING ACTIVITIES
Significant non-cash investing and financing activities include the
acquisition of real estate through foreclosures of mortgage loans amounting
to $205 million in 1999, the transfer of Citigroup common stock to
Citigroup preferred stock valued at $987 million in 1998 and the conversion
of $119 million of real estate held for sale to other invested assets as a
joint venture in 1997.
F-33
<PAGE> 201
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
16. OPERATING SEGMENTS
The Company has two reportable business segments that are separately
managed due to differences in products, services, marketing strategy and
resource management. The business of each segment is maintained and
reported through separate legal entities within the Company. The management
groups of each segment report separately to the common ultimate parent,
Citigroup Inc.
The TRAVELERS LIFE & ANNUITY business segment consolidates primarily the
business of The Travelers Insurance Company and The Travelers Life and
Annuity Company. Travelers Life & Annuity offers individual annuity, group
annuity, individual life and long-term care products distributed by the
Company and TLAC under the Travelers name. Among the range of individual
products offered are fixed and variable deferred annuities, payout
annuities and term, universal and variable life and long-term care
insurance. The group products include institutional pensions, including
guaranteed investment contracts, payout annuities, group annuities to
employer-sponsored retirement and savings plans and structured finance
transactions.
The PRIMERICA LIFE business segment consolidates primarily the business of
Primerica Life Insurance Company, Primerica Life Insurance Company of
Canada and National Benefit Life Insurance Company. The Primerica Life
business segment offers individual life products, primarily term insurance,
to customers through a nationwide sales force of approximately 80,000 full
and part-time licensed Personal Financial Analysts.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies (see Note 1), except that
management also includes receipts on long-duration contracts (universal
life-type and investment contracts) as deposits along with premiums in
measuring business volume.
BUSINESS SEGMENT INFORMATION:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE & PRIMERICA LIFE
1999 ($ in millions) ANNUITY INSURANCE TOTAL
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 666 $ 1,072 $ 1,738
Deposits 11,220 -- 11,220
------- ------- -------
Total business volume $11,886 $ 1,072 $12,958
Net investment income 2,249 257 2,506
Interest credited to contractholders 937 -- 937
Amortization of deferred acquisition costs 127 188 315
Federal income taxes on Operating Income 319 186 505
Operating Income (excludes realized gains or
losses and the related FIT) $ 619 $ 355 $ 974
Segment Assets $56,615 $ 6,916 $63,531
-----------------------------------------------------------------------------------------------------------------
</TABLE>
F-34
<PAGE> 202
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE & PRIMERICA LIFE
1998 ($ in millions) ANNUITY INSURANCE TOTAL
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 683 $1,057 $ 1,740
Deposits 7,693 -- 7,693
------- ------ -------
Total business volume $ 8,376 $1,057 $ 9,433
Net investment income 1,965 220 2,185
Interest credited to contractholders 876 -- 876
Amortization of deferred acquisition costs 88 187 275
Federal income taxes on Operating Income 260 170 430
Operating Income (excludes realized gains or
losses and the related FIT) $ 493 $ 312 $ 805
Segment Assets $49,646 $6,902 $56,548
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE PRIMERICA LIFE
1997 ($ in millions) & ANNUITY INSURANCE TOTAL
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 548 $1,035 $ 1,583
Deposits 5,276 -- 5,276
------- ------ -------
Total business volume $ 5,824 $1,035 $ 6,859
Net investment income 1,836 201 2,037
Interest credited to contractholders 829 -- 829
Amortization of deferred acquisition costs 68 184 252
Federal income taxes on Operating Income 221 153 374
Operating Income (excludes realized gains or
losses and the related FIT) $ 427 $ 283 $ 710
Segment Assets $42,330 $7,110 $49,440
-----------------------------------------------------------------------------------------------------------------
</TABLE>
The amount of investments in equity method investees and total expenditures
for additions to long-lived assets other than financial instruments,
long-term customer relationships of a financial institution, mortgage and
other servicing rights, deferred policy acquisition costs, and deferred tax
assets, were not material.
F-35
<PAGE> 203
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
BUSINESS SEGMENT RECONCILIATION:
($ in millions)
----------------------------------------------------------------------------------------------------------
REVENUES 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total business volume $12,958 $9,433 $6,859
Net investment income 2,506 2,185 2,037
Realized investment gains 113 149 199
Other revenues 521 440 354
Elimination of deposits (11,220) (7,693) (5,276)
----------------------------------------------------------------------------------------------------------
Total revenues $4,878 $4,514 $4,173
==========================================================================================================
OPERATING INCOME 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total operating income of business segments $ 974 $805 $710
Realized investment gains net of tax 73 97 129
----------------------------------------------------------------------------------------------------------
Income from continuing operations $1,047 $902 $839
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
ASSETS 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total assets of business segments $63,531 $56,548 $49,440
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
REVENUE BY PRODUCTS 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred Annuities $5,694 $4,198 $3,303
Group and Payout Annuities 7,275 5,326 3,737
Individual Life and Health Insurance 2,434 2,270 2,102
Other (a) 695 413 307
Elimination of deposits (11,220) (7,693) (5,276)
----------------------------------------------------------------------------------------------------------
Total Revenue $4,878 $4,514 $4,173
==========================================================================================================
</TABLE>
(a) Other represents revenue attributable to unallocated capital and run-off
businesses.
The Company's revenue was derived almost entirely from U.S. domestic
business. Revenue attributable to foreign countries was insignificant.
The Company had no transactions with a single customer representing 10% or
more of its revenue.
F-36
<PAGE> 204
GOLD TRACK
GOLD TRACK SELECT
STATEMENT OF ADDITIONAL INFORMATION
SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
Group Variable Annuity Contract
issued by
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
L-12549S May 2000
<PAGE> 205
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of
Independent Accountants thereto are contained in the Registrant's
Annual Report and are included in the Statement of Additional
Information. The financial statements of the Registrant include:
Statement of Assets and Liabilities as of December 31, 1999
Statement of Operations for the year ended December 31, 1999
Statement of Changes in Net Assets for the years ended December
31, 1999 and 1998
Statement of Investments as of December 31, 1999
Notes to Financial Statements
The consolidated financial statements of The Travelers Insurance Company
and subsidiaries and the report of Independent Accountants, are
contained in the Statement of Additional Information. The consolidated
financial statements of The Travelers Insurance Company and subsidiaries
include:
Consolidated Statements of Income for the years ended December
31, 1999, 1998 and 1997
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Changes in Retained Earnings and
Accumulated Other Changes in Equity from Non-Owner Sources for
the years ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(b) Exhibits
1. Resolution of The Travelers Insurance Company Board of Directors
authorizing the establishment of the Registrant. (Incorporated
herein by reference to Exhibit 1 to the Registration statement on
Form N-4, filed January 11, 1996.)
2. Exempt.
3(a). Distribution and Principal Underwriting Agreement among the
Registrant, The Travelers Insurance Company and CFBDS, Inc.
(Incorporated herein by reference to Exhibit 3(a) to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-60227 filed November 9, 1998)
3(b). Selling Agreement. (Incorporated herein by reference to Exhibit 3(b)
to the Registration Statement on Form N-4, filed May 23, 1997.)
(Incorporated herein by reference to Exhibit 3(b) to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-60227 filed November 9, 1998)
4. Variable Annuity Contract(s). (Incorporated herein by reference to
Exhibit 4 to the Registration Statement on Form N-4, filed August
27, 1996.)
5. None.
6(a). Charter of The Travelers Insurance Company, as amended on October
19, 1994. (Incorporated herein by reference to Exhibit 3(a)(i) to
Registration Statement on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
<PAGE> 206
6(b). By-Laws of The Travelers Insurance Company, as amended on October
20, 1994. (Incorporated herein by reference to Exhibit 3(b)(i) to
the Registration Statement on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
7. None.
8. None.
9. Opinion of Counsel as to the legality of securities being
registered. (Incorporated herein by reference to Exhibit 9 to Post-
Effective Amendment No. 3 to the Registration Statement on Form N-4
filed April 30, 1997.)
10. Consent of KPMG LLP, Independent Certified Public Accountants.
11. Not Applicable.
12. None
13. Schedule for computation of each performance quotation -
Standardized and Non-Standardized. (Incorporated herein be reference
to Exhibit No. 13 to the Post-Effective Amendment No. 2 to the
Registration Statement on Form N-4, filed April 30, 1997.)
15(a). Powers of Attorney authorizing Jay S. Fishman or Ernest J. Wright as
signatory for Robert I. Lipp, Michael A. Carpenter, Charles O.
Prince III, Marc P. Weill, Irwin R. Ettinger, Donald T. DeCarlo and
Christine B. Mead. (Incorporated herein by reference to Exhibit 15
to the Registration Statement on Form N-4, filed January 11, 1996.)
15(b). Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah
as signatory for George C. Kokulis, Katherine M. Sullivan and Glenn
D. Lammey.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
<S> <C>
George C. Kokulis* Director, President and Chief Executive Officer
Katherine M. Sullivan* Director and Senior Vice President
Marc P. Weill** Director and Senior Vice President
Mary Jean Thornton* Executive Vice President and
Chief Information Officer
Stuart Baritz*** Senior Vice President
Jay S. Fishman* Senior Vice President
Barry Jacobson* Senior Vice President
Russell H. Johnson* Senior Vice President
Marla Berman Lewitus Senior Vice President
Brendan Lynch* Senior Vice President
Warren H. May* Senior Vice President
Kathleen Preston* Senior Vice President
David A. Tyson* Senior Vice President
F. Denney Voss* Senior Vice President
Glenn D. Lammey* Chief Financial Officer, Chief
Accounting Officer and Controller
David A. Golino* Vice President
Donald R. Munson, Jr.* Vice President
Anthony Cocolla Second Vice President
</TABLE>
<PAGE> 207
<TABLE>
<C> <C>
Scott R. Hansen Second Vice President
Linn K. Richardson* Second Vice President and Actuary
Paul Weissman Second Vice President and Actuary
Ernest J. Wright* Vice President and Secretary
Kathleen A. McGah* Assistant Secretary and
Deputy General Counsel
Principal Business Address:
* The Travelers Insurance Company ** Citigroup Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013
*** Travelers Portfolio Group
1345 Avenue of the Americas
New York, NY 10105
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Incorporated herein by reference to Exhibit 16 to Post-Effective
Amendment No.2 to the Registration Statement on Form N-4, File No. 333-40193,
filed April 12, 2000.
Item 27. Number of Contract Owners
As of February 29, 2000, 57,965 contract owners held qualified and non-qualified
contracts offered by the Registrant.
Item 28. Indemnification
Sections 33-770 to 33-778, inclusive of the Connecticut General Statutes
("C.G.S.") regarding indemnification of directors and officers of Connecticut
corporations provides in general that Connecticut corporations shall indemnify
their officers, directors and certain other defined individuals against
judgments, fines, penalties, amounts paid in settlement and reasonable expenses
actually incurred in connection with proceedings against the corporation. The
corporation's obligation to provide such indemnification generally does not
apply unless (1) the individual is wholly successful on the merits in the
defense of any such proceeding; or (2) a determination is made (by persons
specified in the statute) that the individual acted in good faith and in the
best interests of the corporation and in all other cases, his conduct was at
least not opposed to the best interests of the corporation, and in a criminal
case he had no reasonable cause to believe his conduct was unlawful; or (3) the
court, upon application by the individual, determines in view of all of the
circumstances that such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine. With respect
to proceedings brought by or in the right of the corporation, the statute
provides that the corporation shall indemnify its officers, directors and
certain other defined individuals, against reasonable expenses actually incurred
by them in connection with such proceedings, subject to certain limitations.
Citigroup Inc. also provides liability insurance for its directors and officers
and the directors and officers of its subsidiaries, including the Registrant.
This insurance provides for coverage against loss from claims made against
directors and officers in their capacity as such, including, subject to certain
exceptions, liabilities under the federal securities laws.
<PAGE> 208
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriter
(a) CFBDS, Inc.
21 Milk Street
Boston, MA 02109
CFBDS, Inc. also serves as principal underwriter for the following :
(a) CFBDS, the Registrant's Distributor, is also the distributor for CitiFundsSM
International Growth & Income Portfolio, CitiFundsSM International Growth
Portfolio, CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash Reserves,
CitiFundsSM Premium U.S. Treasury Reserves, CitiFundsSM Premium Liquid Reserves,
CitiFundsSM Institutional U.S. Treasury Reserves, CitiFundsSM Institutional
Liquid Reserves, CitiFundsSM Institutional Cash Reserves, CitiFundsSM Tax Free
Reserves, CitiFundsSM Institutional Tax Free Reserves, CitiFundsSM California
Tax Free Reserves, CitiFundsSM Connecticut Tax Free Reserves, CitiFundsSM New
York Tax Free Reserves, CitiFundsSM New York Tax Free Income Portfolio,
CitiFundsSM National Tax Free Income Portfolio, CitiFundsSM California Tax Free
Income Portfolio, CitiFundsSM Intermediate Income Portfolio, CitiFundsSM
Balanced Portfolio, CitiFundsSM Small Cap Value Portfolio, CitiFundsSM Growth &
Income Portfolio, CitiFundsSM Large Cap Growth Portfolio, CitiFundsSM Small Cap
Growth Portfolio, CitiSelect VIP Folio 200, CitiSelect VIP Folio 300, CitiSelect
VIP Folio 400, CitiSelect VIP Folio 500, CitiFundsSM Small Cap Growth VIP
Portfolio, CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect Folio 400, and
CitiSelect Folio 500. CFBDS is also the placement agent for Large Cap Value
Portfolio, Small Cap Value Portfolio, International Portfolio, Foreign Bond
Portfolio, Intermediate Income Portfolio, Short-Term Portfolio, Growth & Income
Portfolio, U.S. Fixed Income Portfolio, Large Cap Growth Portfolio, Small Cap
Growth Portfolio, International Equity Portfolio, Balanced Portfolio, Government
Income Portfolio, Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio. CFBDS also serves as the distributor for the
following funds: The Travelers Fund U for Variable Annuities, The Travelers Fund
VA for Variable Annuities, The Travelers Fund BD for Variable Annuities, The
Travelers Fund BD II for Variable Annuities, The Travelers Fund BD III for
Variable Annuities, The Travelers Fund BD IV for Variable Annuities, The
Travelers Fund ABD for Variable Annuities, The Travelers Fund ABD II for
Variable Annuities, The Travelers Separate Account PF for Variable Annuities,
The Travelers Separate Account PF II for Variable Annuities, The Travelers
Separate Account TM for Variable Annuities, The Travelers Separate Account TM II
for Variable Annuities, The Travelers Separate Account Five for Variable
Annuities, The Travelers Separate Account Six for Variable Annuities, The
Travelers Separate Account Seven for Variable Annuities, The Travelers Separate
Account Eight for Variable Annuities, The Travelers Fund UL for Variable Life
Insurance, The Travelers Fund UL II for Variable Life Insurance, The Travelers
Fund UL III for Variable Life Insurance, The Travelers Variable Life Insurance
Separate Account One, The Travelers Variable Life Insurance Separate Account
Two, The Travelers Variable Life Insurance Separate Account Three, The Travelers
Variable Life Insurance Separate Account Four, The Travelers Separate Account
MGA, The Travelers Separate Account MGA
<PAGE> 209
II, The Travelers Growth and Income Stock Account for Variable Annuities,
The Travelers Quality Bond Account for Variable Annuities, The Travelers Money
Market Account for Variable Annuities, The Travelers Timed Growth and Income
Stock Account for Variable Annuities, The Travelers Timed Short-Term Bond
Account for Variable Annuities, The Travelers Timed Aggressive Stock Account for
Variable Annuities, The Travelers Timed Bond Account for Variable Annuities,
Emerging Growth Fund, Government Fund, Growth and Income Fund, International
Equity Fund, Municipal Fund, Balanced Investments, Emerging Markets Equity
Investments, Government Money Investments, High Yield Investments, Intermediate
Fixed Income Investments, International Equity Investments, International Fixed
Income Investments, Large Capitalization Growth Investments, Large
Capitalization Value Equity Investments, Long-Term Bond Investments, Mortgage
Backed Investments, Municipal Bond Investments, Small Capitalization Growth
Investments, Small Capitalization Value Equity Investments, Appreciation
Portfolio, Diversified Strategic Income Portfolio, Emerging Growth Portfolio,
Equity Income Portfolio, Equity Index Portfolio, Growth & Income Portfolio,
Intermediate High Grade Portfolio, International Equity Portfolio, Money Market
Portfolio, Total Return Portfolio, Smith Barney Adjustable Rate Government
Income Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney Appreciation
Fund, Smith Barney Arizona Municipals Fund Inc., Smith Barney California
Municipals Fund Inc., Balanced Portfolio, Conservative Portfolio, Growth
Portfolio, High Growth Portfolio, Income Portfolio, Global Portfolio, Select
Balanced Portfolio, Select Conservative Portfolio, Select Growth Portfolio,
Select High Growth Portfolio, Select Income Portfolio, Concert Social Awareness
Fund, Smith Barney Large Cap Blend Fund, Smith Barney Fundamental Value Fund
Inc., Large Cap Value Fund, Short-Term High Grade Bond Fund, U.S. Government
Securities Fund, Smith Barney Balanced Fund, Smith Barney Convertible Fund,
Smith Barney Diversified Strategic Income Fund, Smith Barney Exchange Reserve
Fund, Smith Barney High Income Fund, Smith Barney Municipal High Income Fund,
Smith Barney Premium Total Return Fund, Smith Barney Total Return Bond Fund,
Cash Portfolio, Government Portfolio, Municipal Portfolio, Concert Peachtree
Growth Fund, Smith Barney Contrarian Fund, Smith Barney Government Securities
Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith Barney
Hansberger Global Value Fund, Smith Barney Investment Grade Bond Fund, Smith
Barney Special Equities Fund, Smith Barney Intermediate Maturity California
Municipals Fund, Smith Barney Intermediate Maturity New York Municipals Fund,
Smith Barney Large Capitalization Growth Fund, Smith Barney S&P 500 Index Fund,
Smith Barney Mid Cap Blend Fund, Smith Barney Managed Governments Fund Inc.,
Smith Barney Managed Municipals Fund Inc., Smith Barney Massachusetts Municipals
Fund, Cash Portfolio, Government Portfolio, Retirement Portfolio, California
Money Market Portfolio, Florida Portfolio, Georgia Portfolio, Limited Term
Portfolio, New York Money Market Portfolio, New York Portfolio, Pennsylvania
Portfolio, Smith Barney Municipal Money Market Fund, Inc., Smith Barney Natural
Resources Fund Inc., Smith Barney New Jersey Municipals Fund Inc., Smith Barney
Oregon Municipals Fund, Zeros Plus Emerging Growth Series 2000, Smith Barney
Security and Growth Fund, Smith Barney Small Cap Blend Fund, Inc., Smith Barney
Telecommunications Income Fund, Income and Growth Portfolio, Reserve Account
Portfolio, U.S. Government/High Quality Securities Portfolio, Emerging Markets
Portfolio, European Portfolio, Global Government Bond Portfolio, International
Balanced Portfolio, International Equity Portfolio, Pacific Portfolio, AIM
Capital Appreciation Portfolio, Alliance Growth Portfolio, GT Global Strategic
Income Portfolio, MFS Total Return Portfolio, Putnam Diversified Income
Portfolio, Smith Barney High Income Portfolio, Smith Barney Large Cap Value
Portfolio, Smith Barney International Equity Portfolio, Smith Barney Large
Capitalization Growth Portfolio, Smith Barney Money Market Portfolio, Smith
Barney Pacific Basin Portfolio, TBC Managed Income Portfolio, Van Kampen
American Capital Enterprise Portfolio, Centurion Tax-Managed U.S. Equity Fund,
Centurion Tax-Managed International Equity Fund, Centurion U.S. Protection Fund,
Centurion International Protection Fund, Global High-Yield Bond Fund,
International Equity Fund, Emerging Opportunities Fund, Core Equity Fund,
Long-Term Bond Fund, Global Dimensions Fund L.P., Citicorp Private Equity L.P.,
AIM V.I. Capital Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I.
Growth Fund, AIM V.I. International Equity Fund, AIM V.I. Value Fund, Fidelity
VIP Growth Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Equity
Income Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund
Portfolio, Fidelity VIP II Index 500 Portfolio, MFS World Government Series, MFS
Money Market Series, MFS Bond Series, MFS Total Return Series, MFS Research
Series, MFS Emerging Growth Series, Salomon Brothers Institutional Money Market
Fund, Salomon Brothers Cash
<PAGE> 210
Management Fund, Salomon Brothers New York Municipal Money Market Fund,
Salomon Brothers National Intermediate Municipal Fund, Salomon Brothers U.S.
Government Income Fund, Salomon Brothers High Yield Bond Fund, Salomon Brothers
Strategic Bond Fund, Salomon Brothers Total Return Fund, Salomon Brothers Asia
Growth Fund, Salomon Brothers Capital Fund Inc, Salomon Brothers Investors Fund
Inc, Salomon Brothers Opportunity Fund Inc, Salomon Brothers Institutional High
Yield Bond Fund, Salomon Brothers Institutional Emerging Markets Debt Fund,
Salomon Brothers Variable Investors Fund, Salomon Brothers Variable Capital
Fund, Salomon Brothers Variable Total Return Fund, Salomon Brothers Variable
High Yield Bond Fund, Salomon Brothers Variable Strategic Bond Fund, Salomon
Brothers Variable U.S. Government Income Fund, and Salomon Brothers Variable
Asia Growth Fund.
(b) The information required by this Item 29 with respect to each director and
officer of CFBDS, Inc. is incorporated by reference to Schedule A of Form BD
filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not Applicable.
Item 30. Location of Accounts and Records
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for so long as payments under the variable annuity
contracts may be accepted;
(b) To include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a Statement
of Additional Information; and
(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4
promptly upon written or oral request.
The Company hereby represents:
(d) That the aggregate charges under the Contracts of the Registrant
described herein are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by the Company.
<PAGE> 211
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this post-effective amendment to this
registration statement and has duly caused this post-effective amendment to this
registration statement to be signed on its behalf in the City of Hartford, State
of Connecticut, on 12th day of April 2000.
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS INSURANCE COMPANY
(Depositor)
By:*GLENN D. LAMMEY
__________________________________________
Glenn D. Lammey, Chief Financial Officer,
Chief Accounting Officer and Controller
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities indicated on the 12th day of
April 2000.
*GEORGE C. KOKULIS Director, President and Chief Executive Officer
- -----------------------
(George C. Kokulis) (Principal Executive Officer)
*KATHERINE M. SULLIVAN Director
- -----------------------
(Katherine M. Sullivan)
*MARC P. WEILL Director
- -----------------------
(Marc P. Weill)
*By: /s/Ernest J. Wright, Attorney-in-Fact
<PAGE> 212
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C> <C>
Exhibit
No. Description Method of Filing
- ------- ------------ ----------------
10. Consent of KPMG LLP, Independent Certified Electronically
Public Accountants.
15(b). Powers of Attorney authorizing Ernest J. Wright or Kathleen A. Electronically
McGah as signatory for George C. Kokulis, Katherine M. Sullivan
and Glenn D. Lammey.
</TABLE>
<PAGE> 1
Exhibit 10
Consent of Independent Certified Public Accountants
Board of Directors
The Travelers Insurance Company
We consent to the use of our reports included herein and to the reference to our
firm as experts under the heading "Independent Accountants."
/s/KPMG LLP
Hartford, Connecticut
April 11, 2000
<PAGE> 1
Exhibit 15(b)
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, GEORGE C. KOKULIS of Simsbury, Connecticut, Director,
President and Chief Executive Officer of The Travelers Insurance Company
(hereafter the "Company"), do hereby make, constitute and appoint ERNEST J.
WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of
said Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form under
the Securities Act of 1933 and the Investment Company Act of 1940 for The
Travelers Separate Account QP for Variable Annuities, a separate account of the
Company dedicated specifically to the funding of variable annuity contracts to
be offered by said Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the Company on behalf
of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of
April 2000.
/s/George C. Kokulis
Director, President and Chief Executive Officer
The Travelers Insurance Company
<PAGE> 2
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, KATHERINE M. SULLIVAN of Longmeadow, Massachusetts, a
Director of The Travelers Insurance Company (hereafter the "Company"), do hereby
make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and
KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them
acting alone, my true and lawful attorney-in-fact, for me, and in my name, place
and stead, to sign registration statements on behalf of said Company on Form N-4
or other appropriate form under the Securities Act of 1933 and the Investment
Company Act of 1940 for The Travelers Separate Account QP for Variable
Annuities, a separate account of the Company dedicated specifically to the
funding of variable annuity contracts to be offered by said Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of
March 2000.
/s/Katherine M. Sullivan
Director
The Travelers Insurance Company
<PAGE> 3
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, GLENN D. LAMMEY of Simsbury, Connecticut, Chief Financial
Officer, Chief Accounting Officer and Controller of The Travelers Insurance
Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST
J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary
of said Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form under
the Securities Act of 1933 and the Investment Company Act of 1940 for The
Travelers Separate Account QP for Variable Annuities, a separate account of the
Company dedicated specifically to the funding of variable annuity contracts to
be offered by said Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the Company on behalf
of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of
March 2000.
/s/Glenn D. Lammey
Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Insurance Company
