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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> 2
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
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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
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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
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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
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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
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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>
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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.
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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> 10
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> 11
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> 12
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. The Company has entered into agreements with either the investment
adviser or distributor of certain of the underlying funds in which the adviser
or distributor pays us a fee for providing administrative services, which fee
may vary. The fee is ordinarily based upon an annual percentage of the average
aggregate net amount invested in the underlying funds on behalf of the Separate
Account. 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.
</TABLE>
12
<PAGE> 13
<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> 14
<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> 15
<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> 16
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> 17
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> 18
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.
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<PAGE> 19
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> 20
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
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<PAGE> 21
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> 22
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> 23
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> 24
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
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<PAGE> 25
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> 26
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> 27
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> 28
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> 29
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> 30
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> 31
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> 32
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
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
32
<PAGE> 33
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> 34
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 35
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> 36
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> 37
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> 38
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> 39
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> 40
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> 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>
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> 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
<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> 43
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> 44
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> 45
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> 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>
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> 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>
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> 48
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<PAGE> 49
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> 50
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE> 51
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
L-12549 Printed in U.S.A.
TIC Ed. 5-2000
<PAGE> 52
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> 53
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> 54
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> 55
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> 56
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> 57
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> 58
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> 59
<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> 60
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> 61
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> 62
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> 63
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. The Company has entered into agreements with either the investment
adviser or distributor of certain of the underlying funds in which the adviser
or distributor pays us a fee for providing administrative services, which fee
may vary. The fee is ordinarily based upon an annual percentage of the average
aggregate net amount invested in the underlying funds on behalf of the Separate
Account. 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> 64
<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> 65
<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> 66
<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> 67
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> 68
- 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> 69
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> 70
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> 71
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> 72
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> 73
<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> 74
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> 75
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;
24
<PAGE> 76
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> 77
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> 78
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> 79
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> 80
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> 81
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> 82
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> 83
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> 84
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> 85
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> 86
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> 87
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> 88
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> 89
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> 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>
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> 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
<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> 92
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> 93
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> 94
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> 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
- ----------------------------------------------------------------------------------------------------------------------
<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> 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
<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
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<PAGE> 98
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> 99
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<PAGE> 100
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
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<PAGE> 102
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
L-12549-C Printed in U.S.A.
TIC Ed. 5-2000
