TRAVELERS FUND BD III FOR VARIABLE ANNUITIES, 485BPOS, 2000-04-13

TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
485BPOS, 2000-04-13

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<PAGE> 1
Registration Statement No. 333-70657
811-08225

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-4
Post-Effective Amendment No. 1 to the
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

And
Post-Effective Amendment No. 7
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
------------------------------------------------
(Exact name of Registrant)

THE TRAVELERS INSURANCE COMPANY
-------------------------------
(Name of Depositor)

ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
---------------------------------------------
(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number, including area code: (860) 277-0111
--------------

ERNEST J. WRIGHT
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
---------------------------
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check appropriate
box):

immediately upon filing pursuant to paragraph (b) of Rule 485.
- -----
X on May 1, 2000 pursuant to paragraph (b) of Rule 485.
- -----
60 days after filing pursuant to paragraph (a)(1) of Rule 485.
- -----
on ___________ pursuant to paragraph (a)(1) of Rule 485.
- -----

If appropriate, check the following box:

_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE> 2

PART A

Information Required in a Prospectus

<PAGE> 3

TRAVELERS VINTAGE XTRA ANNUITY PROSPECTUS:

THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
THE TRAVELERS FUND BD IV FOR VARIABLE ANNUITIES

This prospectus describes TRAVELERS VINTAGE XTRA ANNUITY, a flexible premium
variable annuity contract (the "Contract") issued by The Travelers Insurance
Company or The Travelers Life and Annuity Company, depending on the state in
which you purchased your Contract. The Contract is available in connection with
certain retirement plans that qualify for special federal income tax treatment
("qualified Contracts") as well as those that do not qualify for such treatment
("nonqualified Contracts"). We may issue it as an individual Contract or as a
group Contract. In states where only group Contracts are available, you will be
issued a certificate summarizing the provisions of the group Contract. For
convenience, we refer to Contracts and certificates as "Contracts."

You can choose to have your premium ("purchase payments") accumulate on a fixed
basis and/ or a variable basis. Your contract value will vary daily to reflect
the investment experience of the subaccounts ("funding options") you select and
any interest credited to the Fixed Account. The variable funding options are:

ALLIANCE VARIABLE PRODUCT SERIES FUND, INC.
Premier Growth Portfolio Class B
AMERICAN VARIABLE INSURANCE SERIES
Global Growth Fund -- Class 2
Growth Fund -- Class 2
Growth-Income Fund -- Class 2
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST(1)
Franklin Small Cap Fund -- Class 2(2)
Templeton International Securities Fund --
Class 2(3)
GREENWICH STREET SERIES SECURITIES FUND
Appreciation Portfolio
Diversified Strategic Income Portfolio
Equity Index Portfolio Class II Shares
Total Return Portfolio
JANUS ASPEN SERIES
Aggressive Growth Portfolio -- Service Shares
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
Capital Fund
Investors Fund
Small Cap Growth Fund
THE TRAVELERS SERIES TRUST
Disciplined Small Cap Stock Portfolio
Equity Income Portfolio
Large Cap Portfolio
MFS Emerging Growth Portfolio
MFS Research Portfolio
Strategic Stock Portfolio
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio
MFS Total Return Portfolio
Smith Barney Aggressive Growth Portfolio
Smith Barney High Income Portfolio
Smith Barney International Equity Portfolio
Smith Barney Large Cap Value Portfolio
Smith Barney Large Capitalization Growth Portfolio
Smith Barney Mid Cap Portfolio
Smith Barney Money Market Portfolio
Travelers Managed Income Portfolio
Van Kampen Enterprise Portfolio
VAN KAMPEN LIFE INVESTMENT TRUST
Emerging Growth Portfolio
VARIABLE INSURANCE PRODUCTS FUND II (FIDELITY)
Contrafund(R) Portfolio -- Service Class

- ---------------

(1) Formerly Templeton Variable Products Series.

(2) Formerly offered as Franklin Small Cap Investments Fund -- Class 2.

(3) Formerly offered as Templeton International Fund -- Class 2.

The Fixed Account is described in Appendix C. Unless specified otherwise, this
prospectus refers to the variable funding options. The contracts and/or some of
the funding options may not be available in all states. THIS PROSPECTUS IS VALID
ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE VARIABLE FUNDING
OPTIONS. READ AND RETAIN THEM FOR FUTURE REFERENCE.

This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about the Travelers Fund
BD III for Variable Annuities or the Travelers Fund BD IV for Variable Annuities
("Separate Account") by requesting a copy of the 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 copy, write to The Travelers Insurance Company,
Annuity Investor Services, One Tower Square, Hartford, Connecticut 06183, call
1-800-842-8573 or access the SEC's website (http://www.sec.gov). See Appendix E
for the SAI's table of contents.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.

PROSPECTUS DATED MAY 1, 2000

<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<S> <C>
INDEX OF SPECIAL TERMS............... 2
SUMMARY.............................. 3
FEE TABLE............................ 6
THE ANNUITY CONTRACT................. 11
Contract Owner Inquiries............. 11
Purchase Payments.................... 11
Purchase Payment Credits............. 11
Accumulation Units................... 12
The Funding Options.................. 12
CHARGES AND DEDUCTIONS............... 15
General.............................. 15
Withdrawal Charge.................... 16
Free Withdrawal Allowance............ 16
Administrative Charges............... 16
Mortality and Expense Risk Charge.... 17
Funding Option Expenses.............. 17
Premium Tax.......................... 17
Changes in Taxes Based Upon Premium
or Value........................... 17
TRANSFERS............................ 17
Dollar Cost Averaging................ 18
ACCESS TO YOUR MONEY................. 19
Systematic Withdrawals............... 19
OWNERSHIP PROVISIONS................. 19
Types of Ownership................... 19
Contract Owner..................... 19
Beneficiary........................ 20
Annuitant.......................... 20
DEATH BENEFIT........................ 20
Death Proceeds Before the Maturity
Date............................... 20
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
PAYMENT OPTIONS...................... 25
Election of Options.................. 25
Annuity Options...................... 25
MISCELLANEOUS CONTRACT PROVISIONS.... 26
Right to Return...................... 26
Termination.......................... 26
Required Reports..................... 26
Suspension of Payments............... 27
Transfers of Contract Values to Other
Annuities.......................... 27
THE SEPARATE ACCOUNTS................ 27
Performance Information.............. 27
FEDERAL TAX CONSIDERATIONS........... 28
General Taxation Of Annuities........ 28
Types of Contracts: Qualified or
Nonqualified....................... 28
Nonqualified Annuity Contracts....... 29
Qualified Annuity Contracts.......... 29
Penalty Tax for Premature
Distributions...................... 29
Diversification Requirements for
Variable Annuities................. 30
Ownership of the Investments......... 30
Mandatory Distributions for Qualified
Plans.............................. 30
Taxation of Death Benefit Proceeds... 30
OTHER INFORMATION.................... 31
The Insurance Companies.............. 31
Financial Statements................. 31
IMSA................................. 31
Distribution of Variable Annuity
Contracts.......................... 31
Conformity with State and Federal
Laws............................... 31
Voting Rights........................ 32
Legal Proceedings and Opinions....... 32
APPENDIX A: Condensed Financial
Information for The Travelers
Insurance Company: Separate Account
BD III............................. A-1
APPENDIX B: Condensed Financial
Information for The Travelers Life
and Annuity Company: Separate
Account BD IV...................... B-1
APPENDIX C: The Fixed Account........ C-1
APPENDIX D: Waiver of Withdrawal
Charge for Nursing Home
Confinement........................ D-1
APPENDIX E: Contents of the Statement
of Additional Information.......... E-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
Accumulation Period................... 12
Annuitant............................. 20
Annuity Payments...................... 11
Annuity Unit.......................... 12
Cash Surrender Value.................. 19
Contingent Annuitant.................. 20
Contract Date......................... 11
Contract Owner (You, Your)............ 19
Contract Value........................ 11
Contract Year......................... 11
Death Report Date..................... 20
Fixed Account......................... C-1
Funding Option(s)..................... 12
Joint Owner........................... 20
Maturity Date......................... 11
Purchase Payment...................... 11
Purchase Payment Credit............... 11
Underlying Fund....................... 12
Written Request....................... 11
</TABLE>

2
<PAGE> 5

SUMMARY:

TRAVELERS VINTAGE XTRA 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.

WHAT COMPANY WILL ISSUE MY CONTRACT? Your issuing company is either The
Travelers Insurance Company or The Travelers Life and Annuity Company, ("the
Company," "We" or "Us") depending on where you purchase your Contract. Each
company sponsors its own Separate Account, both of which are described later in
this prospectus. The Travelers Insurance Company sponsors the Travelers Fund BD
III for Variable Annuities ("Fund BD III"); The Travelers Life and Annuity
Company sponsors the Travelers Fund BD IV for Variable Annuities ("Fund BD IV").
When we refer to the Separate Account, we are referring to either Fund BD III or
Fund BD IV, depending upon your issuing company. Your issuing company is The
Travelers Life and Annuity Company unless you purchased your contract in the
following locations listed below, which contracts are issued by The Travelers
Insurance Company.

<TABLE>
<S> <C>
Bahamas New Hampshire
British Virgin Islands Oregon(1)
Guam U.S. Virgin Islands
</TABLE>

- ---------------

(1) The Travelers Insurance Company issues only single premium contracts with
variable and fixed accounts for these states. The Travelers Life and Annuity
Company issues only flexible premium contracts with variable accounts in
these states. Please refer to your Contract or ask your agent for more
information.

You may also refer to the cover page of your Contract for the name of your
issuing company. You may only purchase a Contract where the Contract has been
approved for sale. This Contract may not currently be available for sale in all
locations.

CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE VARIABLE ANNUITY CONTRACT? The
Contract offered by the 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

3
<PAGE> 6

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 (1) individual nonqualified purchases; (2) rollovers from
Individual Retirment Annuities (IRAs); and (3) rollovers from other qualified
retirement plans. Qualified contracts include contracts qualifying under Section
401, 403(b) or 408(b) of the Internal Revenue Code of 1986, as amended. Purchase
of this Contract through a tax qualified retirement plan ("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 this Contract for its Death Benefit, Annuity Option
Benefits, and other non-tax-related benefits.

You may purchase the Contract with an initial payment of at least $5,000. You
may make additional payments of at least $500 at any time during the
accumulation phase.

IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you will receive a full refund of the contract value
(including charges )minus any Purchase Payment Credits. Where state law requires
a longer right to return period, or the return of purchase payments, the Company
will comply. You bear the investment risk on the purchase payment during the
right to return period; therefore, the Contract value returned may be greater or
less than your purchase payment.

If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your full purchase payment
minus and Purchase Payment Credits will be refunded. During the remainder of the
right to return period, the Contract value (including charges) minus any
Purchase Payment Credits will be refunded. The Contract value will be determined
at the close of business on the day we receive a written request for a refund.

During the Right to Return period, you will not bear any contract fees
associated with the Purchase Payment Credits. If you exercise your right to
return, you will be in the same position as if you had exercised the right to
return in a variable annuity contract with no Purchase Payment Credit. You
would, however, receive any gains, and we would bear any losses attributable to
the Purchase Payment Credits.

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. You may transfer between the Fixed Account and the funding options twice
a year (during the 30 days after the six-month contract date anniversary),
provided the amount is not greater than 15% of the Fixed Account Value on that
date.

4
<PAGE> 7

The annual M&E charge depends on the death benefit you choose: 1.25% for the
Standard Death Benefit, and 1.45% for the Enhanced Death Benefit. Each
underlying Fund also charges for management, any applicable asset allocation fee
and other expenses.

A withdrawal charge will apply to withdrawals from the Contract, and is
calculated as a percentage of the purchase payments and associated purchase
payment credits. The maximum percentage is 8%, gradually decreasing to 0% in
years ten and later.

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, credits 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? You may choose to purchase the
Standard or Enhanced Death Benefit. The death benefit applies upon the first
death of the owner, joint owner, or annuitant. Assuming you are the Annuitant,
the death benefit is as follows: If you die before the Contract is in the payout
phase, the person you have chosen as your beneficiary will receive a death
benefit. The death benefit value is calculated at the close of the business day
on which the Company's Home Office receives due proof of death and written
payment instructions. The enhanced death benefit may not be available in all
states. Certain states may have varying age requirements. Please refer to the
Death Benefit section in the prospectus for more details.

ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:

- - PURCHASE PAYMENT CREDITS. For each payment you make during the first contract
year, we will add a credit to your account. The credit will be determined by
the greater age of the owner or the annuitant at the time the contract is
issued. If the greater age is 69 or less, the credit is 5%. If the greater age
is 70 or more, the credit is 4%.

- - 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.

- - 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.

- - AUTOMATIC REBALANCING. You may elect to have the Company periodically
reallocate the values in your Contract to match your original (or your latest)
funding option allocation request.

- - MANAGED DISTRIBUTION PROGRAM. This program allows us to automatically
calculate and distribute to you, in November of the applicable tax year, an
amount that will satisfy the Internal Revenue Service's minimum distribution
requirements imposed on certain contracts once the owner reaches age 70 1/2 or
retires. These minimum distributions occur during the accumulation phase.

5
<PAGE> 8

FEE TABLE
- --------------------------------------------------------------------------------
CONTRACT CHARGES AND EXPENSES

WITHDRAWAL CHARGE
(as a percentage of the purchase payments and associated credits withdrawn)

<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PAYMENT MADE WITHDRAWAL CHARGE
<S> <C>
0-4 8%
5 7%
6 6%
7 5%
8 3%
9 1%
10+ 0%
</TABLE>

<TABLE>
<S> <C>
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40

(Waived if contract value is $100,000 or more)
</TABLE>

ANNUAL SEPARATE ACCOUNT CHARGES:
(as a percentage of the average daily net assets of the Separate Account)

<TABLE>
<S> <C>
STANDARD DEATH BENEFIT
Mortality & Expense Risk Charge............................. 1.25%
Administrative Expense Charge............................... 0.15%
----
Total Separate Account Charges.......................... 1.40%
ENHANCED DEATH BENEFIT
Mortality & Expense Risk Charge............................. 1.45%
Administrative Expense Charge............................... 0.15%
----
Total Separate Account Charges.......................... 1.60%
</TABLE>

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
MANAGEMENT OPERATING
FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS: REIMBURSEMENT) 12B-1 FEES REIMBURSEMENT) REIMBURSEMENT)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALLIANCE VARIABLE PRODUCT SERIES FUND,
INC.
Premier Growth Portfolio -- Class
B.................................. 1.00% 0.25% 0.04% 1.29%
AMERICAN VARIABLE INSURANCE SERIES
Global Growth Fund -- Class 2........ 0.68% 0.25% 0.03% 0.96%
Growth Fund -- Class 2............... 0.38% 0.25% 0.01% 0.64%
Growth-Income Fund -- Class 2........ 0.34% 0.25% 0.01% 0.60%
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Franklin Small Cap Fund -- Class
2(Formerly offered as Franklin
Small Cap Investments Fund)........ 0.55% 0.25% 0.27% 1.07%(1)
Templeton International Securities
Fund -- Class 2 (Formerly offered
as Templeton International Fund)... 0.69% 0.25% 0.19% 1.13%(2)
GREENWICH STREET SERIES FUND
Appreciation Portfolio............... 0.75% 0.04% 0.79%(3)
Diversified Strategic Income
Portfolio.......................... 0.65% 0.13% 0.78%(3)
Equity Index Portfolio -- Class II
Shares............................. 0.21% 0.25% 0.05% 0.51%(4)
Total Return Portfolio............... 0.75% 0.04% 0.79%(3)
JANUS ASPEN SERIES
Aggressive Growth
Portfolio -- Service Shares........ 0.65% 0.25% 0.02% 0.92%(5)
</TABLE>

6
<PAGE> 9

<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT OPERATING
FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS: REIMBURSEMENT) 12B-1 FEES REIMBURSEMENT) REIMBURSEMENT)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALOMON BROTHERS VARIABLE SERIES FUND
INC.
Capital Fund......................... 0.00% 1.00% 1.00%(6)
Investors Fund....................... 0.53% 0.45% 0.98%(6)
Small Cap Growth Fund................ 0.00% 1.50% 1.50%(6)
THE TRAVELERS SERIES TRUST
Disciplined Small Cap Stock
Portfolio.......................... 0.80% 0.20% 1.00%(7)
Equity Income Portfolio.............. 0.75% 0.13% 0.88%
Large Cap Portfolio.................. 0.75% 0.12% 0.87%
MFS Emerging Growth Portfolio........ 0.75% 0.12% 0.87%
MFS Research Portfolio............... 0.80% 0.19% 0.99%
Strategic Stock Portfolio............ 0.60% 0.30% 0.90%(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)
Smith Barney Aggressive Growth
Portfolio.......................... 0.80% 0.20% 1.00%(9)
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 Mid Cap Portfolio....... 0.75% 0.20% 0.95%(9)
Smith Barney Money Market Portfolio.. 0.50% 0.04% 0.54%(8)
Travelers Managed Income Portfolio... 0.65% 0.11% 0.76%(8)
Van Kampen Enterprise Portfolio...... 0.70% 0.03% 0.73%(8)
VAN KAMPEN LIFE INVESTMENT TRUST
Emerging Growth Portfolio............ 0.67% 0.18% 0.85%(10)
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service
Class.............................. 0.58% 0.10% 0.07% 0.75%(11)
</TABLE>

NOTES:

The purpose of this Fee Table is to assist Contract Owners in understanding the
various costs and expenses that a Contract Owner will bear, directly or
indirectly. 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) On 2/8/00, a merger and reorganization was approved to merge the assets of
FRANKLIN SMALL CAP INVESTMENTS FUND into FRANKLIN SMALL CAP FUND, effective
5/1/00. The above table shows restated total expenses based upon the new
fees and assets of FRANKLIN SMALL CAP 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: Managements Fees 0.55%, Distribution and Service Fee
0.25%, Other expenses 0.27% and Total Fund Operating Expenses 1.07%. The
Fund's Class 2 distribution plan or "Rule 12b-1 Plan" is described in the
Fund's prospectus.

(2) On 2/8/00, fund shareholders approved a merger and reorganization to merge
the assets of TEMPLETON INTERNATIONAL EQUITY FUND into TEMPLETON
INTERNATIONAL FUND (which then changed its name to TEMPLETON INTERNATIONAL
SECURITIES FUND), effective 5/1/00. The table shows restated total expenses
based upon the new fees and assets of TEMPLETON INTERNATIONAL 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 0.65%,
Distribution and Service Fee 0.25%, Other expenses 0.20% and Total Fund
Operating Expenses 1.10%. The Fund's Class distribution plan or "Rule 12b-1
Plan" is described in the Fund's prospectus.

(3) The Portfolio Management Fee for the APPRECIATION PORTFOLIO, the TOTAL
RETURN, and the DIVERSIFIED STRATEGIC INCOME PORTFOLIO includes 0.20% for
fund administration.

7
<PAGE> 10

(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) Expenses are based on the estimated expenses that the new Service Shares
Class expects to incur in its initial fiscal year. All expenses are shown
without the effect of offset arrangements.

(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 0.75%, 15.61%, and 16.36% respectively for the SMALL CAP
GROWTH FUND. Expenses for the Small Cap Growth Fund are annualized.

(7) Travelers Insurance has agreed to reimburse the STRATEGIC STOCK PORTFOLIO
and the DISCIPLINED SMALL CAP STOCK PORTFOLIO for expenses for the period
ended December 31, 1999 which exceeded 0.90% and 1.00% respectively.
Without such voluntary arrangements, the actual annualized Total Annual
Operating Expenses would have been 0.99% and 1.49% respectively.

(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
the Adviser. The Adviser has agreed to reimburse AGGRESSIVE GROWTH
PORTFOLIO and MID CAP PORTFOLIO for the amount by which their aggregate
expenses exceed 1.00% and 0.95% respectively. Without such arrangements
through 2/29/00, the Total Annual Operating Expenses for the Portfolios
would have been 1.76% and 2.46% respectively.

(10) The Adviser has voluntarily agreed to reduce its management fees and to
reimburse the EMERGING GROWTH PORTFOLIO for the amount by which the Total
Annual Operating Expenses exceed the amount set forth in the table above.
If certain expenses had not been assumed by the Adviser, Total Return would
have been lower and the Ratio of Expenses to Average Net Assets would have
been 0.88%.

(11) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with 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 Annual Operating Expenses presented in the table
would have been 0.78% for CONTRAFUND PORTFOLIO -- SERVICE CLASS.

EXAMPLE*: STANDARD DEATH BENEFIT

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:
- ---------------------------------------------------------------------------------------------------------------------------
FUNDING OPTION 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>
ALLIANCE VARIABLE PRODUCT SERIES FUND, INC.
Premier Growth Portfolio -- Class B.... 103 164 213 304 27 84 143 304
AMERICAN VARIABLE INSURANCE SERIES
Global Growth Fund -- Class 2.......... 101 154 197 271 24 74 127 271
Growth Fund -- Class 2................. 97 144 181 238 21 64 111 238
Growth-Income Fund -- Class 2.......... 96 143 179 234 20 63 109 234
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Franklin Small Cap Fund -- Class 2..... 101 157 202 282 25 77 132 282
Templeton International Securities
Fund -- Class 2...................... 102 159 205 288 26 79 135 288
GREENWICH STREET SERIES FUND
Appreciation Portfolio................. 98 149 188 254 22 69 118 254
Diversified Strategic Income
Portfolio............................ 96 140 174 225 20 60 104 225
Equity Index Portfolio -- Class II
Shares............................... 98 149 188 253 22 69 118 253
Total Return Portfolio................. 98 149 188 254 22 69 118 254
JANUS ASPEN SERIES
Aggressive Growth Portfolio -- Service
Shares............................... 100 153 195 267 24 73 125 267
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund........................... 100 155 199 275 24 75 129 275
Investors Fund......................... 100 155 198 273 24 75 128 273
Small Cap Growth Fund.................. 105 170 224 324 29 90 154 324
</TABLE>

8
<PAGE> 11

<TABLE>
<CAPTION>
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
- ---------------------------------------------------------------------------------------------------------------------------
FUNDING OPTION 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>
THE TRAVELERS SERIES TRUST
Disciplined Small Cap Stock
Portfolio............................ 100 155 199 275 24 75 129 275
Equity Income Portfolio................ 99 152 193 263 23 72 123 263
Large Cap Portfolio.................... 99 151 192 262 23 71 122 262
MFS Emerging Growth Portfolio.......... 99 151 192 262 23 71 122 262
MFS Research Portfolio................. 100 155 198 274 24 75 128 274
Strategic Stock Portfolio.............. 99 152 194 265 23 72 124 265
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio.............. 99 150 190 257 23 70 120 257
MFS Total Return Portfolio............. 99 150 191 259 23 70 121 259
Smith Barney Aggressive Growth
Portfolio............................ 100 155 199 275 24 75 129 275
Smith Barney High Income Portfolio..... 97 145 182 241 21 65 112 241
Smith Barney International Equity
Portfolio............................ 100 155 199 275 24 75 129 275
Smith Barney Large Capitalization
Growth Portfolio..................... 99 151 192 261 23 71 122 261
Smith Barney Large Cap Value
Portfolio............................ 97 145 182 242 21 65 112 242
Smith Barney Mid Cap Portfolio......... 101 154 197 271 24 74 127 271
Smith Barney Money Market Portfolio.... 96 141 175 228 20 61 105 228
Travelers Managed Income Portfolio..... 98 148 187 251 22 68 117 251
Van Kampen Enterprise Portfolio........ 98 147 185 248 22 67 115 248
VAN KAMPEN LIFE INVESTMENT TRUST
Emerging Growth Portfolio.............. 99 151 191 260 23 71 121 260
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service
Class................................ 98 148 186 250 22 68 116 250
</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 $40 ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL
CHARGE OF .015% OF ASSETS.

EXAMPLE*: ENHANCED DEATH BENEFIT

Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:

9
<PAGE> 12

<TABLE>
<CAPTION>
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
- ---------------------------------------------------------------------------------------------------------------------------
FUNDING OPTION 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>
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund........................... 102 161 209 295 26 81 139 295
Investors Fund......................... 102 161 208 293 26 81 138 293
Small Cap Growth Fund.................. 107 176 233 342 31 96 163 342
THE TRAVELERS SERIES TRUST
Disciplined Small Cap Stock
Portfolio............................ 102 161 209 295 26 81 139 295
Equity Income Portfolio................ 101 158 203 283 25 78 133 283
Large Cap Portfolio.................... 101 157 202 282 25 77 132 282
MFS Emerging Growth Portfolio.......... 101 157 202 282 25 77 132 282
MFS Research Portfolio................. 102 161 208 294 26 81 138 294
Strategic Stock Portfolio.............. 101 158 204 285 25 78 134 285
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio.............. 101 156 200 277 25 76 130 277
MFS Total Return Portfolio............. 101 157 201 279 25 77 131 279
Smith Barney Aggressive Growth
Portfolio............................ 102 161 209 295 26 81 139 295
Smith Barney High Income Portfolio..... 99 151 192 261 23 71 122 261
Smith Barney International Equity
Portfolio............................ 102 161 209 295 26 81 139 295
Smith Barney Large Capitalization
Growth Portfolio..................... 101 157 202 281 25 77 132 281
Smith Barney Large Cap Value
Portfolio............................ 99 151 192 262 23 71 122 262
Smith Barney Mid Cap Portfolio......... 102 160 207 291 26 80 137 291
Smith Barney Money Market Portfolio.... 98 147 186 249 22 67 116 249
Travelers Managed Income Portfolio..... 100 154 197 271 24 74 127 271
Van Kampen Enterprise Portfolio........ 100 153 195 268 24 73 125 268
VAN KAMPEN LIFE INVESTMENT TRUST
Emerging Growth Portfolio.............. 101 157 201 280 25 77 131 280
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service
Class................................ 100 154 196 270 24 74 126 270
</TABLE>

10
<PAGE> 13

THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Travelers Vintage XTRA Annuity is a contract between the contract owner ("you"),
and the Company. You make purchase payments to us and we credit them to your
Contract. The Company promises 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 of your choice.
We offer multiple variable funding options, and one fixed account option. The
contract owner assumes the risk of gain or loss according to the performance of
the variable funding options. The contract value is the amount of purchase
payments and associated credits, plus or minus any investment experience or
interest. The contract value also reflects all surrenders made and charges
deducted. There is generally no guarantee that at the maturity date the contract
value will equal or exceed the total purchase payments made under the Contract.
The date the contract and its benefits become effective is referred to as the
contract date. Each 12-month period following the contract date is called a
contract year.

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.

CONTRACT OWNER INQUIRIES

Any questions you have about your Contract should be directed to the Company's
Home Office at 1-800-842-8573.

PURCHASE PAYMENTS

The initial purchase payment must be at least $5,000. You may make additional
payments of at least $500 at any time. Under certain circumstances, we may waive
the minimum purchase payment requirement. Purchase payments over $1,000,000 may
be made with our prior consent. 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.

PURCHASE PAYMENT CREDITS

During the first contract year, for each purchase payment you make, we will add
a credit to your contract value. The credit is a percentage of the purchase
payment and depends on the greater age of the owner or annuitant. If the greater
age is 69 or under, the credit is 5%. If the greater age is 70 or over, the
credit is 4%.

The credit will be applied to the Investment Options in the same ratio as the
applicable purchase payment.

We will deduct the credit from any refunds made if:

(a) the contract is returned in the Right to Return period (any gains on
the credit will be included in the refund);

(b) the owner (or the annuitant, with no contingent annuitant surviving)
dies during the first 12 months after the credit is applied; or

11
<PAGE> 14

When we determine the amount of credit deducted from any refund amount or death
benefit under (b) or (c), we will not include a credit's investment gains or
losses.

NOTE: We have applied to the SEC for permission to deduct the credit from
refunds made under (b) or (c). Until the permission is granted, we will not
deduct the credit in such circumstances.

ACCUMULATION UNITS

The period between the contract effective date and the maturity date is the
accumulation period. During the accumulation period, an accumulation unit is
used to calculate the value of a Contract. An accumulation unit works like a
share of a mutual fund. Each funding option has a corresponding accumulation
unit value. The accumulation units are valued each business day and their values
may increase or decrease from day to day. The number of accumulation units we
will credit to your Contract once we receive a purchase payment is determined by
dividing the amount directed to each funding option by the value of its
accumulation unit. We calculate the value of an accumulation unit for each
funding option each day the New York Stock Exchange is open. The values are
calculated as of 4:00 p.m. Eastern time. After the value is calculated, we
credit your Contract. During the annuity period (i.e., after the maturity date),
you are credited with annuity units.

THE FUNDING OPTIONS

You choose which of the following variable funding options to have your purchase
payments allocated to. These funding options are subsections of the Separate
Account, which invest in the underlying mutual funds ("underlying funds"). You
will find detailed information about the options and their inherent risks in the
current prospectuses for the funding options which must accompany this
prospectus. You are not investing directly in the underlying fund. Since each
option has varying degrees of risk, please read the prospectuses carefully
before investing. Contact your registered representative or call 1-800-842-8573
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:

12
<PAGE> 15

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST
Franklin Small Cap Fund Seeks long-term capital growth. The Fund seeks to Franklin Advisers, Inc.
(Class 2) accomplish its objective by investing primarily
(normally at least 65% of its assets) in equity
securities of smaller capitalization growth companies.
Templeton International Seeks long-term capital growth through a flexible policy Templeton Investment
Securities Fund (Class of investing in stocks and debt obligations of companies Counsel, Inc.
2) and governments outside the United States. Any income
realized will be incidental.
GREENWICH STREET SERIES
FUND
Appreciation Portfolio Seeks long term appreciation of capital by investing SSB Citi Fund Management
primarily in equity securities. LLC. ("SSB Citi")
Diversified Strategic Seeks high current income by investing primarily in the SSB Citi
Income Portfolio following fixed income securities: U.S. Gov't and Subadviser: Smith Barney
mortgage-related securities, foreign gov't bonds and Global Capital Management,
corporate bonds rated below investment grade. Inc.
Equity Index Portfolio Seeks to replicate, before deduction of expenses, the Travelers Investment
Class II Shares total return performance of the S&P 500 Index. Management Co. ("TIMCO")
Total Return Portfolio (an equity portfolio) Seeks to provide total return, SSB Citi
consisting of long-term capital appreciation and income.
The Portfolio will invest primarily in a diversified
portfolio of dividend-paying common stocks.
JANUS ASPEN SERIES
Aggressive Growth Portfolio -- Service Shares Seeks Janus Capital
long-term capital growth by investing primarily in
common stocks selected for their growth potential,
normally investing at least 50% in the equity assets of
medium-sized companies.
SALOMON BROTHERS VARIABLE
SERIES FUNDS, INC.
Capital Fund Seeks capital appreciation, primarily through Salomon Brothers Asset
investments in common stocks which are believed to have Management ("SBAM")
above-average price appreciation potential and which may
involve above average risk.
Investors Fund Seeks long-term growth of capital, and, secondarily, SBAM
current income, through investments in common stocks of
well-known companies.
Small Cap Growth Fund Seeks long-term growth of capital by investing primarily SBAM
in equity securities of companies with market
capitalizations similar to that of companies included in
the Russell Small Cap Growth Fund 2000 Index.
THE TRAVELERS SERIES TRUST
Disciplined Small Cap Seeks long term capital appreciation by investing Travelers Asset Management
Stock Portfolio primarily (at least 65% of its total assets) in the International LLC
common stocks of U.S. Companies with relatively small ("TAMIC") Subadviser:
market capitalizations at the time of investment. TIMCO
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.
Large Cap Portfolio Seeks long-term growth of capital by investing primarily TAMIC
in equity securities of companies with large market Subadviser: FMR
capitalizations.
MFS Emerging Growth Seeks to provide long-term growth of capital. Dividend TAMIC
Portfolio and interest income from portfolio securities, if any, Subadviser: Massachusetts
is incidental to the MFS Portfolio's investment Financial Services ("MFS")
objective.
MFS Research Portfolio Seeks to provide long-term growth of capital and future TAMIC
income. Subasviser: MFS
</TABLE>

13
<PAGE> 16

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE ADVISER/SUBADVISER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Strategic Stock Seeks to provide an above-average total return through a TAMIC
Portfolio 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 SERIES FUND INC.
Alliance Growth Seeks long-term growth of capital. Current income is Travelers Investment
Portfolio only an incidental consideration. The Portfolio invests Adviser ("TIA")
predominantly in equity securities of companies with a Subadviser: Alliance
favorable outlook for earnings and whose rate of growth Capital Management L.P.
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: MFS
equity securities) consistent with the prudent
employment of capital. Generally, at least 40% of the
Portfolio's assets are invested in equity securities.
Smith Barney Aggressive Seeks capital appreciation by investing primarily in SSB Citi
Growth Portfolio common stocks of companies that are experiencing, or
have the potential to experience, growth of earnings, or
that exceed the average earnings growth rate of
companies whose securities are included in the S&P 500.
Smith Barney High Seeks high current income. Capital appreciation is a SSB Citi
Income Portfolio secondary objective. The Portfolio will invest at least
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 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 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 Mid Cap Seeks long-term growth of capital by investing primarily SSB Citi
Portfolio in equity securities of medium-sized companies with
market capitalizations between $1 billion and $5 billion
at the time of investment.
Smith Barney Money Seeks maximum current income and preservation of SSB Citi
Market Portfolio capital.
Travelers Managed Seeks high current income consistent with prudent risk TIA
Income Portfolio of capital through investments in corporate debt Subadviser: TAMIC
obligations, preferred stocks, and obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities.
Van Kampen Enterprise Seeks capital appreciation through investment in SSB Citi
Portfolio securities believed to have above-average potential for Subadviser: Van Kampen
capital appreciation. Any income received on such Asset Management Inc.
securities is incidental to the objective of Van Kampen
Asset capital appreciation.
VAN KAMPEN LIFE INVESTMENT
TRUST
Emerging Growth Portfolio Seeks capital appreciation by investing primarily in Van Kampen Asset
common stocks of companies considered to be emerging Management Inc.
growth companies.
VARIABLE INSURANCE PRODUCTS
FUND II
Contrafund(R) Portfolio -- Seeks long-term capital appreciation by investing FMR
Service Class primarily in common stocks of companies whose value the
adviser believes is not fully recognized by the public.
</TABLE>

14
<PAGE> 17

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. 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, annuitant, or
first of the joint contract owners,

- 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 Smith
Barney Financial Consultant, and

- other costs of doing business.

Risks we assume include:

- 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 or the maximum of all step-up values for the Enhanced Death
Benefit, and

- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.

We may also deduct a charge for taxes.

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

15
<PAGE> 18

considered in the calculation of the withdrawal charge in the first year. We
will assess the charge as a percentage of the purchase payment and associated
credits withdrawn as follows:

<TABLE>
<S> <C>
YEARS SINCE PURCHASE
PAYMENT MADE WITHDRAWAL CHARGE
0-4 8%
5 7%
6 6%
7 5%
8 3%
9 1%
10+ 0%
</TABLE>

For purposes of the withdrawal charge calculation, withdrawals are deemed to be
taken first from:

(a) any purchase payment and associated credits to which no withdrawal
charge applies, and then

(b) any remaining free withdrawal allowance (as described below) (after
being reduced by (a)), then

(c) from any purchase payment and associated credits to which a withdrawal
charge applies (on a first-in, first-out basis), then

(d) from any Contract earnings.

Unless you instruct us otherwise, we will deduct the withdrawal charge from the
amount requested.

We will not deduct a withdrawal charge if purchase payments are distributed:

- due to the death of the contract owner or the annuitant (with no
contingent annuitant surviving);

- under the Travelers Minimum Distribution Program; or

- under the Nursing Home Confinement provision (as described in Appendix
D).

We will not deduct a withdrawal charge from purchase payment credits if paid out
under the Travelers Minimum Distribution Program

FREE WITHDRAWAL ALLOWANCE

Beginning in the second contract year, you may withdraw up to 10% of the
contract value annually. We calculate the available withdrawal amount as of the
end of the previous Contract year. The free withdrawal provision applies to all
partial withdrawals. We reserve the right to not permit the provision on a full
surrender. In Washington state, the free withdrawal provision applies to all
withdrawals.

ADMINISTRATIVE CHARGES

We will deduct an annual contract administrative charge on the fourth Friday of
each August from Contracts with a value of less than $100,000 on that date. This
charge compensates us for expenses incurred in establishing and maintaining the
Contract. The $40 charge is deducted from the contract value by canceling
accumulation units applicable to each variable funding option on a pro rata
basis. For the first Contract year this charge will be prorated (i.e.
calculated) from the

16
<PAGE> 19

date of purchase. A prorated charge will also be made if the Contract is
completely withdrawn or terminated. We will not deduct a contract administrative
charge:

(1) from the distribution of death proceeds;

(2) after an annuity payout has begun, or

(3) if the contract value on the date of assessment equals or is greater
than $100,000.

An administrative expense charge (sometimes called "sub-account administrative
charge") is deducted on each business day from amounts allocated to the variable
funding options in order to compensate the Company for certain related
administrative and operating expenses. The charge equals, on an annual basis,
0.15% of the daily net asset value allocated to each of the variable funding
options.

MORTALITY AND EXPENSE RISK CHARGE

Each business day, the Company deducts a mortality and expense risk ("M&E")
charge from amounts held in the variable funding options. The deduction is
reflected in our calculation of accumulation and annuity unit values. The
charges stated are the maximum for this product. We reserve the right to lower
this charge at any time. If you choose the Standard Death Benefit, the M&E
charge is 1.25% annually. If you choose the Enhanced Death Benefit, the M&E
charge is 1.45% annually. This charge compensates the Company for 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 contract 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.

TRANSFERS
- --------------------------------------------------------------------------------

Up to 30 days before the maturity date, you may transfer all or part of the
contract value between funding options. Transfers are made at the value(s) next
determined after we receive your request at the Home Office. There are no
charges or restrictions on the amount or frequency of transfers currently;
however, we reserve the right to charge a fee for any transfer request, and to
limit the number of transfers to one in any six-month period. We also 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

17
<PAGE> 20

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.

Since different funding options have different expenses, a transfer of contract
values from one funding option to another could result in your investment
becoming subject to higher or lower expenses. After the maturity date, you may
make transfers between funding options only with our consent.

DOLLAR COST AVERAGING

Dollar cost averaging or the pre-authorized transfer program (the "DCA Program")
allows you 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. You must have a minimum total contract value of $5,000 to enroll
in the DCA Program. The minimum amount that may be transferred through this
program is $400.

You may establish pre-authorized transfers of contract values from the Fixed
Account, subject to certain restrictions. Under the DCA Program, automated
transfers from the Fixed Account may not deplete your Fixed Account Value in
less than twelve months from your enrollment in the DCA 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 in12 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> 21

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.

ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------

Any time before the maturity date, you may redeem all or any portion of the cash
surrender value, that is, the contract value less any withdrawal charge and any
premium tax not previously deducted. Unless you submit a written request
specifying the fixed or variable funding option(s) from which amounts are to be
withdrawn, the withdrawal will be made on a pro rata basis. The cash surrender
value will be determined as of the close of business after we receive your
surrender request at the Home Office. The cash surrender value may be more or
less than the purchase payments made. Withdrawals during the annuity period are
not allowed.

We may defer payment of any cash surrender value for a period of up to seven
days after the written request is received, but it is our intent to pay as soon
as possible. We cannot process requests for withdrawals that are not in good
order. We will contact you if there is a deficiency causing a delay and will
advise what is needed to act upon the withdrawal request.

SYSTEMATIC WITHDRAWALS

After the first contract year and before the maturity date, you may choose to
withdraw a specified dollar amount (at least $100) 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 $15,000 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.

MANAGED DISTRIBUTION PROGRAM. Under the systematic withdrawal option, you may
choose to participate in the Managed Distribution Program. At no cost to you,
you may instruct us to calculate and make minimum distributions that may be
required by the IRS upon reaching age 70 1/2. (See "Federal Tax
Considerations.") These payments will not be subject to the withdrawal charge
and will be in lieu of the free withdrawal allowance. No Dollar Cost Averaging
will be permitted if you are participating in the Managed Distribution Program.

OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------

TYPES OF OWNERSHIP

CONTRACT OWNER

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

19
<PAGE> 22

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.

Joint Owner. For nonqualified contracts only, joint owners (e.g. spouses) may
be named in a written request before the contract is in effect. Joint owners may
independently exercise transfers allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them.

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.

A contingent annuitant may not be changed, deleted or added after the Contract
becomes effective.

DEATH BENEFIT
- --------------------------------------------------------------------------------

Before the maturity date, when there is no contingent annuitant, a death benefit
is payable when either the annuitant or a contract owner dies. At purchase, you
elect either the Standard Death Benefit, or the Enhanced Death Benefit (also
referred to as the "Annual step-up"). The death benefit is calculated at the
close of the business day on which the Company's Home Office receives due proof
of death and written payment instructions ("death report date).

For both the Standard and Enhanced Death Benefit, we must be notified of the
annuitant's death no later than six months from the date of death in order to
pay the death proceeds as described under "Death Proceeds Before the Maturity
Date." If we are notified more than six months after the death, we will pay
death proceeds equal to the contract value on the death report date, less any
purchase payment credits applied within 12 months of death, less any applicable
premium tax.

DEATH PROCEEDS BEFORE THE MATURITY DATE

STANDARD DEATH BENEFIT: The Company will pay the beneficiary an amount equal to
the greater of (1) and (2) below, each reduced by any applicable premium tax and
withdrawals (and charges) not previously deducted:

1) the contract value, less any purchase payment credits applied within 12
months of the death; or

2) the total purchase payments made under the Contract.

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<PAGE> 23

ENHANCED DEATH BENEFIT: The Company will pay the beneficiary a death benefit in
an amount equal to the greatest of (1), (2) or (3) below, each reduced by any
applicable premium tax, withdrawals (and charges) not previously deducted:

1) the contract value, less any purchase payment credits applied within 12
months of the death;

2) the total purchase payments less any partial withdrawals made under the
Contract; or

3) the "step-up value" as described below.

STEP-UP VALUE. The step-up value will initially equal the first purchase
payment. When an additional purchase payment is made, the step-up value will be
increased by the amount of that purchase payment. When a partial surrender is
taken, the step-up value will be reduced by a partial surrender reduction as
described below. On each Contract anniversary before the annuitant's 80th
birthday and before the annuitant's death, if the contract value less any
purchase payment credits applied within the last 12 months is greater than the
step-up value, the step-up value will be reset to equal that greater amount. The
step-up value will not be reduced on these anniversary recalculations (provided
no surrenders are made on that day). The only changes made to the step-up value
on or after the annuitant's 80th birthday will be those related to additional
purchase payments or partial surrenders.

PARTIAL SURRENDER REDUCTION. If you make a partial surrender, the step-up value
is reduced by a partial surrender reduction which equals (1) the step-up value,
multiplied by (2) the amount of the partial surrender, divided by (3) the
contract value before the surrender, less any credits applied within 12 months
of the death.

For example, assume your current contract value is $55,000. If your original
step-up value is $50,000, and you decide to make a partial withdrawal of
$10,000, the step-up value would be reduced as follows:

50,000 X (10,000/55,000) = 9,090

Your new step-up value would be 50,000-9,090, or $40,910.

The following example shows what would happen in a declining market. Assume your
current contract value is $30,000. If your original step-up value is $50,000,
and you decide to make a partial withdrawal of $10,000, the step-up value would
be reduced as follows:

50,000 X (10,000/30,000) = 16,666

Your new step-up value would be 50,000-16,500, or $33,334.

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. The charts do not encompass every situation and
are merely intended as a general guide. More detailed information is provided in
your Contract. Generally, the person(s) receiving the benefit may request that
the proceeds be paid in a lump sum, or be applied to one of the settlement
options available under the Contract.

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<PAGE> 24

NONQUALIFIED CONTRACTS

<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAY THE UNLESS... MANDATORY PAYOUT
THE DEATH OF THE PROCEEDS TO: RULES APPLY*
- --------------------------------------------------------------------------------------------------------------
Owner (who is not the The beneficiary (ies), Unless, the beneficiary is Yes
annuitant) (with no joint or if none, to the the contract owner's spouse
owner) contract owner's estate. and the spouse elects to
continue the contract as the
new owner rather than receive
the distribution.
- --------------------------------------------------------------------------------------------------------------
Owner (who is the annuitant) The beneficiary (ies), Unless, the beneficiary is Yes
(with no joint owner) 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.
- --------------------------------------------------------------------------------------------------------------
Joint Owner (who is not the The surviving joint Unless the surviving joint Yes
annuitant) owner. owner is the spouse and
elects to assume and continue
the contract.
- --------------------------------------------------------------------------------------------------------------
Joint Owner (who is the The beneficiary (ies), Unless the beneficiary is the Yes
annuitant) or if none, to the contract owner's spouse and
contract owner's estate. the spouse elects to assume
and continue the contract.
Or, unless there is a
contingent annuitant the
contingent annuitant becomes
the annuitant and the
proceeds will be paid to the
surviving joint owner. If the
surviving joint owner is the
spouse, the spouse may elect
to assume and continue the
contract.
- --------------------------------------------------------------------------------------------------------------
Annuitant (who is not the The beneficiary (ies). Unless, there is a contingent No
contract owner) annuitant. Then, the
contingent annuitant becomes
the annuitant and the
Contract continues in effect
(generally using the original
maturity date). The proceeds
will then be paid upon the
death of the contingent
annuitant or 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.)
- --------------------------------------------------------------------------------------------------------------
Contingent Annuitant (assuming No death proceeds are N/A
annuitant is still alive) payable; contract
continues.
- --------------------------------------------------------------------------------------------------------------
</TABLE>

22
<PAGE> 25

* 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.

QUALIFIED CONTRACTS

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) or elect a lump
sum distribution. 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 Contract unless the Contract has been fully surrendered or
the proceeds have been paid to the beneficiary before that date, or unless you
elect another 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.

23
<PAGE> 26

You may choose to annuitize at any time after you purchase the contract. Unless
you elect otherwise, the maturity date will be the annuitant's 90th birthday or
ten years after the effective date of the contract, if later. (For Contracts
issued in Florida and New York, the maturity date elected may not be later than
the annuitant's 90th birthday.)

At least 30 days before the original maturity date, a contract owner may elect
to extend the maturity date to any time prior to the annuitant's 90th birthday
or to a later date with the Company's consent. Certain annuity options taken at
the maturity date may be used to meet the minimum required distribution
requirements of federal tax law, or a program of partial surrenders may be used
instead. These mandatory distribution requirements take effect generally upon
the death of the contract owner, or with qualified contracts upon either the
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 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.

24
<PAGE> 27

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.

PAYMENT OPTIONS
- --------------------------------------------------------------------------------

ELECTION OF OPTIONS

While the annuitant is alive, you can change your annuity option selection any
time up to the maturity date. Once annuity payments have begun, no further
elections are allowed.

During the annuitant's lifetime, if you do not elect otherwise before the
maturity date, we will pay you (or another designated payee) the first of a
series of monthly annuity payments based on the life of the annuitant, in
accordance with Annuity Option 2 (Life Annuity with 120 monthly payments
assured). For certain qualified contracts, Annuity Option 4 (Joint and Last
Survivor Joint Life Annuity -- Annuity Reduced on Death of Primary Payee) will
be the automatic option as described in the Contract.

The minimum amount that can be placed under an annuity option will be $2,000
unless we agree to a lesser amount. If any monthly periodic payment due is less
than $100, the Company reserves the right to make payments at less frequent
intervals, or to pay the contract value in a lump-sum.

On the maturity date, we will pay the amount due under the Contract in
accordance with the payment option that you select. You may choose to receive a
single lump-sum payment. You must elect an option in writing, in a form
satisfactory to the Company. Any election made during the lifetime of the
annuitant must be made by the contract owner.

ANNUITY OPTIONS

Subject to the conditions described in "Election of Options" above, all or any
part of the cash surrender value (less any applicable premium taxes) may be paid
under one or more of the following annuity options. Payments under the annuity
options may be elected on a monthly, quarterly, semiannual or annual basis. We
may offer additional options.

Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments
during the lifetime of the annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for beneficiaries.

Option 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Assured. The
Company will make monthly annuity payments during the lifetime of the annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months as elected, we will continue making
payments to the beneficiary during the remainder of the period.

Option 3 -- Joint and Last Survivor Life Annuity -- No Refund. The Company will
make regular annuity payments during the lifetime of the annuitant and a second
person. When either person dies, we will continue making payments to the
survivor. No further payments will be made following the death of the survivor.

25
<PAGE> 28

payee. On the death of the secondary payee, the Company will continue to make
monthly annuity payments to the primary payee in the same amount that would have
been payable during the joint lifetime of the two persons. On the death of the
primary payee, the Company will continue to make annuity payments to the
secondary payee in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee. No further payments will be made
once both payees have died.

Option 5 -- Payments for a Fixed Period. (Fixed Account Only). We will make
periodic payments for the period selected.

MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------

RIGHT TO RETURN

You may return the Contract for a full refund of the contract value (including
charges minus any Purchase Payment Credits) within ten days after you receive it
(the "right to return period"). You bear the investment risk on the purchase
payment during the right to return period; therefore, the contract value
returned may be greater or less than your purchase payment.

If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your purchase payment minus
any Purchase Payment Credits will be refunded in full; during the remainder of
the right to return period, the contract value (including charges minus any
Purchase Payment Credits) will be refunded.

The contract value will be determined following the close of the business day on
which we receive the Contract and a written request for a refund. Where state
law requires a longer period, or the return of purchase payments or other
variations of this provision, the Company will comply. Refer to your Contract
for any state-specific information.

TERMINATION

You do not need to make any purchase payments after the first to keep the
Contract in effect. However, we reserve the right to terminate the Contract on
any business day if the contract value as of that date is less than $2,000 and
no purchase payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the contract owner's last known
address and to any assignee of record. If the Contract is terminated, we will
pay you the cash surrender value (minus any credits applied within 12 months of
termination)less any applicable premium tax, and any applicable administrative
charge.

REQUIRED REPORTS

As often as required by law, but at least once in each contract year before the
due date of the first annuity payment, we will furnish a report showing the
number of accumulation units credited to the Contract and the corresponding
accumulation unit value(s) as of the report date for each funding option to
which the contract owner has allocated amounts during the applicable period. The
Company will keep all records required under federal and state laws.

26
<PAGE> 29

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 Account's net assets; or (4)
during any other period when the SEC, by order, so permits for the protection of
security holders.

TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES

Where state law permits, we may allow contract owners to transfer their contract
values into other annuities offered by us or our affiliated insurance companies
under rules then in effect.

THE SEPARATE ACCOUNTS
- --------------------------------------------------------------------------------

The Travelers Insurance Company and the Travelers Life and Annuity Company each
sponsor separate accounts: The Travelers Fund BD III for Variable Annuities
("Fund BD III") and the Travelers Fund BD IV for Variable Annuities ("Fund BD
IV"), respectively. Both Fund BD III and Fund BD IV were established on March
27, 1997 and are registered with the SEC as unit investment trusts (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 assets of Fund BD III and Fund BD IV are held for the exclusive and separate
benefit of the owners of each 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 "non-standardized 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 annual
administrative charge is converted to a percentage of assets based on the actual
fee collected (or anticipated to be collected, if a new product), divided by the
average net assets for Contracts sold (or anticipated to be sold). Each
quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.

27
<PAGE> 30

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 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.

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

28
<PAGE> 31

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.

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.

29
<PAGE> 32

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 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.

30
<PAGE> 33

OTHER INFORMATION
- --------------------------------------------------------------------------------

THE INSURANCE COMPANIES

Please refer to the table on the first page of the Summary of this prospectus to
determine which company issued your Contract.

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.

The Travelers Life and Annuity Company is a stock insurance company chartered in
1973 in Connecticut and continuously engaged in the insurance business since
that time. It is licensed to conduct life insurance business in a majority of
the states of the United States, the District of Columbia and Puerto Rico, and
intends to seek licensure in the remaining states, except New York. 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.

FINANCIAL STATEMENTS

The financial statements for each insurance company and for each separate
account are located in their respective Statements of Additional Information.

IMSA

The Companies are members of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and IMSA membership in
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities. IMSA members have adopted policies and
procedures that demonstrate a commitment to honesty, fairness and integrity in
all customer contacts involving the sale and service of individual life
insurance and annuity products.

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

31
<PAGE> 34

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.

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 Companies, their 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 Companies.

THE TRAVELERS INSURANCE 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, violation 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, the
Superior Court of Richmond County transferred the lawsuit to the Superior Court
of Gwinnett County, Georgia. The plaintiffs appealed the transfer order, and in
December 1998 the Court of Appeals of the State of Georgia reversed the lower
court's decision. Later in December 1998, defendants petitioned the Georgia
Supreme Court to hear the appeal from the decision of the Court of Appeals,
which was granted in May 1999. In September 1999, the Georgia Supreme Court
heard oral argument on defendant's petition for an order reversing the Georgia
Court of Appeals and transferring the lawsuit from the Superior Court of
Richmond County to the Superior Court of Gwinnett County. The Georgia Supreme
Court reversed its decision, and has not yet issued its opinion. Pending appeal,
proceedings in the trial court have been stayed. Defendants intend to vigorously
contest the litigation.

THE TRAVELERS LIFE AND ANNUITY COMPANY

There are no pending material legal proceedings affecting the Separate Account,
the principal underwriter or the Company.

32
<PAGE> 35

APPENDIX A
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES

<TABLE>
<CAPTION>
PERIOD FROM OCTOBER 14, 1999
PORTFOLIO NAME TO DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------
STANDARD ENHANCED
<S> <C> <C>
ALLIANCE VARIABLE PRODUCT SERIES FUND
PREMIER GROWTH PORTFOLIO CLASS B (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.127 1.127
Number of units outstanding at end of year................ 76,688 96,188
AMERICAN VARIABLE INSURANCE SERIES
GLOBAL GROWTH FUND -- CLASS 2(11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.301 1.301
Number of units outstanding at end of year................ -- 35,494
GROWTH FUND -- CLASS 2 (12/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.184 1.183
Number of units outstanding at end of year................ -- 32,012
GROWTH-INCOME FUND CLASS 2
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
TEMPLETON VARIABLE PRODUCTS SERIES TRUST(1)
FRANKLIN SMALL CAP INVESTMENTS FUND CLASS 2
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
TEMPLETON INTERNATIONAL FUND CLASS 2
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
GREENWICH STREET SERIES SECURITIES FUND
APPRECIATION PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
DIVERSIFIED STRATEGIC INCOME PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
EQUITY INDEX PORTFOLIO CLASS II
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
TOTAL RETURN PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
CAPITAL FUND
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
INVESTORS FUND
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
SMALL CAP GROWTH FUND
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
</TABLE>

A-1
<PAGE> 36
APPENDIX A
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)

<TABLE>
<CAPTION>
PERIOD FROM OCTOBER 14, 1999
PORTFOLIO NAME TO DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------
STANDARD ENHANCED
<S> <C> <C>
THE TRAVELERS SERIES TRUST
DISCIPLINED SMALL CAP STOCK PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
EQUITY INCOME PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
LARGE CAP PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.126 1.125
Number of units outstanding at end of year................ 7,030 --
MFS EMERGING GROWTH PORTFOLIO (12/96)
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
MFS RESEARCH PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
STRATEGIC STOCK PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
TRAVELERS SERIES FUND INC.
ALLIANCE GROWTH PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.149 1.149
Number of units outstanding at end of year................ 11,645 --
MFS TOTAL RETURN PORTFOLIO................................ -- --
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
SMITH BARNEY AGGRESSIVE GROWTH PORTFOLIO (12/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.210 1.209
Number of units outstanding at end of year................ 66,995 --
SMITH BARNEY HIGH INCOME PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
Unit Value at beginning of year........................... -- --
Unit Value at end of year................................. -- --
Number of units outstanding at end of year................ -- --
SMITH BARNEY LARGE CAPITALIZATION GROWTH
PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.090 1.090
Number of units outstanding at end of year................ 11,616 --
SMITH BARNEY LARGE CAP VALUE PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 0.998 0.998
Number of units outstanding at end of year................ -- 46,952
SMITH BARNEY MID CAP PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.166 1.165
Number of units outstanding at end of year................ 4,746 36,659
</TABLE>

A-2
<PAGE> 37
APPENDIX A
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)

The financial statements of Fund BD III and the consolidated financial
statements of The Travelers Insurance Company and Subsidiaries are contained in
the SAI.
Any funds not listed above were not yet available as of December 31, 1999.

The date shown next to the name of each funding option is the date money first
came into the Separate Account.

(1) Formerly Templeton Variable Products Series Fund.

A-3
<PAGE> 38

APPENDIX B

CONDENSED FINANCIAL INFORMATION

- --------------------------------------------------------------------------------

THE TRAVELERS FUND BD IV FOR VARIABLE ANNUITIES

ACCUMULATION UNIT VALUES

<TABLE>
<CAPTION>
PERIOD FROM OCTOBER 14, 1999
PORTFOLIO NAME TO DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------
STANDARD ENHANCED
<S> <C> <C>
ALLIANCE VARIABLE PRODUCT SERIES FUND
PREMIER GROWTH PORTFOLIO CLASS B (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.127 1.127
Number of units outstanding at end of year................ 2,118,594 5,273,207
AMERICAN VARIABLE INSURANCE SERIES
GLOBAL GROWTH FUND -- CLASS 2(11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.301 1.301
Number of units outstanding at end of year................ 496,228 1,335,904
GROWTH FUND -- CLASS 2 (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.184 1.183
Number of units outstanding at end of year................ 790,492 4,513,981
GROWTH-INCOME FUND -- CLASS 2 (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.031 1.031
Number of units outstanding at end of year................ 1,022,054 2,847,709
TEMPLETON VARIABLE PRODUCTS SERIES TRUST(1)
FRANKLIN SMALL CAP INVESTMENTS FUND CLASS 2 (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.173 1.172
Number of units outstanding at end of year................ 719,638 1,075,985
TEMPLETON INTERNATIONAL FUND CLASS 2 (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.109 1.109
Number of units outstanding at end of year................ 445,419 940,873
GREENWICH STREET SERIES SECURITIES FUND
APPRECIATION PORTFOLIO(11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.044 1.043
Number of units outstanding at end of year................ 407,917 1,032,853
DIVERSIFIED STRATEGIC INCOME PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 0.999 0.999
Number of units outstanding at end of year................ 156,084 315,232
EQUITY INDEX PORTFOLIO CLASS II (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.063 1.063
Number of units outstanding at end of year................ 638,959 1,331,138
TOTAL RETURN PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.048 1.048
Number of units outstanding at end of year................ 29,295 193,248
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
CAPITAL FUND (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.032 1.032
Number of units outstanding at end of year................ 42,351 144,350
INVESTORS FUND (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.014 1.014
Number of units outstanding at end of year................ 69,063 323,132
SMALL CAP GROWTH FUND (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.213 1.213
Number of units outstanding at end of year................ 56,346 334,378
THE TRAVELERS SERIES TRUST
DISCIPLINED SMALL CAP STOCK PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.082 1.082
Number of units outstanding at end of year................ 36,483 64,294
</TABLE>

B-1
<PAGE> 39

APPENDIX B

CONDENSED FINANCIAL INFORMATION

- --------------------------------------------------------------------------------

THE TRAVELERS FUND BD IV FOR VARIABLE ANNUITIES

ACCUMULATION UNIT VALUES (CONTINUED)

<TABLE>
<CAPTION>
PERIOD FROM OCTOBER 14, 1999
PORTFOLIO NAME TO DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------
STANDARD ENHANCED
<S> <C> <C>
EQUITY INCOME PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.052 1.052
Number of units outstanding at end of year................ 174,100 581,591
LARGE CAP PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.126 1.125
Number of units outstanding at end of year................ 500,514 715,311
MFS EMERGING GROWTH PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.433 1.432
Number of units outstanding at end of year................ 936,269 1,856,574
MFS RESEARCH PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.135 1.135
Number of units outstanding at end of year................ 307,732 648,369
STRATEGIC STOCK PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 0.993 .0992
Number of units outstanding at end of year................ 35,199 1,165
TRAVELERS SERIES FUND INC.
ALLIANCE GROWTH PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.149 1.149
Number of units outstanding at end of year................ 1,333,895 2,482,793
MFS TOTAL RETURN PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.003 1.002
Number of units outstanding at end of year................ 229,693 421,734
SMITH BARNEY AGGRESSIVE GROWTH PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.210 1.209
Number of units outstanding at end of year................ 1,210,115 1,899,455
SMITH BARNEY HIGH INCOME PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.015 1.015
Number of units outstanding at end of year................ 222,226 431,806
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.230 1.229
Number of units outstanding at end of year................ 945,011 456,157
SMITH BARNEY LARGE CAPITALIZATION GROWTH
PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.090 1.090
Number of units outstanding at end of year................ 2,526,512 2,543,458
SMITH BARNEY LARGE CAP VALUE PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 0.998 0.998
Number of units outstanding at end of year................ 1,119,883 676,689
SMITH BARNEY MID CAP PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.166 1.165
Number of units outstanding at end of year................ 501,324 583,087
SMITH BARNEY MONEY MARKET PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 1.006 1.005
Number of units outstanding at end of year................ 2,574,330 4,261,461
TRAVELERS MANAGED INCOME PORTFOLIO (11/99)
Unit Value at beginning of year........................... 1.000 1.000
Unit Value at end of year................................. 0.997 0.997
Number of units outstanding at end of year................ 194,554 346,462
</TABLE>

B-2
<PAGE> 40

APPENDIX B

CONDENSED FINANCIAL INFORMATION

- --------------------------------------------------------------------------------

THE TRAVELERS FUND BD IV FOR VARIABLE ANNUITIES

ACCUMULATION UNIT VALUES (CONTINUED)

The financial statements of Fund BD IIV and the financial statements of The
Travelers Life and Annuity Company are contained in the SAI.

Any funds not listed above were not yet available as of December 31, 1999.

The date shown next to each funding option is the date money first came into the
funding option through the Separate Account.

(1) Formerly Templeton Variable Products Series Fund.

B-3
<PAGE> 41

APPENDIX C
- --------------------------------------------------------------------------------

THE FIXED ACCOUNT
The Fixed Account is secured by part of the general assets of the Company. The
general assets of the Company include all assets of the Company other than those
held in the separate accounts sponsored by the Company or its affiliates.
The staff of the SEC does not generally review the disclosure in the prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account and the
general account may, however, be subject to certain provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus.
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of the Separate Account or any of
the funding options does not affect the Fixed Account portion of the contract
owner's contract value, or the dollar amount of fixed annuity payments made
under any payout option.
We guarantee that, at any time, the Fixed Account contract value will not be
less than the amount of the purchase payments allocated to the Fixed Account,
plus interest credited as described below, less any applicable premium taxes or
prior surrenders.
Purchase payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of, the Securities
Act of 1933 or Investment Company Act of 1940. We will invest the assets of the
Fixed Account at our discretion. Investment income from such Fixed Account
assets will be allocated to us and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to us includes compensation
for mortality and expense risks borne by us in connection with Fixed Account
Contracts. The amount of such investment income allocated to the Contracts will
vary from year to year in our sole discretion at such rate or rates as we
prospectively declare from time to time.
The initial rate for any allocations into the Fixed Account is guaranteed for
one year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. We also guarantee that for the life of the
Contract we will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in our sole discretion. You assume the risk that interest credited
to the Fixed Account may not exceed the minimum guarantee of 3% for any given
year.
TRANSFERS
You may make transfers from the Fixed Account to any other available funding
option(s) twice a year during the 30 days following the semiannual anniversary
of the contract effective date. The transfers are limited to an amount of up to
15% of the Fixed Account Value on the semiannual contract effective date
anniversary. (This restriction does not apply to transfers under the Dollar Cost
Averaging Program.) Amounts previously transferred from the Fixed Account to
other funding options may not be transferred back to the Fixed Account for a
period of at least six months from the date of transfer. We reserve the right to
waive either of these restrictions.
Automated transfers from the Fixed Account to any of the funding options may
begin at any time. Automated transfers from the Fixed Account may not deplete
your Fixed

C-1
<PAGE> 42

APPENDIX D
- --------------------------------------------------------------------------------

WAIVER OF WITHDRAWAL CHARGE FOR NURSING HOME CONFINEMENT
(AVAILABLE ONLY IF ENHANCED DEATH BENEFIT IS ELECTED.)
(This waiver is not available if the Annuitant is age 71
or older on the date the Contract is issued.)
If, after the first contract year and before the maturity date, the annuitant
begins confinement in an Eligible Nursing Home, you may make a total or partial
withdrawal, subject to the maximum withdrawal amount described below, without
incurring a Withdrawal Charge. In order for the Withdrawal Charge to be waived,
the withdrawal must be made during continued confinement in an Eligible Nursing
Home after the qualifying period has been satisfied, or within sixty (60) days
after such confinement ends. The qualifying period is confinement in an Eligible
Nursing Home for ninety (90) consecutive days. We will require proof of
confinement in a form satisfactory to us, which may include certification by a
licensed physician that such confinement is medically necessary.
An Eligible Nursing Home is defined as an institution or special nursing unit of
a hospital which:
(a) is Medicare approved as a provider of skilled nursing care services; and
(b) is not, other than in name only, an acute care hospital, a home for the
aged, a retirement home, a rest home, a community living center, or a place
mainly for the treatment of alcoholism, mental illness or drug abuse.
OR
Meets all of the following standards:
(a) is licensed as a nursing care facility by the state in which it is licensed;
(b) is either a freestanding facility or a distinct part of another facility
such as a ward, wing, unit or swing-bed of a hospital or other facility;
(c) provides nursing care to individuals who are not able to care for themselves
and who require nursing care;
(d) provides, as a primary function, nursing care and room and board; and
charges for these services;
(e) provides care under the supervision of a licensed physician, registered
nurse (RN) or licensed practical nurse (LPN);
(f) may provide care by a licensed physical, respiratory, occupational or speech
therapist; and
(g) is not, other than in name only, an acute care hospital, a home for the
aged, a retirement home, a rest home, a community living center, or a place
mainly for the treatment of alcoholism, mental illness or drug abuse.
FILING A CLAIM: You must provide the Company with written notice of a claim
during continued confinement after the 90-day qualifying period, or within sixty
days after such confinement ends.
The maximum withdrawal amount for which we will waive the Withdrawal Charge is
the contract value on the next valuation date following written proof of claim,
less any purchase payments made within a one-year period before confinement in
an Eligible Nursing Home begins, less any purchase payments made on or after the
Annuitant's 71st birthday.
Any withdrawal requested which falls under the scope of this waiver will be paid
as soon as we receive proper written proof of your claim, and will be paid in a
lump sum. You should consult with your personal tax adviser regarding the tax
impact of any withdrawals taken from your contract.

D-1
<PAGE> 43

APPENDIX E
- --------------------------------------------------------------------------------

CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

The Statement of Additional Information contains more specific information and
financial statements relating to The Travelers Insurance Company or The
Travelers Life and Annuity Company. A list of the contents of the Statement of
Additional Information is set forth below:

The Insurance Company
Principal Underwriter
Distribution and Principal Underwriting Agreement
Valuation of Assets
Performance Information
Mixed and Shared Funding
Federal Tax Considerations
Independent Accountants
Financial Statements

- --------------------------------------------------------------------------------

Copies of the Statement of Additional Information dated May 1, 2000 are
available without charge. To request a copy, please clip this coupon on the
dotted line above, enter your name and address in the spaces provided below, and
mail to: The Travelers Insurance Company, Annuity Investor Services, One Tower
Square, Hartford, Connecticut 06183. The Travelers Insurance Company Statement
of Additional Information is printed on Form L-21261S, and the The Travelers
Life and Annuity Statement of Additional Information is printed on Form
L-21262S.

Name:
- ----------------------------------------

Address:
- ----------------------------------------

- ----------------------------------------

E-1
<PAGE> 44

THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 45

L-21261 May 1, 2000
<PAGE> 46

TRAVELERS PORTFOLIO ARCHITECT XTRA ANNUITY PROSPECTUS:
THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
THE TRAVELERS FUND BD IV FOR VARIABLE ANNUITIES

This prospectus describes TRAVELERS PORTFOLIO ARCHITECT XTRA ANNUITY, a flexible
premium variable annuity contract (the "Contract") issued by The Travelers
Insurance Company or The Travelers Life and Annuity Company, depending on the
state in which you purchased your Contract. The Contract is available in
connection with certain retirement plans that qualify for special federal income
tax treatment ("qualified Contracts") as well as those that do not qualify for
such treatment ("nonqualified Contracts"). We may issue it as an individual
Contract or as a group Contract. In states where only group Contracts are
available, you will be issued a certificate summarizing the provisions of the
group Contract. For convenience, we refer to Contracts and certificates as
"Contracts."

You can choose to have your premium ("purchase payments") accumulate on a fixed
basis and/or a variable basis. Your contract value will vary daily to reflect
the investment experience of the subaccounts ("funding options") you select and
any interest credited to the Fixed Account. The variable funding options are:

Capital Appreciation Fund
Money Market Portfolio
ALLIANCE VARIABLE PRODUCT SERIES FUND
Premier Growth Portfolio Class B
DELAWARE GROUP PREMIUM FUND, INC.
REIT Series
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio*
Small Cap Portfolio
GREENWICH STREET SERIES FUND
Equity Index Portfolio Class II
JANUS ASPEN SERIES
Balanced Portfolio Service Shares
Global Life Sciences Portfolio Service Shares
Global Technology Portfolio Service Shares
Worldwide Growth Porfolio Service Shares
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
Capital Fund
Investors Fund
Small Cap Growth Fund
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio
MFS Total Return Portfolio
Putnam Diversified Income Portfolio
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio
Disciplined Mid Cap Stock Portfolio
Disciplined Small Cap Stock Portfolio
Equity Income Portfolio
Federated High Yield Portfolio
Federated Stock Portfolio
Large Cap Portfolio
Lazard International Stock Portfolio
MFS Emerging Growth Portfolio
MFS Mid Cap Growth Portfolio
MFS Research Portfolio
Strategic Stock Portfolio
Travelers Quality Bond Portfolio
VARIABLE INSURANCE PRODUCTS FUND II (FIDELITY)
Contrafund(R) Portfolio -- Service Class 2
WARBURG PINCUS TRUST
Emerging Markets Portfolio

- ---------------

* Formerly Capital Appreciation Portfolio.

The Fixed Account is described in Appendix A. Unless specified otherwise, this
prospectus refers to the variable funding options. The contracts and/or some of
the funding options may not be available in all states. THIS PROSPECTUS IS VALID
ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE VARIABLE FUNDING
OPTIONS. READ AND RETAIN THEM FOR FUTURE REFERENCE.

This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about The Travelers Fund
BD III for Variable Annuities or The Travelers Fund BD IV for Variable Annuities
("Separate Account") by requesting a copy of the 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 copy, write to The Travelers Insurance Company,
Annuity Investor Services, One Tower Square, Hartford, Connecticut 06183, call
1-800-842-9368 or access the SEC's website (http://www.sec.gov). See Appendix C
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> 47

TABLE OF CONTENTS

<TABLE>
<S> <C>
Index of Special Terms................ 2
Summary............................... 3
Fee Table............................. 7
The Annuity Contract.................. 12
Contract Owner Inquiries......... 12
Purchase Payments................ 12
Purchase Payment Credits......... 12
Accumulation Units............... 13
The Funding Options.............. 13
Charges and Deductions................ 16
General.......................... 16
Withdrawal Charge................ 17
Free Withdrawal Allowance........ 17
Administrative Charges........... 17
Mortality and Expense Risk
Charge......................... 18
Funding Option Expenses.......... 18
Premium Tax...................... 18
Changes in Taxes Based Upon
Premium or Value............... 18
Transfers............................. 18
Dollar Cost Averaging............ 19
Access to Your Money.................. 20
Systematic Withdrawals........... 20
Managed Distribution Program..... 20
Ownership Provisions.................. 20
Types of Ownership............... 20
Contract Owner................. 20
Beneficiary.................... 21
Annuitant...................... 21
Death Benefit......................... 21
Death Proceeds Before the
Maturity Date.................. 21
Payment of Proceeds.............. 22
Death Proceeds After the Maturity
Date........................... 24
The Annuity Period.................... 24
Maturity Date.................... 24
Allocation of Annuity............ 24
Variable Annuity................. 25
Fixed Annuity.................... 25
Payment Options....................... 25
Election of Options.............. 25
Annuity Options.................. 26
Miscellaneous Contract Provisions..... 26
Right to Return.................. 26
Termination...................... 27
Required Reports................. 27
Suspension of Payments........... 27
Transfers of Contract Values to
Other Annuities................ 27
The Separate Accounts................. 27
Performance Information.......... 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 for
Variable Annuities............. 30
Ownership of the Investments..... 30
Mandatory Distributions for
Qualified Plans................ 31
Taxation of Death Benefit
Proceeds....................... 31
Other Information..................... 31
The Insurance Companies.......... 31
Financial Statements............. 31
IMSA............................. 32
Distribution of Variable Annuity
Contracts...................... 32
Conformity with State and Federal
Laws........................... 32
Voting Rights.................... 32
Legal Proceedings and Opinions... 32
Appendix A: The Fixed Account......... A-1
Appendix B: Waiver of Withdrawal
Charge for Nursing Home
Confinement......................... B-1
Appendix C: Contents of the Statement
of Additional Information........... 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..................... 13
Accumulation Period................... 13
Annuitant............................. 21
Annuity Payments...................... 12
Annuity Unit.......................... 13
Cash Surrender Value.................. 20
Contingent Annuitant.................. 21
Contract Date......................... 12
Contract Owner (You, Your)............ 20
Contract Value........................ 12
Contract Year......................... 12
Death Report Date..................... 21
Fixed Account......................... A-1
Funding Option(s)..................... 13
Maturity Date......................... 12
Purchase Payment...................... 12
Purchase Payment Credit............... 12
Underlying Fund....................... 13
Written Request....................... 12
</TABLE>

2
<PAGE> 48

SUMMARY:
TRAVELERS PORTFOLIO ARCHITECT XTRA 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.

Your issuing company is The Travelers Life and Annuity Company unless you
purchased your Contract in the locations listed below which contracts are issued
by The Travelers insurance Company.

<TABLE>
<S> <C>
Bahamas New Hampshire
British Virgin Islands Oregon(1)
Guam U.S. Virgin Islands
</TABLE>

- ---------------

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.

3
<PAGE> 49

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 (1) individual nonqualified purchases; (2) rollovers from
Individual Retirement Annuities (IRAs); and (3) rollovers from other qualified
retirement plans. Qualified contracts include contracts qualifying under Section
401, 403(b) or 408(b) of the Internal Revenue Code of 1986, as amended. Purchase
of this Contract through a tax qualified retirement plan ("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 this Contract for its Death Benefit, Annuity Option
Benefits, and other non-tax-related benefits.

You may purchase the Contract with an initial payment of at least $5,000. You
may make additional payments of at least $500 at any time during the
accumulation phase.

IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you will receive a full refund of the contract value
(including charges, minus any Purchase Payment Credits). Where state law
requires a longer right to return period, or the return of purchase payments,
the Company will comply. You bear the investment risk on the purchase payment
during the right to return period; therefore, the Contract value returned may be
greater or less than your purchase payment.

If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your full purchase payment
minus any Purchase Payment Credits will be refunded. During the remainder of the
right to return period, the Contract value (including charges, minus any
Purchase Payment Credits) will be refunded. The Contract value will be
determined at the close of business on the day we receive a written request for
a refund.

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. The product offered through this Separate Account is new, and therefore
has no past performance. However, the funding options have been available for
various time periods. Performance information that predates the initial offering
of this Contract is considered "nonstandard" by the SEC. Nonstandard performance
is shown in the Statement of Additional Information that you may request free of
charge.

4
<PAGE> 50

You may transfer between the Fixed Account and the funding options twice a year
(during the 30 days after the six-month contract date anniversary), provided the
amount is not greater than 15% of the Fixed Account Value on that date.

WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. For
contracts with a value of less than $100,000, the Company deducts an annual
administrative charge of $40. The subaccount administrative charge and the
mortality and expense risk ("M&E") charge are deducted from the amounts in the
variable funding options. The subaccount administrative charge is 0.15%
annually. The annual M&E charge depends on the death benefit you choose: 1.25%
for the Standard Death Benefit, and 1.45% for the Enhanced Death Benefit. Each
underlying Fund also charges for management and other expenses.

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? You may choose to purchase the
Standard or Enhanced Death Benefit The death benefit applies upon the first
death of the owner, joint owner, or annuitant. Assuming you are the Annuitant,
the death benefit is as follows: If you die before the Contract is in the payout
phase, the person you have chosen as your beneficiary will receive a death
benefit. The death benefit value is calculated at the close of the business day
on which the Company's Home Office receives due proof of death and written
payment instructions. The enhanced death benefit may not be available in all
states. Certain states may have varying age requirements. Please refer to the
Death Benefit section in the prospectus for more details.

ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:

5
<PAGE> 51

Potential investors should consider their financial ability to continue
purchases through periods of low price levels.

- - AUTOMATIC REBALANCING. You may elect to have the Company periodically
reallocate the values in your Contract to match your original (or your latest)
funding option allocation request.

6
<PAGE> 52

FEE TABLE
- --------------------------------------------------------------------------------

CONTRACT CHARGES AND EXPENSES

WITHDRAWAL CHARGE(as a percentage of the purchase
payments and associated credits withdrawn)

YEARS SINCE PURCHASE

PAYMENT MADE WITHDRAWAL CHARGE
0-4 8%
5 7%
6 6%
7 5%
8 3%
9 1%
10+ 0%

ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(Waived if contract value is $100,000 or more)

ANNUAL SEPARATE ACCOUNT CHARGES:
(as a percentage of the average daily net assets of the
Separate Account)

<TABLE>
<CAPTION>
STANDARD ENHANCED
DEATH DEATH
BENEFIT BENEFIT
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Mortality & Expense Risk Charge....................... 1.25% 1.45%
Administrative Expense Charge......................... 0.15% 0.15%
----- -----
Total Separate Account Charges...................... 1.40% 1.60%

FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the Funding Option as of December 31,
1999, unless otherwise noted).
</TABLE>

<TABLE>
<CAPTION>
TOTAL
ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS: REIMBURSEMENT) 12B-1 FEES REIMBURSEMENT) REIMBURSEMENT)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Fund.................. 0.75% 0.08% 0.83%
Money Market Portfolio..................... 0.32% 0.08% 0.40%(1)
ALLIANCE VARIABLE PRODUCT SERIES FUND, INC.
Premier Growth Portfolio -- Class B.... 1.00% 0.25% 0.04% 1.29%
DELAWARE GROUP PREMIUM FUND
REIT Series............................ 0.64% 0.21% 0.85%(2)
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)
JANUS ASPEN SERIES
Balanced Portfolio -- Service Shares... 0.65% 0.25% 0.02% 0.92%(5)
Global Life Sciences
Portfolio -- Service Shares.......... 0.65% 0.25% 0.19% 1.09%(5)
Global Technology Portfolio -- Service
Shares............................... 0.65% 0.25% 0.13% 1.03%(5)
Worldwide Growth Portfolio -- Service
Shares............................... 0.65% 0.25% 0.05% 0.95%(5)
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund........................... 0.00% 1.00% 1.00%(6)
Investors Fund......................... 0.53% 0.45% 0.98%(6)
Small Cap Growth Fund.................. 0.00% 1.50% 1.50%(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)
</TABLE>

7
<PAGE> 53

<TABLE>
<CAPTION>
TOTAL
ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS: REIMBURSEMENT) 12B-1 FEES REIMBURSEMENT) REIMBURSEMENT)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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)
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 Emerging Growth Portfolio.......... 0.75% 0.12% 0.87%
MFS Mid Cap Growth Portfolio........... 0.80% 0.20% 1.00%(8)
MFS Research Portfolio................. 0.80% 0.19% 0.99%
Strategic Stock Portfolio.............. 0.60% 0.30% 0.90%(8)
Travelers Quality Bond Portfolio....... 0.32% 0.22% 0.54%
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service
Class 2.............................. 0.58% 0.25% 0.07% 0.90%(10)
WARBURG PINCUS TRUST
Emerging Markets Portfolio............. 0.00% 1.40% 1.40%(11)
</TABLE>

NOTES:

(1) Other Expenses have been restated to reflect the current expense
reimbursement arrangement with Travelers Insurance Company. Travelers has
agreed to reimburse the Fund for the amount by which its aggregate expenses
(including the management fee, but excluding brokerage commissions,
interest charges and taxes) exceeds 0.40%. 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.

(5) Expenses are based on the estimated expenses that the new Service Shares
Class of each Portfolio expects to incur in its initial fiscal year. All
expenses are shown without the effect of offset arrangements.

(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 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

8
<PAGE> 54

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 its 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
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 Annual Operating Expenses presented in the table
would have been 0.95% for CONTRAFUND PORTFOLIO -- SERVICE CLASS 2. Service
Class 2 expenses are based on estimated expenses for the first year.

(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> 55

EXAMPLE*: STANDARD DEATH BENEFIT

Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses. The examples assume the purchase payment credit is
included in, and not added to, the $1,000 assumed investment.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
------------------------------------- -------------------------------------
FUNDING OPTION 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................. 99 150 190 258 23 70 120 258
Money Market Portfolio.................... 94 137 168 214 18 57 98 214
ALLIANCE VARIABLE PRODUCT SERIES FUND,
INC.
Premier Growth Portfolio -- Class B... 103 164 213 304 27 84 143 304
DELAWARE GROUP PREMIUM FUND
REIT Series........................... 99 151 191 260 23 71 121 260
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio................ 98 149 188 253 22 69 118 253
Small Cap Portfolio................... 98 149 188 253 22 69 118 253
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class II
Shares.............................. 96 140 174 225 20 60 104 225
JANUS ASPEN SERIES
Balanced Portfolio -- Service
Shares.............................. 100 153 195 267 24 73 125 267
Global Life Sciences
Portfolio -- Service Shares......... 101 158 203 284 25 78 133 284
Global Technology Portfolio -- Service
Shares.............................. 101 156 200 278 25 76 130 278
Worldwide Growth Portfolio -- Service
Shares.............................. 100 154 196 270 24 74 126 270
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund.......................... 100 155 199 275 24 75 129 275
Investors Fund........................ 100 155 198 273 24 75 128 273
Small Cap Growth Fund................. 105 170 224 324 29 90 154 324
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio............. 99 150 190 257 23 70 120 257
MFS Total Return Portfolio............ 99 150 191 259 23 70 121 259
Putnam Diversified Income Portfolio... 99 150 190 258 23 70 120 258
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio............ 98 149 189 255 22 69 119 255
Disciplined Mid Cap Stock Portfolio... 100 154 196 270 24 74 126 270
Disciplined Small Cap Stock
Portfolio........................... 100 155 199 275 24 75 129 275
Equity Income Portfolio............... 99 152 193 263 23 72 123 263
Federated High Yield Portfolio........ 99 150 191 259 23 70 121 259
Federated Stock Portfolio............. 99 150 190 257 23 70 120 257
Large Cap Portfolio................... 99 151 192 262 23 71 122 262
Lazard International Stock
Portfolio........................... 101 157 202 281 25 77 132 281
MFS Emerging Growth Portfolio......... 99 151 192 262 23 71 122 262
MFS Mid Cap Growth Portfolio.......... 100 155 199 275 24 75 129 275
MFS Research Portfolio................ 100 155 198 274 24 75 128 274
Strategic Stock Portfolio............. 99 152 194 265 23 72 124 265
Travelers Quality Bond Portfolio...... 96 141 175 228 20 61 105 228
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service
Class 2............................. 99 152 194 265 23 72 124 265
WARBURG PINCUS TRUST
Emerging Markets Portfolio............ 104 167 219 314 28 87 149 314
</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 $40 ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL CHARGE OF
0.015% OF ASSETS.

10
<PAGE> 56

EXAMPLE*: ENHANCED DEATH BENEFIT

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
------------------------------------- -------------------------------------
FUNDING OPTION 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................. 101 156 200 278 25 76 130 278
Money Market Portfolio.................... 96 143 179 235 20 63 109 235
ALLIANCE VARIABLE PRODUCT SERIES FUND,
INC.
Premier Growth Portfolio -- Class B... 105 170 223 323 29 90 153 323
DELAWARE GROUP PREMIUM FUND
REIT Series........................... 101 157 201 280 25 77 131 280
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio................ 100 155 198 273 24 75 128 273
Small Cap Portfolio................... 100 155 198 273 24 75 128 273
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class II
Shares.............................. 98 147 184 246 22 67 114 246
JANUS ASPEN SERIES
Balanced Portfolio -- Service
Shares.............................. 102 159 205 287 26 79 135 287
Global Life Sciences
Portfolio -- Service Shares......... 103 164 213 304 27 84 143 304
Global Technology Portfolio -- Service
Shares.............................. 103 162 210 298 27 82 140 298
Worldwide Growth Portfolio -- Service
Shares.............................. 102 160 206 290 26 80 136 290
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund.......................... 102 161 209 295 26 81 139 295
Investors Fund........................ 102 161 208 293 26 81 138 293
Small Cap Growth Fund................. 107 176 233 342 31 96 163 342
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio............. 101 156 200 277 25 76 130 277
MFS Total Return Portfolio............ 101 157 201 279 25 77 131 279
Putnam Diversified Income Portfolio... 101 156 200 278 25 76 130 278
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio............ 100 155 199 275 24 75 129 275
Disciplined Mid Cap Stock Portfolio... 102 160 206 290 26 80 136 290
Disciplined Small Cap Stock
Portfolio........................... 102 161 209 295 26 81 139 295
Equity Income Portfolio............... 101 158 203 283 25 78 133 283
Federated High Yield Portfolio........ 101 157 201 279 25 77 131 279
Federated Stock Portfolio............. 101 156 200 277 25 76 130 277
Large Cap Portfolio................... 101 157 202 282 25 77 132 282
Lazard International Stock
Portfolio........................... 103 163 212 301 27 83 142 301
MFS Emerging Growth Portfolio......... 101 157 202 282 25 77 132 282
MFS Mid Cap Growth Portfolio.......... 102 161 209 295 26 81 139 295
MFS Research Portfolio................ 102 161 208 294 26 81 138 294
Strategic Stock Portfolio............. 101 158 204 285 25 78 134 285
Travelers Quality Bond Portfolio...... 98 147 186 249 22 67 116 249
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund(R) Portfolio -- Service
Class 2............................. 101 158 204 285 25 78 134 285
WARBURG PINCUS TRUST
Emerging Markets Portfolio............ 106 173 228 333 30 93 158 333
</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 $40 ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL CHARGE OF
0.015% OF ASSETS.

11
<PAGE> 57

THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------

Travelers Portfolio Architect XTRA Annuity is a contract between the contract
owner ("you"), and the Company. You make purchase payments to us and we credit
them to your Contract. The Company promises 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 of your
choice. We offer multiple variable funding options, and one fixed account
option. The contract owner assumes the risk of gain or loss according to the
performance of the variable funding options. The contract value is the amount of
purchase payments and associated credits, plus or minus any investment
experience or interest. The contract value also reflects all surrenders made and
charges deducted. There is generally no guarantee that at the maturity date the
contract value will equal or exceed the total purchase payments made under the
Contract. The date the contract and its benefits become effective is referred to
as the contract date. Each
12-month period following the contract date is called a contract year.

CONTRACT OWNER INQUIRIES

Any questions you have about your Contract should be directed to the Company's
Home Office at 1-800-842-9368.

PURCHASE PAYMENTS

PURCHASE PAYMENT CREDITS

The credit will be applied to the Investment Options in the same ratio as the
applicable purchase payment.

We will deduct the credit from any refunds made if:

(a) the contract is returned in the Right to Return period (any gains on
the credit will be included in the refund);

(b) the owner (or the annuitant, with no contingent annuitant surviving)
dies during the first 12 months after the credit is applied; or

12
<PAGE> 58

When we determine the amount of credit deducted from any refund amount or death
benefit under (b) or (c), we will not include a credit's investment gains or
losses.

NOTE: We have applied to the SEC for permission to deduct the credit from
refunds made under (b) or (c). Until the permission is granted, we will
not deduct the credit in such circumstances.

ACCUMULATION UNITS

THE FUNDING OPTIONS

You choose which of the following variable funding options to have your purchase
payments allocated to. These funding options are subsections of the Separate
Account, which invest in the underlying mutual funds ("underlying funds"). You
will find detailed information about the options and their inherent risks in the
current prospectuses for the funding options which must accompany this
prospectus. You are not investing directly in the underlying fund. Since each
option has varying degrees of risk, please read the prospectuses carefully
before investing. Contact your registered representative or call 1-800-842-9368
to request additional copies of the prospectuses.

The current variable funding options are listed below, along with their
investment advisers and any subadviser:

ALLIANCE VARIABLE PRODUCT
SERIES FUND
Premier Growth Portfolio Seeks long-term growth of capital by investing Alliance Capital Management
Class B primarily in equity securities of a limited number
of large, carefully selected, high quality U.S.
companies that are judged likely to achieve
superior earning momentum.
</TABLE>

13
<PAGE> 59

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE ADVISER/SUBADVISER
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DELAWARE GROUP PREMIUM
FUND
REIT Series Seeks maximum long-term total return by investing Delaware Management Company,
in securities of companies primarily engaged in Inc.
the real estate industry. Capital appreciation is Subadviser: Lincoln Investment
a secondary objective. Management, Inc.
DREYFUS VARIABLE INVESTMENT
FUND
Appreciation Portfolio Seeks primarily to provide long-term capital The Dreyfus Corporation
growth consistent with the preservation of Subadviser: Fayez Sarofim & Co.
capital; current income is a secondary investment
objective. The portfolio invests primarily in the
common stocks of domestic and foreign insurers.
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, Travelers Investment Management
Class II the total return performance of the S&P 500 Index. Co. ("TIMCO")
JANUS ASPEN SERIES
Balanced Portfolio--Service Seeks long-term capital growth, consistent with Janus Capital
Shares preservation of capital and balanced by current
income.
Global Life Sciences Seeks long-term capital growth by investing Janus Capital
Portfolio--Service Shares primarily in equity securities of U.S. and foreign
companies, normally investing at least 65% of its
total assets in companies with a life science
orientation.
Global Technology Seeks long-term capital growth by investing Janus Capital
Portfolio--Service Shares primarily in equity securities of U.S. and foreign
companies, normally investing at least 65% of its
total assets in companies likely to benefit
significantly from advances in technology.
Worldwide Growth Seeks growth of capital in a manner consistent Janus Capital
Portfolio--Service Shares with preservation of capital by investing
primarily in common stocks of companies of any
size throughout the world.
SALOMON BROTHERS VARIABLE
SERIES FUND INC.
Capital Fund Seeks capital appreciation, primarily through Salomon Brothers Asset
investments in common stocks which are believed to Management ("SBAM")
have above-average price appreciation potential
and which may involve above average risk.
Investors Fund Seeks long-term growth of capital, and, SBAM
secondarily, current income, through investments
in common stocks of well-known companies.
Small Cap Growth Fund Seeks long-term growth of capital by investing SBAM
primarily in equity securities of companies with
market capitalizations similar to that of
companies included in the Russell 2000 Index.
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio Seeks long-term growth of capital. Current income Travelers Investment Adviser,
is only an incidental consideration. The Portfolio Inc. ("TIA")
invests predominantly in equity securities of Subadviser: Alliance Capital
companies with a favorable outlook for earnings Management L.P.
and whose rate of growth is expected to exceed
that of the U.S. economy over time.
MFS Total Return Portfolio (a balanced portfolio) Seeks to obtain TIA
above-average income (compared to a portfolio Subadviser: Massachusetts
entirely invested in equity securities) consistent Financial Services Company
with the prudent employment of capital. Generally, ("MFS")
at least 40% of the Portfolio's assets are
invested in equity securities.
Putnam Diversified Income Seeks high current income consistent with TIA
Portfolio preservation of capital. The Portfolio will Subadviser: Putnam Investment
allocate its investments among the U.S. Government Management, Inc.
Sector, the High Yield Sector, and the
International Sector of the fixed income
securities markets.
</TABLE>

14
<PAGE> 60

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE ADVISER/SUBADVISER
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THE TRAVELERS SERIES TRUST
Convertible Bond Portfolio Seeks current income and capital appreciation by TAMIC
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 TAMIC
Portfolio a broadly diversified portfolio of U.S. common Subadviser: TIMCO
stocks.
Disciplined Small Cap Stock Seeks long term capital appreciation by investing TAMIC
Portfolio primarily (at least 65% of its total assets) in Subadviser: TIMCO
the 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% TAMIC
in income-producing equity securities. The balance Subadviser: Fidelity Management
may be invested in all types of domestic and & Research Co ("FMR")
foreign securities, including bonds. The Portfolio
seeks to achieve a yield that exceeds that of the
securities comprising the S&P 500. The Subadviser
also considers the potential for capital
appreciation.
Federated High Yield Seeks high current income by investing primarily TAMIC
Portfolio in a professionally managed, diversified portfolio Subadviser: Federated
of fixed income securities. Investment Counseling, Inc.
Federated Stock Portfolio Seeks growth of income and capital by investing TAMIC
principally in a professionally managed and Subadviser: Federated
diversified portfolio of common stock of Investment Counseling, Inc.
high-quality companies (i.e., leaders in their
industries and characterized by sound management
and the ability to finance expected growth).
Large Cap Portfolio Seeks long-term growth of capital by investing TAMIC
primarily in equity securities of companies with Subadviser: FMR
large market capitalizations.
Lazard International Stock Seeks capital appreciation by investing primarily TAMIC
Portfolio in the equity securities of non-United States Subadviser: Lazard Asset
companies (i.e., incorporated or organized outside Management
the United States).
MFS Emerging Growth Seeks to provide long-term growth of capital. TAMIC
Portfolio Dividend and interest income from portfolio Subadviser: MFS
securities, if any, is incidental to the MFS
Portfolio's investment objective.
MFS Mid Cap Growth Seeks to obtain long-term growth of capital by TAMIC
Portfolio investing, under normal market conditions, at Subadviser: MFS
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 TAMIC
future income. Subadviser: MFS
Strategic Stock Portfolio Seeks to provide an above-average total return TAMIC
through a combination of potential capital Subadviser: TIMCO
appreciation and 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 TAMIC
and total return.
VARIABLE INSURANCE PRODUCTS
FUND II
Contrafund(R) Portfolio-- Seeks long-term capital appreciation by investing FMR
Service Class 2 primarily in common stocks of companies whose
value the adviser believes is not fully recognized
by the public.
</TABLE>

15
<PAGE> 61

CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------

GENERAL

- the ability for you to make withdrawals and surrenders under the
Contracts;

- the death benefit paid on the death of the contract owner, annuitant, or
first of the joint contract owners,

- 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 sales
agent, and

- other costs of doing business.

Risks we assume include:

- 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 or the maximum of all step-up values for the Enhanced Death
Benefit, and

- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.

We may also deduct a charge for taxes.

Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.

16
<PAGE> 62

WITHDRAWAL CHARGE

We do not deduct a sales charge from purchase payments when they are made to the
Contract. However, a withdrawal charge will apply if purchase payments and
associated credits are withdrawn before they have been in the Contract for ten
years. Purchase payment credits are not considered in the calculation of the
withdrawal charge in the first year. We will assess the charge as a percentage
of the purchase payment and associated credits withdrawn as follows:

<TABLE>
<CAPTION>
YEARS SINCE PURCHASE WITHDRAWAL
PAYMENT MADE CHARGE
<S> <C>
0-4 8%
5 7%
6 6%
7 5%
8 3%
9 1%
10+ 0%
</TABLE>

For purposes of the withdrawal charge calculation, withdrawals are deemed to be
taken first from:

(a) any purchase payment and associated credits to which no withdrawal
charge applies, and then

(b) any remaining free withdrawal allowance (as described below) (after
being reduced by (a)), then

(c) from any purchase payment and associated credits to which a
withdrawal charge applies (on a first-in, first-out basis), then

(d) from any Contract earnings.

Unless you instruct us otherwise, we will deduct the withdrawal charge from the
amount requested.

We will not deduct a withdrawal charge if purchase payments are distributed:

- due to the death of the contract owner or the annuitant (with no
contingent annuitant surviving);

- under the Travelers Minimum Distribution Program; or

- under the Nursing Home Confinement provision (as described in Appendix B)

We will not deduct a withdrawal charge from purchase payment credits if paid out
under the Travelers Minimum Distribution Program.

FREE WITHDRAWAL ALLOWANCE

ADMINISTRATIVE CHARGES

17
<PAGE> 63

date of purchase. A prorated charge will also be made if the Contract is
completely withdrawn or terminated. We will not deduct a contract administrative
charge:

(1) from the distribution of death proceeds;

(2) after an annuity payout has begun, or

(3) if the contract value on the date of assessment equals or is greater
than $100,000.

MORTALITY AND EXPENSE RISK CHARGE

Each business day, the Company deducts a mortality and expense risk ("M&E")
charge from amounts held in the variable funding options. The deduction is
reflected in our calculation of accumulation and annuity unit values. The
charges stated are the maximum for this product. We reserve the right to lower
this charge at any time. If you choose the Standard Death Benefit, the M&E
charge is 1.25% annually. If you choose the Enhanced Death Benefit, the M&E
charge is 1.45% annually. 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

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.

TRANSFERS
- --------------------------------------------------------------------------------

18
<PAGE> 64

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

You may elect the DCA Program through written request or other method acceptable
to the Company. You must have a minimum total Contract Value of $5,000 to enroll
in the DCA Program. The minimum amount that may be transferred through this
program is $400.

You may establish pre-authorized transfers of Contract Values from the Fixed
Account, subject to certain restrictions. Under the DCA Program, automated
transfers from the Fixed Account may not deplete your Fixed Account Value in
less than twelve months from your enrollment in the DCA Program.

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.

19
<PAGE> 65

ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------

SYSTEMATIC WITHDRAWALS

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).

OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------

TYPES OF OWNERSHIP

20
<PAGE> 66

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

A contingent annuitant may not be changed, deleted or added after the Contract
becomes effective.

DEATH BENEFIT
- --------------------------------------------------------------------------------

DEATH PROCEEDS BEFORE THE MATURITY DATE

1) the contract value, less any purchase payment credits applied
within 12 months of the death; or

2) the total purchase payments made under the Contract.

21
<PAGE> 67

1) the contract value, less any purchase payment credits applied
within 12 months of the death;

2) the total purchase payments less any partial withdrawals made under
the Contract; or

3) the "step-up value" as described below.

50,000 x (10,000/55,000) = 9,090

Your new step-up value would be 50,000-9,090, or $40,910.

50,000 x (10,000/30,000) = 16,666

Your new step-up value would be 50,000-16,666, or $33,334.

PAYMENT OF PROCEEDS

NONQUALIFIED CONTRACTS

22
<PAGE> 68

NONQUALIFIED CONTRACTS (CONTINUED)

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
MANDATORY
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL PAYOUT RULES
THE DEATH OF THE PAY THE PROCEEDS TO: UNLESS. . . APPLY*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OWNER (WHO IS THE ANNUITANT) The Unless, the beneficiary is the Yes
(WITH NO JOINT OWNER) beneficiary(ies), or contract owner's spouse and the
if none, to the spouse elects to continue the
contract owner's contract as the new owner rather than
estate. receive the distribution.
- ---------------------------------------------------------------------------------------------------------------
JOINT OWNER (WHO IS NOT THE The surviving joint Unless the surviving joint owner is Yes
ANNUITANT) owner. the spouse and elects to assume and
continue the contract.
- ---------------------------------------------------------------------------------------------------------------
JOINT OWNER (WHO IS THE The Unless the beneficiary is the Yes
ANNUITANT) beneficiary(ies), or contract owner's spouse and the
if none, to the spouse elects to assume and continue
contract owner's the contract.
estate.
Or, unless there is a contingent
annuitant the contingent annuitant
becomes the annuitant and the
proceeds will be paid to the
surviving joint owner. If the
surviving joint owner is the spouse,
the spouse may elect to assume and
continue the contract.
- ---------------------------------------------------------------------------------------------------------------
ANNUITANT (WHO IS NOT THE The Unless, there is a contingent No
CONTRACT OWNER) beneficiary(ies). annuitant. Then, the contingent
annuitant becomes the annuitant and
the Contract continues in effect
(generally using the original
maturity date). The proceeds will
then be paid upon the death of the
contingent annuitant or owner.
- ---------------------------------------------------------------------------------------------------------------
ANNUITANT (WHO IS THE CONTRACT See death of "owner N/A
OWNER) who 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.)
- ---------------------------------------------------------------------------------------------------------------
CONTINGENT ANNUITANT (ASSUMING No death proceeds N/A
ANNUITANT IS STILL ALIVE) are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
CONTINGENT BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

23
<PAGE> 69

QUALIFIED CONTRACTS

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL MANDATORY PAYOUT
THE DEATH OF THE PAY THE PROCEEDS TO: UNLESS. . . RULES APPLY*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OWNER/ANNUITANT The Yes
beneficiary(ies), or
if none, to the
contract owner's
estate.
- ---------------------------------------------------------------------------------------------------------------
BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
CONTINGENT BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

DEATH PROCEEDS AFTER THE MATURITY DATE

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 payouts (annuity options) or elect a
lump sum distribution. 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 Contract unless the Contract has been fully
surrendered or the proceeds have been paid to the beneficiary before that date,
or unless you elect another 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.

At least 30 days before the original maturity date, a contract owner may elect
to extend the maturity date to any time prior to the annuitant's 90th birthday
or to a later date with the Company's consent. Certain annuity options taken at
the maturity date may be used to meet the minimum required distribution
requirements of federal tax law, or a program of partial surrenders may be used
instead. These mandatory distribution requirements take effect generally upon
the death of the contract owner, or with certain 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

24
<PAGE> 70

options as you have selected during the accumulation period (contract value, in
Oregon). 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

FIXED ANNUITY

PAYMENT OPTIONS
- --------------------------------------------------------------------------------

ELECTION OF OPTIONS

While the annuitant is alive, you can change your annuity option selection any
time up to the maturity date. Once annuity payments have begun, no further
elections are allowed.

25
<PAGE> 71

Life Annuity -- Annuity Reduced on Death of Primary Payee) will be the automatic
option as described in the Contract.

ANNUITY OPTIONS

Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of
Primary Payee. The Company will make annuity payments during the lifetimes of
the annuitant and a second person. One will be designated the primary payee, the
other will be designated the secondary payee. On the death of the secondary
payee, the Company will continue to make monthly annuity payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, the Company will continue
to make annuity payments to the secondary payee in an amount equal to 50% of the
payments which would have been made during the lifetime of the primary payee. No
further payments will be made once both payees have died.

Option 5 -- Payments for a Fixed Period. (Fixed Account Only). We will make
periodic payments for the period selected.

MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------

RIGHT TO RETURN

26
<PAGE> 72

TERMINATION

You do not need to make any purchase payments after the first to keep the
Contract in effect. However, we reserve the right to terminate the Contract on
any business day if the contract value as of that date is less than $2,000 and
no purchase payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the contract owner's last known
address and to any assignee of record. If the Contract is terminated, we will
pay you the cash surrender value (minus any credits applied within 12 months of
termination) less any applicable premium tax, and any applicable administrative
charge.

REQUIRED REPORTS

SUSPENSION OF PAYMENTS

TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES

Where state law permits, we may allow contract owners to transfer their contract
values into other annuities offered by us or our affiliated insurance companies
under rules then in effect.

THE SEPARATE ACCOUNTS
- --------------------------------------------------------------------------------

27
<PAGE> 73

Fund BD IV were established on March 27, 1997 and are registered with the SEC as
unit investment trusts (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.

PERFORMANCE INFORMATION

From time to time, we may advertise several types of historical performance for
the Contract's funding options. Once we have performance history, we may
advertise the "standardized average annual total returns" of the funding option,
calculated in a manner prescribed by the SEC. Beginning immediately, we may
advertise 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 annual contract
administrative charge is converted to a percentage of assets based on the actual
fee collected (or anticipated to be collected, if a new product), divided by the
average net assets for Contracts sold (or anticipated to be sold). Each
quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.

28
<PAGE> 74

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
- --------------------------------------------------------------------------------

GENERAL TAXATION OF ANNUITIES

TYPES OF CONTRACTS: QUALIFIED OR 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.

29
<PAGE> 75

QUALIFIED ANNUITY CONTRACTS

PENALTY TAX FOR PREMATURE DISTRIBUTIONS

DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES

OWNERSHIP OF THE INVESTMENTS

30
<PAGE> 76

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.

MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS

TAXATION OF DEATH BENEFIT PROCEEDS

OTHER INFORMATION
- --------------------------------------------------------------------------------

THE INSURANCE COMPANIES

Please refer to the first page of the Summary of this prospectus to determine
which company issued your Contract.

FINANCIAL STATEMENTS

The financial statements of each separate account and the financial statements
for each insurance company are located in their respective Statements of
Additional Information.

31
<PAGE> 77

IMSA

DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS

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

LEGAL PROCEEDINGS AND OPINIONS

32
<PAGE> 78

THE TRAVELERS INSURANCE COMPANY

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.

THE TRAVELERS LIFE AND ANNUITY COMPANY

There are no pending material legal proceedings affecting the Separate Account,
the principal underwriter or the Company.

33
<PAGE> 79

APPENDIX A
- --------------------------------------------------------------------------------

THE FIXED ACCOUNT

The Fixed Account is secured by part of the general assets of the Company. The
general assets of the Company include all assets of the Company other than those
held in the separate accounts sponsored by the Company or its affiliates.

The staff of the SEC does not generally review the disclosure in the prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account and the
general account may, however, be subject to certain provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus.

Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of the Separate Account or any of
the funding options does not affect the Fixed Account portion of the contract
owner's contract value, or the dollar amount of fixed annuity payments made
under any payout option.

We guarantee that, at any time, the Fixed Account contract value will not be
less than the amount of the purchase payments allocated to the Fixed Account,
plus interest credited as described below, less any applicable premium taxes or
prior surrenders.

Purchase payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of, the Securities
Act of 1933 or Investment Company Act of 1940. We will invest the assets of the
Fixed Account at our discretion. Investment income from such Fixed Account
assets will be allocated to us and to the Contracts participating in the Fixed
Account.

Investment income from the Fixed Account allocated to us includes compensation
for mortality and expense risks borne by us in connection with Fixed Account
Contracts. The amount of such investment income allocated to the Contracts will
vary from year to year in our sole discretion at such rate or rates as we
prospectively declare from time to time.

The initial rate for any allocations into the Fixed Account is guaranteed for
one year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. We also guarantee that for the life of the
Contract we will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in our sole discretion. You assume the risk that interest credited
to the Fixed Account may not exceed the minimum guarantee of 3% for any given
year.

TRANSFERS

You may make transfers from the Fixed Account to any other available funding
option(s) twice a year during the 30 days following the semiannual anniversary
of the contract effective date. The transfers are limited to an amount of up to
15% of the Fixed Account Value on the semiannual contract effective date
anniversary. (This restriction does not apply to transfers under the Dollar Cost
Averaging Program.) Amounts previously transferred from the Fixed Account to
other funding options may not be transferred back to the Fixed Account for a
period of at least six months from the date of transfer. We reserve the right to
waive either of these restrictions.

Automated transfers from the Fixed Account to any of the funding options may
begin at any time. Automated transfers from the Fixed Account may not deplete
your Fixed Account value in a period of less than twelve months from your
enrollment in the Dollar Cost Averaging Program.

A-1
<PAGE> 80

APPENDIX B
- --------------------------------------------------------------------------------

WAIVER OF WITHDRAWAL CHARGE FOR NURSING HOME CONFINEMENT
(AVAILABLE ONLY IF ENHANCED DEATH BENEFIT IS ELECTED.)

(This waiver is not available if the Annuitant is age 71 or older
on the date the Contract is issued. This waiver may not be available in all
states.)

If, after the first contract year and before the maturity date, the annuitant
begins confinement in an Eligible Nursing Home, you may make a total or partial
withdrawal, subject to the maximum withdrawal amount described below, without
incurring a Withdrawal Charge. In order for the Withdrawal Charge to be waived,
the withdrawal must be made during continued confinement in an Eligible Nursing
Home after the qualifying period has been satisfied, or within sixty (60) days
after such confinement ends. The qualifying period is confinement in an Eligible
Nursing Home for ninety (90) consecutive days. We will require proof of
confinement in a form satisfactory to us, which may include certification by a
licensed physician that such confinement is medically necessary.

An Eligible Nursing Home is defined as an institution or special nursing unit of
a hospital which:

(a) is Medicare approved as a provider of skilled nursing care services;
and

(b) is not, other than in name only, an acute care hospital, a home for the
aged, a retirement home, a rest home, a community living center, or a
place mainly for the treatment of alcoholism, mental illness or drug
abuse.

Meets all of the following standards:

(a) is licensed as a nursing care facility by the state in which it is
licensed;

(b) is either a freestanding facility or a distinct part of another
facility such as a ward, wing, unit or swing-bed of a hospital or other
facility;

(d) provides, as a primary function, nursing care and room and board; and
charges for these services;

(e) provides care under the supervision of a licensed physician, registered
nurse (RN) or licensed practical nurse (LPN);

(f) may provide care by a licensed physical, respiratory, occupational or
speech therapist; and

(g) is not, other than in name only, an acute care hospital, a home for the
aged, a retirement home, a rest home, a community living center, or a
place mainly for the treatment of alcoholism, mental illness or drug
abuse.

FILING A CLAIM: You must provide the Company with written notice of a claim
during continued confinement after the 90-day qualifying period, or within sixty
days after such confinement ends.

The maximum withdrawal amount for which we will waive the Withdrawal Charge is
the contract value on the next valuation date following written proof of claim,
less any purchase payments made within a one-year period before confinement in
an Eligible Nursing Home begins, less any purchase payments made on or after the
Annuitant's 71st birthday.

Any withdrawal requested which falls under the scope of this waiver will be paid
as soon as we receive proper written proof of your claim, and will be paid in a
lump sum. You should consult with your personal tax adviser regarding the tax
impact of any withdrawals taken from your contract.

B-1
<PAGE> 81

APPENDIX C
- --------------------------------------------------------------------------------

CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

- --------------------------------------------------------------------------------

Copies of the Statement of Additional Information dated May 1, 2000 are
available without charge. To request a copy, please clip this coupon on the
dotted line above, enter your name and address in the spaces provided below, and
mail to: The Travelers Insurance Company, Annuity Investor Services, One Tower
Square, Hartford, Connecticut 06183. The Travelers Insurance Company Statement
of Additional Information is printed on Form L-21261S, and The Travelers Life
and Annuity Statement of Additional Information is printed on Form L-21262S

Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

C-1
<PAGE> 82

THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 83

L-20672 May 1, 2000
<PAGE> 84

PART B

Information Required in a Statement of Additional Information
<PAGE> 85

TRAVELERS PORTFOLIO ARCHITECT XTRA
TRAVELERS VINTAGE XTRA

STATEMENT OF ADDITIONAL INFORMATION

dated

May 1, 2000

for

THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES

ISSUED BY

THE TRAVELERS INSURANCE COMPANY

This Statement of Additional Information ("SAI") is not a prospectus but relates
to, and should be read in conjunction with, the Variable Annuity Contract
Prospectus dated May 1, 2000. A copy of the Prospectus may be obtained by
writing to The Travelers Insurance Company, Annuity Services, One Tower Square,
Hartford, Connecticut 06183-8036, or by calling (800) 842-8573.

TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 1

PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . 1

DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT . . . . . . . . . . 2

VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 2

PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 3

MIXED AND SHARED FUNDING . . . . . . . . . . . . . . . . . . . . . . 10

FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . .. . . . . . . . . . 10

INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . 13

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 86
THE INSURANCE COMPANY

The Travelers Insurance Company (the "Company"), is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. The Company is licensed to conduct a life
insurance business in all states of the United States, the District of Columbia,
Puerto Rico, Guam, the U.S. and British Virgin Islands, and the Bahamas. The
Company's Home Office is located at One Tower Square, Hartford, Connecticut
06183, and its telephone number is (860) 277-0111.

The Company is a wholly owned subsidiary of The Travelers Insurance
Group Inc., an indirect, wholly owned subsidiary of Citigroup Inc.
("Citigroup"), a diversified holding company whose businesses provide a broad
range of financial services to consumer and corporate customers around the
world. Citigroup's activities are conducted through the Global Consumer, Global
Corporate and Investment Bank, Global Investment Management and Private Banking,
and Investment Activities segments.

STATE REGULATION. The Company is subject to the laws of the state of Connecticut
governing insurance companies and to regulation by the Insurance Commissioner of
the state of Connecticut (the "Commissioner"). An annual statement covering the
operations of the Company for the preceding year, as well as its financial
conditions as of December 31 of such year, must be filed with the Commissioner
in a prescribed format on or before March 1 of each year. The Company's books
and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted at
least once every four years.

The Company is also subject to the insurance laws and regulations of
all other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the home state
(jurisdiction of domicile) in determining the field of permissible investments.

THE SEPARATE ACCOUNT. The Separate Account meets the definition of a separate
account under the federal securities laws, and will comply with the provisions
of the 1940 Act. Additionally, the operations of the Separate Account are
subject to the provisions of Section 38a-433 of the Connecticut General Statutes
which authorizes the Connecticut Insurance Commissioner to adopt regulations
under it. Section 38a-433 contains no restrictions on the investments of the
Separate Account, and the Commissioner has adopted no regulations under the
Section that affect the Separate Account.

PRINCIPAL UNDERWRITER

CFBDS, Inc. serves as principal underwriter for Fund BD III and the
Contracts. The offering is continuous. CFBDS's principal executive offices are
located at 21 Milk Street, Boston, Massachusetts. CFBDS is not affiliated with
the Company or Separate Account Nine. However, it is currently anticipated that
Travelers Distribution LLC, an affiliated broker dealer, may become the
principal underwriter for the Contracts during the year 2000.

1
<PAGE> 87
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT

Under the terms of the Distribution and Principal Underwriting
Agreement among Fund BD III, CFBDS and the Company, CFBDS acts as agent for the
distribution of the Contracts and as principal underwriter for the Contracts.
The Company reimburses CFBDS for certain sales and overhead expenses connected
with sales functions.

VALUATION OF ASSETS

FUNDING OPTIONS: The value of the assets of each Funding Option is determined at
4:00 p.m. eastern time on each business day, unless we need to close earlier due
to an emergency. A business day is any day the New York Stock Exchange is open.
Each security traded on a national securities exchange is valued at the last
reported sale price on the business day. If there has been no sale on that day,
then the value of the security is taken to be the mean between the reported bid
and asked prices on the business day or on the basis of quotations received from
a reputable broker or any other recognized source.

Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available is
valued at the mean between the quoted bid and asked prices on the business day
or on the basis of quotations received from a reputable broker or any other
recognized source.

Securities traded on the over-the-counter-market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.

Short-term investments for which a quoted market price is available are
valued at market. Short-term investments maturing in more than sixty days for
which there is no reliable quoted market price are valued by "marking to market"
(computing a market value based upon quotations from dealers or issuers for
securities of a similar type, quality and maturity.) "Marking to market" takes
into account unrealized appreciation or depreciation due to changes in interest
rates or other factors which would influence the current fair values of such
securities. Short-term investments maturing in sixty days or less for which
there is no reliable quoted market price are valued at amortized cost which
approximates market.

THE CONTRACT VALUE: The value of an accumulation unit on any business day is
determined by multiplying the value on the preceding business day by the net
investment factor for the valuation period just ended. The net investment factor
is used to measure the investment performance of a funding option from one
valuation period to the next. The net investment factor for a funding option for
any valuation period is equal to the sum of 1.000000 plus the net investment
rate (the gross investment rate less any applicable funding option deductions
during the valuation period relating to the mortality and expense risk charge
and the administrative expense charge). The gross investment rate of a funding
option is equal to (a) minus (b), divided by (c) where:

(a) = investment income plus capital gains and losses (whether realized or
unrealized);

(b) = any deduction for applicable taxes (presently zero); and

2
<PAGE> 88
The gross investment rate may be either positive or negative. A funding
option's investment income includes any distribution whose ex-dividend date
occurs during the valuation period.

ACCUMULATION UNIT VALUE. The value of the accumulation unit for each funding
option was initially established at $1.00. The value of an accumulation unit on
any business day is determined by multiplying the value on the preceding
business day by the net investment factor for the valuation period just ended.
The net investment factor is calculated for each funding option and takes into
account the investment performance, expenses and the deduction of certain
expenses.

ANNUITY UNIT VALUE. The initial Annuity Unit Value applicable to each funding
option was established at $1.00. An annuity unit value as of any business day is
equal to (a) the value of the annuity unit on the preceding business day,
multiplied by (b) the corresponding net investment factor for the valuation
period just ended, divided by (c) the assumed net investment factor for the
valuation period. (For example, the assumed net investment factor based on an
annual assumed net investment rate of 3.0% for a Valuation Period of one day is
1.000081 and, for a period of two days, is 1.000081 x 1.000081.)

PERFORMANCE INFORMATION

From time to time, the Company may advertise several types of
historical performance for the Funding Options of the Separate Account. The
Company may advertise the "standardized average annual total returns" of the
Funding Options, calculated in a manner prescribed by the Securities and
Exchange Commission, as well as the "nonstandardized total returns," as
described below:

STANDARDIZED METHOD. Quotations of average annual total returns are
computed according to a formula in which a hypothetical initial investment of
$1,000 is applied to the Funding Option, and then related to ending redeemable
values over one-, five-, and ten-year periods, or for a period covering the time
during which the Funding Option has been in existence, if less. If a Funding
Option has been in existence for less than one year, the "since inception" total
return performance quotations are year-to-date and are not average annual total
returns. These quotations reflect the deduction of all recurring charges during
each period (on a pro rata basis in the case of fractional periods). The
deduction for the annual contract administrative charge is converted to a
percentage of assets based on the actual fee collected (or anticipated to be
collected, if a new product), divided by the average net assets for contracts
sold (or anticipated to be sold) under the Prospectus to which this Statement of
Additional Information relates. Each quotation assumes a total redemption at the
end of each period. The withdrawal charge is not reflected because the Contract
is designed for long-term investment.

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 annual contract administrative charge, which, if
reflected, would decrease the level of performance shown.

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

3
<PAGE> 89
they been held under the Contract for the period quoted. The total return
quotations are based upon historical earnings and are not necessarily
representative of future performance.

GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of the Separate Account and the Funding Options.

FOR PORTFOLIO ARCHITECT XTRA: Average annual total returns for each of the
Funding Options computed according to nonstandardized method for the period
ending December 31, 1999 are set forth in the following table. Actual returns
for the funding options offered through the Separate Account are not available,
since the product is new and therefore has no investment history. However,
average annual total returns have been calculated using each funding option's
investment performance since inception.

FOR VINTAGE XTRA: Average annual total returns for each of the Funding Options
computed according to the standardized and nonstandardized methods for the
period ending December 31, 1999 are set forth in the following tables:

4
<PAGE> 90
TRAVELERS PORTFOLIO ARCHITECT XTRA
NONSTANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99

<TABLE>
<CAPTION>
Cumulative Returns Average Annual Returns
------------------------------------------------ -----------------------
YTD 1 YR 3 YR 5 YR 10 YR 3 YR 5 YR

<S> <C> <C> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
Alliance Growth Portfolio 30.22% 30.22% 110.53% 257.21% -- 28.17% 29.00%
Capital Appreciation Fund (Janus) 51.20% 51.20% 199.68% 409.43% 673.74% 44.17% 38.49%
Delaware Investments REIT Series -4.17% -4.17% -- -- -- -- --
Dreyfus Capital Appreciation Portfolio 9.71% 9.71% 77.78% 189.94% -- 21.14% 23.73%
Dreyfus Small Cap Portfolio 21.24% 21.24% 32.65% 94.52% -- 9.88% 14.23%
Equity Income Portfolio (Fidelity) 3.26% 3.26% 49.04% -- -- 14.23% --
Equity Index Portfolio Class II * 18.71% 18.71% 97.82% 227.46% -- 25.53% 26.77%
Federated Stock Portfolio 3.68% 3.68% 58.40% -- -- 16.57% --
Large Cap Portfolio (Fidelity) 27.33% 27.33% 106.94% -- -- 27.43% --
Lazard International Stock Portfolio 19.82% 19.82% 41.52% -- -- 12.27% --
MFS Emerging Growth Portfolio 74.13% 74.13% 174.89% -- -- 40.08% --
MFS Mid Cap Growth Portfolio 61.71% 61.71% -- -- -- -- --
MFS Research Portfolio 21.76% 21.76% -- -- -- -- --
Salomon Brothers Investors Fund 9.90% 9.90% -- -- -- -- --
Strategic Stock Portfolio 3.31% 3.31% -- -- -- -- --
Travelers Disciplined Mid Cap Stock 11.70% 11.70% -- -- -- -- --
Portfolio
Travelers Disciplined Small Cap Stock 18.54% 18.54% -- -- -- -- --
Portfolio
Warburg Pincus Emerging Markets Portfolio 78.70% 78.70% -- -- -- -- --
BOND ACCOUNTS:
Federated High Yield Portfolio 1.46% 1.46% 18.91% -- -- 5.94% --
Putnam Diversified Income Portfolio -0.50% -0.50% 4.56% 28.91% -- 1.50% 5.21%
Travelers Convertible Bond Portfolio 16.85% 16.85% -- -- -- -- --
Travelers Quality Bond Portfolio -0.52% -0.52% 12.06% -- -- 3.87% --
</TABLE>

<TABLE>
<CAPTION>
Average Annual Returns Calendar Year Returns
---------------------------- ----------------------------
10 YR Inception Inception 1998 1997 1996
to Date Date #
<S> <C> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
Alliance Growth Portfolio -- 26.76% 6/20/94 27.03% 27.04% 27.38%
Capital Appreciation Fund (Janus) 22.70% 13.83% 5/16/83 59.27% 24.18% 26.21%
Delaware Investments REIT Series -- -8.50% 5/6/98 -- -- --
Dreyfus Capital Appreciation Portfolio -- 18.20% 4/5/93 28.30% 26.10% 23.64%
Dreyfus Small Cap Portfolio -- 33.61% 8/31/90 -4.90% 14.94% 14.78%
Equity Income Portfolio (Fidelity) -- 16.27% 8/30/96 10.65% 30.28% --
Equity Index Portfolio Class II * -- 19.34% 11/30/91 26.61% 31.39% 21.58%
Federated Stock Portfolio -- 18.70% 8/30/96 16.05% 31.47% --
Large Cap Portfolio (Fidelity) -- 28.82% 8/30/96 33.49% 21.54% --
Lazard International Stock Portfolio -- 12.91% 8/1/96 10.86% 6.43% --
MFS Emerging Growth Portfolio -- 37.48% 8/30/96 32.22% 19.14% --
MFS Mid Cap Growth Portfolio -- 30.60% 3/23/98 -- -- --
MFS Research Portfolio -- 14.53% 3/23/98 -- -- --
Salomon Brothers Investors Fund -- 10.18% 2/17/98 -- -- --
Strategic Stock Portfolio -- -2.21% 5/6/98 -- -- --
Travelers Disciplined Mid Cap Stock -- 21.49% 4/1/97 15.10% -- --
Portfolio
Travelers Disciplined Small Cap Stock -- 2.53% 5/1/98 -- -- --
Portfolio
Warburg Pincus Emerging Markets Portfolio -- 21.45% 12/31/97 -17.48% -- --
BOND ACCOUNTS:
Federated High Yield Portfolio -- 7.48% 8/30/96 3.05% 13.65% --
Putnam Diversified Income Portfolio -- 4.78% 6/20/94 -0.94% 6.06% 6.52%
Travelers Convertible Bond Portfolio -- 9.71% 5/1/98 -- -- --
Travelers Quality Bond Portfolio -- 4.38% 8/30/96 6.78% 5.45% --
</TABLE>

5
<PAGE> 91
TRAVELERS PORTFOLIO ARCHITECT XTRA (CONT'D)
NONSTANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99

<TABLE>
<CAPTION>
Cumulative Returns Average Annual Returns
----------------------------------------------- -----------------------
YTD 1 YR 3 YR 5 YR 10 YR 3 YR 5 YR

<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED ACCOUNTS:
MFS Total Return Portfolio 1.01% 1.01% 32.62% 85.43% -- 9.87% 13.14%
MONEY MARKET ACCOUNTS:
Travelers Money Market Portfolio 3.32% 3.32% 10.49% 16.29% 34.68% 3.38% 3.06%
</TABLE>

<TABLE>
<CAPTION>
Average Annual Returns Calendar Year Returns
----------------------------- --------------------------
10 YR Inception Inception 1998 1997 1996
to Date Date #
<S> <C> <C> <C> <C> <C> <C>
BALANCED ACCOUNTS:
MFS Total Return Portfolio -- 11.26% 6/20/94 9.90% 19.36% 12.70%
MONEY MARKET ACCOUNTS:
Travelers Money Market Portfolio 3.02% 3.42% 12/31/87 3.39% 3.40% 2.52%
</TABLE>

* Certain funds offer multiple classes of shares. The performance above may
reflect the fees and performance of another class of the same fund for periods
before the current class existed. If the current class's 12b-1 fee and other
expenses were higher, the performance shown would be lower. # The inception date
is the date that the underlying fund commenced operations.

6
<PAGE> 92
TRAVELERS VINTAGE XTRA
STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
<TABLE>
<CAPTION>

10 Years Inception
STOCK ACCOUNTS: 1 Year 5 Years (or inception) Date #
<S> <C> <C> <C> <C>
Alliance Growth Portfolio -- -- 5.69% 11/4/99
Alliance Premier Growth Portfolio Class B* -- -- 3.67% 11/3/99
American Funds Global Growth Fund * -- -- 19.66% 11/3/99
American Funds Growth Fund * -- -- 8.86% 11/4/99
American Funds Growth-Income Fund * -- -- -5.15% 11/4/99
Equity Income Portfolio (Fidelity) -- -- -3.22% 11/4/99
Equity Index Portfolio Class II* -- -- -2.19% 11/11/99
Fidelity VIP II Contrafund (R) Portfolio - Service Class * -- -- 4.68% 11/3/99
Franklin Small Cap Investments Fund Class 2 * -- -- 7.85% 11/15/99
Large Cap Portfolio (Fidelity) -- -- 3.52% 11/4/99
MFS Emerging Growth Portfolio -- -- 31.76% 11/3/99
MFS Research Portfolio -- -- 4.40% 11/4/99
Salomon Brothers Capital Fund -- -- -5.06% 11/16/99
Salomon Brothers Investors Fund -- -- -6.74% 11/29/99
Salomon Brothers Small Cap Growth Fund -- -- 11.59% 11/3/99
Smith Barney Aggressive Growth Portfolio -- -- 11.25% 11/3/99
Smith Barney Appreciation Portfolio -- -- -4.00% 11/4/99
Smith Barney International Equity Portfolio -- -- 13.09% 11/15/99
Smith Barney Large Cap Growth Portfolio -- -- 0.24% 11/3/99
Smith Barney Large Cap Value Portfolio -- -- -8.19% 11/3/99
Smith Barney Mid Cap Portfolio -- -- 7.20% 11/4/99
Smith Barney Total Return Portfolio -- -- -3.58% 11/29/99
Strategic Stock Portfolio -- -- -8.70% 11/26/99
Templeton International Fund Class 2 * -- -- 2.00% 11/4/99
Travelers Disciplined Small Cap Stock Portfolio -- -- -0.50% 11/26/99
Van Kampen Emerging Growth Portfolio -- -- 28.10% 11/3/99
Van Kampen Enterprise Portfolio -- -- 5.95% 11/4/99
BOND ACCOUNTS:
Smith Barney Diversified Strategic Income Portfolio -- -- -8.12% 11/9/99
Smith Barney High Income Portfolio -- -- -6.67% 11/9/99
Travelers Managed Income Portfolio -- -- -8.32% 11/3/99
BALANCED ACCOUNTS:
MFS Total Return Portfolio -- -- -7.78% 11/3/99
MONEY MARKET ACCOUNTS:
Smith Barney Money Market Portfolio -- -- -7.51% 11/8/99
</TABLE>

* Certain funds offer multiple classes of shares. The performance above may
reflect the fees and performance of another class of the same fund for periods
before the current class existed. If the current class's 12b-1 fee and other
expenses were higher, the performance shown would be lower. # The inception date
used to calculate standardized performance is based on the date that the
investment option became active in the product.

7
<PAGE> 93
TRAVELERS VINTAGE XTRA
NONSTANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99

CUMULATIVE RETURNS AVERAGE ANNUAL RETURNS
----------------------------------------------- -----------------------
ENHANCED DEATH BENEFIT YTD 1 YR 3 YR 5 YR 10 YR 3 YR 5 YR

<S> <C> <C> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
Alliance Growth Portfolio 30.16% 30.16% 109.91% 254.71% -- 28.04% 28.80%
Alliance Premier Growth Portfolio Class B * 30.06% 30.06% 149.51% 329.65% -- 35.63% 33.83%
American Funds Global Growth Fund * 67.02% 67.02% -- -- -- -- --
American Funds Growth Fund * 54.82% 54.82% 163.35% 283.44% 476.28% 38.09% 30.82%
American Funds Growth-Income Fund * 9.45% 9.45% 57.21% 139.25% 225.52% 16.28% 19.05%
Equity Income Portfolio (Fidelity) 3.25% 3.25% 48.74% -- -- 14.15% --
Equity Index Portfolio Class II * 18.69% 18.69% 97.27% 225.27% -- 25.42% 26.59%
Fidelity VIP II Contrafund (R) Portfolio- 22.20% 22.20% 90.92% -- -- 24.05% --
Service Class*
Franklin Small Cap Investments Fund Class 2 * 71.60% 71.60% -- -- -- -- --
Large Cap Portfolio (Fidelity) 27.26% 27.26% 106.29% -- -- 27.30% --
MFS Emerging Growth Portfolio 73.98% 73.98% 174.14% -- -- 39.96% --
MFS Research Portfolio 21.72% 21.72% -- -- -- -- --
Salomon Brothers Capital Fund 20.15% 20.15% -- -- -- -- --
Salomon Brothers Investors Fund 9.88% 9.88% -- -- -- -- --
Salomon Brothers Small Cap Growth Fund -- -- -- -- -- -- --
Smith Barney Aggressive Growth Portfolio -- -- -- -- -- -- --
Smith Barney Appreciation Portfolio 11.33% 11.33% 62.38% 142.99% -- 17.54% 19.42%
Smith Barney International Equity Portfolio 65.09% 65.09% 74.87% 121.83% -- 20.48% 17.26%
Smith Barney Large Cap Growth Portfolio 28.76% 28.76% -- -- -- -- --
Smith Barney Large Cap Value Portfolio -1.52% -1.52% 32.64% 104.74% -- 9.87% 15.40%
Smith Barney Mid Cap Portfolio -- -- -- -- -- -- --
Smith Barney Total Return Portfolio 20.10% 20.10% 42.65% 116.41% -- 12.57% 16.69%
Strategic Stock Portfolio 3.30% 3.30% -- -- -- -- --
Templeton International Fund Class 2 * 21.27% 21.27% 45.62% 102.67% -- 13.35% 15.17%
Travelers Disciplined Small Cap Stock Portfolio 18.50% 18.50% -- -- -- -- --
Van Kampen Emerging Growth Portfolio 101.17% 101.17% 222.80% -- -- 47.79% --
Van Kampen Enterprise Portfolio 23.94% 23.94% 93.16% 205.09% -- 24.54% 24.98%
BOND ACCOUNTS:
Smith Barney Diversified Strategic Income 0.11% 0.11% 11.56% 39.52% -- 3.71% 6.88%
Portfolio
Smith Barney High Income Portfolio 0.97% 0.97% 11.83% 45.91% -- 3.80% 7.84%
Travelers Managed Income Portfolio -0.72% -0.72% 10.86% 28.20% -- 3.50% 5.09%
</TABLE>

AVERAGE ANNUAL RETURNS CALENDAR YEAR RETURNS
------------------------------------ ----------------------------------
ENHANCED DEATH BENEFIT 10 YR Inception Inception 1998 1997 1996
Date to Date #
<S> <C> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
Alliance Growth Portfolio -- 6/20/94 26.71% 27.00% 26.98% 27.32%
Alliance Premier Growth Portfolio Class B * -- 6/26/92 24.31% 45.63% 31.74% 20.74%
American Funds Global Growth Fund * -- 4/30/97 35.90% 26.74% -- --
American Funds Growth Fund * 19.13% 2/8/84 17.73% 33.13% 27.77% 11.28%
American Funds Growth-Income Fund * 12.52% 2/28/85 13.63% 16.23% 23.58% 16.55%
Equity Income Portfolio (Fidelity) -- 8/30/96 16.24% 10.62% 30.22% --
Equity Index Portfolio Class II * -- 11/30/91 19.30% 26.56% 31.33% 21.54%
Fidelity VIP II Contrafund (R) Portfolio- -- 1/31/95 26.51% 27.91% 22.15% 19.31%
Service Class*
Franklin Small Cap Investments Fund Class 2 * -- 5/1/98 30.87% -- -- --
Large Cap Portfolio (Fidelity) -- 8/30/96 28.76% 33.42% 21.49% --
MFS Emerging Growth Portfolio -- 8/30/96 37.46% 32.18% 19.21% --
MFS Research Portfolio -- 3/23/98 14.59% -- -- --
Salomon Brothers Capital Fund -- 2/17/98 19.63% -- -- --
Salomon Brothers Investors Fund -- 2/17/98 10.16% -- -- --
Salomon Brothers Small Cap Growth Fund -- 11/1/99 21.29% -- -- --
Smith Barney Aggressive Growth Portfolio -- 11/1/99 20.68% -- -- --
Smith Barney Appreciation Portfolio -- 10/16/91 12.97% 17.24% 24.41% 18.01%
Smith Barney International Equity Portfolio -- 6/20/94 14.48% 4.80% 1.07% 15.84%
Smith Barney Large Cap Growth Portfolio -- 5/1/98 31.93% -- -- --
Smith Barney Large Cap Value Portfolio -- 6/20/94 13.39% 8.08% 24.62% 17.87%
Smith Barney Mid Cap Portfolio -- 11/1/99 16.63% -- -- --
Smith Barney Total Return Portfolio -- 12/3/93 15.15% 3.30% 14.99% 23.42%
Strategic Stock Portfolio -- 5/1/98 -2.19% -- -- --
Templeton International Fund Class 2 * -- 5/1/92 13.42% 7.27% 11.94% 22.12%
Travelers Disciplined Small Cap Stock Portfolio -- 5/1/98 2.53% -- -- --
Van Kampen Emerging Growth Portfolio -- 7/3/95 38.34% 35.37% 18.54% 14.81%
Van Kampen Enterprise Portfolio -- 6/21/94 23.13% 23.14% 26.56% 20.97%
BOND ACCOUNTS:
Smith Barney Diversified Strategic Income -- 10/16/91 4.98% 4.72% 6.42% 9.50%
Portfolio
Smith Barney High Income Portfolio -- 6/22/94 6.79% -1.15% 12.05% 11.34%
Travelers Managed Income Portfolio -- 6/28/94 4.50% 3.40% 7.98% 1.38%
</TABLE>

8
<PAGE> 94
TRAVELERS VINTAGE XTRA (CONT'D)
NONSTANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99

CUMULATIVE RETURNS AVERAGE ANNUAL RETURNS
----------------------------------------------------- ------------------------------
ENHANCED DEATH BENEFIT YTD 1 YR 3 YR 5 YR 10 YR 3 YR 5 YR 10 YR

<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCED ACCOUNTS:
MFS Total Return Portfolio 1.00% 1.00% 32.38% 84.51% -- 9.80% 13.03% --
MONEY MARKET ACCOUNTS:
Smith Barney Money Market Portfolio 3.10% 3.10% 10.24% 18.11% -- 3.30% 3.38% --
</TABLE>

AVERAGE ANNUAL RETURNS CALENDAR YEAR RETURNS
------------------------- ---------------------
ENHANCED DEATH BENEFIT Inception Inception 1998 1997 1996
Date to Date #
<S> <C> <C> <C> <C> <C>
BALANCED ACCOUNTS:
MFS Total Return Portfolio 6/20/94 11.23% 9.89% 19.27% 12.67%
MONEY MARKET ACCOUNTS:
Smith Barney Money Market Portfolio 6/20/94 3.30% 3.38% 3.42% 3.28%
</TABLE>

9
<PAGE> 95
MIXED AND SHARED FUNDING

Certain variable annuity separate accounts and variable life insurance
separate accounts may invest in the funding options simultaneously (called
"mixed" and "shared" funding). It is conceivable that in the future it may be
disadvantageous to do so. Although the Company and the funding options do not
currently foresee any such disadvantages either to variable annuity contract
owners or variable life policy owners, each funding option's Board of Directors
intends to monitor events in order to identify any material conflicts between
them and to determine what action, if any, should be taken. If a Board of
Directors was to conclude that separate funds should be established for variable
life and variable annuity separate accounts, the variable annuity contract
owners would not bear any of the related expenses, but variable annuity contract
owners and variable life insurance policy owners would no longer have the
economies of scale resulting from a larger combined fund.

FEDERAL TAX CONSIDERATIONS

The following description of the federal income tax consequences under
this Contract is not exhaustive and is not intended to cover all situations.
Because of the complex tax laws and the fact that tax results will vary
according to each individual's factual status, tax advice may be needed by a
person contemplating purchase of an annuity contract and by a contract owner or
beneficiary who may make elections under a contract. For further information,
please consult a qualified tax adviser.

MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS

Federal tax law requires that minimum annual distributions begin by
April 1st of the calendar year following the calendar year in which a
participant under a qualified plan, a Section 403(b) annuity, or an IRA attains
age 701/2. Distributions must also begin or be continued according to required
patterns following the death of the contract owner or the annuitant.

NONQUALIFIED ANNUITY CONTRACTS

Individuals may purchase tax-deferred annuities without tax law funding
limits. The purchase payments receive no tax benefit, deduction or deferral, but
increases in the value of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however, (e.g., by a corporation), the increases in value attributable to
purchase payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in the income of a contract owner when the
contract owner transfers the contract without adequate consideration.

If two or more annuity contracts are purchased from the same insurer
within the same calendar year, distributions from any of them will be taxed
based upon the amount of income in all of the same calendar year series of
annuities. This will generally have the effect of causing taxes to be paid
sooner on the deferred gain in the contracts.

Those receiving partial distributions made before the maturity date
will generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the Company by the other insurance company at
the time of the exchange. There is income in the contract

10
<PAGE> 96
generally to the extent the cash value exceeds the investment in the contract.
The investment in the contract is equal to the amount of premiums paid less any
amount received previously which was excludable from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.

The federal tax law requires that nonqualified annuity contracts meet
minimum mandatory distribution requirements upon the death of the contract
owner, including the first of joint owners. Failure to meet these requirements
will cause the surviving joint owner, or the beneficiary, to lose the tax
benefits associated with annuity contracts, i.e., primarily the tax deferral
prior to distribution. The distribution required depends, among other things,
upon whether an annuity option is elected or whether the new contract owner is
the surviving spouse. Contracts will be administered by the Company in
accordance with these rules and the Company will make a notification when
payments should be commenced.

INDIVIDUAL RETIREMENT ANNUITIES

To the extent of earned income for the year and not exceeding $2,000
per individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $4,000.

The Code provides for the purchase of a Simplified Employee Pension
(SEP) plan. A SEP is funded through an IRA with an annual employer contribution
limit of 15% of compensation up to $30,000 for each participant.

SIMPLE Plan IRA Form

Effective January 1, 1997, employers may establish a savings incentive
match plan for employees ("SIMPLE plan") under which employees can make elective
salary reduction contributions to an IRA based on a percentage of compensation
of up to $6,000. (Alternatively, the employer can establish a SIMPLE cash or
deferred arrangement under IRS Section 401(k)). Under a SIMPLE plan IRA, the
employer must either make a matching contribution of 100% on the first 3% or 7%
contribution for all eligible employees. Early withdrawals are subject to the
10% early withdrawal penalty generally applicable to IRAs, except that an early
withdrawal by an employee under a SIMPLE plan IRA, within the first two years of
participation, shall be subject to a 25% early withdrawal tax.

ROTH IRAS

Effective January 1, 1998, Section 408A of the Code permits certain
individuals to contribute to a Roth IRA. Eligibility to make contributions is
based upon income, and the applicable limits vary based on marital status and/or
whether the contribution is a rollover contribution from another IRA or an
annual contribution. Contributions to a Roth IRA, which are subject to certain
limitations ($2,000 per year for annual contributions), are not deductible and
must be made in cash or as a rollover or transfer from another Roth IRA or other
IRA. A conversion of a "traditional" IRA to a Roth IRA may be subject to tax and
other special rules apply. You should consult a tax adviser before combining any

11
<PAGE> 97
converted amounts with other Roth IRA contributions, including any other
conversion amounts from other tax years.

Qualified distributions from a Roth IRA are tax-free. A qualified
distribution requires that the Roth IRA has been held for at least 5 years, and
the distribution is made after age 59-1/2, on death or disability of the owner,
or for a limited amount ($10,000) for a qualified first time home purchase for
the owner or certain relatives. Income tax and a 10% penalty tax may apply to
distributions made (1) before age 59-1/2 (subject to certain exceptions) or (2)
during five taxable years starting with the year in which the first contribution
is made to the Roth IRA.

QUALIFIED PENSION AND PROFIT-SHARING PLANS

Under a qualified pension or profit-sharing plan, purchase payments
made by an employer are not currently taxable to the participant and increases
in the value of a contract are not subject to taxation until received by a
participant or beneficiary.

Distributions are taxable to the participant or beneficiary as ordinary
income in the year of receipt. Any distribution that is considered the
participant's "investment in the contract" is treated as a return of capital and
is not taxable. Certain lump-sum distributions may be eligible for special
forward averaging tax treatment for certain classes of individuals.

FEDERAL INCOME TAX WITHHOLDING

The portion of a distribution which is taxable income to the recipient
will be subject to federal income tax withholding as follows:

1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS

There is a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA or to another retirement plan but that are not
directly rolled over. A distribution made directly to a participant or
beneficiary may avoid this result if:

(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or

(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or

(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 701/2 or as otherwise
required by law.

A distribution including a rollover that is not a direct rollover will
be subject to the 20% withholding, and a 10% additional tax penalty may apply to
any amount not added back in the rollover. The 20% withholding may be recovered
when the participant or beneficiary files a personal income tax return for the
year if a rollover was completed within 60 days of receipt of the funds, except
to the extent that the participant or spousal beneficiary is otherwise
underwithheld or short on estimated taxes for that year.

12
<PAGE> 98
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)

To the extent not described as requiring 20% withholding in 1 above,
the portion of a non-periodic distribution which constitutes taxable income will
be subject to federal income tax withholding, if the aggregate distributions
exceed $200 for the year, unless the recipient elects not to have taxes
withheld. If no such election is made, 10% of the taxable distribution will be
withheld as federal income tax. Election forms will be provided at the time
distributions are requested. This form of withholding applies to all annuity
programs.

3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR)

The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage withholding
tables as if the recipient were married claiming three exemptions. A recipient
may elect not to have income taxes withheld or have income taxes withheld at a
different rate by providing a completed election form. Election forms will be
provided at the time distributions are requested. This form of withholding
applies to all annuity programs. As of January 1, 1999, a recipient receiving
periodic payments (e.g., monthly or annual payments under an annuity option)
which total $14,850 or less per year, will generally be exempt from periodic
withholding.

Recipients who elect not to have withholding made are liable for
payment of federal income tax on the taxable portion of the distribution. All
recipients may also be subject to penalties under the estimated tax payment
rules if withholding and estimated tax payments are not sufficient to cover tax
liabilities.

Recipients who do not provide a social security number or other
taxpayer identification number will not be permitted to elect out of
withholding. Additionally, U.S citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.

INDEPENDENT ACCOUNTANTS

The consolidated financial statements of The Travelers Insurance
Company and subsidiaries as of December 31, 1999 and 1998, and for each of the
years in the three-year period ended December 31, 1999, included herein, and the
financial statements of Fund BD III as of and for the year ended December 31,
1999, also included herein, have been included in reliance upon the reports of
KPMG LLP, independent certified public accountants, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.

13
<PAGE> 99
BOOK E

ANNUAL REPORT
DECEMBER 31, 1999

THE TRAVELERS FUND BD III
FOR VARIABLE ANNUITIES

[TRAVELERS LIFE & ANNUITY LOGO]

The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183

<PAGE> 100

THE TRAVELERS FUND BD III
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999

<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
Alliance Variable Product Series Fund, 4,825 shares (cost $182,547) .......... $ 194,915
American Variable Insurance Series Class 2, 2,695 shares (cost $79,610) ...... 84,106
BT Insurance Funds Trust, 44,686 shares (cost $500,645) ...................... 537,382
Greenwich Street Series Fund, 4,548,931 shares (cost $147,320,496) ........... 163,124,678
Money Market Portfolio, 93,940 shares (cost $93,940) ......................... 93,940
The Travelers Series Trust, 376 shares (cost $7,578) ......................... 7,928
Travelers Series Fund Inc., 14,442 shares (cost $186,913) .................... 202,294
Variable Insurance Products Fund II, 2,522 shares (cost $69,261) ............. 73,397
------------

Total Investments (cost $148,440,990) ...................................... $164,318,640

Receivables:
Dividends .................................................................... 157
Purchase payments and transfers from other Travelers accounts ................ 773,666
------------

Total Assets ............................................................... 165,092,463
------------

LIABILITIES:
Payables:
Insurance charges .......................................................... 49,806
Administrative fees ........................................................ 5,927
Equity protection fees ..................................................... 63,438
------------

Total Liabilities ........................................................ 119,171

------------

NET ASSETS: .................................................................... $164,973,292
============
</TABLE>

See Notes to Financial Statements

-1-
<PAGE> 101

THE TRAVELERS FUND BD III
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................................. $ 222,325

EXPENSES:
Insurance charges ..................................................... $ 630,408
Administrative fees ................................................... 74,428
Equity protection fees ................................................ 752,448
------------

Total expenses ...................................................... 1,457,284
------------

Net investment loss ............................................... (1,234,959)
------------

REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ...................................... 1,043,795
Cost of investments sold ............................................ 959,917
------------

Net realized gain (loss) .......................................... 83,878

Change in unrealized gain (loss) on investments:
Unrealized gain at December 31, 1998 .................................. 1,354,220
Unrealized gain at December 31, 1999 .................................. 15,877,650
------------

Net change in unrealized gain (loss) for the year ................... 14,523,430
------------

Net realized gain (loss) and change in unrealized gain (loss) ..... 14,607,308
------------

Net increase in net assets resulting from operations .................. $ 13,372,349
============
</TABLE>

See Notes to Financial Statements

-2-
<PAGE> 102

THE TRAVELERS FUND BD III
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
---- ----

<S> <C> <C>
OPERATIONS:
Net investment loss ................................................ $ (1,234,959) $ (91,925)
Net realized gain (loss) from investment transactions .............. 83,878 101,617
Net change in unrealized gain (loss) on investments ................ 14,523,430 1,357,026
------------- -------------

Net increase in net assets resulting from operations ............. 13,372,349 1,366,718
------------- -------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 120,919,914 and 10,241,829 units, respectively) ... 139,387,742 11,277,444
Participant transfers from other Travelers accounts
(applicable to 403,151 and 66,568 units, respectively) ........... 477,274 67,637
Administrative charges
(applicable to 2,282 and 440 units, respectively) ................ (3,148) (463)
Contract surrenders
(applicable to 774,241 and 95,529 units, respectively) ........... (1,013,691) (110,460)
Participant transfers to other Travelers accounts
(applicable to 16,948 units) ..................................... (25,829) -
Other payments to participants
(applicable to 13,865 units) ..................................... - (16,917)
------------- -------------

Net increase in net assets resulting from unit transactions ...... 138,822,348 11,217,241
------------- -------------

Net increase in net assets ..................................... 152,194,697 12,583,959

NET ASSETS:
Beginning of year .................................................. 12,778,595 194,636
------------- -------------

End of year ........................................................ $ 164,973,292 $ 12,778,595
============= =============
</TABLE>

See Notes to Financial Statements

-3-
<PAGE> 103

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Fund BD III for Variable Annuities ("Fund BD III") is a
separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Citigroup Inc., and is available for
funding certain variable annuity contracts issued by The Travelers. Fund BD
III is registered under the Investment Company Act of 1940, as amended, as a
unit investment trust. Fund BD III includes the Travelers Index Annuity and
Travelers Vintage XTRA Annuity products.

Participant purchase payments applied to Fund BD III are invested in one or
more eligible funds in accordance with the selection made by the contract
owner. As of December 31, 1999, the eligible funds available under Fund BD
III were: Money Market Portfolio; Equity Index Portfolio, Appreciation
Portfolio, Diversified Strategic Income Portfolio, Equity Index Portfolio
Class II and Total Return Portfolio of Greenwich Street Series Fund; Salomon
Brothers Variable Capital Fund, Salomon Brothers Variable Investors Fund and
Salomon Brothers Variable Small Cap Growth Fund of Salomon Brothers Variable
Series Funds Inc.; Disciplined Small Cap Stock Portfolio, Equity Income
Portfolio, Large Cap Portfolio, MFS Emerging Growth Portfolio, MFS Research
Portfolio and Strategic Stock Portfolio of The Travelers Series Trust;
Alliance Growth Portfolio, MFS Total Return Portfolio, Smith Barney
Aggressive Growth Portfolio, Smith Barney High Income Portfolio, Smith Barney
International Equity Portfolio, Smith Barney Large Capitalization Growth
Portfolio , Smith Barney Large Cap Value Portfolio, Smith Barney Mid Cap
Portfolio, Smith Barney Money Market Portfolio, Travelers Managed Income
Portfolio and Van Kampen Enterprise Portfolio of Travelers Series Fund Inc.
(all of which are managed by affiliates of The Travelers); Small Cap Index
Fund and EAFE(R) Equity Index Fund of BT Insurance Funds Trust; Premier
Growth Portfolio Class B of Alliance Variable Product Series Fund; Global
Growth Fund, Growth Fund, Growth Income Fund of American Variable Insurance
Series Class 2; Franklin Small Cap Investment Fund Class 2 and Templeton
International Fund Class 2 of the Templeton Variable Products Series Fund;
Emerging Growth Portfolio of Van Kampen Life Investment Trust; and
Contrafund(R) Portfolio-Service Class of Variable Insurance Products Fund II.
All of the funds are Massachusetts business trusts except for Salomon
Brothers Variable Series Funds Inc., Travelers Series Fund Inc., both of
which are incorporated under Maryland law; and Van Kampen Life Investment
trust which is a Delaware business trust. Not all funds may be available in
all states or to all contract owners.

The following is a summary of significant accounting policies consistently
followed by Fund BD III in the preparation of its financial statements.

SECURITY VALUATION. Investments are valued daily at the net asset values per
share of the underlying funds.

SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Dividend income is recorded on the ex-dividend date.

FEDERAL INCOME TAXES. The operations of Fund BD III form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986, as
amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income of Fund BD III. Fund BD III is not taxed as
a "regulated investment company" under Subchapter M of the Code.

OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

-4-
<PAGE> 104

NOTES TO FINANCIAL STATEMENTS - CONTINUED

2. INVESTMENTS

The aggregate costs of purchases and proceeds from sales of investments were
$138,051,061 and $1,043,795 respectively, for the year ended December 31,
1999. Realized gains and losses from investment transactions are reported on
an average cost basis. The cost of investments in eligible funds was
$148,440,990 at December 31, 1999. Gross unrealized appreciation for all
investments at December 31, 1999 was $15,880,036. Gross realized depreciation
for all investments at December 31, 1999 was $2,386.

3. CONTRACT CHARGES

Insurance charges are paid for the mortality and expense risks assumed by The
Travelers. Each business day, The Travelers deducts a mortality and expense
risk charge which is reflected in the calculation of accumulation and annuity
unit values. This charge equals, on an annual basis, 1.25% and 1.45% of the
amounts held in each funding option for the Standard Death Benefit and
Enhanced Death Benefit, respectively.

Administrative fees are paid for administrative expenses. This fee is also
deducted each business day and reflected in the calculation of accumulation
and annuity unit values. This charge equals, on an annual basis, 0.15% of the
amount held in each funding option.

For the Travelers Index Annuity contracts in the accumulation phase with a
contract value less than $50,000, an annual charge of $30 (prorated for
partial periods) is deducted from participant account balances and paid to
The Travelers to cover contract administrative charges. For the Travelers
Vintage XTRA Annuity contracts in the accumulation phase with a contract
value less than $100,000, an annual charge of $40 (prorated for partial
periods) is deducted from participant account balances and paid to The
Travelers to cover contract administrative charges.

Participants in the Equity Index Portfolio may elect, at the time of
purchase, to obtain a Principal Protection Feature. Under this feature, The
Travelers will guarantee that the value of the contract after eight years
will be at least equal to 115%, 100% or 90% of the purchase payment. The
annual fee, which depends on the level of protection that is chosen, as well
as market conditions, is equivalent to an amount of up to 2.00% of the
participant's contract value. Additionally, participants who withdraw from
this feature before the end of the eighth contact year will be subject to a
withdrawal fee of up to 4% of the original purchase payment withdrawn.

No sales charge is deducted from participant purchase payments when they are
received. However, for the Travelers Index Annuity Product, The Travelers
generally assesses a contingent deferred sales charge of up to 6% if a
participant's purchase payment is surrendered within eight years of its
payment date. For the Travelers Vintage XTRA Annuity product, The Travelers
generally assesses a contingent deferred sales charge of up to 8% if a
participant's purchase payment is surrendered within nine years of its
payment date. Contract surrender payments include $20,101 and $2,889 of
contingent deferred sales charges for the years ended December 31, 1999 and
1998 respectively.

4. CHANGE IN ACCOUNTING

On January 1, 1999, in conjunction with the implementation of a new system,
Fund BD III changed its basis of reporting realized gains and losses for
investment transactions from an identified cost basis to an average cost
basis. The accounting change had no effect on net assets.

-5-
<PAGE> 105

NOTES TO FINANCIAL STATEMENTS - CONTINUED

5. NET CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------------------------

ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ --------- ------------
<S> <C> <C> <C>
Alliance Variable Product Series Fund
Premier Growth Portfolio Class B
Standard Death Benefit .................................................... 76,688 $ 1.127 $ 86,448
Enhanced Death Benefit .................................................... 96,188 1.127 108,396

American Variable Insurance Series Class 2
Global Growth Fund
Standard Death Benefit .................................................... - 1.301 -
Enhanced Death Benefit .................................................... 35,494 1.301 46,170
Growth Fund
Standard Death Benefit .................................................... - 1.184 -
Enhanced Death Benefit .................................................... 32,012 1.183 37,880

BT Insurance Funds Trust
EAFE Equity Index Fund
Standard Death Benefit .................................................... 86,483 1.468 126,913
Enhanced Death Benefit .................................................... - 1.461 -
Small Cap Index Fund
Standard Death Benefit .................................................... 379,973 1.080 410,290
Enhanced Death Benefit .................................................... - 1.075 -

Greenwich Street Series Fund
Equity Index Portfolio
Standard Death Benefit
0.00% Principle Protection Fee ............................................ 1,776,976 1.581 2,808,876
0.80% Principle Protection Fee ............................................ - 1.552 -
0.85% Principle Protection Fee ............................................ - 1.299 -
0.95% Principle Protection Fee ............................................ 16,731 1.550 25,931
1.00% Principle Protection Fee ............................................ 577,193 1.408 812,556
1.10% Principle Protection Fee ............................................ 219,822 1.541 338,799
1.35% Principle Protection Fee ............................................ 2,144,703 1.538 3,297,807
1.45% Principle Protection Fee ............................................ 3,384,455 1.285 4,350,687
1.50% Principle Protection Fee ............................................ 36,888,854 1.527 56,334,236
1.80% Principle Protection Fee ............................................ 79,071,649 1.107 87,542,752
1.90% Principle Protection Fee ............................................ - 1.521 -
2.00% Principle Protection Fee ............................................ 20,820 1.410 29,358
</TABLE>

-6-
<PAGE> 106

NOTES TO FINANCIAL STATEMENTS - CONTINUED

5. NET CONTRACT OWNERS' EQUITY (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------------------

ACCUMULATION UNIT NET
UNITS VALUE ASSETS
---------------- ------------ ------------
<S> <C> <C> <C>
Greenwich Street Series Fund (continued)
Enhanced Death Benefit
0.00% Principle Protection Fee ......................... 460,640 $ 1.573 $ 724,799
0.80% Principle Protection Fee ......................... - 1.545 -
0.85% Principle Protection Fee ......................... - 1.295 -
0.95% Principle Protection Fee ......................... - 1.544 -
1.00% Principle Protection Fee ......................... 254,591 1.404 357,447
1.10% Principle Protection Fee ......................... 9,692 1.534 14,868
1.35% Principle Protection Fee ......................... 10,990 1.532 16,832
1.45% Principle Protection Fee ......................... 61,752 1.281 79,132
1.50% Principle Protection Fee ......................... 3,627,419 1.520 5,514,103
1.80% Principle Protection Fee ......................... 1,197,428 1.106 1,324,930
1.90% Principle Protection Fee ......................... - 1.515 -
2.00% Principle Protection Fee ......................... 147,045 1.405 206,548

Money Market Portfolio
Standard Death Benefit ................................. 87,063 1.080 94,055
Enhanced Death Benefit ................................. - 1.076 -

The Travelers Series Trust
Large Cap Portfolio
Standard Death Benefit ................................. 7,030 1.126 7,914
Enhanced Death Benefit ................................. - 1.125 -

Travelers Series Fund Inc.
Alliance Growth Portfolio
Standard Death Benefit ................................. 11,645 1.149 13,382.00
Enhanced Death Benefit ................................. - 1.149 -
Smith Barney Aggressive Growth Portfolio
Standard Death Benefit ................................. 66,995 1.210 81,043
Enhanced Death Benefit ................................. - 1.209 -
Smith Barney Large Capitalization Growth Portfolio
Standard Death Benefit ................................. 11,616 1.090 12,661
Enhanced Death Benefit ................................. - 1.090 -
Smith Barney Large Cap Value Portfolio
Standard Death Benefit ................................. - 0.998 -
Enhanced Death Benefit ................................. 46,952 0.998 46,857
Smith Barney Mid Cap Portfolio
Standard Death Benefit ................................. 4,746 1.166 5,532
Enhanced Death Benefit ................................. 36,659 1.165 42,718

Variable Insurance Products Fund II
Contrafund(R) Portfolio - Service Class
Standard Death Benefit ................................. 64,462 1.138 73,372
Enhanced Death Benefit ................................. - 1.138 -
------------

Net Contract Owners' Equity ................................ $164,973,292
============
</TABLE>

-7-

<PAGE> 107

NOTES TO FINANCIAL STATEMENTS - CONTINUED

6. STATEMENT OF INVESTMENTS

<TABLE>
<CAPTION>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
------------ ------------
<S> <C> <C>
ALLIANCE VARIABLE PRODUCT SERIES FUND (0.1%)
Premier Growth Portfolio Class B
Total (Cost $182,547) 4,825 $ 194,915
------------ ------------

AMERICAN VARIABLE INSURANCE SERIES CLASS 2 (0.1%)
Global Growth Fund (Cost $40,591) 2,158 46,199
Growth Fund (Cost $39,019) 537 37,907
------------ ------------
Total (Cost $79,610) 2,695 84,106
------------ ------------

BT INSURANCE FUNDS TRUST (0.3%)
EAFE Equity Index Fund (Cost $116,952) 9,335 126,956
Small Cap Index Fund (Cost $383,693) 35,351 410,426
------------ ------------
Total (Cost $500,645) 44,686 537,382
------------ ------------

GREENWICH STREET SERIES FUND (99.3%)
Equity Index Portfolio
Total (Cost $147,320,496) 4,548,931 163,124,678
------------ ------------

MONEY MARKET PORTFOLIO (0.1%)
Total (Cost $93,940) 93,940 93,940
------------ ------------

THE TRAVELERS SERIES TRUST (0.0%)
Large Cap Portfolio
Total (Cost $7,578) 376 7,928
------------ ------------

TRAVELERS SERIES FUND INC. (0.1%)
Alliance Growth Portfolio (Cost $12,086) 407 13,389
Smith Barney Aggressive Growth Portfolio (Cost $71,422) 6,706 81,071
Smith Barney Large Capitalization Growth Portfolio (Cost $11,862) 792 12,668
Smith Barney Large Cap Value Portfolio (Cost $48,161) 2,403 46,887
Smith Barney Mid Cap Portfolio (Cost $43,382) 4,134 48,279
------------ ------------
Total (Cost $186,913) 14,442 202,294
------------ ------------

VARIABLE INSURANCE PRODUCTS FUND II (0.0%)
Contrafund(R) Portfolio - Service ClasS
Total (Cost $69,261) 2,522 73,397
------------ ------------
TOTAL INVESTMENT OPTIONS (100%)
(COST $148,440,990) $164,318,640
============
</TABLE>

-8-
<PAGE> 108

This page intentionally left blank.

-9-

<PAGE> 109

NOTES TO FINANCIAL STATEMENTS - CONTINUED

7. SCHEDULE OF FUND BD III OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS
ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
PREMIER GROWTH
PORTFOLIO CLASS B GLOBAL GROWTH FUND GROWTH FUND
--------------------- --------------------- ----------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................................. $ - $ - $ 2,060 $ - $ 5,104 $ -
--------- ------- --------- -------- --------- --------
EXPENSES:
Insurance charges .......................................... 219 - 71 - 24 -
Administrative fees ........................................ 24 - 7 - 3 -
Equity protection fees ..................................... - - - - - -
--------- ------- --------- -------- --------- --------
Net investment income (loss) ........................... (243) - 1,982 - 5,077 -
--------- ------- --------- -------- --------- --------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ........................... 172 - 49 - - -
Cost of investments sold ................................. 169 - 46 - - -
--------- ------- --------- -------- --------- --------

Net realized gain (loss) ............................... 3 - 3 - - -
--------- ------- --------- -------- --------- --------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ................. - - - - - -
Unrealized gain (loss) end of year ....................... 12,368 - 5,608 - (1,112) -
--------- ------- --------- -------- --------- --------

Net change in unrealized gain (loss) for the year ...... 12,368 - 5,608 - (1,112) -
--------- ------- --------- -------- --------- --------
Net increase (decrease) in net assets
resulting from operations .............................. 12,128 - 7,593 - 3,965 -
--------- ------- --------- -------- --------- --------

UNIT TRANSACTIONS:
Participant purchase payments .............................. 182,716 - 38,577 - 33,915 -
Participant transfers from other Travelers accounts ........ - - - - - -
Administrative charges ..................................... - - - - - -
Contract surrenders ........................................ - - - - - -
Participant transfers to other Travelers accounts .......... - - - - - -
Other payments to participants ............................. - - - - - -
--------- ------- --------- -------- --------- --------
Net increase (decrease) in net assets
resulting from unit transactions ....................... 182,716 - 38,577 - 33,915 -
--------- ------- --------- -------- --------- --------
Net increase (decrease) in net assets .................. 194,844 - 46,170 - 37,880 -

NET ASSETS:
Beginning of year ........................................ - - - - - -
--------- ------- --------- -------- --------- --------
End of year .............................................. $ 194,844 $ - $ 46,170 $ - $ 37,880 $ -
========= ======= ========= ======== ========= ========
</TABLE>

-10-

<PAGE> 110

NOTES TO FINANCIAL STATEMENTS - CONTINUED

<TABLE>
<CAPTION>
EAFE EQUITY INDEX FUND SMALL CAP INDEX FUND EQUITY INDEX PORTFOLIO MONEY MARKET PORTFOLIO
- --------------------------- ---------------------------- --------------------------------- --------------------------
1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C>
$ 5,753 $ - $ 15,423 $ - $ 192,334 $ 25,856 $ 1,133 $ 398
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

355 - 1,746 - 627,365 53,888 296 101
43 - 210 - 74,069 6,339 36 13
- - - - 752,448 57,838 - -
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------
5,355 - 13,467 - (1,261,548) (92,209) 801 284
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

339 - 11,826 - 720,440 1,414,059 310,740 125
325 - 12,027 - 636,387 1,312,442 310,740 125
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

14 - (201) - 84,053 101,617 - -
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

- - - - 1,354,220 (2,806) - -
10,004 - 26,733 - 15,804,181 1,354,220 - -
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

10,004 - 26,733 - 14,449,961 1,357,026 - -
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

15,373 - 39,999 - 13,272,466 1,366,434 801 284
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

107,541 - 326,951 - 138,354,949 11,268,444 79,638 9,000
4,000 - 43,829 - 425,072 67,637 4,373 -
(1) - (11) - (3,110) (448) (26) (15)
- - (478) - (1,013,213) (110,460) - -
- - - - (25,829) - - -
- - - - - (16,917) - -
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

111,540 - 370,291 - 137,737,869 11,208,256 83,985 8,985
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

126,913 - 410,290 - 151,010,335 12,574,690 84,786 9,269

- - - - 12,769,326 194,636 9,269 -
- --------- ----------- --------- ---------- ------------- ----------- -------- ---------

$ 126,913 $ - $ 410,290 $ - $ 163,779,661 $12,769,326 $ 94,055 $ 9,269
========= =========== ========= ========== ============= =========== ======== =========
</TABLE>

-11-

<PAGE> 111

NOTES TO FINANCIAL STATEMENTS - CONTINUED

7. SCHEDULE OF FUND BD III OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS
ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)

<TABLE>
<CAPTION>
ALLIANCE GROWTH SMITH BARNEY AGGRESSIVE
LARGE CAP PORTFOLIO PORTFOLIO GROWTH PORTFOLIO
-------------------- --------------------- -----------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................... $ 378 $ - $ - $ - $ 61 $ -
-------- -------- -------- -------- -------- --------
EXPENSES:
Insurance charges ....................................... 13 - 22 - 62 -
Administrative fees ..................................... 1 - 2 - 8 -
Equity protection fees .................................. - - - - - -
-------- -------- -------- -------- -------- --------
Net investment income (loss) ........................ 364 - (24) - (9) -
-------- -------- -------- -------- -------- --------

REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ........................ - - 17 - 42 -
Cost of investments sold .............................. - - 16 - 39 -
-------- -------- -------- -------- -------- --------

Net realized gain (loss) ............................ - - 1 - 3 -
-------- -------- -------- -------- -------- --------

Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .............. - - - - - -
Unrealized gain (loss) end of year .................... 351 - 1,303 - 9,649 -
-------- -------- -------- -------- -------- --------

Net change in unrealized gain (loss) for the year ... 351 - 1,303 - 9,649 -
-------- -------- -------- -------- -------- --------

Net increase (decrease) in net assets
resulting from operations ........................... 715 - 1,280 - 9,643 -
-------- -------- -------- -------- -------- --------

UNIT TRANSACTIONS:

Participant purchase payments ........................... 7,199 - 12,102 - 71,400 -
Participant transfers from other Travelers accounts ..... - - - - - -
Administrative charges .................................. - - - - - -
Contract surrenders ..................................... - - - - - -
Participant transfers to other Travelers accounts ....... - - - - - -
Other payments to participants .......................... - - - - - -
-------- -------- -------- -------- -------- --------

Net increase (decrease) in net assets
resulting from unit transactions .................... 7,199 - 12,102 - 71,400 -
-------- -------- -------- -------- -------- --------

Net increase (decrease) in net assets ................... 7,914 - 13,382 - 81,043 -

NET ASSETS:
Beginning of year ..................................... - - - - - -
-------- -------- -------- -------- -------- --------

End of year ........................................... $ 7,914 $ - $ 13,382 $ - $ 81,043 $ -
======== ======== ======== ======== ======== ========
</TABLE>

-12-
<PAGE> 112

NOTES TO FINANCIAL STATEMENTS - CONTINUED

<TABLE>
<CAPTION>
SMITH BARNEY LARGE
CAPITALIZATION GROWTH SMITH BARNEY LARGE SMITH BARNEY MID CAP CONTRAFUND(R) PORTFOLIO -
PORTFOLIO CAP VALUE PORTFOLIO PORTFOLIO SERVICE CLASS
- ------------------------- -------------------------- --------------------------- --------------------------
1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C>
$ 27 $ - $ - $ - $ 52 $ - $ - $ -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

21 - 80 - 76 - 58 -
2 - 8 - 8 - 7 -
- - - - - - - -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------
4 - (88) - (32) - (65) -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

17 - 58 - 55 - 40 -
16 - 60 - 53 - 39 -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

1 - (2) - 2 - 1 -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

- - - - - - - ----------
806 - (1,274) - 4,897 - 4,136 -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

806 - (1,274) - 4,897 - 4,136 -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

811 - (1,364) - 4,867 - 4,072 -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

11,850 - 48,221 - 43,383 - 69,300 -
- - - - - - - -
- - - - - - - -
- - - - - - -
- - - - - - - -
- - - - - - - -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

11,850 - 48,221 - 43,383 - 69,300 -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

12,661 - 46,857 - 48,250 - 73,372 -

- - - - - - - -
- -------- ---------- -------- ---------- -------- ----------- -------- ----------

$ 12,661 $ - $ 46,857 $ - $ 48,250 $ - $ 73,372 $ -
======== ========== ======== ========== ======== =========== ======== ==========
</TABLE>

-13-

<PAGE> 113

NOTES TO FINANCIAL STATEMENTS - CONTINUED

7. SCHEDULE OF FUND BD III OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS
ENDED DECEMBER 31, 1999 AND 1998 (CONTINUED)

<TABLE>
<CAPTION>
COMBINED
----------------------------------
1999 1998
---- ----

<S> <C> <C>
INVESTMENT INCOME:
Dividends ................................................ $ 222,325 $ 26,254
------------- -------------

EXPENSES:
Insurance charges ........................................ 630,408 53,989
Administrative fees ...................................... 74,428 6,352
Equity protection fees ................................... 752,448 57,838
------------- -------------
Net investment income (loss) ......................... (1,234,959) (91,925)
------------- -------------

REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ......................... 1,043,795 1,414,184
Cost of investments sold ............................... 959,917 1,312,567
------------- -------------

Net realized gain (loss) ................................. 83,878 101,617
------------- -------------

Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ............... 1,354,220 (2,806)
Unrealized gain (loss) end of year ..................... 15,877,650 1,354,220
------------- -------------

Net change in unrealized gain (loss) for the year .... 14,523,430 1,357,026
------------- -------------

Net increase (decrease) in net assets
resulting from operations ............................ 13,372,349 1,366,718
------------- -------------

UNIT TRANSACTIONS:
Participant purchase payments ............................ 139,387,742 11,277,444
Participant transfers from other Travelers accounts ...... 477,274 67,637
Administrative and asset allocation charges .............. (3,148) (463)
Contract surrenders ...................................... (1,013,691) (110,460)
Participant transfers to other Travelers accounts ........ (25,829) -
Other payments to participants ........................... - (16,917)
------------- -------------
Net increase (decrease) in net assets
resulting from unit transactions ..................... 138,822,348 11,217,241
------------- -------------

Net increase (decrease) in net assets ................ 152,194,697 12,583,959

NET ASSETS:
Beginning of year ...................................... 12,778,595 194,636
------------- -------------

End of year ............................................ $ 164,973,292 $ 12,778,595
============= =============
</TABLE>

-14-

<PAGE> 114

NOTES TO FINANCIAL STATEMENTS - CONTINUED

8. SCHEDULE OF ACCUMULATION UNITS FOR FUND BD III FOR THE YEARS ENDED DECEMBER
31, 1999 AND 1998

<TABLE>
<CAPTION>
PREMIER GROWTH
PORTFOLIO CLASS B GLOBAL GROWTH FUND GROWTH FUND
----------------- ------------------ ---------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of year ........... - - - - - -
Accumulation units purchased and
transferred from other Travelers accounts .... 172,876 - 35,494 - 32,012 -
Accumulation units redeemed and
transferred to other Travelers accounts ...... - - - - - -
------- ----- ------- ---- ----------- ----------
Accumulation units end of year ................. 172,876 - 35,494 - 32,012 -
======= ===== ======= ==== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
EAFE EQUITY SMALL CAP EQUITY INDEX
INDEX FUND INDEX FUND PORTFOLIO
----------------- ------------------ ---------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of year ........... - - - - 10,376,290 186,609
Accumulation units purchased and
transferred from other Travelers accounts .... 86,484 - 380,491 - 120,287,397 10,299,501
Accumulation units redeemed and
transferred to other Travelers accounts ...... (1) - (518) - (792,927) (109,820)
------- ----- ------- ---- ----------- ----------
Accumulation units end of year ................. 86,483 - 379,973 - 129,870,760 10,376,290
======= ===== ======= ==== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
MONEY MARKET LARGE CAP ALLIANCE GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------------ ---------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of year ........... 8,882 - - - - -
Accumulation units purchased and
transferred from other Travelers accounts .... 78,206 8,896 7,030 - 11,645 -
Accumulation units redeemed and
transferred to other Travelers accounts ...... (25) (14) - - - -
------- ----- ------- ---- ----------- ----------
Accumulation units end of year ................. 87,063 8,882 7,030 - 11,645 -
======= ===== ======= ==== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
SMITH BARNEY SMITH BARNEY LARGE
AGGRESSIVE CAPITALIZATION GROWTH SMITH BARNEY LARGE
GROWTH PORTFOLIO PORTFOLIO CAP VALUE PORTFOLIO
----------------- ------------------ ---------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of year ........... - - - - - -
Accumulation units purchased and
transferred from other Travelers accounts .... 66,995 - 11,616 - 46,952 -
Accumulation units redeemed and
transferred to other Travelers accounts ...... - - - - - -
------- ----- ------- ---- ----------- ----------
Accumulation units end of year ................. 66,995 - 11,616 - 46,952 -
======= ===== ======= ==== =========== ==========
</TABLE>

-15-

<PAGE> 115

NOTES TO FINANCIAL STATEMENTS - CONTINUED

8. SCHEDULE OF ACCUMULATION UNITS FOR FUND BD III FOR THE YEARS ENDED DECEMBER
31, 1999 AND 1998 (CONTINUED)

<TABLE>
<CAPTION>
SMITH BARNEY CONTRAFUND(R) PORTFOLIO -
MID CAP PORTFOLIO SERVICE CLASS COMBINED
----------------- ------------------------- ----------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation units beginning of year ........... - - - - 10,385,172 186,609
Accumulation units purchased and
transferred from other Travelers accounts .... 41,405 - 64,462 - 121,323,065 10,308,397
Accumulation units redeemed and
transferred to other Travelers accounts ...... - - - - (793,471) (109,834)
------- - ------- ----- ------------ ------------
Accumulation units end of year ................. 41,405 - 64,462 - 130,914,766 10,385,172
======= ===== ======= ===== ============ ============
</TABLE>

-16-

<PAGE> 116

INDEPENDENT AUDITORS' REPORT

To the Owners of Variable Annuity Contracts of The Travelers Fund BD III for
Variable Annuities:

We have audited the accompanying statement of assets and liabilities of The
Travelers Fund BD III for Variable Annuities as of December 31, 1999, and the
related statement of operations for the year then ended and the statements of
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of shares owned as of December 31, 1999, by correspondence with the
underlying funds. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Travelers Fund BD III for
Variable Annuities as of December 31, 1999, the results of its operations for
the year then ended and the changes in its net assets for each of the two years
in the period then ended, in conformity with generally accepted accounting
principles.

/s/ KPMG LLP

Hartford, Connecticut
February 18, 2000

-17-
<PAGE> 117

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<PAGE> 118

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<PAGE> 119

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<PAGE> 120

Independent Auditors
KPMG LLP
Hartford, Connecticut

This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Fund BD III for Variable Annuities or
Fund BD III's underlying funds. It should not be used in connection with any
offer except in conjunction with the Prospectus for The Travelers Fund BD III
for Variable Annuities product(s) offered by The Travelers Insurance Company and
the Prospectuses of the underlying funds, which collectively contain all
pertinent information, including the applicable sales commissions.

FNDBDIII (Annual) (12-99) Printed in U.S.A.

<PAGE> 121
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholder
The Travelers Insurance Company and Subsidiaries:

We have audited the accompanying consolidated balance sheets of The Travelers
Insurance Company and Subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, changes in retained earnings and
accumulated other changes in equity from non-owner sources and cash flows for
each of the years in the three-year period ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Travelers
Insurance Company and Subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.

/s/ KPMG LLP
Hartford, Connecticut
January 18, 2000

F-1
<PAGE> 122
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in millions)

FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
---- ---- ----

<S> <C> <C> <C>
REVENUES
Premiums $1,738 $1,740 $1,583
Net investment income 2,506 2,185 2,037
Realized investment gains 113 149 199
Other revenues 521 440 354
- -------------------------------------------------------------------------------------------------- ------------- -------------
Total Revenues 4,878 4,514 4,173
- -------------------------------------------------------------------------------------------------- ------------- -------------

BENEFITS AND EXPENSES
Current and future insurance benefits 1,515 1,475 1,341
Interest credited to contractholders 937 876 829
Amortization of deferred acquisition costs 315 275 252
General and administrative expenses 519 505 468
- -------------------------------------------------------------------------------------------------- ------------- -------------
Total Benefits and Expenses 3,286 3,131 2,890
- -------------------------------------------------------------------------------------------------- ------------- -------------

Income from continuing operations before federal income taxes 1,592 1,383 1,283
- -------------------------------------------------------------------------------------------------- ------------- -------------

Federal income tax expense
Current 409 442 434
Deferred 136 39 10
- -------------------------------------------------------------------------------------------------- ------------- -------------
Total Federal Income Taxes 545 481 444
- -------------------------------------------------------------------------------------------------- ------------- -------------
Net income $1,047 $902 $839
================================================================================================== ============= =============
</TABLE>

See Notes to Consolidated Financial Statements.

F-2
<PAGE> 123
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in millions)

DECEMBER 31, 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at fair value (cost, $24,500, $22,973) $23,866 $23,893
Equity securities, at fair value (cost, $691, $474) 784 518
Mortgage loans 2,285 2,606
Real estate held for sale 236 143
Policy loans 1,258 1,857
Short-term securities 1,283 1,098
Trading securities, at market value 1,678 1,186
Other invested assets 2,098 2,251
- ----------------------------------------------------------------------------------------------------------------------------
Total Investments 33,488 33,552
- ----------------------------------------------------------------------------------------------------------------------------

Cash 85 65
Investment income accrued 395 393
Premium balances receivable 178 99
Reinsurance recoverables 3,234 3,387
Deferred acquisition costs 2,688 2,317
Separate and variable accounts 22,199 15,313
Other assets 1,264 1,422
- ----------------------------------------------------------------------------------------------------------------------------
Total Assets $63,531 $56,548
- ----------------------------------------------------------------------------------------------------------------------------

LIABILITIES
Contractholder funds $17,567 $16,739
Future policy benefits and claims 12,563 12,326
Separate and variable accounts 22,194 15,305
Deferred federal income taxes 23 422
Trading securities sold not yet purchased, at market value 1,098 873
Other liabilities 2,466 2,783
- ----------------------------------------------------------------------------------------------------------------------------
Total Liabilities 55,911 48,448
- ----------------------------------------------------------------------------------------------------------------------------

SHAREHOLDER'S EQUITY
Common stock, par value $2.50; 40 million shares authorized, issued and outstanding 100 100
Additional paid-in capital 3,819 3,800
Retained earnings 4,099 3,602
Accumulated other changes in equity from non-owner sources (398) 598
- ----------------------------------------------------------------------------------------------------------------------------
Total Shareholder's Equity 7,620 8,100
- ----------------------------------------------------------------------------------------------------------------------------

Total Liabilities and Shareholder's Equity $63,531 $56,548
============================================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE> 124
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS AND
ACCUMULATED OTHER CHANGES IN EQUITY FROM NON-OWNER SOURCES
($ in millions)

- -----------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN RETAINED EARNINGS 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Balance, beginning of year $3,602 $2,810 $2,471
Net income 1,047 902 839
Dividends to parent 550 110 500
- -----------------------------------------------------------------------------------------------------------
Balance, end of year $4,099 $3,602 $2,810
===========================================================================================================

- -----------------------------------------------------------------------------------------------------------
STATEMENTS OF ACCUMULATED OTHER CHANGES
IN EQUITY FROM NON-OWNER SOURCES
- -----------------------------------------------------------------------------------------------------------

Balance, beginning of year $598 $535 $223
Unrealized gains (losses), net of tax (996) 62 313
Foreign currency translation, net of tax 0 1 (1)
- -----------------------------------------------------------------------------------------------------------
Balance, end of year $(398) $598 $535
===========================================================================================================

- -----------------------------------------------------------------------------------------------------------
SUMMARY OF CHANGES IN EQUITY
FROM NON-OWNER SOURCES
- -----------------------------------------------------------------------------------------------------------

Net Income $1,047 $902 $839
Other changes in equity from non-owner sources (996) 63 312
- -----------------------------------------------------------------------------------------------------------
Total changes in equity from non-owner sources $51 $965 $1,151
===========================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE> 125
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
($ in millions)

FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Premiums collected $1,715 $1,763 $1,519
Net investment income received 2,365 2,021 2,059
Other revenues received 537 419 373
Benefits and claims paid (1,094) (1,127) (1,230)
Interest credited to contractholders (958) (918) (853)
Operating expenses paid (1,013) 751) (638)
Income taxes paid (393) (506) (368)
Trading account investments purchases, net (80) (38) (54)
Other (104) 12 18
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 975 875 826
- ---------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 4,103 2,608 2,259
Mortgage loans 662 722 663
Proceeds from sales of investments
Fixed maturities 12,562 13,390 7,592
Equity securities 100 212 341
Mortgage loans - - 207
Real estate held for sale 219 53 169
Purchases of investments
Fixed maturities (18,129) (18,072) (11,143)
Equity securities (309) (194) (483)
Mortgage loans (470) 457) (771)
Policy loans, net 599 15 38
Short-term securities (purchases) sales, net 316 495) (2)
Other investments purchases, net (413) (550) (260)
Securities transactions in course of settlement, net (463) 192 311
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (1,223) (2,576) (1,079)
- ---------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of commercial paper, net - - (50)
Contractholder fund deposits 5,764 4,383 3,544
Contractholder fund withdrawals (4,946) (2,565) (2,757)
Dividends to parent company (550) (110) (500)
- ---------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 268 1,708 237
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 20 7 (16)
- ---------------------------------------------------------------------------------------------------------------------
Cash at December 31, $85 $65 $58
====================================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

F-5
<PAGE> 126
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies used in the preparation of the accompanying
financial statements follow.

Basis of Presentation

The Travelers Insurance Company (TIC), together with its subsidiaries (the
Company), is a wholly owned subsidiary of The Travelers Insurance Group
Inc. (TIGI), an indirect wholly owned subsidiary of Citigroup Inc.
(Citigroup). The consolidated financial statements include the accounts of
the Company and its insurance and non-insurance subsidiaries on a fully
consolidated basis. The primary insurance entities of the Company are TIC
and its subsidiaries, The Travelers Life and Annuity Company (TLAC),
Primerica Life Insurance Company (Primerica Life), and its subsidiaries,
Primerica Life Insurance Company of Canada and National Benefit Life
Insurance Company (NBL).

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and benefits and
expenses during the reporting period. Actual results could differ from
those estimates.

Certain prior year amounts have been reclassified to conform to the 1999
presentation.

ACCOUNTING CHANGES

Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities

Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (FAS 125). This
statement establishes accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. These
standards are based on an approach that focuses on control. Under this
approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been surrendered
and derecognizes liabilities when extinguished. FAS 125 provides standards
for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. Effective January 1, 1998, the
Company adopted the collateral provisions of FAS 125 that were not
effective until 1998 in accordance with Statement of Financial Accounting
Standards No. 127, "Deferral of the Effective Date of Certain Provisions of
SFAS 125." The adoption of the collateral provisions of FAS 125 created
additional assets and liabilities on the Company's consolidated statement
of financial position related to the recognition of securities provided and
received as collateral. There was no impact on the Company's results of
operations from the adoption of the collateral provisions of FAS 125.

F-6
<PAGE> 127
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use During the third quarter of 1998, the Company adopted
(effective January 1, 1998) the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants' Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for
internal use and for determining when specific costs should be capitalized
or expensed. The adoption of SOP 98-1 did not have a material impact on the
Company's financial condition, results of operations or liquidity.

Accounting by Insurance and Other Enterprises for Insurance - Related
Assessments

In January 1999, the Company adopted (effective January 1, 1999) Statement
of Position 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" (SOP 97-3). SOP 97-3 provides guidance for
determining when an entity should recognize a liability for guaranty-fund
and other insurance-related assessments, how to measure that liability, and
when an asset may be recognized for the recovery of such assessments
through premium tax offsets or policy surcharges. The adoption of this SOP
had no impact on the Company's financial condition, results of operations
or liquidity.

ACCOUNTING POLICIES

Investments
Fixed maturities include bonds, notes and redeemable preferred stocks. Fair
values of investments in fixed maturities are based on quoted market prices
or dealer quotes or, if these are not available, discounted expected cash
flows using market rates commensurate with the credit quality and maturity
of the investment. Also included in fixed maturities are loan-backed and
structured securities, which are amortized using the retrospective method.
The effective yield used to determine amortization is calculated based upon
actual historical and projected future cash flows, which are obtained from
a widely-accepted securities data provider. Fixed maturities are classified
as "available for sale" and are reported at fair value, with unrealized
investment gains and losses, net of income taxes, charged or credited
directly to shareholder's equity.

Equity securities, which include common and nonredeemable preferred stocks,
are classified as "available for sale" and carried at fair value based
primarily on quoted market prices. Changes in fair values of equity
securities are charged or credited directly to shareholder's equity, net of
income taxes.

Mortgage loans are carried at amortized cost. A mortgage loan is considered
impaired when it is probable that the Company will be unable to collect
principal and interest amounts due. For mortgage loans that are determined
to be impaired, a reserve is established for the difference between the
amortized cost and fair market value of the underlying collateral. In
estimating fair value, the Company uses interest rates reflecting the
higher returns required in the current real estate financing market.
Impaired loans were insignificant at December 31, 1999 and 1998.

F-7
<PAGE> 128
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Real estate held for sale is carried at the lower of cost or fair value
less estimated cost to sell. Fair value of foreclosed properties is
established at the time of foreclosure by internal analysis or external
appraisers, using discounted cash flow analyses and other accepted
techniques. Thereafter, an allowance for losses on real estate held for
sale is established if the carrying value of the property exceeds its
current fair value less estimated costs to sell. There was no such
allowance at December 31, 1999 and 1998.

Trading securities and related liabilities are normally held for periods
less than six months. These investments are marked to market with the
change recognized in net investment income during the current period.

Short-term securities, consisting primarily of money market instruments and
other debt issues purchased with a maturity of less than one year, are
carried at amortized cost which approximates market.

Other invested assets include partnership investments and real estate joint
ventures accounted for on the equity method of accounting. Undistributed
income is reported in net investment income.

Accrual of income is suspended on fixed maturities or mortgage loans that
are in default, or on which it is likely that future payments will not be
made as scheduled. Interest income on investments in default is recognized
only as payment is received.

DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments, including financial
futures contracts, options, forward contracts, interest rate swaps,
currency swaps, and equity swaps, as a means of hedging exposure to
interest rate and foreign currency risk. Hedge accounting is used to
account for derivatives. To qualify for hedge accounting the changes in
value of the derivative must be expected to substantially offset the
changes in value of the hedged item. Hedges are monitored to ensure that
there is a high correlation between the derivative instruments and the
hedged investment.

Gains and losses arising from financial futures contracts are used to
adjust the basis of hedged investments and are recognized in net investment
income over the life of the investment.

Payments to be received or made under interest rate swaps are accrued and
recognized in net investment income. Swaps hedging investments are carried
at fair value with unrealized gains and losses, net of taxes, charged or
credited directly to shareholder's equity. Interest rate and currency swaps
hedging liabilities are off-balance sheet.

Forward contracts, interest rate options and equity swaps were not
significant at December 31, 1999 and 1998. Information concerning
derivative financial instruments is included in Note 5.

INVESTMENT GAINS AND LOSSES
Realized investment gains and losses are included as a component of pre-tax
revenues based upon specific identification of the investments sold on the
trade date. Also included are gains and losses arising from the
remeasurement of the local currency value of foreign investments to U.S.
dollars, the functional currency of the Company. The foreign exchange
effects of Canadian operations are included in unrealized gains and losses.

F-8
<PAGE> 129
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

POLICY LOANS
Policy loans are carried at the amount of the unpaid balances that are not
in excess of the net cash surrender values of the related insurance
policies. The carrying value of policy loans, which have no defined
maturities, is considered to be fair value.

DEFERRED ACQUISITION COSTS
Costs of acquiring individual life insurance, annuities and long-term care
business, principally commissions and certain expenses related to policy
issuance, underwriting and marketing, all of which vary with and are
primarily related to the production of new business, are deferred.
Acquisition costs relating to traditional life insurance, including term
insurance and long-term care insurance, are amortized in relation to
anticipated premiums; universal life in relation to estimated gross
profits; and annuity contracts employing a level yield method. For life
insurance, a 15 to 20-year amortization period is used; for long-term care
business, a 10 to 20-year period is used, and a seven to 20-year period is
employed for annuities. Deferred acquisition costs are reviewed
periodically for recoverability to determine if any adjustment is required.
Adjustments, if any, are charged to income.

VALUE OF INSURANCE IN FORCE

The value of insurance in force is an asset recorded at the time of
acquisition of an insurance company. It represents the actuarially
determined present value of anticipated profits to be realized from life
insurance, annuities and health contracts at the date of acquisition using
the same assumptions that were used for computing related liabilities where
appropriate. The value of insurance in force was the actuarially determined
present value of the projected future profits discounted at interest rates
ranging from 14% to 18%. Traditional life insurance and guaranteed
renewable health policies are amortized in relation to anticipated
premiums; universal life is amortized in relation to estimated gross
profits; and annuity contracts are amortized employing a level yield
method. The value of insurance in force is reviewed periodically for
recoverability to determine if any adjustment is required. Adjustments, if
any, are charged to income.

SEPARATE AND VARIABLE ACCOUNTS
Separate and variable accounts primarily represent funds for which
investment income and investment gains and losses accrue directly to, and
investment risk is borne by, the contractholders. Each account has specific
investment objectives. The assets of each account are legally segregated
and are not subject to claims that arise out of any other business of the
Company. The assets of these accounts are carried at market value. Certain
other separate accounts provide guaranteed levels of return or benefits and
the assets of these accounts are primarily carried at market value. Amounts
assessed to the contractholders for management services are included in
revenues. Deposits, net investment income and realized investment gains and
losses for these accounts are excluded from revenues, and related liability
increases are excluded from benefits and expenses.

GOODWILL
Goodwill represents the cost of acquired businesses in excess of net assets
and is being amortized on a straight-line basis principally over a 40-year
period. The carrying amount is regularly reviewed for indication of
impairment in value that in the view of management would be other than
temporary. If it is determined that goodwill is unlikely to be recovered,
impairment is recognized on a discounted cash flow basis.

F-9
<PAGE> 130
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

CONTRACTHOLDER FUNDS
Contractholder funds represent receipts from the issuance of universal
life, corporate owned life insurance, pension investment and certain
deferred annuity contracts. Contractholder fund balances are increased by
such receipts and credited interest and reduced by withdrawals, mortality
charges and administrative expenses charged to the contractholders.
Interest rates credited to contractholder funds range from 3.5% to 10.0%.

FUTURE POLICY BENEFITS
Future policy benefits represent liabilities for future insurance policy
benefits. Benefit reserves for life insurance and annuities have been
computed based upon mortality, morbidity, persistency and interest
assumptions applicable to these coverages, which range from 2.5% to 10.0%,
including adverse deviation. These assumptions consider Company experience
and industry standards. The assumptions vary by plan, age at issue, year of
issue and duration. Appropriate recognition has been given to experience
rating and reinsurance.

OTHER LIABILITIES
Included in Other Liabilities is the Company's estimate of its liability
for guaranty fund and other insurance-related assessments. State guaranty
fund assessments are based upon the Company's share of premium written or
received in one or more years prior to an insolvency occurring in the
industry. Once an insolvency has occurred, the Company recognizes a
liability for such assessments if it is probable that an assessment will be
imposed and the amount of the assessment can be reasonably estimated. At
December 31, 1999, the Company had a liability of $21.9 million for
guaranty fund assessments and a related premium tax offset recoverable of
$4.7 million. The assessments are expected to be paid over a period of
three to five years and the premium tax offsets are expected to be realized
over a period of 10 to 15 years.

SECURITIES LOANED
Securities loaned are recorded at the amount of cash received as
collateral. The Company receives cash collateral in an amount in excess of
the market value of securities loaned. The Company monitors the market
value of securities loaned on a daily basis with additional collateral
obtained as necessary.

PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company's insurance subsidiaries, domiciled principally in Connecticut
and Massachusetts, prepare statutory financial statements in accordance
with the accounting practices prescribed or permitted by the insurance
departments of the states of domicile. Prescribed statutory accounting
practices include certain publications of the National Association of
Insurance Commissioners (NAIC) as well as state laws, regulations, and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The impact of any
permitted accounting practices on statutory surplus of the Company is not
material.

The NAIC recently completed a process intended to codify statutory
accounting practices for certain insurance enterprises. As a result of this
process, the NAIC will issue a revised statutory Accounting Practices and
Procedures Manual - version effective January 1, 2001 (the revised Manual)
that will be effective for years beginning January 1, 2001. It is expected
that the State of Connecticut will require that, effective January 1, 2001,
insurance companies domiciled in Connecticut prepare their statutory basis
financial statements in accordance with the revised Manual subject to any
deviations prescribed or permitted

F-10
<PAGE> 131
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

by the Connecticut insurance commissioner. The Company has not yet
determined the impact that this change will have on the statutory capital
and surplus of its insurance subsidiaries.

PREMIUMS
Premiums are recognized as revenues when due. Reserves are established for
the portion of premiums that will be earned in future periods and for
deferred profits on limited-payment policies that are being recognized in
income over the policy term.

OTHER REVENUES
Other revenues include management fees for variable annuity separate
accounts; surrender, mortality and administrative charges and fees earned
on investment, universal life and other insurance contracts; and revenues
of non-insurance subsidiaries.

CURRENT AND FUTURE INSURANCE BENEFITS
Current and future insurance benefits represent charges for mortality and
morbidity related to fixed annuities, universal life, term life and health
insurance benefits.

INTEREST CREDITED TO CONTRACTHOLDERS
Interest credited to contractholders represents amounts earned by universal
life, corporate owned life insurance, pension investment and certain
deferred annuity contracts in accordance with contract provisions.

FEDERAL INCOME TAXES
The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income
taxes arise from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and liabilities.
A deferred federal income tax asset is recognized to the extent that future
realization of the tax benefit is more likely than not, with a valuation
allowance for the portion that is not likely to be recognized.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). In June 1999, the
FASB issued Statement of Financial Standards No. 137 "Deferral of the
Effective Date of FASB Statement No. 133" (FAS 137) which allows entities
which have not adopted FAS 133 to defer its effective date to all fiscal
quarters of all fiscal years beginning after June 15, 2000. FAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the consolidated balance sheet and measure those instruments
at fair value. If certain conditions are met, a derivative may be
specifically designated as (a) a hedge of the exposure to changes in the
fair value of a recognized asset or liability or an unrecognized firm
commitment, (b) a hedge of the exposure to variable cash flows of a
recognized asset or liability or of a forecasted transaction, or (c) a
hedge of the foreign currency exposure of a net investment in a foreign

F-11
<PAGE> 132
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

operation, an unrecognized firm commitment, an available-for-sale security,
or a foreign-currency-denominated forecasted transaction. The accounting
for changes in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and the resulting
designation. Upon initial application of FAS 133, hedging relationships
must be designated anew and documented pursuant to the provisions of this
statement. The Company adopted the deferral provisions of FAS 137,
effective January 1, 2000 and has not yet determined the impact that FAS
133 will have on its consolidated financial statements.

2. COMMERCIAL PAPER AND LINES OF CREDIT

TIC has issued commercial paper directly to investors in prior years. No
commercial paper was outstanding at December 31, 1999 or December 31, 1998.
TIC must maintain bank lines of credit at least equal to the amount of the
outstanding commercial paper. Citigroup and TIC have an agreement with a
syndicate of banks to provide $1.0 billion of revolving credit, to be
allocated to Citigroup or the Company. TIC's participation in this
agreement is limited to $250 million. The agreement consists of a five-year
revolving credit facility that expires in June 2001. At December 31, 1999
and 1998, no credit under this agreement was allocated to TIC. Under this
facility the Company is required to maintain certain minimum equity and
risk-based capital levels. At December 31, 1999, the Company was in
compliance with these provisions. If TIC had borrowings outstanding on this
facility, the interest rate would be based upon LIBOR plus a contractually
negotiated margin.

3. REINSURANCE

The Company participates in reinsurance in order to limit losses, minimize
exposure to large risks, provide additional capacity for future growth and
to effect business-sharing arrangements. Reinsurance is accomplished
through various plans of reinsurance, primarily yearly renewable term
coinsurance and modified coinsurance. The Company remains primarily liable
as the direct insurer on all risks reinsured.

Since 1997 universal life business was reinsured under an 80%/20% quota
share reinsurance program and term life business was reinsured under a
90%/10% quota share reinsurance program. Prior to 1997, the Company
reinsured all of its life business via first dollar quota share treaties on
an 80%/20% basis. Maximum retention of $1.5 million is generally reached on
policies in excess of $7.5 million. For other plans of insurance, it is the
policy of the Company to obtain reinsurance for amounts above certain
retention limits on individual life policies, which limits vary with age
and underwriting classification. Generally, the maximum retention on an
ordinary life risk is $1.5 million. Total inforce business ceded under
reinsurance contracts is $222.5 billion and $201.3 billion at December 31,
1999 and 1998.

The Company writes workers' compensation business through its Accident
Department. This business is ceded 100% to an affiliate, The Travelers
Indemnity Company.

F-12
<PAGE> 133
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

A summary of reinsurance financial data reflected within the consolidated
statements of income and balance sheets is presented below ($ in millions):

WRITTEN PREMIUMS 1999 1998 1997
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Direct $2,274 $2,310 $2,148
Assumed from:
Non-affiliated companies - - 1
Ceded to:
Affiliated companies (206) (242) (280)
Non-affiliated companies (322) (317) (273)
------------------------------------------------------------------------------------------------------
Total Net Written Premiums $1,746 $1,751 $1,596
======================================================================================================
</TABLE>

<TABLE>
<CAPTION>
EARNED PREMIUMS 1999 1998 1997
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Direct $2,248 $1,949 $2,170
Assumed from:
Non-affiliated companies - - 1
Ceded to:
Affiliated companies (193) (251) (321)
Non-affiliated companies (327) (308) (291)
------------------------------------------------------------------------------------------------------
Total Net Earned Premiums $1,728 $1,390 $1,559
======================================================================================================
</TABLE>

Reinsurance recoverables at December 31, 1999 and 1998 include amounts
recoverable on unpaid and paid losses and were as follows ($ in millions):

REINSURANCE RECOVERABLES 1999 1998
------------------------------------------------------------------------------------------------------

<S> <C> <C>
Life and Accident and Health Business:
Non-affiliated companies $1,221 $1,297
Property-Casualty Business:
Affiliated companies 2,013 2,090
------------------------------------------------------------------------------------------------------
Total Reinsurance Recoverables $3,234 $3,387
======================================================================================================
</TABLE>

Total reinsurance recoverables at December 31, 1999 and 1998 include $569
million and $640 million, respectively, from The Metropolitan Life
Insurance Company in connection with the sale of the Company's group life
insurance and related businesses in 1995.

F-13
<PAGE> 134
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

4. SHAREHOLDER'S EQUITY

Shareholder's Equity and Dividend Availability

The Company's statutory net income, which includes the statutory net income
of all insurance subsidiaries, was $890 million, $702 million and $754
million for the years ended December 31, 1999, 1998 and 1997, respectively.

The Company's statutory capital and surplus was $5.03 billion and $4.95
billion at December 31, 1999 and 1998, respectively.

The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to its parent
without prior approval of insurance regulatory authorities. Statutory
surplus of $679 million is available in 2000 for dividend payments by the
Company without prior approval of the Connecticut Insurance Department. In
addition, under a revolving credit facility, the Company is required to
maintain certain minimum equity and risk-based capital levels. The Company
was in compliance with these covenants at December 31, 1999 and 1998. The
Company paid dividends of $550 million, $110 million and $500 million in
1999, 1998 and 1997, respectively.

F-14
<PAGE> 135
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

4. SHAREHOLDER'S EQUITY (continued)

Accumulated Other Changes in Equity from Non-Owner Sources, Net of Tax

Changes in each component of Accumulated Other Changes in Equity from Non-Owner
Sources were as follows:

<TABLE>
<CAPTION>
ACCUMULATED OTHER
NET UNREALIZED FOREIGN CHANGES IN EQUITY FROM
GAIN (LOSS) ON CURRENCY NON-OWNER SOURCES
INVESTMENT SECURITIES TRANSLATION
($ in millions) ADJUSTMENTS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $232 $(9) $223
Unrealized gain on investment securities,
net of tax of $239 442 - 442
Less: reclassification adjustment for gains
included in net income, net of tax of $70 129 - 129
Foreign currency translation adjustment,
net of tax of $0 - (1) (1)
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE 313 (1) 312
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 545 (10) 535
Unrealized gains on investment securities,
net of tax of $85 159 - 159
Less: reclassification adjustment for gains
included in net income, net of tax of $52 97 - 97
Foreign currency translation adjustment,
net of tax of $2 - 1 1
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE 62 1 63
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 607 (9) 598
Unrealized losses on investment securities,
net of tax of $497 (923) - (923)
Less: reclassification adjustment for gains
included in net income, net of tax of $40 73 - 73
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE (996) - (996)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $(389) $(9) $(398)
===============================================================================================================================
</TABLE>

F-15
<PAGE> 136
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Derivative Financial Instruments

The Company uses derivative financial instruments, including financial
futures, interest rate swaps, currency swaps, options and forward contracts
as a means of hedging exposure to interest rate, equity price, and foreign
currency risk on anticipated transactions or existing assets and
liabilities. The Company, through a subsidiary that is a broker/dealer,
Tribeca Investments LLC (Tribeca) holds and issues derivative instruments
for trading purposes. All of these derivative financial instruments have
off-balance sheet risk. Financial instruments with off-balance sheet risk
involve, to varying degrees, elements of credit and market risk in excess
of the amount recognized in the balance sheet. The contract or notional
amounts of these instruments reflect the extent of involvement the Company
has in a particular class of financial instrument. However, the maximum
loss of cash flow associated with these instruments can be less than these
amounts. For interest rate swaps, currency swaps, options and forward
contracts, credit risk is limited to the amount that it would cost the
Company to replace the contracts. Financial futures contracts and purchased
listed option contracts have little credit risk since organized exchanges
are the counterparties. The Company as a writer of option contracts has no
credit risk since the counterparty has no performance obligation after it
has paid a cash premium.

The Company monitors creditworthiness of counterparties to these financial
instruments by using criteria of acceptable risk that are consistent with
on-balance sheet financial instruments. The controls include credit
approvals, limits and other monitoring procedures.

The Company uses exchange-traded financial futures contracts to manage its
exposure to changes in interest rates which arise from the sale of certain
insurance and investment products, or the need to reinvest proceeds from
the sale or maturity of investments. To hedge against adverse changes in
interest rates, the Company enters long or short positions in financial
futures contracts which offset asset price changes resulting from changes
in market interest rates until an investment is purchased or a product is
sold.

Margin payments are required to enter a futures contract and contract gains
or losses are settled daily in cash. The contract amount of futures
contracts represents the extent of the Company's involvement, but not
future cash requirements, as open positions are typically closed out prior
to the delivery date of the contract.

At December 31, 1999 and 1998, the Company held financial futures contracts
with notional amounts of $255 million and $459 million, respectively. These
financial futures had a deferred gain of $1.8 million and a deferred loss
of $.5 million in 1999, and a deferred gain of $3.3 million and a deferred
loss of $.1 million in 1998. Total gains of $6.9 million and $1.5 million
from financial futures were deferred at December 31, 1999 and 1998,
respectively, relating to anticipated investment purchases and investment
product sales, and are reported as other liabilities. At December 31, 1999
and 1998, the Company's futures contracts had no fair value because these
contracts were marked to market and settled in cash daily.

F-16

<PAGE> 137
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The Company enters into interest rate swaps in connection with other
financial instruments to provide greater risk diversification and better
match assets and liabilities. Under interest rate swaps, the Company agrees
with other parties to exchange, at specified intervals, the difference
between fixed-rate and floating-rate interest amounts calculated by
reference to an agreed notional principal amount. The Company also enters
into basis swaps in which both legs of the swap are floating with each
based on a different index. Generally, no cash is exchanged at the outset
of the contract and no principal payments are made by either party. A
single net payment is usually made by one counterparty at each due date.
Swap agreements are not exchange-traded so they are subject to the risk of
default by the counterparty.

At December 31, 1999 and 1998, the Company held interest rate swap
contracts with notional amounts of $1,498.2 million and $1,077.9 million,
respectively. The fair value of these financial instruments was $25.3
million (gain position) and $26.3 million (loss position) at December 31,
1999 and was $5.6 million (gain position) and $19.6 million (loss position)
at December 31, 1998. The fair values were determined using the discounted
cash flow method. At December 31, 1999, the Company held swap contracts
with affiliate counterparties with a notional amount of $207.5 million and
a fair value of $22.6 million (loss position).

The Company enters into currency swaps in connection with other financial
instruments to provide greater risk diversification and better match assets
purchased in U.S. Dollars with corresponding funding agreements issued in
foreign currencies. Under currency swaps, the Company agrees with other
parties to exchange, at specified intervals, foreign currency for U.S.
Dollars based upon interest amounts calculated by reference to an agreed
notional principal amount. Generally, there is an exchange of foreign
currency for U.S. Dollars at the outset of the contract based upon the
prevailing foreign exchange rate. Swap agreements are not exchange traded
so they are subject to the risk of default by the counterparty.

At December 31, 1999 and 1998, the Company held currency swap contracts
with notional amounts of $732.7 million and $10.0 million, respectively.
The fair value of these financial instruments was $59.2 million (loss
position) at December 31, 1999 and $.4 million (gain position) at December
31, 1998. The fair values were determined using the discounted cash flow
method.

The Company uses equity option contracts to manage its exposure to changes
in equity market prices that arise from the sale of certain insurance
products. To hedge against adverse changes in the equity market prices, the
Company enters long positions in equity option contracts with major
financial institutions. These contracts allow the Company, for a fee, the
right to receive a payment if the Standard and Poor's 500 Index falls below
agreed upon strike prices.

At December 31, 1999 and 1998, the Company held equity options with
notional amounts of $275.4 million and zero, respectively. The fair value
of these financial instruments was $32.6 million (gain position) at
December 31, 1999. The fair value of these contracts represent the
estimated replacement cost as quoted by independent third party brokers.

The off-balance sheet risks of interest rate options, equity swaps and
forward contracts were not significant at December 31, 1999 and 1998.

The off-balance sheet risk of derivative instruments held for trading
purposes was not significant at December 31, 1999 and 1998.

F-17
<PAGE> 138
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, the Company issues fixed and variable
rate loan commitments and has unfunded commitments to partnerships. The
off-balance sheet risk of these financial instruments was not significant
at December 31, 1999 and 1998. The Company had unfunded commitments to
partnerships with a value of $459.7 million at December 31, 1999.

Fair Value of Certain Financial Instruments

The Company uses various financial instruments in the normal course of its
business. Certain insurance contracts are excluded by Statement of
Financial Accounting Standards No. 107, "Disclosure about Fair Value of
Financial Instruments", and therefore are not included in the amounts
discussed.

At December 31, 1999 and 1998, investments in fixed maturities had a
carrying value and a fair value of $23.9 billion and $23.9 billion,
respectively. See Notes 1 and 12.

At December 31, 1999 mortgage loans had a carrying value of $2.3 billion
and a fair value of $2.3 billion and in 1998 had a carrying value of $2.6
billion and a fair value of $2.8 billion. In estimating fair value, the
Company used interest rates reflecting the current real estate financing
market.

Citigroup Preferred Stock included in other invested assets had a carrying
value and fair value of $987 million at December 31, 1999 and 1998.

At December 31, 1999, contractholder funds with defined maturities had a
carrying value of $5.0 billion and a fair value of $4.7 billion, compared
with a carrying value and a fair value of $3.3 billion at December 31,
1998. The fair value of these contracts is determined by discounting
expected cash flows at an interest rate commensurate with the Company's
credit risk and the expected timing of cash flows. Contractholder funds
without defined maturities had a carrying value of $10.1 billion and a fair
value of $9.9 billion at December 31, 1999, compared with a carrying value
of $10.4 billion and a fair value of $10.2 billion at December 31, 1998.
These contracts generally are valued at surrender value.

The carrying values of $228 million and $144 million of financial
instruments classified as other assets approximated their fair values at
December 31, 1999 and 1998, respectively. The carrying values of $1.2
billion and $2.3 billion of financial instruments classified as other
liabilities also approximated their fair values at December 31, 1999 and
1998, respectively. Fair value is determined using various methods,
including discounted cash flows, as appropriate for the various financial
instruments.

The assets of separate accounts providing a guaranteed return had a
carrying value and a fair value of $251 million at December 31, 1999,
compared with a carrying value and a fair value of $235 million at December
31, 1998. The liabilities of separate accounts providing a guaranteed
return had a carrying value and a fair value of $251 million at December
31, 1999, compared with a carrying value and a fair value of $209 million
and $206 million, respectively, at December 31, 1998.

The carrying values of cash, trading securities and trading securities sold
not yet purchased are carried at fair value. The carrying values of
short-term securities and investment income accrued approximated their fair
values.

The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.

F-18
<PAGE> 139
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

6. COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk

See Note 5 for a discussion of financial instruments with off-balance sheet
risk.

Litigation

In March 1997, a purported class action entitled Patterman v. The
Travelers, Inc., et al. was commenced in the Superior Court of Richmond
County, Georgia, alleging, among other things, violations of the Georgia
RICO statute and other state laws by an affiliate of the Company, Primerica
Financial Services, Inc. and certain of its affiliates. Plaintiffs seek
unspecified compensatory and punitive damages and other relief. In October
1997, defendants answered the complaint, denied liability and asserted
numerous affirmative defenses. In February 1998, on defendants' motion, the
Superior Court of Richmond County transferred the lawsuit to the Superior
Court of Gwinnett County, Georgia. Plaintiffs appealed the transfer order,
and in December 1998 the Court of Appeals of the State of Georgia reversed
the lower court's decision. Defendants petitioned the Georgia Supreme Court
to hear an appeal from the decision of the Court of Appeals, and the
petition was granted in May 1998. In September 1999, oral argument on
defendants' petition was heard and, on February 28, 2000, the Georgia
Supreme Court affirmed the Georgia Court of Appeals and remanded the matter
to the Superior Court of Richmond County. In March 2000, defendants moved
the Georgia Supreme Court to reconsider its February 28, 2000 decision, and
that motion remains pending. Proceedings in the trial court have been
stayed pending appeal. Defendants intend to vigorously contest the
litigation.

The Company is also a defendant or co-defendant in various other litigation
matters in the normal course of business. Although there can be no
assurances, as of December 31, 1999, the Company believes, based on
information currently available, that the ultimate resolution of these
legal proceedings would not be likely to have a material adverse effect on
its results of operations, financial condition or liquidity.

7. BENEFIT PLANS

Pension and Other Postretirement Benefits

The Company participates in a qualified, noncontributory defined benefit
pension plan sponsored by Citigroup. In addition, the Company provides
certain other postretirement benefits to retired employees through a plan
sponsored by TIGI. The Company's share of net expense for the qualified
pension and other postretirement benefit plans was not significant for
1999, 1998 and 1997. Through plans sponsored by TIGI, the Company also
provides defined contribution pension plans for certain agents. Company
contributions are primarily a function of production. The expense for these
plans was not significant in 1999, 1998 and 1997.

401(k) Savings Plan

Substantially all of the Company's employees are eligible to participate in
a 401(k) savings plan sponsored by Citigroup. Effective January 1, 1997,
the Company discontinued matching contributions for the majority of its
employees. The Company's expenses in connection with the 401(k) savings
plan were not significant in 1999, 1998 and 1997.

F-19
<PAGE> 140
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

8. RELATED PARTY TRANSACTIONS

The principal banking functions, including payment of salaries and
expenses, for certain subsidiaries and affiliates of TIGI are handled by
two companies. The Company handles banking functions for the life and
annuity operations of Travelers Life & Annuity and some of its
non-insurance affiliates. The Travelers Indemnity Company handles banking
functions for the property-casualty operations, including most of its
property-casualty insurance and non-insurance affiliates. Settlements
between companies are made at least monthly. The Company provides various
employee benefits coverages to employees of certain subsidiaries of TIGI.
The premiums for these coverages were charged in accordance with cost
allocation procedures based upon salaries or census. In addition,
investment advisory and management services, data processing services and
claims processing services are shared with affiliated companies. Charges
for these services are shared by the companies on cost allocation methods
based generally on estimated usage by department.

The Company maintains a short-term investment pool in which its insurance
affiliates participate. The position of each company participating in the
pool is calculated and adjusted daily. At December 31, 1999 and 1998, the
pool totaled approximately $2.6 billion and $2.3 billion, respectively. The
Company's share of the pool amounted to $1.0 billion and $793 million at
December 31, 1999 and 1998, respectively, and is included in short-term
securities in the consolidated balance sheet.

Included in short-term investments at December 31, 1998 was a 90-day
variable rate note receivable from Citigroup. The rate was based upon the
AA financial commercial paper rate plus 14 basis points. The rate at
December 31, 1998 was 5.47%. The balance, which was $500 million at
December 31, 1998, was paid in full on February 25, 1999. Interest accrued
at December 31, 1998 was $2.2 million. Interest earned was $3.9 million and
$9.4 million in 1999 and 1998, respectively.

The Company markets deferred annuity products and life and health insurance
through its affiliate, Salomon Smith Barney Financial Consultants (SSB).
Premiums and deposits related to these products were $1.4 billion, $1.3
billion, and $1.0 billion in 1999, 1998 and 1997, respectively.

At December 31, 1999 and 1998 the Company had outstanding loaned securities
to SSB for $123.0 million and $39.7 million, respectively.

Included in other invested assets is a $987 million investment in Citigroup
preferred stock at December 31, 1999 and 1998, carried at cost.

The Company sells structured settlement annuities to the insurance
subsidiaries of Travelers Property Casualty Corp. (TAP) in connection with
the settlement of certain policyholder obligations. Such premiums and
deposits were $156 million, $104 million, and $88 million for 1999, 1998
and 1997, respectively. Reserves and contractholder funds related to these
annuities amounted to $798 million and $787 million in 1999 and 1998,
respectively.

In the ordinary course of business, the Company purchases and sells
securities through affiliated broker-dealers. These transactions are
conducted on an arm's length basis.

F-20
<PAGE> 141
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Primerica Life has entered into a General Agency Agreement with Primerica
Financial Services, Inc. (Primerica), that provides that Primerica will be
Primerica Life's general agent for marketing all insurance of Primerica
Life. In consideration of such services, Primerica Life agreed to pay
Primerica marketing fees of no less than $10 million based upon U.S. gross
direct premiums received by Primerica Life. In each of 1999 and 1998 the
fees paid by Primerica Life were $12.5 million.

In 1998 Primerica became a distributor of products for Travelers Life &
Annuity. Primerica sold $903 million and $256 million of deferred annuities
in 1999 and 1998, respectively.

The Company participates in a stock option plan sponsored by Citigroup that
provides for the granting of stock options in Citigroup common stock to
officers and key employees. To further encourage employee stock ownership,
during 1997 Citigroup introduced the WealthBuilder stock option program.
Under this program, all employees meeting certain requirements have been
granted Citigroup stock options.

The Company applies Accounting Principles Board Opinion No. 25 (APB 25) and
related interpretations in accounting for stock options. Since stock
options under the Citigroup plans are issued at fair market value on the
date of award, no compensation cost has been recognized for these awards.
FAS 123 provides an alternative to APB 25 whereby fair values may be
ascribed to options using a valuation model and amortized to compensation
cost over the vesting period of the options.

Had the Company applied FAS 123 in accounting for Citigroup stock options,
net income would have been the pro forma amounts indicated below:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income, as reported $1,047 $902 $839
FAS 123 pro forma adjustments, after tax (16) (13) (9)
------------------------------------------------------------------------------------------------------
Net income, pro forma $1,031 $889 $830
------------------------------------------------------------------------------------------------------
</TABLE>

F-21
<PAGE> 142
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

9. LEASES

Most leasing functions for TIGI and its subsidiaries are administered by
TAP. Rent expense related to all leases is shared by the companies on a
cost allocation method based generally on estimated usage by department.
Net rent expense was $30 million, $24 million, and $15 million in 1999,
1998 and 1997, respectively.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
YEAR ENDING DECEMBER 31, MINIMUM OPERATING RENTAL
($ in millions) PAYMENTS
--------------------------------------------------------------------------
<S> <C>
2000 $38
2001 42
2002 41
2003 41
2004 41
Thereafter 273
--------------------------------------------------------------------------
Total Rental Payments $476
=========================================================================
</TABLE>

Future sublease rental income of approximately $79 million will partially
offset these commitments. Also, the Company will be reimbursed for 50% of
the rental expense for a particular lease totaling $195 million, by an
affiliate. Minimum future capital lease payments are not significant.

The Company is reimbursed for use of furniture and equipment through cost
sharing agreements by its affiliates.

F-22
<PAGE> 143
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
10. FEDERAL INCOME TAXES

EFFECTIVE TAX RATE

<TABLE>
<CAPTION>
($ in millions)
--------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Before Federal Income Taxes $1,592 $1,383 $1,283
Statutory Tax Rate 35% 35% 35%
--------------------------------------------------------------------------------------------------------
Expected Federal Income Taxes 557 484 449
Tax Effect of:
Non-taxable investment income (19) (5) (4)
Other, net 7 2 (1)
--------------------------------------------------------------------------------------------------------
Federal Income Taxes $ 545 $ 481 $ 444
========================================================================================================
Effective Tax Rate 34% 35% 35%
--------------------------------------------------------------------------------------------------------
</TABLE>

COMPOSITION OF FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
Current:
<S> <C> <C> <C>
United States $377 $418 $410
Foreign 32 24 24
--------------------------------------------------------------------------------------------------------
Total 409 442 434
--------------------------------------------------------------------------------------------------------
Deferred:
United States 143 40 10
Foreign (7) (1) --
--------------------------------------------------------------------------------------------------------
Total 136 39 10
--------------------------------------------------------------------------------------------------------
Federal Income Taxes $545 $481 $444
========================================================================================================
</TABLE>

Additional tax benefits attributable to employee stock plans allocated
directly to shareholder's equity were $17 million for each of the years
ended December 31, 1999, 1998 and 1997.

F-23
<PAGE> 144
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The net deferred tax liabilities at December 31, 1999 and 1998 were
comprised of the tax effects of temporary differences related to the
following assets and liabilities:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
($ in millions) 1999 1998
---- ----
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets:
Benefit, reinsurance and other reserves $ 645 $ 616
Operating lease reserves 70 76
Investments, net 11 --
Other employee benefits 106 103
Other 142 135
-----------------------------------------------------------------------------------------------------------------
Total 974 930
-----------------------------------------------------------------------------------------------------------------

Deferred Tax Liabilities:
Deferred acquisition costs and value of insurance in force (773) (673)
Investments, net -- (489)
Other (124) (90)
-----------------------------------------------------------------------------------------------------------------
Total (897) (1,252)
-----------------------------------------------------------------------------------------------------------------
Net Deferred Tax (Liability) Asset Before Valuation Allowance 77 (322)
Valuation Allowance for Deferred Tax Assets (100) (100)
-----------------------------------------------------------------------------------------------------------------
Net Deferred Tax Liability After Valuation Allowance $ (23) $ (422)
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The Company and its life insurance subsidiaries file a consolidated federal
income tax return. Federal income taxes are allocated to each member of the
consolidated group on a separate return basis adjusted for credits and
other amounts required by the consolidation process. Any resulting
liability will be paid currently to the Company. Any credits for losses
will be paid by the Company to the extent that such credits are for tax
benefits that have been utilized in the consolidated federal income tax
return.

The $100 million valuation allowance is sufficient to cover any capital
losses on investments that may exceed the capital gains able to be
generated in the life insurance group's consolidated federal income tax
return based upon management's best estimate of the character of the
reversing temporary differences. Reversal of the valuation allowance is
contingent upon the recognition of future capital gains or a change in
circumstances that causes the recognition of the benefits to become more
likely than not. There was no change in the valuation allowance during
1999. The initial recognition of any benefit produced by the reversal of
the valuation allowance will be recognized by reducing goodwill.

At December 31, 1999, the Company had no ordinary or capital loss
carryforwards.

F-24
<PAGE> 145
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The policyholders surplus account, which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account is
approximately $932 million. Income taxes are not provided for on this
amount because under current U.S. tax rules such taxes will become payable
only to the extent such amounts are distributed as a dividend or exceed
limits prescribed by federal law. Distributions are not contemplated from
this account. At current rates the maximum amount of such tax would be
approximately $326 million.

11. NET INVESTMENT INCOME

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GROSS INVESTMENT INCOME
Fixed maturities $1,806 $1,598 $1,460
Mortgage loans 235 295 291
Joint ventures and partnerships 141 74 55
Trading 141 43 57
Other, including policy loans 287 240 263
------------------------------------------------------------------------------------------------------
2,610 2,250 2,126
------------------------------------------------------------------------------------------------------
Investment expenses 104 65 89
------------------------------------------------------------------------------------------------------
Net investment income $2,506 $2,185 $2,037
------------------------------------------------------------------------------------------------------
</TABLE>

12. INVESTMENTS AND INVESTMENT GAINS (LOSSES)

Realized investment gains (losses) for the periods were as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REALIZED INVESTMENT GAINS
Fixed maturities $(23) $111 $ 71
Equity securities 7 6 (9)
Mortgage loans 29 21 59
Real estate held for sale 108 16 67
Other (8) (5) 11
------------------------------------------------------------------------------------------------------
Total Realized Investment Gains $113 $149 $199
------------------------------------------------------------------------------------------------------
</TABLE>

F-25
<PAGE> 146
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Changes in net unrealized investment gains (losses) that are reported as
accumulated other changes in equity from non-owner sources or unrealized
gains on Citigroup stock in shareholder's equity were as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNREALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $(1,554) $ 91 $ 446
Equity securities 49 13 25
Other (30) (169) 520
-------------------------------------------------------------------------------------------------------------
Total Unrealized Investment Gains (Losses) (1,535) (65) 991
-------------------------------------------------------------------------------------------------------------

Related taxes (539) (20) 350
-------------------------------------------------------------------------------------------------------------
Change in unrealized investment gains (losses) (996) (45) 641
Transferred to paid in capital, net of tax -- (585) --
Balance beginning of year 598 1,228 587
-------------------------------------------------------------------------------------------------------------
Balance End of Year $ (398) $ 598 $1,228
-------------------------------------------------------------------------------------------------------------
</TABLE>

Included in Other in 1998 is the unrealized loss on Citigroup common stock
of $167 million prior to the conversion to preferred stock. Also included
in Other were unrealized gains of $506 million, which were reported in
1997, related to appreciation of Citigroup common stock.

F-26
<PAGE> 147
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Fixed Maturities

The amortized cost and fair value of investments in fixed maturities were
as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
GROSS GROSS
DECEMBER 31, 1999 AMORTIZED UNREALIZED UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 5,081 $ 22 $ 224 $ 4,879
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,032 14 53 993
Obligations of states, municipalities and
political subdivisions 214 -- 31 183
Debt securities issued by foreign governments 811 35 10 836
All other corporate bonds 13,938 69 384 13,623
Other debt securities 3,319 30 99 3,250
Redeemable preferred stock 105 4 7 102
-------------------------------------------------------------------------------------------------------------------
Total Available For Sale $24,500 $ 174 $ 808 $23,866
-------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
GROSS GROSS
DECEMBER 31, 1998 AMORTIZED UNREALIZED UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 4,717 $ 147 $ 11 $ 4,853
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,563 186 3 1,746
Obligations of states, municipalities and
political subdivisions 239 18 -- 257
Debt securities issued by foreign governments 634 41 3 672
All other corporate bonds 13,025 532 57 13,500
Other debt securities 2,709 106 38 2,777
Redeemable preferred stock 86 3 1 88
------------------------------------------------------------------------------------------------------------------
Total Available For Sale $22,973 $ 1,033 $ 113 $23,893
------------------------------------------------------------------------------------------------------------------
</TABLE>

F-27
<PAGE> 148
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Proceeds from sales of fixed maturities classified as available for sale
were $12.6 billion, $13.4 billion and $7.6 billion in 1999, 1998 and 1997,
respectively. Gross gains of $200 million, $314 million and $170 million
and gross losses of $223 million, $203 million and $99 million in 1999,
1998 and 1997, respectively, were realized on those sales.

Fair values of investments in fixed maturities are based on quoted market
prices or dealer quotes or, if these are not available, discounted expected
cash flows using market rates commensurate with the credit quality and
maturity of the investment. The fair value of investments for which a
quoted market price or dealer quote are not available amounted to $4.8
billion and $4.8 billion at December 31, 1999 and 1998, respectively.

The amortized cost and fair value of fixed maturities at December 31, 1999,
by contractual maturity, are shown below. Actual maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
AMORTIZED
($ in millions) COST FAIR VALUE
--------------------------------------------------------------------------------------
<S> <C> <C>
MATURITY:
Due in one year or less $1,624 $1,622
Due after 1 year through 5 years 6,633 6,599
Due after 5 years through 10 years 5,257 5,132
Due after 10 years 5,905 5,634
--------------------------------------------------------------------------------------
19,419 18,987
--------------------------------------------------------------------------------------
Mortgage-backed securities 5,081 4,879
--------------------------------------------------------------------------------------
Total Maturity $24,500 $23,866
--------------------------------------------------------------------------------------
</TABLE>

The Company makes investments in collateralized mortgage obligations
(CMOs). CMOs typically have high credit quality, offer good liquidity, and
provide a significant advantage in yield and total return compared to U.S.
Treasury securities. The Company's investment strategy is to purchase CMO
tranches which are protected against prepayment risk, including planned
amortization class (PAC) tranches. Prepayment protected tranches are
preferred because they provide stable cash flows in a variety of interest
rate scenarios. The Company does invest in other types of CMO tranches if a
careful assessment indicates a favorable risk/return tradeoff. The Company
does not purchase residual interests in CMOs.

At December 31, 1999 and 1998, the Company held CMOs classified as
available for sale with a fair value of $3.8 billion and $3.4 billion,
respectively. Approximately 52% and 54%, respectively, of the Company's CMO
holdings are fully collateralized by GNMA, FNMA or FHLMC securities at
December 31, 1999 and 1998. In addition, the Company held $1.1 billion and
$1.4 billion of GNMA, FNMA or FHLMC mortgage-backed pass-through securities
at December 31, 1999 and 1998, respectively. Virtually all of these
securities are rated AAA.

F-28
<PAGE> 149
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Equity Securities

The cost and fair values of investments in equity securities were as
follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
GROSS GROSS
EQUITY SECURITIES: UNREALIZED UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
Common stocks $195 $123 $ 4 $314
Non-redeemable preferred stocks 496 15 41 470
-------------------------------------------------------------------------------------------------------------------
Total Equity Securities $691 $138 $45 $784
-------------------------------------------------------------------------------------------------------------------

DECEMBER 31, 1998
Common stocks $129 $44 $ 3 $170
Non-redeemable preferred stocks 345 10 7 348
-------------------------------------------------------------------------------------------------------------------
Total Equity Securities $474 $54 $10 $518
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Proceeds from sales of equity securities were $100 million, $212 million
and $341 million in 1999, 1998 and 1997, respectively. Gross gains of $15
million, $30 million and $53 million and gross losses of $8 million, $24
million and $62 million in 1999, 1998 and 1997, respectively, were realized
on those sales.

Mortgage Loans and Real Estate Held For Sale

At December 31, 1999 and 1998, the Company's mortgage loan and real estate
held for sale portfolios consisted of the following:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
($ in millions) 1999 1998
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Mortgage Loans $2,228 $2,370
Underperforming Mortgage Loans 57 236
--------------------------------------------------------------------------------------------------
Total Mortgage Loans 2,285 2,606
--------------------------------------------------------------------------------------------------

Real Estate Held For Sale - Foreclosed 223 112
Real Estate Held For Sale - Investment 13 31
--------------------------------------------------------------------------------------------------
Total Real Estate 236 143
--------------------------------------------------------------------------------------------------
Total Mortgage Loans and Real Estate Held for Sale $2,521 $2,749
==================================================================================================
</TABLE>

Underperforming mortgage loans include delinquent mortgage loans, loans in
the process of foreclosure, foreclosed loans and loans modified at interest
rates below market.

F-29
<PAGE> 150
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Aggregate annual maturities on mortgage loans at December 31, 1999 are as
follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
YEAR ENDING DECEMBER 31,
($ in millions)
-----------------------------------------------------------------------
<S> <C>
Past Maturity $ 39
2000 162
2001 172
2002 137
2003 131
2004 140
Thereafter 1,504
-----------------------------------------------------------------------
Total $2,285
=======================================================================
</TABLE>

Trading Securities

Trading securities of the Company are held in Tribeca.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
($ in millions) 1999 1998
-------------------------------------------------------------------------------------------
TRADING SECURITIES OWNED
<S> <C> <C>
Convertible bond arbitrage $1,045 $754
Merger arbitrage 421 427
Other 212 5
-------------------------------------------------------------------------------------------
Total $1,678 $1,186
-------------------------------------------------------------------------------------------
TRADING SECURITIES SOLD NOT YET PURCHASED
Convertible bond arbitrage $799 $521
Merger arbitrage 299 352
-------------------------------------------------------------------------------------------
Total $1,098 $873
-------------------------------------------------------------------------------------------
</TABLE>

The Company's trading portfolio investments and related liabilities are
normally held for periods less than six months. Therefore, expected future
cash flows for these assets and liabilities are expected to be realized in
less than one year.

F-30

<PAGE> 151
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Concentrations

At December 31, 1999 and 1998, the Company had an investment in Citigroup
Preferred Stock of $987 million. See Note 8.

The Company maintains a short-term investment pool for its insurance
affiliates in which the Company also participates. See Note 8.

The Company had concentrations of investments, primarily fixed maturities,
in the following industries:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
($ in millions) 1999 1998
--------------------------------------------------------------------------
<S> <C> <C>
Banking $1,906 $2,131
Electric Utilities 1,653 1,513
Finance 1,571 1,346
--------------------------------------------------------------------------
</TABLE>

The Company held investments in Foreign Banks in the amount of $1,012
million and $997 million at December 31, 1999 and 1998, respectively, which
are included in the table above. Also, below investment grade assets
included in the preceding table were not significant.

Included in fixed maturities are below investment grade assets totaling
$2.2 billion and $2.1 billion at December 31, 1999 and 1998, respectively.
The Company defines its below investment grade assets as those securities
rated "Ba1" or below by external rating agencies, or the equivalent by
internal analysts when a public rating does not exist. Such assets include
publicly traded below investment grade bonds and certain other privately
issued bonds and notes that are classified as below investment grade.

Mortgage loan investments are relatively evenly dispersed throughout the
United States, with no significant holdings in any one state. Also, there
is no significant mortgage loan investment in a particular property type.

F-31
<PAGE> 152
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often includes
pledges of assets, including stock and other assets, guarantees and letters
of credit. The Company's underwriting standards with respect to new
mortgage loans generally require loan to value ratios of 75% or less at the
time of mortgage origination.

Non-Income Producing Investments

Investments included in the consolidated balance sheets that were
non-income producing for the preceding 12 months were insignificant.

Restructured Investments

The Company had mortgage loans and debt securities that were restructured
at below market terms at December 31, 1999 and 1998. The balances of the
restructured investments were insignificant. The new terms typically defer
a portion of contract interest payments to varying future periods. The
accrual of interest is suspended on all restructured assets, and interest
income is reported only as payment is received. Gross interest income on
restructured assets that would have been recorded in accordance with the
original terms of such loans was insignificant in 1999 and in 1998.
Interest on these assets, included in net investment income was
insignificant in 1999 and 1998.

13. DEPOSIT FUNDS AND RESERVES

At December 31, 1999, the Company had $27.0 billion of life and annuity
deposit funds and reserves. Of that total, $13.8 billion is not subject to
discretionary withdrawal based on contract terms. The remaining $13.2
billion is for life and annuity products that are subject to discretionary
withdrawal by the contractholder. Included in the amount that is subject to
discretionary withdrawal is $2.1 billion of liabilities that are
surrenderable with market value adjustments. Also included are an
additional $4.9 billion of life insurance and individual annuity
liabilities which are subject to discretionary withdrawals, and have an
average surrender charge of 4.6%. In the payout phase, these funds are
credited at significantly reduced interest rates. The remaining $6.2
billion of liabilities are surrenderable without charge. More than 12.7% of
these relate to individual life products. These risks would have to be
underwritten again if transferred to another carrier, which is considered a
significant deterrent against withdrawal by long-term policyholders.
Insurance liabilities that are surrendered or withdrawn are reduced by
outstanding policy loans and related accrued interest prior to payout.

F-32
<PAGE> 153
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

14. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES

The following table reconciles net income to net cash provided by operating
activities:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
($ in millions) ---- ---- ----
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income From Continuing Operations $ 1,047 $ 902 $ 839
Adjustments to reconcile net income to net cash provided by
operating activities:
Realized gains (113) (149) (199)
Deferred federal income taxes 136 39 10
Amortization of deferred policy acquisition costs 315 275 252
Additions to deferred policy acquisition costs (686) (566) (471)
Investment income (221) (202) (32)
Premium balances (23) 23 (64)
Insurance reserves and accrued expenses 421 348 111
Other 99 205 380
---------------------------------------------------------------------------------------------------------------------
Net cash provided by operations $ 975 $ 875 $ 826
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
</TABLE>

15. NON-CASH INVESTING AND FINANCING ACTIVITIES

Significant non-cash investing and financing activities include the
acquisition of real estate through foreclosures of mortgage loans amounting
to $205 million in 1999, the transfer of Citigroup common stock to
Citigroup preferred stock valued at $987 million in 1998 and the conversion
of $119 million of real estate held for sale to other invested assets as a
joint venture in 1997.

F-33
<PAGE> 154
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

16. OPERATING SEGMENTS

The Company has two reportable business segments that are separately
managed due to differences in products, services, marketing strategy and
resource management. The business of each segment is maintained and
reported through separate legal entities within the Company. The management
groups of each segment report separately to the common ultimate parent,
Citigroup Inc.

The TRAVELERS LIFE & ANNUITY business segment consolidates primarily the
business of The Travelers Insurance Company and The Travelers Life and
Annuity Company. Travelers Life & Annuity offers individual annuity, group
annuity, individual life and long-term care products distributed by the
Company and TLAC under the Travelers name. Among the range of individual
products offered are fixed and variable deferred annuities, payout
annuities and term, universal and variable life and long-term care
insurance. The group products include institutional pensions, including
guaranteed investment contracts, payout annuities, group annuities to
employer-sponsored retirement and savings plans and structured finance
transactions.

The PRIMERICA LIFE business segment consolidates primarily the business of
Primerica Life Insurance Company, Primerica Life Insurance Company of
Canada and National Benefit Life Insurance Company. The Primerica Life
business segment offers individual life products, primarily term insurance,
to customers through a nationwide sales force of approximately 80,000 full
and part-time licensed Personal Financial Analysts.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies (see Note 1), except that
management also includes receipts on long-duration contracts (universal
life-type and investment contracts) as deposits along with premiums in
measuring business volume.

BUSINESS SEGMENT INFORMATION:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE & PRIMERICA LIFE
1999 ($ in millions) ANNUITY INSURANCE TOTAL
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 666 $ 1,072 $ 1,738
Deposits 11,220 -- 11,220
------- ------- -------
Total business volume $11,886 $ 1,072 $12,958
Net investment income 2,249 257 2,506
Interest credited to contractholders 937 -- 937
Amortization of deferred acquisition costs 127 188 315
Federal income taxes on Operating Income 319 186 505
Operating Income (excludes realized gains or
losses and the related FIT) $ 619 $ 355 $ 974
Segment Assets $56,615 $ 6,916 $63,531
-----------------------------------------------------------------------------------------------------------------
</TABLE>

F-34
<PAGE> 155
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE & PRIMERICA LIFE
1998 ($ in millions) ANNUITY INSURANCE TOTAL
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 683 $1,057 $ 1,740
Deposits 7,693 -- 7,693
------- ------ -------
Total business volume $ 8,376 $1,057 $ 9,433
Net investment income 1,965 220 2,185
Interest credited to contractholders 876 -- 876
Amortization of deferred acquisition costs 88 187 275
Federal income taxes on Operating Income 260 170 430
Operating Income (excludes realized gains or
losses and the related FIT) $ 493 $ 312 $ 805
Segment Assets $49,646 $6,902 $56,548
-----------------------------------------------------------------------------------------------------------------
</TABLE>

-----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE PRIMERICA LIFE
1997 ($ in millions) & ANNUITY INSURANCE TOTAL
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 548 $1,035 $ 1,583
Deposits 5,276 -- 5,276
------- ------ -------
Total business volume $ 5,824 $1,035 $ 6,859
Net investment income 1,836 201 2,037
Interest credited to contractholders 829 -- 829
Amortization of deferred acquisition costs 68 184 252
Federal income taxes on Operating Income 221 153 374
Operating Income (excludes realized gains or
losses and the related FIT) $ 427 $ 283 $ 710
Segment Assets $42,330 $7,110 $49,440
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The amount of investments in equity method investees and total expenditures
for additions to long-lived assets other than financial instruments,
long-term customer relationships of a financial institution, mortgage and
other servicing rights, deferred policy acquisition costs, and deferred tax
assets, were not material.

F-35
<PAGE> 156
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
BUSINESS SEGMENT RECONCILIATION:
($ in millions)
----------------------------------------------------------------------------------------------------------

REVENUES 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total business volume $12,958 $9,433 $6,859
Net investment income 2,506 2,185 2,037
Realized investment gains 113 149 199
Other revenues 521 440 354
Elimination of deposits (11,220) (7,693) (5,276)
----------------------------------------------------------------------------------------------------------
Total revenues $4,878 $4,514 $4,173
==========================================================================================================

OPERATING INCOME 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total operating income of business segments $ 974 $805 $710
Realized investment gains net of tax 73 97 129
----------------------------------------------------------------------------------------------------------
Income from continuing operations $1,047 $902 $839
==========================================================================================================
</TABLE>

<TABLE>
<CAPTION>
ASSETS 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total assets of business segments $63,531 $56,548 $49,440
==========================================================================================================
</TABLE>

REVENUE BY PRODUCTS 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred Annuities $5,694 $4,198 $3,303
Group and Payout Annuities 7,275 5,326 3,737
Individual Life and Health Insurance 2,434 2,270 2,102
Other (a) 695 413 307
Elimination of deposits (11,220) (7,693) (5,276)
----------------------------------------------------------------------------------------------------------
Total Revenue $4,878 $4,514 $4,173
==========================================================================================================
</TABLE>

(a) Other represents revenue attributable to unallocated capital and run-off
businesses.

The Company's revenue was derived almost entirely from U.S. domestic
business. Revenue attributable to foreign countries was insignificant.

The Company had no transactions with a single customer representing 10% or
more of its revenue.

F-36
<PAGE> 157
STATEMENT OF ADDITIONAL INFORMATION
FUND BD III

TRAVELERS PORTFOLIO ARCHITECT XTRA
TRAVELERS VINTAGE XTRA

Individual Variable Annuity Contract
issued by

The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183

l-20672S May 2000

14
<PAGE> 158
PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) The financial statements of the Registrant and the Report of Independent
Auditors thereto are contained in the Registrant's Annual Report and
included in the Statement of Additional Information. The financial
statements of the Registrant include:

Statement of Assets and Liabilities as of December 31, 1999
Statement of Operations for the year ended December 31, 1999
Statement of Changes in Net Assets for the years ended December 31,
1999 and 1998
Statement of Investments as of December 31, 1999
Notes to Financial Statements

The consolidated financial statements of The Travelers Insurance Company
and subsidiaries and the report of Independent Accountants, are
contained in the Statement of Additional Information. The consolidated
financial statements of The Travelers Insurance Company and subsidiaries
include:

Consolidated Statements of Income for the years ended December 31,
1999, 1998 and 1997
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Changes in Retained Earnings and
Accumulated Other Changes in Equity from Non-Owner Sources for the
years ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended December
31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements

(b) EXHIBITS

1. Resolution of The Travelers Insurance Company Board of Directors
authorizing the establishment of the Registrant. (Incorporated
herein by reference to Exhibit 1 to the Registration Statement on
Form N-4, filed May 23, 1997.)

2. Not Applicable.

3(a). Distribution and Principal Underwriting Agreement among the
Registrant, The Travelers Insurance Company and CFBDS, Inc.
(Incorporated herein by reference to Exhibit 3(a) to the
Registration Statement on Form N-4, File No. 333-60227 filed
November 9, 1998.)

3(b). Selling Agreement. (Incorporated herein by reference to Exhibit
3(b) to the Registration Statement on Form N-4, File No. 333-60227,
filed November 9, 1998.)

4. Variable Annuity Contract. (Incorporated herein by reference to
Exhibit 4 to the Registration Statement on Form N-4, File No.
333-70657, filed January 15, 1999.)

5. Application. (Incorporated herein by reference to Exhibit 5 to
Pre-Effective Amendment No. 2 the Registration Statement on Form
N-4, filed September 29, 1999.)

6(a). Charter of The Travelers Insurance Company, as amended on October
19, 1994. (Incorporated herein by reference to Exhibit 6(a) to
Registration Statement on Form N-4, File No. 333-40193, filed
November 13, 1998.)

<PAGE> 159

6(b). By-Laws of The Travelers Insurance Company, as amended on October
20, 1994. (Incorporated herein by reference to Exhibit 6(b) to the
Registration Statement on Form N-4, File No. 333-40193, filed
November 13, 1998.)

9. Opinion of Counsel as to the legality of securities being
registered. (Incorporated herein by reference to Exhibit 9 to the
Registration Statement on Form N-4, File No. 333-70657, filed
January 15, 1999.)

10. Consent of KPMG LLP, Independent Certified Public Accountants.

13. Computation of Total Return Calculations - Standardized and
Non-Standardized. (Incorporated herein by reference to Exhibit 13
to Pre-Effective Amendment No. 2 the Registration Statement on Form
N-4, filed September 29, 1999.)

15(a). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Michael A. Carpenter, Jay S. Benet, George
C. Kokulis, Robert I. Lipp, Ian R. Stuart, Katherine M. Sullivan
and Marc P. Weill. (Incorporated herein by reference to Exhibit
15(a) to the Registration Statement on Form N-4, File No.
333-27689, filed May 23, 1997.)

15(b). Power of Attorney authorizing Ernest J. Wright or Kathleen A. McGah
as signatory for George C. Kokulis, Katherine M. Sullivan and Glenn
D. Lammey. (Incorporated herein by reference to Exhibit 15(b) to
Post-Effective Amendment No. 3 the Registration Statement on Form
N-4, File No. 333-27689, filed April 12. 2000.)

Item 25. Directors and Officers of the Depositor

Name and Principal Positions and Offices
Business Address with Insurance Company
- ------------------ ----------------------------------
George C. Kokulis* Director, President and Chief
Executive Officer
Katherine M. Sullivan* Director and Senior Vice President
Marc P. Weill** Director and Senior Vice President
Mary Jean Thornton* Executive Vice President and
Chief Information Officer
Stuart Baritz*** Senior Vice President
Jay S. Fishman* Senior Vice President
Barry Jacobson* Senior Vice President
Russell H. Johnson* Senior Vice President
Brendan Lynch* Senior Vice President
Warren H. May* Senior Vice President
Kathleen Preston* Senior Vice President
David A. Tyson* Senior Vice President
F. Denney Voss* Senior Vice President
Glenn D. Lammey* Chief Financial Officer, Chief
Accounting Officer and Controller
David A. Golino* Vice President
Donald R. Munson, Jr.* Vice President
Anthony Cocolla Second Vice President
Scott R. Hansen Second Vice President
Linn K. Richardson* Second Vice President and Actuary

<PAGE> 160

Paul Weissman Second Vice President and Actuary
Ernest J. Wright* Vice President and Secretary
Kathleen A. McGah* Assistant Secretary and
Deputy General Counsel

Principal Business Address:
* The Travelers Insurance Company ** Citigroup Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013

*** Travelers Portfolio Group
1345 Avenue of the Americas
New York, NY 10105

Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant

Incorporated herein by reference to Exhibit 16 to Post-Effective
Amendment No.2 to the Registration Statement on Form N-4, File No.
333-40193, filed April 12, 2000.

Item 27. Number of Contract Owners

As of February 29, 2000, 5 contract owners held qualified and non-qualified
contracts offered by the Registrant.

Item 28. Indemnification

Sections 33-770 to 33-778, inclusive of the Connecticut General Statutes
("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations provides in general that Connecticut corporations
shall indemnify their officers, directors and certain other defined
individuals against judgments, fines, penalties, amounts paid in settlement
and reasonable expenses actually incurred in connection with proceedings
against the corporation. The corporation's obligation to provide such
indemnification generally does not apply unless (1) the individual is wholly
successful on the merits in the defense of any such proceeding; or (2) a
determination is made (by persons specified in the statute) that the
individual acted in good faith and in the best interests of the corporation
and in all other cases, his conduct was at least not opposed to the best
interests of the corporation, and in a criminal case he had no reasonable
cause to believe his conduct was unlawful; or (3) the court, upon
application by the individual, determines in view of all of the
circumstances that such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine. With
respect to proceedings brought by or in the right of the corporation, the
statute provides that the corporation shall indemnify its officers,
directors and certain other defined individuals, against reasonable expenses
actually incurred by them in connection with such proceedings, subject to
certain limitations.

Citigroup Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Registrant. This insurance provides for coverage against loss from claims
made against directors and officers in their capacity as such, including,
subject to certain exceptions, liabilities under the federal securities laws.

<PAGE> 161

Rule 484 Undertaking

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Item 29. Principal Underwriter

(a) CFBDS, Inc.
21 Milk Street
Boston, MA 02109

CFBDS, Inc. also serves as principal underwriter for the following :

(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFunds(SM) International Growth & Income Portfolio, CitiFunds(SM)
International Growth Portfolio, CitiFunds(SM) U.S. Treasury Reserves,
CitiFunds(SM) Cash Reserves, CitiFunds(SM) Premium U.S. Treasury Reserves,
CitiFunds(SM) Premium Liquid Reserves, CitiFunds(SM) Institutional U.S. Treasury
Reserves, CitiFunds(SM) Institutional Liquid Reserves, CitiFunds(SM)
Institutional Cash Reserves, CitiFunds(SM) Tax Free Reserves, CitiFunds(SM)
Institutional Tax Free Reserves, CitiFunds(SM) California Tax Free Reserves,
CitiFunds(SM) Connecticut Tax Free Reserves, CitiFunds(SM) New York Tax Free
Reserves, CitiFunds(SM) New York Tax Free Income Portfolio, CitiFunds(SM)
National Tax Free Income Portfolio, CitiFunds(SM) California Tax Free Income
Portfolio, CitiFunds(SM) Intermediate Income Portfolio, CitiFunds(SM) Balanced
Portfolio, CitiFunds(SM) Small Cap Value Portfolio, CitiFunds(SM) Growth &
Income Portfolio, CitiFunds(SM) Large Cap Growth Portfolio, CitiFunds(SM) Small
Cap Growth Portfolio, CitiSelect VIP Folio 200, CitiSelect VIP Folio 300,
CitiSelect VIP Folio 400, CitiSelect VIP Folio 500, CitiFunds(SM) Small Cap
Growth VIP Portfolio, CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect
Folio 400, and CitiSelect Folio 500. CFBDS is also the placement agent for
Large Cap Value Portfolio, Small Cap Value Portfolio, International
Portfolio, Foreign Bond Portfolio, Intermediate Income Portfolio, Short-Term
Portfolio, Growth & Income Portfolio, U.S. Fixed Income Portfolio, Large Cap
Growth Portfolio, Small Cap Growth Portfolio, International Equity
Portfolio, Balanced Portfolio, Government Income Portfolio, Tax Free
Reserves Portfolio, Cash Reserves Portfolio and U.S. Treasury Reserves
Portfolio. CFBDS also serves as the distributor for the following funds: The
Travelers Fund U for Variable Annuities, The Travelers Fund VA for Variable
Annuities, The Travelers Fund BD for Variable Annuities, The Travelers Fund
BD II for Variable Annuities, The Travelers Fund BD III for Variable
Annuities, The Travelers Fund BD IV for Variable Annuities, The Travelers
Fund ABD for Variable Annuities, The Travelers Fund ABD II for Variable
Annuities, The Travelers Separate Account PF for Variable Annuities, The
Travelers Separate Account PF II for Variable Annuities, The Travelers
Separate Account QP for Variable Annuities, The Travelers Separate Account
TM for Variable Annuities, The Travelers Separate Account TM II for Variable
Annuities, The Travelers Separate Account Five for Variable Annuities, The
Travelers Separate Account Six for Variable Annuities, The Travelers
Separate Account Seven for Variable Annuities, The Travelers Separate
Account Eight for Variable Annuities, The Travelers Fund UL for Variable
Life Insurance, The Travelers Fund UL II for Variable Life Insurance, The
Travelers Fund UL III for Variable Life Insurance, The Travelers Variable
Life Insurance Separate Account One, The Travelers Variable Life Insurance
Separate Account Two, The Travelers Variable Life Insurance Separate Account
Three, The Travelers Variable Life Insurance Separate Account Four, The
Travelers Separate

<PAGE> 162

Account MGA, The Travelers Separate Account MGA II, The Travelers Growth and
Income Stock Account for Variable Annuities, The Travelers Quality Bond
Account for Variable Annuities, The Travelers Money Market Account for
Variable Annuities, The Travelers Timed Growth and Income Stock Account for
Variable Annuities, The Travelers Timed Short-Term Bond Account for Variable
Annuities, The Travelers Timed Aggressive Stock Account for Variable
Annuities, The Travelers Timed Bond Account for Variable Annuities, Emerging
Growth Fund, Government Fund, Growth and Income Fund, International Equity
Fund, Municipal Fund, Balanced Investments, Emerging Markets Equity
Investments, Government Money Investments, High Yield Investments,
Intermediate Fixed Income Investments, International Equity Investments,
International Fixed Income Investments, Large Capitalization Growth
Investments, Large Capitalization Value Equity Investments, Long-Term Bond
Investments, Mortgage Backed Investments, Municipal Bond Investments, Small
Capitalization Growth Investments, Small Capitalization Value Equity
Investments, Appreciation Portfolio, Diversified Strategic Income Portfolio,
Emerging Growth Portfolio, Equity Income Portfolio, Equity Index Portfolio,
Growth & Income Portfolio, Intermediate High Grade Portfolio, International
Equity Portfolio, Money Market Portfolio, Total Return Portfolio, Smith
Barney Adjustable Rate Government Income Fund, Smith Barney Aggressive
Growth Fund Inc., Smith Barney Appreciation Fund, Smith Barney Arizona
Municipals Fund Inc., Smith Barney California Municipals Fund Inc., Balanced
Portfolio, Conservative Portfolio, Growth Portfolio, High Growth Portfolio,
Income Portfolio, Global Portfolio, Select Balanced Portfolio, Select
Conservative Portfolio, Select Growth Portfolio, Select High Growth
Portfolio, Select Income Portfolio, Concert Social Awareness Fund, Smith
Barney Large Cap Blend Fund, Smith Barney Fundamental Value Fund Inc., Large
Cap Value Fund, Short-Term High Grade Bond Fund, U.S. Government Securities
Fund, Smith Barney Balanced Fund, Smith Barney Convertible Fund, Smith
Barney Diversified Strategic Income Fund, Smith Barney Exchange Reserve
Fund, Smith Barney High Income Fund, Smith Barney Municipal High Income
Fund, Smith Barney Premium Total Return Fund, Smith Barney Total Return Bond
Fund, Cash Portfolio, Government Portfolio, Municipal Portfolio, Concert
Peachtree Growth Fund, Smith Barney Contrarian Fund, Smith Barney Government
Securities Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith
Barney Hansberger Global Value Fund, Smith Barney Investment Grade Bond
Fund, Smith Barney Special Equities Fund, Smith Barney Intermediate Maturity
California Municipals Fund, Smith Barney Intermediate Maturity New York
Municipals Fund, Smith Barney Large Capitalization Growth Fund, Smith Barney
S&P 500 Index Fund, Smith Barney Mid Cap Blend Fund, Smith Barney Managed
Governments Fund Inc., Smith Barney Managed Municipals Fund Inc., Smith
Barney Massachusetts Municipals Fund, Cash Portfolio, Government Portfolio,
Retirement Portfolio, California Money Market Portfolio, Florida Portfolio,
Georgia Portfolio, Limited Term Portfolio, New York Money Market Portfolio,
New York Portfolio, Pennsylvania Portfolio, Smith Barney Municipal Money
Market Fund, Inc., Smith Barney Natural Resources Fund Inc., Smith Barney
New Jersey Municipals Fund Inc., Smith Barney Oregon Municipals Fund, Zeros
Plus Emerging Growth Series 2000, Smith Barney Security and Growth Fund,
Smith Barney Small Cap Blend Fund, Inc., Smith Barney Telecommunications
Income Fund, Income and Growth Portfolio, Reserve Account Portfolio, U.S.
Government/High Quality Securities Portfolio, Emerging Markets Portfolio,
European Portfolio, Global Government Bond Portfolio, International Balanced
Portfolio, International Equity Portfolio, Pacific Portfolio, AIM Capital
Appreciation Portfolio, Alliance Growth Portfolio, GT Global Strategic
Income Portfolio, MFS Total Return Portfolio, Putnam Diversified Income
Portfolio, Smith Barney High Income Portfolio, Smith Barney Large Cap Value
Portfolio, Smith Barney International Equity Portfolio, Smith Barney Large
Capitalization Growth Portfolio, Smith Barney Money Market Portfolio, Smith
Barney Pacific Basin Portfolio, TBC Managed Income Portfolio, Van Kampen
American Capital Enterprise Portfolio, Centurion Tax-Managed U.S. Equity
Fund, Centurion Tax-Managed International Equity Fund, Centurion U.S.
Protection Fund, Centurion International Protection Fund, Global High-Yield
Bond Fund, International Equity Fund, Emerging Opportunities Fund, Core
Equity Fund, Long-Term Bond Fund, Global Dimensions Fund L.P., Citicorp
Private Equity L.P., AIM V.I. Capital Appreciation Fund, AIM V.I. Government
Series Fund, AIM V.I. Growth Fund, AIM V.I. International Equity Fund, AIM
V.I. Value Fund, Fidelity VIP Growth Portfolio, Fidelity VIP High Income
Portfolio, Fidelity VIP Equity Income Portfolio, Fidelity VIP Overseas
Portfolio, Fidelity VIP II Contrafund Portfolio, Fidelity VIP II Index 500
Portfolio, MFS World Government Series, MFS Money Market Series, MFS Bond
Series, MFS Total Return Series, MFS Research Series, MFS Emerging Growth
Series, Salomon Brothers Institutional Money Market Fund, Salomon Brothers
Cash

<PAGE> 163

Management Fund, Salomon Brothers New York Municipal Money Market Fund,
Salomon Brothers National Intermediate Municipal Fund, Salomon Brothers U.S.
Government Income Fund, Salomon Brothers High Yield Bond Fund, Salomon
Brothers Strategic Bond Fund, Salomon Brothers Total Return Fund, Salomon
Brothers Asia Growth Fund, Salomon Brothers Capital Fund Inc, Salomon
Brothers Investors Fund Inc, Salomon Brothers Opportunity Fund Inc, Salomon
Brothers Institutional High Yield Bond Fund, Salomon Brothers Institutional
Emerging Markets Debt Fund, Salomon Brothers Variable Investors Fund,
Salomon Brothers Variable Capital Fund, Salomon Brothers Variable Total
Return Fund, Salomon Brothers Variable High Yield Bond Fund, Salomon
Brothers Variable Strategic Bond Fund, Salomon Brothers Variable U.S.
Government Income Fund, and Salomon Brothers Variable Asia Growth Fund.

(b) The information required by this Item 29 with respect to each director
and officer of CFBDS, Inc. is incorporated by reference to Schedule A of
Form BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934
(File No. 8-32417).

Item 30. Location of Accounts and Records

(1) The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

The undersigned Registrant hereby undertakes:

(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for so long as payments under the variable annuity
contracts may be accepted;

(b) To include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a post
card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of
Additional Information; and

(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.

The Company hereby represents:

(a). That the aggregate charges under the Contracts of the Registrant
described herein are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by the
Company.

<PAGE> 164

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this amendment to this registration
statement and has caused this amendment to this registration statement to be
signed on its behalf, in the City of Hartford, and State of Connecticut, on
this 13th day of April, 2000.

THE TRAVELERS FUND BD III FOR VARIABLE ANNUITIES
(Registrant)

THE TRAVELERS INSURANCE COMPANY
(Depositor)

By:*GLENN D. LAMMEY
------------------------------------------
Glenn D. Lammey, Chief Financial Officer,
Chief Accounting Officer and Controller

As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities indicated on the 13th
day of April 2000.

*GEORGE C. KOKULIS Director, President and Chief
- ----------------------------- Executive Officer
(George C. Kokulis) (Principal Executive Officer)

*KATHERINE M. SULLIVAN Director
- -----------------------------
(Katherine M. Sullivan)

*MARC P. WEILL Director
- -----------------------------
(Marc P. Weill)

*By: /s/Ernest J. Wright, Attorney-in-Fact

<PAGE> 165

EXHIBIT INDEX

Exhibit
No. Description Method of Filing
- ------- ----------- ----------------

10 Consent of KPMG LLP, Independent Certified Electronically
Public Accountants.

<PAGE> 1

Exhibit 10

Consent of Independent Certified Public Accountants

Board of Directors
The Travelers Insurance Company

We consent to the use of our reports included herein and to the reference to
our firm as experts under the heading "Independent Accountants."

/s/KPMG LLP

Hartford, Connecticut
April 11, 2000