<PAGE> 1
ANNUAL REPORT
DECEMBER 31, 1998
THE TRAVELERS SEPARATE ACCOUNT PF
FOR VARIABLE ANNUITIES
[TRAVELERS LIFE & ANNUITY A MEMBER GROUP LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
THE TRAVELERS SEPARATE ACCOUNT PF
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
Greenwich Street Series Fund, 287,954 shares (cost $5,574,309) ................... $ 6,093,113
Smith Barney Concert Allocation Series Inc., 956,231 shares (cost $10,781,204) ... 11,678,551
The Travelers Series Trust, 434,034 shares (cost $3,927,426) ..................... 4,521,471
Travelers Series Fund Inc., 2,276,607 shares (cost $9,143,102) ................... 9,498,399
--------------
Total Investments (cost $29,426,041) ............................................ $ 31,791,534
Receivables:
Dividends .......................................................................... 8,162
Purchase payments and transfers from other Travelers accounts ...................... 408,334
Other assets ......................................................................... 1,456
--------------
Total Assets .................................................................... 32,209,486
--------------
LIABILITIES:
Payables:
Insurance charges ............................................................... 8,477
Administrative fees ............................................................. 1,017
--------------
Total Liabilities .............................................................. 9,494
--------------
NET ASSETS: $ 32,199,992
==============
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 3
THE TRAVELERS SEPARATE ACCOUNT PF
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 9, 1998 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends .............................................................. $ 45,080
EXPENSES:
Insurance charges ...................................................... $ 83,163
Administratve fees ..................................................... 9,980
-------------
Total expenses ........................................................ 93,143
-------------
Net investment loss .................................................. (48,063)
-------------
REALIZED GAIN (LOSS) AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ........................................ 735,109
Cost of investments sold .............................................. 753,271
--------------
Net realized gain (loss) ............................................. (18,162)
Unrealized gain (loss) on investments:
Unrealized gain at December 31, 1998 ................................... 2,365,493
-------------
Net realized gain (loss) and unrealized gain (loss) ............... 2,347,331
-------------
Net increase in net assets resulting from operations ..................... $ 2,299,268
=============
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 4
THE TRAVELERS SEPARATE ACCOUNT PF
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGE IN NET ASSETS
FOR THE PERIOD JULY 9, 1998 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1998
<TABLE>
<S> <C>
OPERATIONS:
Net investment loss ................................................................ $ (48,063)
Net realized gain (loss) from investment transactions .............................. (18,162)
Unrealized gain (loss) on investments .............................................. 2,365,493
--------------
Net increase in net assets resulting from operations ............................. 2,299,268
--------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 32,392,869 units) ................................................ 30,282,003
Participant transfers from other Travelers accounts
(applicable to 512,618 units) ................................................... 476,099
Administrative charges
(applicable to 471 units) ....................................................... (417)
Contract surrenders
(applicable to 393,985 units) ................................................... (379,031)
Participant transfers to other Travelers accounts
(applicable to 478,192 units) ................................................... (477,930)
--------------
Net increase in net assets resulting from unit transactions ........................ 29,900,724
--------------
Net increase in net assets ....................................................... 32,199,992
NET ASSETS:
Beginning of period ................................................................ -
--------------
End of period ...................................................................... $ 32,199,992
==============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Separate Account PF for Variable Annuities ("Separate Account
PF") is a separate account of The Travelers Insurance Company ("The
Travelers"), an indirect wholly owned subsidiary of Citigroup Inc. (formerly
Travelers Group Inc.), and is available for funding certain variable annuity
contracts issued by The Travelers. Separate Account PF is registered under
the Investment Company Act of 1940, as amended, as a unit investment trust.
Participant purchase payments applied to Separate Account PF are invested in
one or more eligible funds in accordance with the selection made by the
contract owner. As of December 31, 1998, the eligible funds available under
Separate Account PF were: Smith Barney High Income Portfolio, Smith Barney
International Equity Portfolio, Smith Barney Large Cap Value Portfolio,
Smith Barney Money Market Portfolio and MFS Total Return Portfolio of
Travelers Series Fund Inc.; MFS Mid Cap Growth Portfolio and MFS Research
Portfolio of The Travelers Series Trust; Appreciation Portfolio of Greenwich
Street Series Fund and Select High Growth Portfolio, Select Growth
Portfolio, Select Balanced Portfolio, Select Conservative Portfolio and
Select Income Portfolio of Smith Barney Concert Allocation Series Inc.
Travelers Series Fund Inc. and Smith Barney Concert Allocation Series Inc.
are incorporated under Maryland law. The Travelers Series Trust and
Greenwich Street Series Fund are registered as Massachusetts business
trusts. All eligible funds are managed by affiliates of The Travelers. Not
all funds may be available in all states or to all contract owners.
The following is a summary of significant accounting policies consistently
followed by Separate Account PF in the preparation of its financial
statements.
SECURITY VALUATION. Investments are valued daily at the net asset values per
share of the underlying funds.
SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Dividend income is recorded on the ex-dividend date.
FEDERAL INCOME TAXES. The operations of Separate Account PF form a part of
the total operations of The Travelers and are not taxed separately. The
Travelers is taxed as a life insurance company under the Internal Revenue
Code of 1986, as amended (the "Code"). Under existing federal income tax
law, no taxes are payable on the investment income of Separate Account PF.
Separate Account PF is not taxed as a "regulated investment company" under
Subchapter M of the Code.
OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
-4-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS - CONTINUED
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments were
$30,179,311 and $735,109, respectively, for the period ended December 31,
1998. Realized gains and losses from investment transactions are reported on
an identified cost basis. The cost of investments in eligible funds was
$29,426,041 at December 31, 1998. Gross unrealized appreciation for all
investments at December 31, 1998 was $2,365,493.
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. These charges are equivalent to 1.25% of the average net
assets of Separate Account PF on an annual basis.
Administrative fees are paid for administrative expenses incurred by The
Travelers. This charge is equivalent to 0.15% of the average net assets of
Separate Account PF on an annual basis.
For contracts in the accumulation phase, an annual charge of $30 (prorated
for partial periods) is deducted from participant account balances and paid
to The Travelers to cover contract administrative charges.
No sales charge is deducted from participant purchase payments when they are
received. However, The Travelers generally assesses a contingent deferred
sales charge of up to 8% if a participant's purchase payment is surrendered
within eight years of its payment date. Contract surrender payments include
$13,758 of contingent deferred sales charges for the period ended December
31, 1998.
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS-CONTINUED
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Greenwich Street Series Fund
Appreciation Portfolio ..................................... 6,001,504 $ 1.032 $ 6,194,331
Smith Barney Concert Allocation Series Inc.
Select Balanced Portfolio .................................. 3,276,785 1.010 3,308,871
Select Conservative Portfolio .............................. 958,292 1.006 964,352
Select Growth Portfolio .................................... 4,128,790 1.028 4,245,386
Select High Growth Portfolio ............................... 2,419,349 1.007 2,437,232
Select Income Portfolio .................................... 855,703 1.005 859,853
The Travelers Series Trust
MFS Mid Cap Growth Portfolio ............................... 1,229,892 1.008 1,239,712
MFS Research Portfolio ..................................... 3,296,438 1.009 3,327,124
Travelers Series Fund Inc.
MFS Total Return Portfolio ................................. 1,863,613 1.011 1,884,772
Smith Barney International Equity Portfolio ................ 1,252,105 0.889 1,113,169
Smith Barney Money Market Portfolio ........................ 1,796,861 1.016 1,826,509
Smith Barney High Income Portfolio ......................... 1,085,592 0.958 1,039,669
Smith Barney Large Cap Value Portfolio ..................... 3,867,915 0.972 3,759,012
-----------------
Net Contract Owners' Equity ..................................................................... $ 32,199,992
=================
</TABLE>
-6-
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS-CONTINUED
5. STATEMENT OF INVESTMENTS
<TABLE>
<S> <C> <C>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
-------------------- --------------------
GREENWICH STREET SERIES FUND (19.2%)
Appreciation Portfolio
Total (Cost $5,574,309) 287,954 $6,093,113
-------------------- --------------------
SMITH BARNEY CONCERT ALLOCATION SERIES INC. (36.7%)
Select Balanced Portfolio (Cost $3,062,969) 271,179 3,235,165
Select Conservative Portfolio (Cost $931,152) 82,945 964,645
Select Growth Portfolio (Cost $3,792,178) 334,556 4,185,292
Select High Growth Portfolio (Cost $2,151,305) 193,276 2,433,342
Select Income Portfolio (Cost $843,600) 74,275 860,107
-------------------- --------------------
Total (Cost $10,781,204) 956,231 11,678,551
-------------------- --------------------
THE TRAVELERS SERIES TRUST (14.2%)
MFS Mid Cap Growth Portfolio (Cost $1,053,979) 121,434 1,220,417
MFS Research Portfolio (Cost $2,873,447) 312,600 3,301,054
-------------------- --------------------
Total (Cost $3,927,426) 434,034 4,521,471
-------------------- --------------------
TRAVELERS SERIES FUND INC. (29.9%)
MFS Total Return Portfolio (Cost $1,796,504) 110,587 1,883,292
Smith Barney International Equity Portfolio (Cost $1,046,711) 80,112 1,100,740
Smith Barney Money Market Portfolio (Cost $1,824,046) 1,824,046 1,824,046
Smith Barney High Income Portfolio (Cost $990,439) 79,722 1,009,279
Smith Barney Large Cap Value Portfolio (Cost $3,485,402) 182,140 3,681,042
-------------------- --------------------
Total (Cost $9,143,102) 2,276,607 9,498,399
-------------------- --------------------
TOTAL INVESTMENT OPTIONS (100%)
(COST $29,426,041) $31,791,534
====================
</TABLE>
-7-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS-CONTINUED
6. SCHEDULE OF SEPARATE ACCOUNT PF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIOD JULY 9, 1998 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
SELECT
APPRECIATION SELECT BALANCED CONSERVATIVE
PORTFOLIO PORTFOLIO PORTFOLIO
---------------- --------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................................ $ 5,842 $ 3,825 $
---------------- --------------- ---------------
EXPENSES:
Insurance charges.................................... 16,646 8,996 2,149
Administrative fees.................................. 1,997 1,080 258
---------------- --------------- ---------------
Net investment income (loss)..................... (12,801) (6,251) (2,407)
---------------- --------------- ---------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold..................... 75,695 52,682 5,539
Cost of investments sold........................... 77,539 55,428 5,488
---------------- --------------- ---------------
Net realized gain (loss)......................... (1,844) (2,746) 51
---------------- --------------- ---------------
Unrealized gain (loss) on investments:
End of period...................................... 518,804 172,196 33,493
---------------- --------------- ---------------
Net increase (decrease) in net assets
resulting from operations........................ 504,159 163,199 31,137
---------------- --------------- ---------------
UNIT TRANSACTIONS:
Participant purchase payments........................ 5,756,836 3,118,435 936,675
Participant transfers from other Travelers accounts 33,630 101,610 2,830
Administrative charges............................... (88) (39) (4)
Contract surrenders.................................. (88,674) (67,754) (6,286)
Participant transfers to other Travelers accounts.... (11,532) (6,580)
---------------- --------------- ---------------
Net increase (decrease) in net assets
resulting from unit transactions................. 5,690,172 3,145,672 933,215
---------------- --------------- ---------------
Net increase (decrease) in net assets........... 6,194,331 3,308,871 964,352
NET ASSETS:
Beginning of period............................... - - -
---------------- ------------- -------------
End of period..................................... $ 6,194,331 $ 3,308,871 $ 964,352
================ ============= =============
<CAPTION>
SELECT GROWTH SELECT HIGH
PORTFOLIO GROWTH PORTFOLIO
--------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................................ $ 5,632 $ 1,231
---------------- ----------------
EXPENSES:
Insurance charges.................................... 10,648 5,674
Administrative fees.................................. 1,278 681
---------------- ----------------
Net investment income (loss)..................... (6,294) (5,124)
---------------- ----------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold..................... 20,302 35,232
Cost of investments sold........................... 23,239 38,718
---------------- ----------------
Net realized gain (loss)......................... (2,937) (3,486)
---------------- ----------------
Unrealized gain (loss) on investments:
End of period...................................... 393,114 282,037
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations........................ 383,883 273,427
---------------- ----------------
UNIT TRANSACTIONS:
Participant purchase payments........................ 3,791,482 2,204,672
Participant transfers from other Travelers accounts 80,498 4,350
Administrative charges............................... (45) (29)
Contract surrenders.................................. (5,441) (25,550)
Participant transfers to other Travelers accounts.... (4,991) (19,638)
---------------- ----------------
Net increase (decrease) in net assets
resulting from unit transactions................. 3,861,503 2,163,805
---------------- ----------------
Net increase (decrease) in net assets........... 4,245,386 2,437,232
NET ASSETS:
Beginning of period............................... - -
---------------- ----------------
End of period..................................... $ 4,245,386 $ 2,437,232
================ ================
</TABLE>
-8-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
SMITH BARNEY SMITH BARNEY
SELECT INCOME MFS MID CAP MFS RESEARCH MFS TOTAL INTERNATIONAL MONEY MARKET
PORTFOLIO GROWTH PORTFOLIO PORTFOLIO RETURN PORTFOLIO EQUITY PORTFOLIO PORTFOLIO
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
$ 774 $ - $ 5,158 $ - $ - $ 22,618
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
2,045 3,184 9,493 5,119 3,105 5,948
246 382 1,139 614 373 714
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
(1,517) (3,566) (5,474) (5,733) (3,478) 15,956
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
8,668 4,333 32,304 9,288 2,723 476,246
8,889 4,826 36,960 9,584 3,241 476,246
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
(221) (493) (4,656) (296) (518) -
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
16,507 166,438 427,607 86,788 54,029 -
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
14,769 162,379 417,477 80,759 50,033 15,956
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
842,966 1,077,817 2,928,146 1,781,032 1,032,738 2,271,505
3,337 4,812 30,212 66,590 34,161 -
(8) (20) (60) (36) (20) (13)
(1,211) (1,955) (46,795) (42,743) (947) (36,469)
- (3,321) (1,856) (830) (2,796) (424,470)
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
845,084 1,077,333 2,909,647 1,804,013 1,063,136 1,810,553
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
859,853 1,239,712 3,327,124 1,884,772 1,113,169 1,826,509
- - - - - -
- -------------- --------------- ---------------- ---------------- ----------------- -----------------
$ 859,853 $ 1,239,712 $ 3,327,124 $ 1,884,772 $ 1,113,169 $ 1,826,509
============== =============== ================ ================ ================= =================
<CAPTION>
SMITH BARNEY SMITH BARNEY
HIGH INCOME LARGE CAP VALUE
PORTFOLIO PORTFOLIO
- -------------- -----------------
<S> <C>
$ - $ -
- -------------- -----------------
2,358 7,798
283 935
- -------------- ----------------
(2,641) (8,733)
- -------------- ----------------
10,240 1,857
10,986 2,127
- -------------- ----------------
(746) (270)
- -------------- ----------------
18,840 195,640
- -------------- ----------------
15,453 186,637
- -------------- ----------------
934,407 3,605,292
95,415 18,654
(8) (47)
(5,337) (49,869)
(261) (1,655)
- -------------- ----------------
1,024,216 3,572,375
- -------------- ----------------
1,039,669 3,759,012
- -------------- ----------------
- -
- -------------- ----------------
$ 1,039,669 $ 3,759,012
============== ================
</TABLE>
-9-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF SEPARATE ACCOUNT PF OPERATIONS AND CHANGES IN NET ASSETS FOR
THE PERIOD JULY 9, 1998 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1998
(CONTINUED)
<TABLE>
<CAPTION>
COMBINED
---------------
<S> <C>
INVESTMENT INCOME:
Dividends ............................................. $ 45,080
---------------
EXPENSES:
Insurance charges ..................................... 83,163
Administrative fees ................................... 9,980
---------------
Net investment income (loss)....................... (48,063)
---------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from investment transactions:
Proceeds from investments sold....................... 735,109
Cost of investments sold ............................ 753,271
---------------
Net realized gain (loss) .......................... (18,162)
---------------
Unrealized gain (loss) on
End of period ....................................... 2,365,493
---------------
Net increase (decrease) in assets
resulting from operations............................ 2,299,268
---------------
UNIT TRANSACTIONS:
Participant purchase payments ......................... 30,282,003
Participant transfers from other Travelers accounts ... 476,099
Administrative charges ................................ (417)
Contract surrenders ................................... (379,031)
Participant transfers to other Travelers accounts...... (477,930)
---------------
Net increase (decrease) in net assets
resulting from unit transactions.................... 29,900,724
---------------
Net increase (decrease) in net assets.................. 32,199,992
NET ASSETS:
Beginning of period ................................. -
---------------
End of period ....................................... $32,199,992
===============
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF ACCUMULATION UNITS FOR SEPARATE ACCOUNT PF
FOR THE PERIOD JULY 9, 1998 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
SELECT
APPRECIATION SELECT BALANCED CONSERVATIVE
PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ----------------- --------------
<S> <C> <C> <C>
Accumulation units beginning of period ...... - - -
Accumulation units purchased and
transferred from other Travelers accounts ... 6,105,370 3,352,820 964,675
Accumulation units redeemed and
transferred to other Travelers accounts ..... (103,866) (76,035) (6,383)
------------ ------------- -------------
Accumulation units end of period ............ 6,001,504 3,276,785 958,292
============ ============= =============
<CAPTION>
SELECT HIGH
SELECT GROWTH GROWTH SELECT INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- -------------
<S> <C> <C> <C>
Accumulation units beginning of period ...... - - -
Accumulation units purchased and
transferred from other Travelers accounts ... 4,140,125 2,467,694 856,924
Accumulation units redeemed and
transferred to other Travelers accounts ..... (11,335) (48,345) (1,221)
------------ ------------- -----------
Accumulation units end of period ............ 4,128,790 2,419,349 855,703
============ ============= ===========
<CAPTION>
MFS MID CAP
GROWTH MFS RESEARCH MFS TOTAL
PORTFOLIO PORTFOLIO RETURN PORTFOLIO
-------------- -------------- ------------------
<S> <C> <C> <C>
Accumulation units beginning of period ...... - - -
Accumulation units purchased and
transferred from other Travelers accounts ... 1,235,756 3,348,754 1,908,113
Accumulation units redeemed and
transferred to other Travelers accounts ..... (5,864) (52,316) (44,500)
------------ ------------ -----------
Accumulation units end of period ............ 1, 229,892 3,296,438 1,863,613
============ ============ ============
<CAPTION>
SMITH BARNEY SMITH BARNEY SMITH BARNEY
INTERNATIONAL MONEY MARKET HIGH INCOME
EQUITY PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------- -------------
<S> <C> <C> <C>
Accumulation units beginning of period ...... - - -
Accumulation units purchased and
transferred from other Travelers accounts ... 1,256,815 2,252,690 1,091,667
Accumulation units redeemed and
transferred to other Travelers accounts ..... (4,710) (455,829) (6,075)
-------------- ------------ ------------
Accumulation units end of period ............ 1,252,105 1,796,861 1,085,592
============== ============ ============
<CAPTION>
SMITH BARNEY
LARGE CAP
VALUE PORTFOLIO COMBINED
---------------- ------------
<S> <C> <C>
Accumulation units beginning of period ...... - -
Accumulation units purchased and
transferred from other Travelers accounts ... 3,924,084 32,905,487
Accumulation units redeemed and
transferred to other Travelers accounts ..... (56,169) (872,648)
------------ ------------
Accumulation units end of period ............ 3,867,915 32,032,839
============ ============
</TABLE>
-11-
<PAGE> 13
INDEPENDENT AUDITORS' REPORT
To the Owners of Variable Annuity Contracts of
The Travelers Separate Account PF for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Separate Account PF for Variable Annuities as of December 31, 1998,
and the related statement of operations and changes in net assets for the period
July 9, 1998 (date operations commenced) to December 31, 1998. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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, 1998, by correspondence with the
underlying funds. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Travelers Separate Account
PF for Variable Annuities as of December 31, 1998, the results of its operations
and the changes in its net assets for the period July 9, 1998 (date operations
commenced) to December 31, 1998, in conformity with generally accepted
accounting principles.
KPMG LLP
Hartford, Connecticut
February 17, 1999
-12-
<PAGE> 14
Independent Auditors
KPMG LLP
Hartford, Connecticut
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Separate Account PF for Variable
Annuities or Separate Account PF's underlying funds. It should not be used in
connection with any offer except in conjunction with the Prospectus for The
Travelers Separate Account PF 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.
VG-SepPF (Annual) (12-98) Printed in U.S.A.
