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Registration Statement No. 333-58809
811-08869
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective No. 2
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Post-Effective No. 2
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES
---------------------------------------------------------
(Exact name of Registrant)
THE TRAVELERS LIFE AND ANNUITY 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 Life and Annuity 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.
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X on May 1, 2000 pursuant to paragraph (b) of Rule 485.
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60 days after filing pursuant to paragraph (a)(1) of Rule 485.
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on ___________ pursuant to paragraph (a)(1) of Rule 485.
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If appropriate, check the following box:
this post-effective amendment designates a new effective date for
- ---- a previously filed post-effective amendment.
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PART A
Information Required in a Prospectus
<PAGE> 3
TRAVELERS RETIREMENT ACCOUNT
PROSPECTUS
This prospectus describes TRAVELERS RETIREMENT ACCOUNT, a flexible premium
deferred 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"). 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."
Your contract value will vary daily to reflect the investment experience of the
funding options you select. The variable funding options available are:
Capital Appreciation Fund
High Yield Bond Trust
Managed Assets Trust
Money Market Portfolio
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund
Emerging Opportunities Fund
Global High-Yield Bond Fund
Intermediate-Term Bond Fund
International Equity Fund Long-Term Bond Fund
DELAWARE GROUP PREMIUM FUND
REIT Series
Small Cap Value Series
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio(1)
Small Cap Portfolio
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class II Shares
JANUS ASPEN SERIES
Worldwide Growth Portfolio -- Service Shares
THE MONTGOMERY FUNDS III
Montgomery Variable Series: Growth Fund
OCC ACCUMULATION TRUST
Equity Portfolio
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund
Investors Fund
Total Return Fund
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio
MFS Total Return Portfolio
Putnam Diversified Income Portfolio
Smith Barney High Income Portfolio
Smith Barney International Equity Portfolio
Smith Barney Large Capitalization Growth Portfolio
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio
Disciplined Small Cap Stock Portfolio
Equity Income Portfolio
Federated Stock Portfolio
Large Cap Portfolio
Lazard International Stock Portfolio
MFS Mid Cap Growth Portfolio
MFS Research Portfolio
Social Awareness Stock Portfolio
Strategic Stock Portfolio
Travelers Quality Bond Portfolio
U.S. Government Securities Portfolio
Utilities Portfolio
VARIABLE INSURANCE PRODUCTS FUND II (FIDELITY)
Asset Manager Portfolio -- Service Class 2
WARBURG PINCUS TRUST
Emerging Markets Portfolio
- ---------------
(1) Formerly Capital Appreciation Portfolio
THE CONTRACT AND/OR SOME OF THE FUNDING OPTIONS MAY NOT BE AVAILABLE IN ALL
STATES. THIS PROSPECTUS IS ONLY VALID 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
Separate Account Five for Variable Annuities or the Travelers Separate Account
Six for Variable Annuities by requesting a Statement of Additional Information
("SAI") dated May 1, 2000. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference to this prospectus.
To request a copy, write to The Travelers Insurance Company, Annuity Services,
One Tower Square, Hartford, CT 06183-8130, call 1-800-842-9406, or access the
SEC's website (http://www.sec.gov). See Appendix D 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.
THIS PROSPECTUS IS ACCOMPANIED BY A COPY EACH OF THE TRAVELERS INSURANCE
COMPANY'S AND THE TRAVELERS LIFE AND ANNUITY COMPANY'S LATEST ANNUAL REPORTS ON
FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 1999. VARIABLE ANNUITY CONTRACTS ARE
NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
PROSPECTUS DATED MAY 1, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Index of Special Terms................ 2
Summary............................... 3
Fee Table............................. 6
Condensed Financial Information....... 13
The Annuity Contract.................. 13
Contract Owner Inquiries............ 13
Purchase Payments................... 13
Conservation Credit................. 13
Accumulation Units.................. 13
The Funding Options................. 14
Charges and Deductions................ 18
General............................. 18
Withdrawal Charge................... 18
Free Withdrawal Allowance........... 19
Premium Tax......................... 19
Mortality and Expense Risk Charge... 19
Funding Option Expenses............. 20
Floor Benefit/Liquidity Benefit..... 20
CHART Asset Allocation Program
Charges.......................... 20
Changes in Taxes Based Upon Premium
or Value......................... 20
Transfers............................. 20
Dollar Cost Averaging............... 20
Asset Allocation Advice............. 21
Access to Your Money.................. 21
Systematic Withdrawals.............. 21
Managed Distribution Program........ 21
Ownership Provisions.................. 22
Types of Ownership.................. 22
Contract Owner................... 22
Annuitant........................ 22
Beneficiary...................... 22
Death Benefit......................... 22
Death Benefit Proceeds Prior to
Maturity Date.................... 22
Death Proceeds After the Maturity
Date............................. 23
Payment of Proceeds................. 24
The Annuity Period.................... 24
Maturity Date....................... 24
Liquidity Benefit................... 24
Allocation of Annuity............... 25
Variable Annuity.................... 25
Fixed Annuity....................... 25
Payment Options....................... 26
Election of Options................. 26
Variable Annuitization Floor
Benefit.......................... 26
Annuity Options..................... 26
Miscellaneous Contract Provisions..... 27
Right to Return..................... 27
Termination......................... 27
Required Reports.................... 28
Suspension of Payments.............. 28
Transfers of Contract Values to
other Annuities.................. 28
The Separate Accounts................. 28
Performance Information............. 28
Federal Tax Considerations............ 29
General Taxation of Annuities....... 29
Qualified Annuity Contracts......... 29
Penalty Tax for Premature
Distributions.................... 30
Taxation of Surrenders Under
Liquidity Feature................ 30
Diversification Requirements of
Variable Annuities............... 30
Ownership of the Investments........ 30
Mandatory Distributions for
Qualified Plans.................. 30
Taxation of Death Benefit
Proceeds......................... 31
Available Information................. 31
Incorporation of Certain Documents By
Reference........................... 31
Other Information..................... 32
The Insurance Companies............. 32
Financial Statements................ 32
IMSA................................ 32
Distribution of Variable Annuity
Contracts........................ 32
Conformity with State and Federal
Laws............................. 32
Voting Rights....................... 33
Contract Modification............... 33
Legal Proceedings and Opinions...... 33
APPENDIX A: Condensed Financial
Information of The Travelers Insurance
Company: Separate Account Five...... A-1
APPENDIX B: Condensed Financial
Information of The Travelers Life
and Annuity Company: Separate
Account Six......................... B-1
APPENDIX C: Nursing Home
Confinement......................... C-1
APPENDIX D: Market Value Adjustment... D-1
APPENDIX E: Contents of the Statement
of Additional Information........... E-1
Financial Statements
</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 Period................... 13
Annuitant............................. 22
Annuitization Credit.................. 25
Annuity Payments...................... 13
Annuity Unit.......................... 14
Cash Surrender Value.................. 21
Certificate........................... 4
Conservation Credit................... 13
Contract Date......................... 13
Contract Owner........................ 22
Contract Value........................ 13
Contract Year......................... 13
Death Report Date..................... 23
Funding Option(s)..................... 14
Maturity Date......................... 13
Participant........................... 4
Purchase Payment...................... 13
Underlying Fund....................... 14
Written Request....................... 13
</TABLE>
2
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SUMMARY:
TRAVELERS RETIREMENT ACCOUNT
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 Separate
Account Five for Variable Annuities ("Separate Account Five"); The Travelers
Life and Annuity Company sponsors the Travelers Separate Account Six for
Variable Annuities ("Separate Account Six"). When we refer to the Separate
Account, we are referring to either Separate Account Five or Separate Account
Six, depending upon your issuing company. 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.
Bahamas
British Virgin Islands
Guam
New Hampshire
New Jersey
New York
U.S. Virgin Islands
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. Depending on market conditions, you may gain or lose
money in any of these options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase
generally, 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. 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.
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. The dollar amount of your payments may
increase or decrease.
In addition, depending on which annuity option you select, and depending on
market conditions, there are several other options and features available upon
annuitization. These include an annuitization credit, a variable annuitization
floor benefit, a liquidity benefit and an increasing benefit option. Please
refer to your Contract and the prospectus for further details.
WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with qualified retirement plans (which include contracts
qualifying under Section 401(a), 403(b), 408 or 457 of the Internal Revenue Code
(the "Code"). Purchase of this Contract through a Plan does not provide any
additional tax deferral benefits beyond those provided by the Plan. Accordingly,
if you are purchasing this Contract through a Plan, you should consider
purchasing the Contract for its Death Benefit, Annuity Option Benefits or other
non-tax related benefits.
You may purchase the Contract with an initial payment of at least $20,000. You
may make additional payments of at least $5,000 any time during the accumulation
phase.
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We may add a conservation credit to funds received as purchase payments if such
funds originated from another Contract issued by Our affiliates or Us. If
applied, we will determine the amount of this credit.
If you select the Optional Death Benefit, we will add a credit to each purchase
payment equal to 2% of that purchase payment. These credits are applied pro rata
to the same funding options to which your purchase payment was applied.
WHO IS THE CONTRACT ISSUED TO? If you purchase an individual contract, you are
the contract owner. If a group contract is purchased, we issue certificates to
the individual participants. Where we refer to "you," we are referring to the
individual contract owner, or the group participant, as applicable. We refer to
both contracts and certificates as "contracts." If a group unallocated contract
is purchased, we issue only the contract. Where we refer to "you," we are
referring to the group participant.
We issue group contracts in connection with retirement plans. Depending on your
retirement plan, certain features and/or funding options described in this
prospectus may not be available to you. Your retirement plan provisions
supercede the prospectus. If you have any questions about your specific
retirement plan, contact your plan administrators.
IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you receive a full refund of the cash value (including
charges). Where state law requires a longer right to return (free look), or the
return of the purchase payments, we will comply. You bear the investment risk
during the free look period; therefore, the cash value returned to you may be
greater or less than your purchase payment. The cash value will be determined as
of the close of business on the day we receive a written request for a refund.
If the Contract is purchased as an Individual Retirement Annuity (IRA), and is
returned within the first seven days after contract delivery, your full purchase
payment will be refunded. During the remainder of the IRA free look period, the
cash value (including charges) will be refunded. The cash value will be
determined as of the close of business on the day we receive a written request
for a refund.
WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
any or all of the funding options shown on the cover page. The funding options
are described in the prospectuses for the funds. Depending on market conditions,
you may make or lose money in any of these options.
The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Standard and nonstandard performance is shown in the Statement of
Additional Information that you may request free of charge.
You can transfer between the funding options as frequently as you wish without
any current tax implications. Currently there is no charge for transfers, nor a
limit to the number of transfers allowed. We may, in the future, charge a fee
for any transfer request, or limit the number of transfers allowed. At a
minimum, we would always allow one transfer every six months. We reserve the
right to restrict transfers that we determine will disadvantage other contract
owners.
WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. For the
Standard Death Benefit, the annual insurance charge is 0.80% of the amounts you
direct to the funding options. For the Optional Death Benefit and Credit option,
the annual insurance charge is 1.25%. Each funding option also charges for
management and other expenses. Please refer to the Fee Table for more
information about the charges.
A withdrawal charge will apply to withdrawals from the Contract, and is
calculated as a percentage of the purchase payments. The maximum percentage is
5%, gradually decreasing to 0% in year 6 and later.
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If the Variable Annuitization Floor Benefit is selected, there is a Floor
Benefit charge assessed. This charge will vary based upon market conditions, and
will be set at the time you choose this option. Once established, this charge
will remain the same throughout the term of the annuitization.
HOW WILL MY CONTRIBUTIONS AND WITHDRAWALS BE TAXED? Generally, the payments you
make to a qualified Contract during the accumulation phase are made with
before-tax dollars. You will be taxed on your purchase payments and on any
earnings when you make a withdrawal or begin receiving annuity payments.
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.
During the annuity period, if you have elected the optional Variable Annuity
Floor Option and take a surrender, there will be tax implications. Consult your
tax advisor.
HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. Withdrawal charges, income taxes, and/or a penalty tax may
apply to taxable amounts withdrawn.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? The person you have chosen as
your beneficiary will receive a death benefit upon the death of the owner before
the maturity date. You may select either the Standard Death Benefit or the
Optional Death Benefit and Credit at the time of purchase. The death benefit
paid depends on your age at the time of your death. The death benefit is
calculated as of the close of the business day on which the Home Office receives
due proof of death and written distribution instructions.
Any amount paid will be reduced by any applicable premium tax, or surrenders not
previously deducted. Certain states may have varying age requirements. Please
refer to the Death Benefit section of the prospectus for more details.
ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:
- DOLLAR COST AVERAGING. This is a program that allows you to invest a
fixed amount of money in funding options each month, theoretically
giving you a lower average cost per unit over time than a single
one-time purchase. Dollar Cost Averaging requires regular investments
regardless of fluctuating price levels, and does not guarantee profits
or prevent losses in a declining market. Potential investors should
consider their financial ability to continue purchases through periods
of low price levels.
- ASSET ALLOCATION ADVICE. If allowed, you may elect to enter into a
separate advisory agreement with Copeland Financial Services LLC
("Copeland"), an affiliate of the Company, for the purpose of receiving
asset allocation advice under Copeland's CHART Program. The CHART
Program allocates all purchase payments among the American Odyssey
Funds. The CHART Program and applicable fees are fully described in a
separate disclosure statement.
- 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.
- 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.
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FEE TABLE
- --------------------------------------------------------------------------------
CONTRACT CHARGES AND EXPENSES:
WITHDRAWAL CHARGE (as a percentage of the purchase payments withdrawn)
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE WITHDRAWAL
PAYMENT MADE CHARGE
<S> <C>
1 or less 5%
2 4%
3 3%
4 2%
5 1%
6 and later 0%
</TABLE>
During the annuity period, if you have elected the Liquidity Benefit, a
surrender charge of 5% of the amount withdrawn will be assessed. See "Liquidity
Benefit."
ANNUAL SEPARATE ACCOUNT CHARGES:
(as a percentage of the average daily net assets of the Separate Account)
<TABLE>
<CAPTION>
STANDARD ENHANCED
DEATH BENEFIT DEATH BENEFIT
<S> <C> <C>
Mortality & Expense Risk Charge...................... 0.80% 1.25%
Administrative Expense Charge........................ None None
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Total Separate Account Charges.................... 0.80% 1.25%
</TABLE>
During the annuity period, if you have elected the Floor Benefit, a total annual
separate account charge of up to 3.80% or 4.25% may apply. See "Floor Benefit
Charge."
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the funding option as of
December 31, 1999, unless otherwise noted.)
Each of the American Odyssey Funds is listed twice, once with the optional CHART
asset allocation fee of .80% reflected and once without the optional asset
allocation fee.
<TABLE>
<CAPTION>
TOTAL ANNUAL
OTHER OPERATING
MANAGEMENT FEE EXPENSES EXPENSES
(AFTER EXPENSE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
UNDERLYING FUNDS: REIMBURSEMENT) FEES REIMBURSEMENT) REIMBURSEMENT)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Fund.................. 0.75% 0.08% 0.83%
High Yield Bond Trust...................... 0.50% 0.31% 0.81%
Managed Assets Trust....................... 0.50% 0.10% 0.60%
Money Market Portfolio..................... 0.32% 0.08% 0.40%(1)
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund...................... 0.56% 0.08% 0.64%
Emerging Opportunities Fund........... 0.75% 0.12% 0.87%
Global High-Yield Bond Fund........... 0.67% 0.16% 0.83%
Intermediate-Term Bond Fund........... 0.49% 0.10% 0.59%
International Equity Fund............. 0.59% 0.13% 0.72%
Long-Term Bond Fund................... 0.50% 0.10% 0.60%
AMERICAN ODYSSEY FUNDS, INC.*
Core Equity Fund...................... 0.56% 0.88% 1.44%
Emerging Opportunities Fund........... 0.75% 0.92% 1.67%
Global High-Yield Bond Fund........... 0.67% 0.96% 1.63%
Intermediate-Term Bond Fund........... 0.49% 0.90% 1.39%
International Equity Fund............. 0.59% 0.93% 1.52%
Long-Term Bond Fund................... 0.50% 0.90% 1.40%
DELAWARE GROUP PREMIUM FUND
REIT Series........................... 0.64% 0.21% 0.85%(2)
Small Cap Value Series................ 0.75% 0.10% 0.85%
</TABLE>
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<TABLE>
<CAPTION>
TOTAL ANNUAL
OTHER OPERATING
MANAGEMENT FEE EXPENSES EXPENSES
(AFTER EXPENSE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
UNDERLYING FUNDS: REIMBURSEMENT) FEES REIMBURSEMENT) REIMBURSEMENT)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
Worldwide Growth Portfolio -- Service
Shares.............................. 0.65% 0.25% 0.05% 0.95%(5)
THE MONTGOMERY FUNDS III
Montgomery Variable Series: Growth
Fund................................ 0.52% 0.73% 1.25%(6)
OCC ACCUMULATION TRUST
Equity Portfolio...................... 0.80% 0.11% 0.91%
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund.......................... 0.00% 1.00% 1.00%(7)
Investors Fund........................ 0.53% 0.45% 0.98%(7)
Total Return Fund..................... 0.15% 0.85% 1.00%(7)
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II.......... 1.00% 0.20% 1.20%(8)
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio............. 0.80% 0.02% 0.82%(9)
MFS Total Return Portfolio............ 0.80% 0.04% 0.84%(9)
Putnam Diversified Income Portfolio... 0.75% 0.08% 0.83%(9)
Smith Barney High Income Portfolio.... 0.60% 0.06% 0.66%(9)
Smith Barney International Equity
Portfolio........................... 0.90% 0.10% 1.00%(9)
Smith Barney Large Capitalization
Growth Portfolio.................... 0.75% 0.11% 0.86%(9)
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio... 0.70% 0.25% 0.95%(10)
Disciplined Small Cap Stock
Portfolio........................... 0.80% 0.20% 1.00%(11)
Equity Income Portfolio............... 0.75% 0.13% 0.88%
Federated Stock Portfolio............. 0.63% 0.19% 0.82%
Large Cap Portfolio................... 0.75% 0.12% 0.87%
Lazard International Stock
Portfolio........................... 0.83% 0.23% 1.06%
MFS Mid Cap Growth Portfolio.......... 0.80% 0.20% 1.00%(11)
MFS Research Portfolio................ 0.80% 0.19% 0.99%
Social Awareness Stock Portfolio...... 0.64% 0.16% 0.80%
Strategic Stock Portfolio............. 0.60% 0.30% 0.90%(11)
Travelers Quality Bond Portfolio...... 0.32% 0.22% 0.54%
U.S. Government Securities
Portfolio........................... 0.32% 0.16% 0.48%
Utilities Portfolio................... 0.65% 0.23% 0.88%
VARIABLE INSURANCE PRODUCTS II
Asset Manager Portfolio -- Service
Class 2............................. 0.53% 0.25% 0.10% 0.88%(12)
WARBURG PINCUS TRUST
Emerging Markets Portfolio............ 0.00% 1.40% 1.40%(13)
* Includes CHART asset allocation fee of 0.80%.
</TABLE>
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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) Other Expenses have been restated to reflect the current expense
reimbursement arrangement with Travelers Insurance Company. Travelers has
agreed to reimburse the Portfolio for the amount by which its aggregate
expenses (including the management fee, but excluding brokerage
commissions, interest charges and taxes) exceeds 0.40%. Without such
arrangement, Total Expenses would have been 0.50% for the MONEY MARKET
PORTFOLIO.
(2) The investment adviser for the REIT SERIES is Delaware Management Company
("DMC"). Effective May 1, 2000 through October 31,2000, DMC has voluntarily
agreed to waive its management fee and reimburse the Series for expenses to
the extent that total expenses will not exceed 0.85%. Without such and
arrangement, Total Annual Operating Expenses for the fund would have been
0.96%.
(3) Formerly Capital Appreciation Portfolio.
(4) The Portfolio Management Fee for EQUITY INDEX PORTFOLIO -- CLASS II
includes 0.06% for fund administration and a distribution plan or "Rule
12b-1 plan". Fees for Class II reflect the period from 3/22/99 (inception
date) to 12/31/99. On March 22, 1999, the fund adopted its current fee
structure.
(5) 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 investment manager of the MONTGOMERY VARIABLE SERIES: GROWTH FUND has
agreed to reduce some or all of its management fees if necessary to keep
Total Annual Operating Expenses, expressed on an annualized basis, at or
below one and one quarter percent (1.25%) of its average net assets. Absent
this waiver of fees, the Portfolio's Total Annual Operating Expenses would
equal 2.25%.
(7) The Adviser has waived all or a portion of its Management Fees for the year
ended December 31, 1999. If such fees were not waived or expenses
reimbursed, the Management Fee, Other Expenses, and Total Annual Operating
Expenses would have been as follows: 0.70%, 0.45% and 1.15% respectively
for the INVESTORS FUND; 0.85%, 1.14%, and 1.99% respectively for the
CAPITAL FUND; and 0.80%, 0.85%, and 1.65% respectively for the TOTAL RETURN
FUND.
(8) The Adviser for STRONG SCHAFER VALUE FUND II has voluntarily agreed to cap
the Total Annual Operating Expenses at 1.20%. The adviser has no current
intention to, but may in the future, discontinue or modify any waiver of
fees or absorption of expenses at its discretion without further
notification. Absent the waiver of fees, the Total Annual Operating
Expenses would be 1.57%.
(9) 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.
(10) 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.
(11) Travelers Insurance Company has agreed to reimburse the STRATEGIC STOCK
PORTFOLIO, the DISCIPLINED SMALL CAP STOCK PORTFOLIO, and the MFS MID CAP
GROWTH PORTFOLIO for expenses for the period ended December 31, 1999 which
exceeded 0.90%, 1.00% and 1.00% respectively. Without such arrangements,
the actual annualized Total Annual Operating Expenses would have been
0.99%, 1.49%, and 1.07% respectively.
(12) 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 0.89% for ASSET MANAGER PORTFOLIO -- SERVICE CLASS 2.
Service Class 2 expenses are based on estimated expenses for the first
year.
(13) 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.
8
<PAGE> 11
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:
------------------------------------- -------------------------------------
UNDERLYING FUNDING OPTIONS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation Fund............ 67 81 99 193 17 51 89 193
High Yield Bond Trust................ 66 81 98 191 16 51 88 191
Managed Assets Trust................. 64 74 87 168 14 44 77 168
Money Market Portfolio............... 62 68 76 146 12 38 66 146
AMERICAN ODYSSEY FUNDS, INC.(1)
Core Equity Fund................. 65 76 89 172 15 46 79 172
Emerging Opportunities Fund...... 67 83 101 198 17 53 91 198
Global High-Yield Bond Fund...... 67 81 99 193 17 51 89 193
Intermediate-Term Bond Fund...... 64 74 86 167 14 44 76 167
International Equity Fund........ 65 78 93 181 15 48 83 181
Long-Term Bond Fund.............. 64 74 87 168 14 44 77 168
AMERICAN ODYSSEY FUNDS, INC.(2)
Core Equity Fund................. 73 100 130 257 23 70 120 257
Emerging Opportunities Fund...... 75 107 142 281 25 77 132 281
Global High-Yield Bond Fund...... 75 106 140 277 25 76 130 277
Intermediate-Term Bond Fund...... 72 99 127 252 22 69 117 252
International Equity Fund........ 74 102 134 266 24 72 124 266
Long-Term Bond Fund.............. 72 99 128 253 22 69 118 253
DELAWARE GROUP PREMIUM FUND
REIT Series...................... 67 82 100 195 17 52 90 195
Small Cap Value Series........... 67 82 100 195 17 52 90 195
DREYFUS VARIABLE INVESTMENT FUND
Appreciation Portfolio........... 66 80 96 188 16 50 86 188
Small Cap Portfolio.............. 66 80 96 188 16 50 86 188
JANUS ASPEN SERIES
Worldwide Growth Portfolio --
Service Shares................. 65 77 92 179 15 47 82 179
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class
II Shares...................... 63 72 82 158 13 42 72 158
THE MONTGOMERY FUNDS III
Montgomery Variable Series:
Growth Fund.................... 71 94 120 238 21 64 110 238
OCC ACCUMULATION TRUST
Equity Portfolio................. 67 84 103 202 17 54 93 202
SALOMON BROTHERS VARIABLE SERIES FUND
INC.
Capital Fund..................... 68 87 107 212 18 57 97 212
Investors Fund................... 68 86 106 209 18 56 96 209
Total Return Fund................ 68 87 107 212 18 57 97 212
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II..... 70 93 118 233 20 63 108 233
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio........ 66 81 98 192 16 51 88 192
MFS Total Return Portfolio....... 67 82 99 194 17 52 89 194
Putnam Diversified Income
Portfolio...................... 67 81 99 193 17 51 89 193
Smith Barney High Income
Portfolio...................... 65 76 90 175 15 46 80 175
Smith Barney International Equity
Portfolio...................... 68 87 107 212 18 57 97 212
Smith Barney Large Capitalization
Growth Portfolio............... 67 82 100 197 17 52 90 197
</TABLE>
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:
------------------------------------- -------------------------------------
UNDERLYING FUNDING OPTIONS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock
Portfolio...................... 68 85 105 206 18 55 95 206
Disciplined Small Cap Stock
Portfolio...................... 68 87 107 212 18 57 97 212
Equity Income Portfolio.......... 67 83 101 199 17 53 91 199
Federated Stock Portfolio........ 66 81 98 192 16 51 88 192
Large Cap Portfolio.............. 67 83 101 198 17 53 91 198
Lazard International Stock
Portfolio...................... 69 88 111 218 19 58 101 218
MFS Mid Cap Growth Portfolio..... 68 87 107 212 18 57 97 212
MFS Research Portfolio........... 68 86 107 211 18 56 97 211
Social Awareness Stock
Portfolio...................... 66 81 97 190 16 51 87 190
Strategic Stock Portfolio........ 67 84 102 201 17 54 92 201
Travelers Quality Bond
Portfolio...................... 64 72 83 161 14 42 73 161
U.S. Government Securities
Portfolio...................... 63 71 80 155 13 41 70 155
Utilities Portfolio.............. 67 83 101 199 17 53 91 199
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager
Portfolio -- Service Class 2... 65 75 88 171 15 45 78 171
WARBURG PINCUS TRUST
Emerging Markets Portfolio....... 72 99 128 253 22 69 118 253
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
(1) Reflects expenses that would be incurred for those Contract Owners who DO
NOT participate in the CHART Asset Allocation program.
(2) Reflects expenses that would be incurred for those Contract Owners who DO
participate in the CHART Asset Allocation program.
10
<PAGE> 13
EXAMPLE*: OPTIONAL 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:
------------------------------------- -------------------------------------
UNDERLYING FUNDING OPTIONS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation Fund............ 71 95 122 241 21 65 112 241
High Yield Bond Trust................ 71 95 121 239 21 65 111 239
Managed Assets Trust................. 69 88 110 217 19 58 100 217
Money Market Portfolio............... 67 82 100 196 17 52 90 196
AMERICAN ODYSSEY FUNDS, INC.(1)
Core Equity Fund................. 69 89 112 221 19 59 102 221
Emerging Opportunities Fund...... 72 96 124 245 22 66 114 245
Global High-Yield Bond Fund...... 71 95 122 241 21 65 112 241
Intermediate-Term Bond Fund...... 69 88 110 216 19 58 100 216
International Equity Fund........ 70 92 116 230 20 62 106 230
Long-Term Bond Fund.............. 69 88 110 217 19 58 100 217
AMERICAN ODYSSEY FUNDS, INC.(2)
Core Equity Fund................. 77 114 152 302 27 84 142 302
Emerging Opportunities Fund...... 80 120 164 324 30 90 154 324
Global High-Yield Bond Fund...... 79 119 162 320 29 89 152 320
Intermediate-Term Bond Fund...... 77 112 150 297 27 82 140 297
International Equity Fund........ 78 116 156 310 28 86 146 310
Long-Term Bond Fund.............. 77 112 151 298 27 82 141 298
DELAWARE GROUP PREMIUM FUND.
REIT Series...................... 71 96 123 243 21 66 113 243
Small Cap Value Series........... 71 96 123 243 21 66 113 243
DREYFUS VARIABLE INVESTMENT FUND
Capital Appreciation Portfolio... 71 94 119 236 21 64 109 236
Small Cap Portfolio.............. 71 94 119 236 21 64 109 236
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class
II Shares...................... 68 85 105 207 18 55 95 207
JANUS ASPEN SERIES
Worldwide Growth Portfolio....... 70 91 115 227 20 61 105 227
THE MONTGOMERY FUNDS III
Montgomery Variable Series:
Growth Fund.................... 75 108 143 284 25 78 133 284
OCC ACCUMULATION TRUST
Equity Portfolio................. 72 98 126 249 22 68 116 249
SALOMON BROTHERS VARIABLE SERIES FUND
INC.
Capital Fund..................... 73 100 130 258 23 70 120 258
Investors Fund................... 73 100 129 256 23 70 119 256
Total Return Fund................ 73 100 130 258 23 70 120 258
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II..... 75 106 141 279 25 76 131 279
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio........ 71 95 121 240 21 65 111 240
MFS Total Return Portfolio....... 71 95 122 242 21 65 112 242
Putnam Diversified Income
Portfolio...................... 71 95 122 241 21 65 112 241
Smith Barney High Income
Portfolio...................... 69 90 113 223 19 60 103 223
Smith Barney International Equity
Portfolio...................... 73 100 130 258 23 70 120 258
Smith Barney Large Capitalization
Growth Portfolio............... 71 96 123 244 21 66 113 244
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR
END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN:
------------------------------------- -------------------------------------
UNDERLYING FUNDING OPTIONS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock
Portfolio...................... 72 99 128 253 22 69 118 253
Disciplined Small Cap Stock
Portfolio...................... 73 100 130 258 23 70 120 258
Equity Income Portfolio.......... 72 97 124 246 22 67 114 246
Federated Stock Portfolio........ 71 95 121 240 21 65 111 240
Large Cap Portfolio.............. 72 96 124 245 22 66 114 245
Lazard International Stock
Portfolio...................... 73 102 134 265 23 72 124 265
MFS Mid Cap Growth Portfolio..... 73 100 130 258 23 70 120 258
MFS Research Portfolio........... 73 100 130 257 23 70 120 257
Social Awareness Stock
Portfolio...................... 71 94 120 238 21 64 110 238
Strategic Stock Portfolio........ 72 97 125 248 22 67 115 248
Travelers Quality Bond
Portfolio...................... 68 86 107 211 18 56 97 211
U.S. Government Securities
Portfolio...................... 68 85 104 204 18 55 94 204
Utilities Portfolio.............. 72 97 124 246 22 67 114 246
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio -- Service
Class II........................... 69 89 112 220 19 59 102 220
WARBURG PINCUS TRUST
Emerging Markets Portfolio....... 77 112 151 298 27 82 141 298
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
(1) Reflects expenses that would be incurred for those Contract Owners who DO
NOT participate in the CHART Asset Allocation program.
(2) Reflects expenses that would be incurred for those Contract Owners who DO
participate in the CHART Asset Allocation program.
12
<PAGE> 15
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
See Appendices A and B.
THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Travelers Retirement Account 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 and any applicable credits accumulate tax deferred in the
funding options of your choice. 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 payment plus any applicable 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 1-800-842-9406.
PURCHASE PAYMENTS
The initial purchase payment must be at least $20,000. You may make additional
payments of at least $5,000 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.
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.
If the Optional Death Benefit is selected, we will add a credit to your Contract
with each purchase payment. Each credit is added to the contract value when the
applicable purchase payment is applied, and will equal 2% of each purchase
payment. These credits are applied pro rata to the same funding options to which
your purchase payment was applied.
CONSERVATION CREDIT
If you are purchasing this Contract with funds from another contract issued by
Us or Our affiliates, you may receive a conservation credit to your purchase
payments. If applied, we will determine the amount of such credit.
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
13
<PAGE> 16
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 1-800-842-9406
to request additional copies of the prospectuses.
If any of the funding options become unavailable for allocating purchase
payments, or if we believe that further investment in a funding option is
inappropriate for the purposes of the Contract, we may substitute another
funding option. However, we will not make any substitutions without notifying
you and obtaining any state and SEC approval, if necessary. From time to time we
may make new funding options available.
The current variable funding options are listed below, along with their
investment advisers and any subadviser:
<TABLE>
<CAPTION>
INVESTMENT OPTIONS INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund Seeks growth of capital through the use of Travelers Asset Management
common stocks. Income is not an objective. International Company LLC
The Fund invests principally in common stocks ("TAMIC")
of small to large companies which are Subadviser: Janus Capital Corp.
expected to experience wide fluctuations in
price both in rising and declining markets.
High Yield Bond Trust* Seeks generous income. The assets of the High TAMIC
Yield Bond Trust will be invested in bonds
which, as a class, sell at discounts from par
value and are typically high risk securities.
Managed Assets Trust** Seeks high total investment return through a TAMIC
fully managed investment policy in a Subadviser: Travelers
portfolio of equity, debt and convertible Investment Management Company
securities. ("TIMCO")
Money Market Portfolio Seeks high current income from short-term TAMIC
money market instruments while preserving
capital and maintaining a high degree of
liquidity.
AMERICAN ODYSSEY FUNDS, INC.
Core Equity Fund Seeks maximum long-term total return by American Odyssey Funds
investing primarily in common stocks of well- Management, Inc.
established companies. Subadvisers: Equinox
Capital Management, L.L.C.;
Putnam Investment Management
Inc.; and State Street Global
Advisors
Emerging Opportunities Fund Seeks maximum long-term total return by American Odyssey Funds
investing primarily in common stocks of Management, Inc.
small, rapidly growing companies. Subadviser: Cowen Asset
Management; Chartwell
Investment Partners; and State
Street Global Advisors
Global High-Yield Bond Fund*(1) Seeks maximum long-term total return (capital American Odyssey Funds
appreciation and income) by investing Management, Inc.
primarily in high-yield debt securities from Subadviser: Credit Suisse Asset
the United States and abroad. Management
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
INVESTMENT OPTIONS INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AMERICAN ODYSSEY FUNDS, INC.
(CONT.)
Intermediate-Term Bond Fund* Seeks maximum long-term total return by American Odyssey Funds
investing primarily in intermediate-term Management, Inc.
corporate debt securities, U.S. government Subadviser: TAMIC
securities, mortgage-related securities and
asset-backed securities, as well as money
market instruments.
International Equity Fund Seeks maximum long-term total return by American Odyssey Funds
investing primarily in common stocks of Management, Inc.
established non-U.S. companies. Subadviser: Bank of Ireland
Asset Management (U.S.) Limited
Long-Term Bond Fund* Seeks maximum long-term total return by American Odyssey Funds
investing primarily in long-term corporate Management, Inc.
debt securities, U.S. government securities, Subadviser: Western Asset
mortgage-related securities, and asset-backed Management Company
securities, as well as money market
instruments.
DELAWARE GROUP PREMIUM
FUND
REIT Series Seeks maximum long-term total return by Delaware Management Company,
investing in securities of companies Inc.
primarily engaged in the real estate Subadviser: Lincoln Investment
industry. Capital appreciation is a secondary Management, Inc.
objective.
Small Cap Value Series Seeks capital appreciation by investing in Delaware Management Company,
small to mid-cap common stocks whose market Inc.
value appears low relative to their Subadviser: Lincoln Investment
underlying value or future earnings and Management, Inc.
growth potential Emphasis will also be placed
on securities of companies that may be
temporarily out of favor or whose value is
not yet recognized by the market.
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 ("Sarofim")
investment objective. The portfolio invests
primarily in the common stocks of domestic
and foreign issuers.
Small Cap Portfolio Seeks to maximize capital appreciation. The Dreyfus Corporation
Subadviser: Sarofim
GREENWICH STREET SERIES FUND
Equity Index Portfolio -- Class Seeks to replicate, before deduction of TIMCO
II Shares expenses, the total return performance of the
S&P 500 Index.
JANUS ASPEN SERIES
Worldwide Growth Portfolio -- Seeks growth of capital in a manner Janus Capital
Service Shares consistent with preservation of capital by
investing primarily in common stocks of
companies of any size throughout the world.
MONTGOMERY FUNDS III
Montgomery Variable Series: Seeks capital appreciation by investing Montgomery Asset Management
Growth Fund primarily in equity securities, usually
common stock, of domestic companies of all
sizes, and emphasizes companies having market
capitalizations of $1 billion or more.
OCC ACCUMULATION TRUST
Equity Portfolio Seeks long-term capital appreciation through OpCap Advisors
investment in securities (primarily equity
securities) of companies that are believed by
the adviser to be undervalued in the
marketplace in relation to factors such as
the companies' assets or earnings.
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
INVESTMENT OPTIONS INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SALOMON BROTHERS VARIABLE SERIES
FUND, INC.
Capital Fund Seeks capital appreciation, primarily through Salomon Brothers Asset
investments in common stocks which are Management ("SBAM")
believed to 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.
Total Return Fund Seeks above-average income (compared to a SBAM
portfolio invested entirely in equity
securities). Secondarily, seeks opportunities
for growth of capital and income.
STRONG VARIABLE INSURANCE FUNDS,
INC.
Strong Schafer Value Fund II Seeks long-term capital appreciation. Current Strong Capital Management Inc.
income is a secondary objective when Subadviser: Schafer Capital
selecting investments. The goal is to Management, Inc.
identify stocks that provide above-average
earnings growth prospects at a
price-to-earnings ratio lower than that of
the S&P 500.
TRAVELERS SERIES FUND INC.
Alliance Growth Portfolio Seeks long-term growth of capital. Current Travelers Investment Adviser
income is only an incidental consideration. ("TIA")
The Portfolio invests predominantly in equity Subadviser: Alliance Capital
securities of companies with a favorable Management L.P.
outlook for earnings 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 above- TIA
average income (compared to a portfolio Subadviser: Massachusetts
entirely invested in equity securities) Financial Services Company
consistent with the prudent employment of ("MFS")
capital. Generally, 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. Management, Inc.
Government Sector, the High Yield Sector, and
the International Sector of the fixed income
securities markets.
Smith Barney High Income Seeks high current income. Capital SSB Citi Fund Management LLC
Portfolio appreciation is a secondary objective. The ("SSB Citi")
Portfolio will invest at least 65% of its
assets in high-yielding corporate debt
obligations and preferred stock.
Smith Barney International Equity Seeks total return on assets from growth of SSB Citi
Portfolio capital and income by investing at least 65%
of its assets in a diversified portfolio of
equity securities of established non-U.S.
issuers.
Smith Barney Large Seeks long-term growth of capital by SSB Citi
Capitalization Growth Portfolio investing in equity securities of companies
with large market capitalizations.
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Seeks growth of capital by investing TAMIC
Portfolio primarily in a broadly diversified portfolio Subadviser: TIMCO
of U.S. common stocks.
Disciplined Small Cap Stock Seeks long term capital appreciation by TAMIC
Portfolio investing primarily (at least 65% of its Subadviser: TIMCO
total assets) in the common stocks of U.S.
Companies with relatively small market
capitalizations at the time of investment.
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
INVESTMENT OPTIONS INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THE TRAVELERS SERIES TRUST
(CONT.)
Equity Income Portfolio Seeks reasonable income by investing at least TAMIC
65% in income-producing equity securities. Subadviser: Fidelity Management
The balance may be invested in all types of & Research Company ("FMR")
domestic and 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 Stock Portfolio Seeks growth of income and capital by TAMIC
investing principally in a professionally Subadviser: Federated
managed and diversified portfolio of common Investment Counseling, Inc.
stock of 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 TAMIC
investing primarily in equity securities of Subadviser: FMR
companies with large market capitalizations.
Lazard International Stock Seeks capital appreciation by investing TAMIC
Portfolio primarily in the equity securities of Subadviser: Lazard Asset
non-United States companies (i.e., Management
incorporated or organized outside the United
States).
MFS Mid Cap Growth Portfolio Seeks to obtain long-term growth of capital TAMIC
by investing, under normal market conditions, Subadviser: MFS
at least 65% of its total assets in equity
securities of companies with medium market
capitalization which the investment adviser
believes have above-average growth potential.
MFS Research Portfolio Seeks to provide long-term growth of capital TAMIC
and future income. Subadviser: MFS
Social Awareness Stock Portfolio Seeks long-term capital appreciation and SSB Citi
retention of net investment income by
selecting investments, primarily common
stocks, which meet the social criteria
established for the Portfolio. Social
criteria currently excludes companies that
derive a significant portion of their
revenues from the production of tobacco,
tobacco products, alcohol, or military
defense systems, or in the provision of
military defense related services or gambling
services.
Strategic Stock Portfolio Seeks to provide an above-average total TAMIC
return through a combination of potential Subadviser: TIMCO
capital 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 Portfolio Seeks current income, moderate capital TAMIC
volatility and total return.
U.S. Government Securities Seeks to select investments from the point of TAMIC
Portfolio view of an investor concerned primarily with
the highest credit quality, current income
and total return. The assets of the Portfolio
will be invested in direct obligations of the
United States, its agencies and
instrumentalities.
Utilities Portfolio Seeks to provide current income by investing SSB Citi
in equity and debt securities of companies in
the utilities industries.
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Seeks high total return with reduced risk FMR
Portfolio -- Service Class 2 over the long-term by allocating its assets
among stocks, bonds and short-term
fixed-income instruments.
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
INVESTMENT OPTIONS INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
WARBURG PINCUS TRUST
Emerging Markets Portfolio Seeks long-term growth of capital by Warburg Pincus Asset
investing primarily in equity securities of Management, Inc.
non-U.S. issuers consisting of companies in
emerging securities markets.
</TABLE>
(1) Formerly American Odyssey Short-Term Bond Fund. The name investment
objective and investment subadviser of this fund were changed pursuant to a
shareholder vote effective May 1, 1998.
* The funding options marked with an asterisk (*) are considered competing
funds, and may be subject to transfer restrictions. Those marked with two
asterisks (**) are not currently considered competing funds, but may be so in
the future because of an allowable change in the funding option's investment
strategy. Please refer to the contract for transfer restrictions.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts. We may also deduct a charge for taxes. Services and benefits we
provide include:
- the ability for you to make withdrawals and surrenders under the
Contracts;
- the death benefit paid on the death of the contract owner,
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:
- risks that annuitants may live longer than estimated when the
annuity factors under the Contracts were established,
- that the amount of the death benefit will be greater than the
contract value and
- that the costs of providing the services and benefits under the
Contracts will exceed the charges deducted.
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
We may reduce or eliminate the withdrawal charge, 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
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 are
withdrawn before they have
18
<PAGE> 21
been in the Contract for six years. We will assess the charge as a percentage of
the purchase payment withdrawn as follows:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE WITHDRAWAL
PAYMENT MADE CHARGE
<S> <C>
1 or less 5%
2 4%
3 3%
4 2%
5 1%
6 and thereafter 0%
</TABLE>
For purposes of the withdrawal charge calculation, withdrawals are deemed to be
taken first from:
(a) any purchase payments and associated credits to which no
withdrawal charge applies; then
(b) from any remaining free withdrawal amount (as described below)
after the reduction by the amount of (a); then
(c) from any remaining purchase payments and associated credits (on a
first-in, first-out basis); and 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:
- from payments we make due to the death of the annuitant;
- if an annuity payout has begun, other than the Liquidity Benefit
Option (see "Liquidity Benefit");
- if an income option of at least ten years' duration is elected;
- from amounts withdrawn which are deposited to other contracts issued
by Us or our affiliate, subject to Our approval;
- if withdrawals are taken under our Managed Distribution Program, if
elected by you (see "Access to Your Contract Values"); or
- if you are confined to an Eligible Nursing Home, as described in
Appendix C.
FREE WITHDRAWAL ALLOWANCE
You may withdraw up to 20% of the contract value annually. During the first
contract year, the available withdrawal amount will be 20% of the initial
purchase payment. After the first contract year, the available withdrawal amount
will be calculated as of the end of the previous contract year. The free
withdrawal provision applies to all partial withdrawals and full withdrawals,
except those transferred directly to annuity contracts issued by other financial
institutions. We reserve the right to not permit the provision on a full
surrender. In Washington state, the free withdrawal provision applies to all
withdrawals.
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.
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. For the Standard Death Benefit, this charge
19
<PAGE> 22
equals, on an annual basis, 0.80% of the amounts held in each funding option.
For the Optional Death Benefit and Credit, this charge equals, on an annual
basis, 1.25% of the amounts held in each funding option. 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.
FLOOR BENEFIT/LIQUIDITY BENEFIT CHARGES
If the Variable Annuitization Floor Benefit is selected, a charge is deducted
upon election of this benefit. This charge compensates Us for guaranteeing a
minimum variable annuity payment regardless of the performance of the funding
options selected by you. This charge will vary based upon market conditions, but
will never increase your annual separate account charge by more than 3%. The
charge will be set at the time of election, and will remain level throughout the
term of annuitization. If the Liquidity Benefit is selected, there is a
surrender charge of 5% of the amounts withdrawn. Please refer to "The Annuity
Period" for a description of these benefits.
CHART ASSET ALLOCATION PROGRAM CHARGES
Under the CHART Program, purchase payments and cash values are allocated among
the specified asset allocation funds. The charge for this advisory service is
equal to a maximum of 0.80% of the assets subject to the CHART Program. The
CHART Program fee will be paid by quarterly withdrawals from the cash values
allocated to the asset allocation funds. The Company will not treat these
withdrawals as taxable distributions. Please refer to "Miscellaneous Contract
Provisions" for further information.
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 transfers exceeding 12 per
year, 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 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
20
<PAGE> 23
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 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. All provisions and terms of the
Contract apply to the DCA and Special DCA Programs, including provisions
relating to the transfer of money between investment options. We reserve the
right to suspend or modify transfer privileges at any time and to assess a
processing fee for this service.
ASSET ALLOCATION ADVICE
Owners may elect to enter into a separate advisory agreement with Copeland , an
affiliate of the Company. For a fee, Copeland provides asset allocation advice
under its CHART Program(R), which is fully described in a separate Disclosure
Statement. The CHART Program may not be available in all marketing programs
through which this Contract is sold.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Any time before the maturity date, you may redeem all or any portion of the cash
surrender value, less any premium tax not previously deducted. Unless you submit
a written request specifying the 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.
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.
We also provide access to your money during the annuitization period, which is
discussed in detail in the "Annuity Period" section of this prospectus.
SYSTEMATIC WITHDRAWALS
Before the maturity date, you may choose to withdraw a specified dollar amount
on a monthly, quarterly, semiannual or annual basis. Any applicable premium
taxes and withdrawal charge will be deducted. To elect systematic withdrawals,
you must make the election on the form provided by the Company. 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.
21
<PAGE> 24
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
Contract Owner ("you"). The Contract belongs to the contract owner named in the
Contract (on the Specifications page.) The annuitant is the individual upon
whose life the maturity date and the amount of monthly annuity payments depend.
Because this is a qualified contract, the owner and the annuitant must always be
the same person. You have sole power to exercise any rights and to receive all
benefits given in the contract provided you have not named an irrevocable
beneficiary.
Beneficiary. The beneficiary is named by you in a written request. The
beneficiary has the right to receive any remaining contractual benefits upon
your death. If more than one beneficiary survives the annuitant, they will share
equally in benefits unless other shares are recorded with the Company by written
request before your death.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request and while the Contract continues.
DEATH BENEFIT
- --------------------------------------------------------------------------------
DEATH BENEFIT PROCEEDS PRIOR TO MATURITY DATE
The person chosen as the beneficiary will receive a death benefit upon the death
of the owner/annuitant before the maturity date. You may select either the
Standard Death Benefit or the Optional Death Benefit and Credit at the time of
purchase:
STANDARD DEATH BENEFIT:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
ANNUITANT'S AGE DEATH BENEFIT PAYABLE
ON THE CONTRACT DATE (CALCULATED AS OF THE DEATH REPORT DATE)
- ------------------------------------------------------------------------------------------
<S> <C>
Before age 80 IF NOTIFIED WITHIN 6 MONTHS OF THE DEATH: Greater of:
(1) Contract value, or
(2) Total purchase payments less any withdrawals (and
related charges).
IF NOTIFIED 6 MONTHS OR MORE AFTER THE DEATH: Contract value
(unless prohibited by state law)
- ------------------------------------------------------------------------------------------
On or after age 80 Contract value.
- ------------------------------------------------------------------------------------------
</TABLE>
OPTIONAL DEATH BENEFIT AND CREDIT
The Optional Death Benefit and Credit varies depending on the annuitant's age on
the Contract Date.
22
<PAGE> 25
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
ANNUITANT'S AGE DEATH BENEFIT PAYABLE
ON THE CONTRACT DATE (CALCULATED AS OF THE DEATH REPORT DATE)
- ------------------------------------------------------------------------------------------
<S> <C>
Under Age 70 IF NOTIFIED WITHIN 6 MONTHS OF THE DEATH: Greatest of:
(1) Contract value; or
(2)
Total purchase payments, less any withdrawals (and related charges), or
(3) Maximum Step-Up death benefit value (described below)
associated with contract date anniversaries beginning with
the 5th, and ending with the last before the annuitant's
76th birthday.
IF NOTIFIED 6 MONTHS OR MORE AFTER THE DEATH: Contract value
(unless prohibited by state law)
- ------------------------------------------------------------------------------------------
Age 70-75 IF NOTIFIED WITHIN 6 MONTHS OF THE DEATH: Greatest of:
(1) Contract value, or
(2)
Total purchase payments, less any withdrawals (and related charges), or
(3) Step-Up death benefit value (described below) associated
with the 5th contract date anniversary.
IF NOTIFIED 6 MONTHS OR MORE AFTER THE DEATH: Contract value
(unless prohibited by state law)
- ------------------------------------------------------------------------------------------
Age 76-80 Greater of (1) or (2) above.
- ------------------------------------------------------------------------------------------
Age over 80 Contract value.
- ------------------------------------------------------------------------------------------
</TABLE>
All death benefit values described above are calculated at the close of business
on the date the Company receives due proof of death and written distribution
instructions (the "death report date"). The amounts will be reduced by any
applicable premium taxes due.
STEP-UP DEATH BENEFIT VALUE
A separate Step-Up death benefit value will be established on the fifth contract
date anniversary and on each subsequent contract date anniversary on or before
the death report date and will initially equal the contract value on that
anniversary. After a Step-Up death benefit value has been established, it will
be recalculated each time a purchase payment is made or a partial surrender is
taken until the death report date. Step-Up death benefit values will be
recalculated by increasing them by the amount of each applicable purchase
payment and by reducing them by a Partial Surrender Reduction (as described
below) for each applicable partial surrender. Recalculations of Step-Up death
benefit values related to any purchase payments or any partial surrenders will
be made in the order that such purchase payments or partial surrender reductions
occur.
The Partial Surrender Reduction referenced above is equal to:
1. The amount of a Step-Up death benefit value immediately prior to the
reduction for the partial surrender, multiplied by
2. The amount of the partial surrender divided by the contract value
immediately prior to the partial surrender.
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 50,000-16,666, or $33,334.
DEATH PROCEEDS AFTER THE MATURITY DATE
If you die on or after the maturity date, the Company will pay the beneficiary a
death benefit consisting of any benefit remaining under the annuity option then
in effect.
23
<PAGE> 26
PAYMENT OF PROCEEDS
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.
The Company will pay the proceeds to the beneficiary (ies), or if none, to the
contract owner's estate.
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). 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; (c) for the joint lifetime of the
annuitant and another person, and thereafter during the lifetime of the survivor
or (d) for a number of payments assured. We may require proof that you are alive
before annuity payments are made. Not all options may be available in all
states.
You may choose to annuitize at any time after you purchase the contract. Unless
you elect otherwise, the maturity date will be the later of your 90th birthday,
or ten years after the effective date, if later. (In certain states, the
maturity date elected may not be later than the annuitant's 90th birthday; refer
to your Contract.) At least 30 days before the original maturity date, you may
elect to extend the maturity date to any time prior to your 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 either the death of the contract owner,
or upon the later of the contract owner's attainment of age 70 1/2 or year of
retirement. Please refer to the optional, no-cost Managed Distribution Program
described in the "Access to your Money" section of this prospectus. You should
seek independent tax advice regarding the election of minimum required
distributions.
LIQUIDITY BENEFIT
If you select any annuity option which guarantees you payments for a minimum
period of time ("period certain"), you may take a lump sum payment (equal to a
portion or all of the value of the remaining period certain payments) any time
after the first contract year. There is a surrender charge of 5% of the amount
withdrawn under this option.
For variable annuity payments, we use the Assumed Net Investment Factor,
("ANIF") as the interest rate to determine the lump sum amount. If you request
only a percentage of the amount available, we will reduce the amount of each
payment during the rest of the period certain by that percentage. After the
certain period expires, any remaining payments, if applicable, will not be
affected by the utilization of this benefit.
For fixed annuity payments, we calculate the present value of the remaining
period certain payments using a current interest rate. The current interest rate
used depends on the amount of time left in the annuity option you elected. The
current rate will be the same rate we would give someone electing an annuity
option for that same amount of time. If you request a percentage of the amount
available during the period certain, we will reduce the amount of each payment
during the rest of the period certain by that percentage. After the certain
period expires, any remaining payments, if applicable, will not be affected by
the utilization of this benefit.
24
<PAGE> 27
The market value adjustment formula for calculating the present value described
above for fixed annuity payments is as follows:
Present Value =LOGO[Payment(s) X (1/1 + iC)(t/365)]
Where
<TABLE>
<S> <C> <C>
iC = the interest rate described above
n = the number of payments remaining in the contract owner's
certain period at the time of request for this benefit
t = number of days remaining until that payment is made,
adjusting for leap years.
</TABLE>
See Appendix D for examples of this market value adjustment.
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. If, at the time annuity payments begin,
no election has been made to the contrary, the cash surrender value will be
applied to provide an annuity funded by the same 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.")
ANNUITIZATION CREDIT. This credit is applied to the contract value used to
purchase one of the annuity options described below. The credit equals 0.5% of
your contract value if you annuitize during contract years 2-5, 1% during
contract years 6-10, and 2% after contract year 10. There is no credit applied
to contracts held less than 1 year.
VARIABLE ANNUITY
You may choose an annuity payout that fluctuates depending on the investment
experience of the variable funding options. The number of annuity units credited
to the Contract is determined by dividing the first monthly annuity payment
attributable to each funding option by the corresponding accumulation unit value
as of 14 days before the date annuity payments begin. An annuity unit is used to
measure the dollar value of an annuity payment. The number of annuity units (but
not their value) remains fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. If a variable annuity is elected,
the amount applied to it will be the value of the funding options as of 14 days
before the date annuity payments begin less any applicable premium taxes not
previously deducted.
The amount of the first monthly payment depends on the annuity option elected
and the annuitant's adjusted age. A formula for determining the adjusted age is
contained in the Contract. The total first monthly annuity payment is determined
by multiplying the benefit per $1,000 of value shown in the Contract tables by
the number of thousands of dollars of contract value applied to that annuity
option and factors in an assumed daily net investment factor. The Assumed Daily
Net Investment factor corresponds to an annual interest rate of 3%, used to
determine the guaranteed payout rates shown. If investment rates are higher at
the time annuitization is selected, payout rates will be higher than those
shown. The Company reserves the right to require satisfactory proof of age of
any person on whose life annuity payments are based before making the first
payment under any of the payment options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
all subsequent annuity payments changes from month to month based on the
investment experience of the applicable funding options. The total amount of
each annuity payment will be equal to the sum of the basic payments in each
funding option. The actual amounts of these payments are determined by
multiplying the number of annuity units credited to each funding option by the
corresponding annuity unit value as of the date 14 days before the date the
payment is due.
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under
25
<PAGE> 28
"Variable Annuity," except that the amount applied to begin the annuity will be
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.
If you have elected the Increasing Benefit Option, the payments will be
calculated as above. However, the initial payment will be less than that
reflected in the table and the subsequent payments will be increased by the
percentage you elected.
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
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 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 you.
VARIABLE ANNUITIZATION FLOOR BENEFIT. This benefit may not be available, or may
only be available under certain annuity options, if we determine market
conditions so dictate. If available, the Company will guarantee that, regardless
of the performance of the funding options selected by you, your annuity payments
will never be less than a certain percentage of your first annuity payment. This
percentage will vary depending on market conditions, but will never be less than
50%. You may not elect this benefit if you are over age 80. Additionally, you
must select from certain funds available under this guarantee. Currently, these
funds are the Equity Index Portfolio Class II, the Travelers Quality Bond
Portfolio, and the U.S. Government Securities Portfolio. We may, at our
discretion, increase or decrease the number of funds available under this
benefit. This benefit is not currently available under Annuity Option 5. The
benefit is not available with the 5% ANIF under any Option. If you select this
benefit, you may not elect to liquidate any portion of your Contract.
There is a charge for this guarantee, which will begin upon election of this
benefit. This charge will vary based upon market conditions, and will be
established at the time the benefit is elected. Once established, the charge
will remain level throughout the remainder of the annuitization, and will never
increase your annual separate account charge by more than 3% per year.
We reserve the right to restrict the amount of contract value to be annuitized
under this benefit.
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.
Options 1-5 below may be applied to either a Fixed or Variable Annuity. We may
offer additional options.
INCREASING BENEFIT OPTION. For Fixed Annuities, the annuity payment you receive
may be either level (except after death of Primary Payee in Option 4) or
increasing. If increasing payments are
26
<PAGE> 29
selected, the initial payment will be less than the corresponding level payment
for the same annuity option, but your payments will increase on each contract
date anniversary by a percentage chosen by you. You may choose a whole number
percentage from one to four.
Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments
during your lifetime 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 your lifetime, 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.
Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of
Primary Payee. The Company will make annuity payments during your lifetimes of
you 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 -- Payment for a Fixed Period. The Company will make monthly payments
for the period selected.
Option 6 -- Income Option. The Company will make a certain number of payments
which are not based on the annuitant's lifetime.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
You may return the Contract for a full refund of the contract value (including
charges) 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 will
be refunded in full; during the remainder of the right to return period, the
contract value (including charges) 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 less any applicable contract or premium tax
charges.
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<PAGE> 30
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.
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 Separate Account Five for Variable
Annuities ("Separate Account Five") and the Travelers Separate Account Six for
Variable Annuities ("Separate Account Six"), respectively. Both Separate Account
Five and Separate Account Six were established on June 8, 1998 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 Separate Account Five and Separate Account Six 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 "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
28
<PAGE> 31
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). Each
quotation assumes a total redemption at the end of each period with the
applicable withdrawal charge deducted at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. 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.
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.
29
<PAGE> 32
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.
TAXATION OF SURRENDERS UNDER THE LIQUIDITY FEATURE
As discussed above, no taxable income is recognized prior to the distribution of
proceeds to the contract owner. The Liquidity Benefit available under this
Contract is considered a distribution under the Code, and therefore is subject
to ordinary income tax as well as the penalty tax for premature distributions,
if applicable.
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.
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<PAGE> 33
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an owner.
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.
AVAILABLE INFORMATION
- --------------------------------------------------------------------------------
The Companies are both subject to the information requirements of the Securities
and Exchange Act of 1934 ("the 1934 Act"), as amended, and file reports and
other information with the Securities and Exchange Commission ("Commission").
You may read and copy this information and other information at the following
locations:
- public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C.
- the Commission's Regional Offices located at Seven World Trade
Center, New York, New York 10048,
- the Commission's Regional Offices located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661.
Under the Securities Act of 1933, the Companies have each filed with the
Commission registration statements (the "Registration Statement") relating to
the Contracts offered by this Prospectus. This Prospectus has been filed as a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement and the exhibits. Reference is hereby
made to such Registration Statement and exhibits for further information about
the Companies and the Contracts. The Registration Statement and the exhibits may
be inspected and copied as described above. Although the Companies each furnish
the Annual Reports on Form 10-K for the year ended December 31, 1999 to owners
of contracts or certificates, the Companies do not plan to furnish subsequent
annual reports containing financial information to the owners of contracts or
certificates described in this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- --------------------------------------------------------------------------------
Each Company's latest Annual Report on Form 10-K has been filed with the
Commission. They are both incorporated by reference into this Prospectus and
copies must accompany this Prospectus.
The Forms 10-K for the fiscal year ended December 31, 1999 contain additional
information about each Company including audited financial statements for the
latest fiscal year. The Travelers Insurance Company filed its Form 10-K on March
21, 2000 via Edgar, File No. 33-33691. The Travelers Life and Annuity Company
filed its Form 10-K on March 21, 2000 via Edgar; File No. 33-58677.
If requested, the Companies will furnish, without charge, a copy of any and all
of the documents incorporated by reference, other than exhibits to those
documents (unless such exhibits are specifically incorporated by reference in
those documents). You may direct your requests to: The Travelers Insurance
Company, One Tower Square, Hartford, Connecticut 06183-8130, Attention: Annuity
Services. The telephone number is (860) 422-3985. You may also obtain copies of
any documents, incorporated by reference into this prospectus by accessing the
SEC's website (http://www.sec.gov).
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<PAGE> 34
OTHER INFORMATION
- --------------------------------------------------------------------------------
THE INSURANCE COMPANIES
Please refer to 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 are included in the Form
10-K, which are attached to this prospectus. The financial statements 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
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.
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<PAGE> 35
VOTING RIGHTS
The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.
CONTRACT MODIFICATION
The Company reserves the right to modify the Contract to keep it qualified under
all related law and regulations which are in effect during the term of this
Contract. We will obtain the approval of any regulatory authority needed for the
modifications.
LEGAL PROCEEDINGS AND OPINIONS
Legal matters in connection with the federal laws and regulations affecting the
issue and sale of the contract described in this prospectus, as well as the
organization of the 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.
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THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 37
APPENDIX A
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT FIVE FOR VARIABLE ANNUITIES
AIR = ASSUMED INVESTMENT RATE
FC = FLOOR BENEFIT CHARGE
STANDARD = STANDARD DEATH BENEFIT
OPTIONAL = OPTIONAL DEATH BENEFIT
<TABLE>
<CAPTION>
PERIOD FROM JUNE 9, 1999* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD BOND TRUST (9/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 0.980 0.980 0.977 0.977 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 93,082 -- -- -- -- --
MANAGED ASSETS TRUST (6/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.102 1.102 1.098 1.098 -- -- -- --
Number of units outstanding at end
of year......................... 13,609 -- 899,389 -- -- -- -- --
MONEY MARKET PORTFOLIO (9/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.032 1.032 1.028 1.028 -- -- -- --
Number of units outstanding at end
of year......................... 36,453 -- 134,132 -- -- -- -- --
AMERICAN ODYSSEY FUNDS, INC.
CORE EQUITY FUND (9/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 0.995 0.995 0.992 0.992 -- -- -- --
Number of units outstanding at end
of year......................... 21,459 -- 68,472 -- -- -- -- --
EMERGING OPPORTUNITIES FUND (9/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.465 1.465 1.460 1.460 -- -- -- --
Number of units outstanding at end
of year......................... 6,201 -- 29,981 -- -- -- -- --
GLOBAL HIGH-YIELD BOND FUND
(12/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.070 1.070 1.066 1.066 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 18,317 -- -- -- -- --
INTERMEDIATE-TERM BOND FUND (8/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.005 1.005 1.002 1.002 -- -- -- --
Number of units outstanding at end
of year......................... 73,160 -- 44,935 -- -- -- -- --
INTERNATIONAL EQUITY FUND (7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.272 1.272 1.267 1.267 -- -- -- --
Number of units outstanding at end
of year......................... 6,933 -- 91,971 -- -- -- -- --
LONG-TERM BOND FUND (9/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 0.979 0.979 0.976 0.976 -- -- -- --
Number of units outstanding at end
of year......................... 37,502 -- 49,414 -- -- -- -- --
DELAWARE GROUP PREMIUM FUND
REIT SERIES
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
Number of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
SMALL CAP VALUE SERIES (10/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 0.991 0.991 0.988 0.988 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 3,413 -- -- -- -- --
</TABLE>
A-1
<PAGE> 38
APPENDIX A
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT FIVE FOR VARIABLE ANNUITIES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM JUNE 9, 1999* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO**
(7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.081 1.081 1.077 1.077 -- -- -- --
Number of units outstanding at end
of year......................... 24,552 -- 320,468 -- -- -- -- --
SMALL CAP PORTFOLIO (10/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.240 1.240 1.236 1.236 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 37,863 -- -- -- -- --
GREENWICH STREET SERIES FUND
EQUITY INDEX PORTFOLIO II (7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year......... 1.133 1.133 1.129 1.129 1.127 1.123 1.122 1.117
Number of units outstanding at end
of year......................... 13,350 -- 317,090 -- -- -- -- --
THE MONTGOMERY FUNDS III
MONTGOMERY VARIABLE SERIES; GROWTH
FUND (10/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.208 1.208 1.204 1.204 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 22,857 -- -- -- -- --
OCC ACCUMULATION TRUST
EQUITY 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
FUNDS, INC.
CAPITAL FUND (7/98)
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
Number of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
INVESTORS FUND (10/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.088 1.088 1.084 1.084 -- -- -- --
Number of units outstanding at end
of year......................... 13,535 -- 6,020 -- -- -- -- --
TOTAL RETURN FUND
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
Number of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
STRONG VARIABLE INSURANCE FUNDS,
INC.
STRONG SCHAFER VALUE FUND II
(7/98)
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 (7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.303 1.303 1.298 1.298 -- -- -- --
Number of units outstanding at end
of year......................... 17,222 -- 226,122 -- -- -- -- --
MFS TOTAL RETURN PORTFOLIO (7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 0.994 0.994 0.991 0.991 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 114,042 -- -- -- -- --
</TABLE>
A-2
<PAGE> 39
APPENDIX A
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT FIVE FOR VARIABLE ANNUITIES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM JUNE 9, 1999* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<->TRAVELERS SERIES FUND
INC. (CONT.)
PUTNAM DIVERSIFIED INCOME
PORTFOLIO ()
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
Number of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
SMITH BARNEY HIGH INCOME PORTFOLIO
(8/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.007 1.007 1.004 1.004 -- -- -- --
Number of units outstanding at end
of year......................... 20,231 -- -- -- -- -- -- --
SMITH BARNEY INTERNATIONAL EQUITY
PORTFOLIO (12/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.569 1.569 1.563 1.563 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 53,669 -- -- -- -- --
SMITH BARNEY LARGE CAPITALIZATION
GROWTH PORTFOLIO (10/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.132 1.132 1.128 1.128 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 77,927 -- -- -- -- --
THE TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK
PORTFOLIO (8/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.132 1.132 1.129 1.129 -- -- -- --
Number of units outstanding at end
of year......................... 4,950 -- 13,503 -- -- -- -- --
DISCIPLINED SMALL CAP STOCK
PORTFOLIO ()
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
umber of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
EQUITY INCOME PORTFOLIO (7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.021 1.021 1.017 1.017 -- -- -- --
Number of units outstanding at end
of year......................... 12,381 -- 255,091 -- -- -- -- --
FEDERATED STOCK PORTFOLIO ()
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
Number of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
LARGE CAP PORTFOLIO (7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.224 1.224 1.219 1.219 -- -- -- --
Number of units outstanding at end
of year......................... 12,719 -- 89,328 -- -- -- -- --
LAZARD INTERNATIONAL STOCK
PORTFOLIO (8/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.194 1.194 1.190 1.190 -- -- -- --
Number of units outstanding at end
of year......................... 4,591 -- -- -- -- -- -- --
MFS MID CAP GROWTH PORTFOLIO
(10/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.603 1.603 1.598 1.598 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 91,838 -- -- -- -- --
MFS RESEARCH PORTFOLIO ()
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
Number of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
</TABLE>
A-3
<PAGE> 40
APPENDIX A
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT FIVE FOR VARIABLE ANNUITIES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM JUNE 9, 1999* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<->THE TRAVELERS SERIES
TRUST (CONT.)
SOCIAL AWARENESS PORTFOLIO (7/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.115 1.115 1.111 1.111 -- -- -- --
Number of units outstanding at end
of year......................... 14,167 -- 57,036 -- -- -- -- --
STRATEGIC STOCK PORTFOLIO
Unit Value at beginning of year... -- -- -- -- -- -- -- --
Unit Value at end of year......... -- -- -- -- -- -- -- --
Number of units outstanding at end
of year......................... -- -- -- -- -- -- -- --
TRAVELERS QUALITY BOND PORTFOLIO
(8/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year......... 1.002 1.002 0.998 0.998 1.000 0.999 0.996 0.994
Number of units outstanding at end
of year......................... 19,941 -- 8,527 -- -- -- -- --
U.S. GOVERNMENT SECURITIES
PORTFOLIO (8/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year......... 0.968 0.968 0.965 0.965 0.966 0.965 0.962 0.961
Number of units outstanding at end
of year......................... 20,423 -- 75,867 -- -- -- -- --
UTILITIES PORTFOLIO (8/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 0.959 0.959 0.956 0.956 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 2,049 -- -- -- -- --
WARBURG PINCUS TRUST
EMERGING MARKETS PORTFOLIO (10/99)
Unit Value at beginning of year... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year......... 1.506 1.506 1.502 1.502 -- -- -- --
Number of units outstanding at end
of year......................... -- -- 42,199 -- -- -- -- --
</TABLE>
The date next to each funding option's name reflects the date money first came
into the funding option through the Separate Account. The financial statements
for Separate Account Five and the consolidated financial statements for The
Travelers Insurance Company and subsidiaries are contained in the SAI. Those
funding options not listed above were not available as of December 31, 1999.
* Date money first came into the Separate Account.
** Formerly Capital Appreciation Portfolio
A-4
<PAGE> 41
APPENDIX B
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES
AIR = ASSUMED INVESTMENT RATE
FC = FLOOR BENEFIT CHARGE
STANDARD = STANDARD DEATH BENEFIT
OPTIONAL = OPTIONAL DEATH BENEFIT
<TABLE>
<CAPTION>
PERIOD FROM MARCH 22* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83%FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD BOND TRUST (5/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.980 0.980 0.977 0.977 -- -- -- --
Number of units outstanding at
end of year.................... 92,789 -- 879,832 -- -- -- -- --
MANAGED ASSETS TRUST (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.102 1.102 1.098 1.098 -- -- -- --
Number of units outstanding at
end of year.................... 232,345 -- 5,360,035 -- -- -- -- --
MONEY MARKET PORTFOLIO (4/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.032 1.032 1.028 1.028 -- -- -- --
Number of units outstanding at
end of year.................... 239,890 -- 5,359,933 -- -- -- -- --
AMERICAN ODYSSEY FUNDS, INC.
CORE EQUITY FUND (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.995 0.995 0.992 0.992 -- -- -- --
Number of units outstanding at
end of year.................... 228,230 -- 5,697,520 -- -- -- -- --
EMERGING OPPORTUNITIES FUND
(3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.465 1.465 1.460 1.460 -- -- -- --
Number of units outstanding at
end of year.................... 113,574 -- 2,542,636 -- -- -- -- --
GLOBAL HIGH-YIELD BOND FUND
(3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.070 1.070 1.066 1.066 -- -- -- --
Number of units outstanding at
end of year.................... 48,457 -- 1,363,227 -- -- -- -- --
INTERMEDIATE-TERM BOND FUND
(3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.005 1.005 1.002 1.002 -- -- -- --
Number of units outstanding at
end of year.................... 187,387 -- 2,889,162 -- -- -- -- --
INTERNATIONAL EQUITY FUND (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.272 1.272 1.267 1.267 -- -- -- --
Number of units outstanding at
end of year.................... 90,221 -- 3,413,512 -- -- -- -- --
LONG-TERM BOND FUND (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.979 0.979 0.976 0.976 -- -- -- --
Number of units outstanding at
end of year.................... 139,623 -- 3,629,750 -- -- -- -- --
DELAWARE GROUP PREMIUM FUND
REIT SERIES (7/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.937 0.937 0.935 0.935 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 22,639 -- -- -- -- --
SMALL CAP VALUE SERIES (4/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.991 0.991 0.988 0.988 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 184,589 -- -- -- -- --
</TABLE>
B-1
<PAGE> 42
APPENDIX B
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM MARCH 22* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83%FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO**
(3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.081 1.081 1.077 1.077 -- -- -- --
Number of units outstanding at
end of year.................... 244,529 -- 2,447,252 -- -- -- -- --
SMALL CAP PORTFOLIO (4/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.240 1.240 1.236 1.236 -- -- -- --
Number of units outstanding at
end of year.................... 45,091 -- 1,060,068 -- -- -- -- --
GREENWICH STREET SERIES FUND
EQUITY INDEX PORTFOLIO II (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year........ 1.133 1.133 1.129 1.129 1.127 1.123 1.122 1.117
Number of units outstanding at
end of year.................... 207,054 -- 5,953,238 -- -- -- -- --
THE MONTGOMERY FUNDS III
MONTGOMERY VARIABLE SERIES;
GROWTH FUND (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.208 1.208 1.204 1.204 -- -- -- --
Number of units outstanding at
end of year.................... 16,056 -- 573,739 -- -- -- -- --
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.930 0.930 0.927 0.927 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 150,291 -- -- -- -- --
SALOMON BROTHERS VARIABLE SERIES
FUNDS, INC.
CAPITAL FUND (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.222 1.222 1.218 1.218 -- -- -- --
Number of units outstanding at
end of year.................... 13,279 -- 1,398,956 -- -- -- -- --
INVESTORS FUND (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.088 1.088 1.084 1.084 -- -- -- --
Number of units outstanding at
end of year.................... 5,119 -- 665,635 -- -- -- -- --
TOTAL RETURN FUND (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.002 1.002 0.998 0.998 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 163,763 -- -- -- -- --
STRONG VARIABLE INSURANCE FUNDS,
INC.
STRONG SCHAFER VALUE FUND II
(7/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.877 0.877 0.875 0.875 -- -- -- --
Number of units outstanding at
end of year.................... 6,351 -- 114,839 -- -- -- -- --
TRAVELERS SERIES FUND INC.
ALLIANCE GROWTH PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.303 1.303 1.298 1.298 -- -- -- --
Number of units outstanding at
end of year.................... 274,568 -- 4,867,877 -- -- -- -- --
MFS TOTAL RETURN PORTFOLIO (4/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.994 0.994 0.991 0.991 -- -- -- --
Number of units outstanding at
end of year.................... 56,338 -- 822,665 -- -- -- -- --
</TABLE>
B-2
<PAGE> 43
APPENDIX B
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM MARCH 22* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83%FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TRAVELERS SERIES FUND INC. (CONT.)
PUTNAM DIVERSIFIED INCOME
PORTFOLIO (6/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.010 1.010 1.007 1.007 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 188,752 -- -- -- -- --
SMITH BARNEY HIGH INCOME
PORTFOLIO (5/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.007 1.007 1.004 1.004 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 174,517 -- -- -- -- --
SMITH BARNEY INTERNATIONAL EQUITY
PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.569 1.569 1.563 1.563 -- -- -- --
Number of units outstanding at
end of year.................... 33,821 -- 942,437 -- -- -- -- --
SMITH BARNEY LARGE CAPITALIZATION
GROWTH PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.132 1.32 1.128 1.128 -- -- -- --
Number of units outstanding at
end of year.................... 100,647 -- 2,808,440 -- -- -- -- --
THE TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK
PORTFOLIO (6/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.132 1.132 1.129 1.129 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 131,236 -- -- -- -- --
DISCIPLINED SMALL CAP STOCK
PORTFOLIO (5/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.150 1.150 1.147 1.147 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 41,709 -- -- -- -- --
EQUITY INCOME PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.021 1.021 1.017 1.017 -- -- -- --
Number of units outstanding at
end of year.................... 216,322 -- 2,462,986 -- -- -- -- --
FEDERATED STOCK PORTFOLIO (4/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.965 0.965 0.962 0.962 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 342,000 -- -- -- -- --
LARGE CAP PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.224 1.224 1.219 1.219 -- -- -- --
Number of units outstanding at
end of year.................... 247,021 -- 2,827,437 -- -- -- -- --
LAZARD INTERNATIONAL STOCK
PORTFOLIO (4/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.194 1.194 1.190 1.190 -- -- -- --
Number of units outstanding at
end of year.................... 13,922 -- 118,109 -- -- -- -- --
MFS MID CAP GROWTH PORTFOLIO
(5/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.603 1.603 1.598 1.598 -- -- -- --
Number of units outstanding at
end of year.................... 22,378 -- 519,757 -- -- -- -- --
</TABLE>
B-3
<PAGE> 44
APPENDIX B
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES (CONTINUED)
<TABLE>
<CAPTION>
PERIOD FROM MARCH 22* TO DECEMBER 31, 1999
STANDARD STANDARD OPTIONAL OPTIONAL
STANDARD STANDARD OPTIONAL OPTIONAL 3%AIR, 3%AIR, 3%AIR, 3%AIR,
3%AIR 5%AIR 3%AIR 5%AIR .62FC 1.1%FC .83%FC 1.40%FC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE TRAVELERS SERIES TRUST (CONT.)
MFS RESEARCH PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.213 1.213 1.209 1.209 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 169,528 -- -- -- -- --
SOCIAL AWARENESS PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.115 1.115 1.111 1.111 -- -- -- --
Number of units outstanding at
end of year.................... 204,232 -- 1,692,027 -- -- -- -- --
STRATEGIC STOCK PORTFOLIO (9/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.942 0.942 0.940 0.940 -- -- -- --
Number of units outstanding at
end of year.................... -- -- 75,116 -- -- -- -- --
TRAVELERS QUALITY BOND PORTFOLIO
(3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year........ 1.002 1.002 0.998 0.998 1.000 0.999 0.996 0.994
Number of units outstanding at
end of year.................... 30,445 -- 1,489,904 -- -- -- -- --
U.S. GOVERNMENT SECURITIES
PORTFOLIO (3/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Unit Value at end of year........ 0.968 0.968 0.965 0.965 0.966 0.965 0.962 0.961
Number of units outstanding at
end of year.................... 81,239 -- 1,134,380 -- -- -- -- --
UTILITIES PORTFOLIO (5/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 0.959 0.959 0.956 0.956 -- -- -- --
Number of units outstanding at
end of year.................... 52,624 -- 426,556 -- -- -- -- --
WARBURG PINCUS TRUST
EMERGING MARKETS PORTFOLIO (5/99)
Unit Value at beginning of
year........................... 1.000 1.000 1.000 1.000 -- -- -- --
Unit Value at end of year........ 1.506 1.506 1502 1.502 -- -- -- --
Number of units outstanding at
end of year.................... 54,662 -- 563,587 -- -- -- -- --
</TABLE>
The date next to each funding option's name reflects the date money first came
into the funding option through the Separate Account. The financial statements
for Separate Account Six and the financial statements for The Travelers Life and
Annuity Company are contained in the SAI. Those funding options not listed above
were not available as of December 31, 1999.
* Date money first came into Separate Account
** Formerly Capital Appreciation Portfolio
B-4
<PAGE> 45
APPENDIX C
- --------------------------------------------------------------------------------
WAIVER OF WITHDRAWAL CHARGE FOR NURSING HOME CONFINEMENT
(This waiver is not available if the Annuitant is age 71 or older on the date
the Contract is issued.
Please refer to your contract for any state variations of this waiver)
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.
C-1
<PAGE> 46
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<PAGE> 47
APPENDIX D
- --------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT
If you (the Annuitant) have selected any period certain option, you may elect to
surrender a payment equal to a portion or all of the present value of the
remaining period certain payments any time after the first contract year. There
is a surrender charge of 5% of the amount withdrawn under this option.
For fixed annuity payments, we calculate the present value of the remaining
period certain payments using a current interest rate. The current interest rate
is the then current annual rate of return offered by Us on new Fixed Annuity
period certain only annuitizations for the amount of time remaining in the
certain period. If the period of time remaining is less than the minimum length
of time for which we offer a new Fixed Annuity Period Certain Only
Annuitization, then the interest rate will be the rate of return for that
minimum length of time.
The formula for calculating the Present Value is as follows:
Present Value =LOGO[Payment(s) X (1/1 + iC)(t/365)]
Where
iC = the interest rate described above
n = the number of payments remaining in the contract owner's certain
period at the time of request for this benefit
t = number of days remaining until that payment is made, adjusting for
leap years.
If you request a percentage of the total amount available, the remaining period
certain payments will be reduced by that percentage for the remainder of the
certain period. After the certain period expires, any remaining payments will
increase to the level they would have been had no liquidation taken place.
Illustration:
<TABLE>
<S> <C>
Amount Annuitized: $12,589.80
Annuity Option: Life w/10 Year Certain
$1,000 Annually--first payment
Annuity Payments: immediately
</TABLE>
For the purposes of this illustration, assume after two years (immediately
preceding the third payment), you choose to receive full liquidity, and the
current rate of return which we are then crediting for 8 year fixed Period
Certain Only Annuitizations is 4.00%. The total amount available for liquidity
is calculated as follows:
1000 + (1000/1.04) + (1000/1.04)( 7/8)2 + (1000/1.04)( 7/8)3 + (1000/1.04)
( 7/8)4 + (1000/1.04)( 7/8)5 + (1000/1.04)( 7/8)6 + (1000/1.04)
( 7/8)7 = $7002.06
The surrender penalty is calculated as 5% of $7,002.06, or $350.10.
The net result to you after subtraction of the surrender penalty of $350.10
would be $6,651.96.
You would receive no more payments for 8 years. After 8 years, if you are still
living, you will receive $1000 annually until your death.
D-1
<PAGE> 48
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<PAGE> 49
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
Mixed and Shared Funding
Performance Information
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 complete the coupon found
below and mail it to: The Travelers Insurance Company, Annuity Services, One
Tower Square, Hartford, Connecticut, 06183-8130. The Travelers Insurance Company
Statement of Information is printed on Form L-21256S, and The Travelers Life and
Annuity Company Statement of Information is printed on Form L-21257S.
Name:
- ------------------------------------------------
Address:
- ------------------------------------------------
---------------------------------------------------------
E-1
<PAGE> 50
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<PAGE> 51
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<PAGE> 52
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<PAGE> 53
L-21256 TIC Ed. 5-2000
Printed in U.S.A.
<PAGE> 54
PART B
Information Required in a Statement of Additional Information
<PAGE> 55
TRAVELERS RETIREMENT ACCOUNT
VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
dated
May 1, 2000
for
THE TRAVELERS SEPARATE ACCOUNT SIX
FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY 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 Life and Annuity Company, Annuity Services, One Tower
Square, Hartford, Connecticut 06183-8036, or by calling (800) 842-9406 or by
accessing the Securities and Exchange Commission's website at
http://www.sec.gov.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . 2
PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . 2
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT . . . . 3
VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . 3
MIXED AND SHARED FUNDING . . . . . . . . . . . . . . . . . 4
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . 4
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . .. . . . 9
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . 11
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 56
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company") is a stock
insurance company chartered in 1973 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, (except New Hampshire and New York) and
the District of Columbia and Puerto Rico. 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
Company, 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. Separate Account Six meets the definition of a separate
account under the federal securities laws, and will comply with the provisions
of the 1940 Act. Additionally, the operations of Separate Account Six are
subject to the provisions of Section 38a-433 of the Connecticut General Statutes
which authorizes the Commissioner to adopt regulations under it. Section 38a-433
contains no restrictions on the investments of the Separate Account, and the
Commissioner has adopted no regulations under the Section that affect the
Separate Account.
PRINCIPAL UNDERWRITER
CFBDS, Inc. serves as principal underwriter for Separate Account Six
and the Contracts. The offering is continuous. CFBDS, Inc.'s principal executive
offices are located at 21 Milk Street, Boston, MA 02116. CFBDS is not affiliated
with the Company or Separate Account Six. 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.
2
<PAGE> 57
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
Under the terms of the Distribution and Principal Underwriting
Agreement among Separate Account Six, 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
(c) = the value of the assets of the funding option at the beginning
of the valuation period.
3
<PAGE> 58
The gross investment rate may be either positive or negative. A
Funding Option's investment income includes any distribution whose ex-dividend
date occurs during the valuation period.
ACCUMULATION UNIT VALUE. The value of the accumulation unit for each Funding
Option was initially established at $1.00. The value of an accumulation unit on
any business day is determined by multiplying the value on the preceding
business day by the net investment factor for the valuation period just ended.
The net investment factor is calculated for each Funding Option and takes into
account the investment performance, expenses and the deduction of certain
expenses.
ANNUITY UNIT VALUE. The initial Annuity Unit Value applicable to each Funding
Option was established at $1.00. An annuity unit value as of any business day is
equal to (a) the value of the annuity unit on the preceding business day,
multiplied by (b) the corresponding net investment factor for the valuation
period just ended, divided by (c) the assumed net investment factor for the
valuation period. (For example, the assumed net investment factor based on an
annual assumed net investment rate of 3.0% for a Valuation Period of one day is
1.000081 and, for a period of two days, is 1.000081 x 1.000081.)
MIXED AND SHARED FUNDING
Certain variable annuity separate accounts and variable life
insurance separate accounts may invest in the Funding Options simultaneously
(called "mixed" and "shared" funding). It is conceiveable that in the future it
may be disadvantageous to do so. Although the Company and the Funding Options do
not currently forsee any such disadvantages either to variable annuity contract
owners or variable life policy owners, each Funding Option's Board of Directors
intends to monitor events in order to identify any material conflicts between
them and to determine what action, if any, should be taken. If a Board of
Directors was to conclude that separate funds should be established for variable
life and variable annuity separate accounts, the variable annuity contract
owners would not bear any of the related expenses, but variable annuity contract
owners and variable life insurance policy owners would no longer have the
economies of scale resulting from a larger combined fund.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for the Funding Options of Separate Account Six. 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). Each
quotation assumes a total redemption at the end of each period with the
assessment of any applicable withdrawal charge deducted at that time.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be
calculated in a similar manner based on the performance of the Funding Options
over a period of time, usually for the calendar year-to-date, and for the past
one-, three-, five- and ten-year periods. Nonstandardized total returns will not
reflect the deduction of any applicable withdrawal 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 prior to the date they
became available under Separate Account Six, 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.
4
<PAGE> 59
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 Separate Account Six and the
Funding Options.
Average annual total returns for each Funding Option computed
according to the standardized and nonstandardized methods for the period ending
December 31, 1999 are set forth in the following tables.
5
<PAGE> 60
TRAVELERS RETIREMENT ACCOUNT
STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STOCK ACCOUNTS: 1 Year 5 Year 10 Year (or inception) Inception Date #
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Growth Portfolio - - 23.32% 3/25/99
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund - - -5.77% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund - - 38.70% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund - - 20.40% 3/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Investments REIT Series - - -11.17% 7/20/99
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Series - - -6.13% 4/20/99
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio - - 2.32% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio - - 17.38% 4/6/99
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio (Fidelity) - - -3.36% 3/25/99
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Index Portfolio Class II * - - 7.23% 3/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Stock Portfolio - - -8.61% 4/21/99
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) - - 15.85% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
Lazard International Stock Portfolio - - 13.04% 4/21/99
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio - - 51.85% 5/10/99
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio - - 14.85% 3/25/99
- ------------------------------------------------------------------------------------------------------------------------------------
Montgomery Variable Series: Growth Fund - - 14.41% 3/25/99
- ------------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Equity Portfolio - - -11.89% 6/17/99
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund - - 15.66% 3/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund - - 3.02% 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio - - 48.53% 3/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio - - 7.19% 3/29/99
- ------------------------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) - - 5.53% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
Strategic Stock Portfolio - - -10.68% 9/8/99
- ------------------------------------------------------------------------------------------------------------------------------------
Strong Schafer Value Fund II - - -16.88% 7/6/99
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio - - 7.29% 6/15/99
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio - - 8.94% 5/10/99
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) - - -9.14% 5/4/99
- ------------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Markets Portfolio - - 42.66% 5/24/99
- ------------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High-Yield Bond Fund - - 1.27% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund - - -4.85% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund - - -7.29% 3/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio - - -4.30% 6/8/99
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio - - -4.64% 5/19/99
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust - - -7.17% 5/7/99
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio - - -5.16% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio - - -8.34% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio - - -5.85% 4/16/99
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund - - -5.18% 3/23/99
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Managed Assets Trust - - 4.33% 3/22/99
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio - - -2.32% 4/6/99
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
6
<PAGE> 61
TRAVELERS RETIREMENT ACCOUNT
NON STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
------------------------------------------------------------------------------
Inception To
YTD 1 YR 3YR 5YR Date Inception Date #
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STOCK ACCOUNTS:
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Growth Portfolio 30.62% 30.62% 28.49% 29.25% 27.15% 6/20/94
- -----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund -1.52% -1.52% 13.54% 19.48% 14.10% 5/1/93
- -----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 35.03% 35.03% 8.79% 9.97% 9.92% 5/1/93
- -----------------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 30.89% 30.89% 15.49% 16.85% 13.76% 5/1/93
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Investments REIT Series -3.83% -3.83% - - -8.20% 5/6/98
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Series -6.04% -6.04% 5.06% 10.93% 9.28% 12/23/93
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation Portfolio 10.08% 10.08% 21.43% 23.96% 18.56% 4/5/93
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Portfolio 21.63% 21.63% 10.17% 14.49% 33.99% 8/31/90
- -----------------------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio (Fidelity) 3.61% 3.61% 14.35% - 16.47% 8/30/96
- -----------------------------------------------------------------------------------------------------------------------------------
Equity Index Portfolio Class II * 19.10% 19.10% 25.85% 27.03% 19.72% 11/30/91
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Stock Portfolio 4.04% 4.04% 16.83% - 19.02% 8/30/96
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Portfolio (Fidelity) 27.72% 27.72% 27.22% - 28.74% 8/30/96
- -----------------------------------------------------------------------------------------------------------------------------------
Lazard International Stock Portfolio 20.20% 20.20% 12.64% - 13.39% 8/1/96
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Mid Cap Growth Portfolio 62.14% 62.14% - - 30.99% 3/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Research Portfolio 22.14% 22.14% - - 14.99% 3/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
Montgomery Variable Series: Growth Fund 19.29% 19.29% 15.47% - 18.52% 2/9/96
- -----------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Equity Portfolio 1.25% 1.25% 11.84% 18.50% 14.40% 8/1/88
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Capital Fund 20.57% 20.57% - - 20.13% 2/17/98
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Investors Fund 10.27% 10.27% - - 10.54% 2/17/98
- -----------------------------------------------------------------------------------------------------------------------------------
Smith Barney International Equity Portfolio 65.66% 65.66% 20.90% 17.68% 14.88% 6/20/94
- -----------------------------------------------------------------------------------------------------------------------------------
Smith Barney Large Cap Growth Portfolio 29.21% 29.21% - - 32.71% 5/6/98
- -----------------------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio (Smith Barney) 14.40% 14.40% 23.39% 23.99% 16.62% 5/1/92
- -----------------------------------------------------------------------------------------------------------------------------------
Strategic Stock Portfolio 3.66% 3.66% - - -1.86% 5/6/98
- -----------------------------------------------------------------------------------------------------------------------------------
Strong Schafer Value Fund II -4.06% -4.06% - - -2.09% 10/10/97
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Mid Cap Stock Portfolio 12.06% 12.06% - - 21.87% 4/1/97
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Disciplined Small Cap Stock Portfolio 18.92% 18.92% - - 2.91% 5/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities Portfolio (Smith Barney) -1.32% -1.32% 12.53% 14.06% 11.89% 2/4/94
- -----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Markets Portfolio 79.18% 79.18% - - 21.82% 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS:
- -----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High-Yield Bond Fund 9.31% 9.31% - - 1.39% 5/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund 0.23% 0.23% 4.47% 5.85% 4.25% 5/1/93
- -----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -3.95% -3.95% 4.60% 6.72% 5.15% 5/1/93
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio -0.15% -0.15% 1.83% 5.52% 5.13% 6/20/94
- -----------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio 1.32% 1.32% 4.17% 8.23% 7.17% 6/22/94
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers High Yield Bond Trust 3.13% 3.13% 7.70% 10.30% 7.48% 6/10/83
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Quality Bond Portfolio -0.17% -0.17% 4.23% - 4.75% 8/30/96
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers U.S. Government Securities Portfolio -5.33% -5.33% 4.65% 7.13% 5.39% 1/24/92
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED ACCOUNTS:
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio 1.36% 1.36% 10.20% 13.43% 11.62% 6/20/94
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Total Return Fund -0.47% -0.47% - - 2.23% 2/17/98
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Managed Assets Trust 12.81% 12.81% 17.46% 17.97% 10.24% 6/7/83
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNTS:
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Money Market Portfolio 3.67% 3.67% 3.72% 3.39% 3.78% 12/31/87
- -----------------------------------------------------------------------------------------------------------------------------------
</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.
7
<PAGE> 62
TRAVELERS RETIREMENT ACCOUNT CHART PROGRAM
STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
<TABLE>
<CAPTION>
-----------------------------------------------------------
1 YR 5 YR 10 YR or Inception Inception Date #
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STOCK ACCOUNTS:
- ------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund - - -6.53% 3/23/1999
- ------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund - - 39.88% 3/23/1999
- ------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund - - 20.75% 3/22/1999
- ------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- ------------------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund - - 0.76% 3/23/1999
- ------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund - - -5.61% 3/23/1999
- ------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund - - -8.21% 3/22/1999
- ------------------------------------------------------------------------------------------------------------
</TABLE>
# The inception date used to calculate standardized performance is based on the
date that the investment option became active in the product.
TRAVELERS RETIREMENT ACCOUNT CHART PROGRAM
NON STANDARDIZED PERFORMANCE UPDATE AS OF 12/31/99
<TABLE>
<CAPTION>
-------------------------------------------------
AVERAGE ANNUAL RETURNS
------------------------------------------------------------------------------
Inception To Inception
YTD 1 YR 3YR 5YR Date Date #
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STOCK ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund -2.31% -2.31% 12.63% 18.53% 13.21% 5/1/93
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 33.99% 33.99% 7.87% 0.92% 2.85% 5/1/93
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 29.87% 29.87% 14.58% 15.88% 12.81% 5/1/93
- ----------------------------------------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund 8.44% 8.44% - - 0.55% 5/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -0.56% -0.56% 3.64% 2.74% 1.72% 5/1/93
- ----------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -5.10% -5.10% 3.49% 5.71% 4.18% 5/1/93
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------
CALENDAR YEAR RETURNS
---------------------------------------
1998 1997 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STOCK ACCOUNTS
- -------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund -2.31% 13.19% -
- -------------------------------------------------------------------------------------------------
American Odyssey Emerging Opportunities Fund 33.99% -10.68% -
- -------------------------------------------------------------------------------------------------
American Odyssey International Equity Fund 29.87% 12.54% -
- -------------------------------------------------------------------------------------------------
BOND ACCOUNTS
- -------------------------------------------------------------------------------------------------
American Odyssey Global High -Yield Bond Fund 8.44% - -
- -------------------------------------------------------------------------------------------------
American Odyssey Intermediate-Term Bond Fund -0.56% 6.28% -
- -------------------------------------------------------------------------------------------------
American Odyssey Long-Term Bond Fund -5.10% 6.40% -
- -------------------------------------------------------------------------------------------------
</TABLE>
# The inception date is the date that the underlying fund commenced operations.
8
<PAGE> 63
FEDERAL TAX CONSIDERATIONS
The following description of the federal income tax consequences
under this Contract is not exhaustive and is not intended to cover all
situations. Because of the complexity of the law and the fact that the tax
results will vary according to the factual status of the individual involved,
tax advice may be needed by a person contemplating purchase of an annuity
contract and by a contract owner or beneficiary who may make elections under a
contract. For further information, please consult a qualified tax adviser.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law generally requires that minimum annual distributions
begin by April 1st of the calendar year following the calendar year in which a
participant under a qualified plan, a Section 403(b) annuity, or an IRA attains
age 701/2. Distributions must also begin or be continued according to required
patterns following the death of the contract owner or the annuitant.
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
9
<PAGE> 64
applicable to IRAs, except that an early withdrawal by an employee under a
SIMPLE plan IRA, within the first two years of participation, shall be subject
to a 25% early withdrawal tax.
ROTH IRAS
Effective January 1, 1998, Section 408A of the Code permits certain
individuals to contribute to a Roth IRA. Eligibility to make contributions is
based upon income, and the applicable limits vary based on marital status and/or
whether the contribution is a rollover contribution from another IRA or an
annual contribution. Contributions to a Roth IRA, which are subject to certain
limitations ($2,000 per year for annual contributions), are not deductible and
must be made in cash or as a rollover or transfer from another Roth IRA or other
IRA. A conversion of a "traditional" IRA to a Roth IRA may be subject to tax and
other special rules apply. You should consult a tax adviser before combining any
converted amounts with other Roth IRA contributions, including any other
conversion amounts from other tax years.
Qualified distributions from a Roth IRA are tax-free. A qualified
distribution requires that the Roth IRA has been held for at least 5 years, and
the distribution is made after age 59 1/2, on death or disability of the owner,
or for a limited amount ($10,000) for a qualified first time home purchase for
the owner or certain relatives. Income tax and a 10% penalty tax may apply to
distributions made (1) before age 59 1/2 (subject to certain exceptions) or (2)
during five taxable years starting with the year in which the first contribution
is made to the Roth IRA.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, purchase payments
made by an employer are not currently taxable to the participant and increases
in the value of a contract are not subject to taxation until received by a
participant or beneficiary.
Distributions are taxable to the participant or beneficiary as
ordinary income in the year of receipt. Any distribution that is considered the
participant's "investment in the contract" is treated as a return of capital and
is not taxable. Certain lump-sum distributions may be eligible for special
forward averaging tax treatment for certain classes of individuals.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the
recipient will be subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that
are eligible for rollover to an IRA or to another retirement plan but that are
not directly rolled over. A distribution made directly to a participant or
beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise required by law.
10
<PAGE> 65
A distribution including a rollover that is not a direct rollover
will be subject to the 20% withholding, and a 10% additional tax penalty may
apply to any amount not added back in the rollover. The 20% withholding may be
recovered when the participant or beneficiary files a personal income tax return
for the year if a rollover was completed within 60 days of receipt of the funds,
except to the extent that the participant or spousal beneficiary is otherwise
underwithheld or short on estimated taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above,
the portion of a non-periodic distribution which constitutes taxable income will
be subject to federal income tax withholding, if the aggregate distributions
exceed $200 for the year, unless the recipient elects not to have taxes
withheld. If no such election is made, 10% of the taxable distribution will be
withheld as federal income tax. Election forms will be provided at the time
distributions are requested. This form of withholding applies to all annuity
programs.
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 financial statements of The Travelers Life and Annuity Company
as of December 31, 1999 and 1998, and for each of the years in the three-year
period ended December 31, 1999, included herein, and the financial statements of
Separate Account Six as of December 31, 1999 and for the period from March 22,
1999 (date operations commenced) to 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.
11
<PAGE> 66
ANNUAL REPORT
DECEMBER 31, 1999
THE TRAVELERS SEPARATE ACCOUNT SIX
FOR VARIABLE ANNUITIES
[TRAVELERS LIFE & ANNUITY LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 67
THE TRAVELERS SEPARATE ACCOUNT SIX
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments in eligible funds at market value:
American Odyssey Funds, Inc., 1,561,000 shares (cost $21,149,246) .............. $ 22,277,296
Delaware Group Premium Fund, Inc., 14,322 shares (cost $208,443) ............... 203,634
Dreyfus Variable Investment Fund, 92,189 shares (cost $3,948,721) .............. 4,220,686
Greenwich Street Series Fund, 191,827 shares (cost $6,352,175) ................. 6,869,310
High Yield Bond Trust, 100,422 shares (cost $955,621) .......................... 951,000
Managed Assets Trust, 286,803 shares (cost $5,734,712) ......................... 6,057,284
Money Market Portfolio, 5,693,234 shares (cost $5,693,234) ..................... 5,693,234
OCC Accumulation Trust, 3,712 shares (cost $137,616) ........................... 139,429
Salomon Brothers Variable Series Funds Inc., 201,300 shares (cost $2,504,308) .. 2,611,119
Strong Variable Insurance Funds, Inc., 11,631 shares (cost $108,290) ........... 106,078
Montgomery Funds III, 38,638 shares (cost $657,835) ............................ 710,547
The Travelers Series Trust, 817,858 shares (cost $12,961,151) .................. 13,477,911
Travelers Series Fund Inc., 554,294 shares (cost $11,086,117) .................. 12,622,528
Warburg Pincus Trust, 65,508 shares (cost $792,227) ............................ 928,910
---------------
Total Investments (cost $72,289,696) ....................................... $ 76,868,966
Receivables:
Dividends ....................................................................... 12,608
Purchase payments and transfers from other Travelers accounts ................... 656,072
-------------
Total Assets ............................................................... 77,537,646
-------------
LIABILITIES:
Payables:
Insurance charges .............................................................. 22,757
-------------
Total Liabilities .......................................................... 22,757
-------------
NET ASSETS: $ 77,514,889
============
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 68
THE TRAVELERS SEPARATE ACCOUNT SIX
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................................. $ 857,883
EXPENSES:
Insurance charges .......................................................... 258,830
-------------
Net investment income ................................................... 599,053
-------------
REALIZED GAIN (LOSS) AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ........................................... $ 3,764,035
Cost of investments sold ................................................. 3,703,696
--------------
Net realized gain (loss) ................................................ 60,339
Unrealized gain (loss) on investments:
Unrealized gain at December 31, 1999 ...................................... 4,579,270
-------------
Net realized gain (loss) and unrealized gain (loss) ................... 4,639,609
-------------
Net increase in net assets resulting from operations ........................ $ 5,238,662
=============
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 69
THE TRAVELERS SEPARATE ACCOUNT SIX
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS:
Net investment income ..................................................... $ 599,053
Net realized gain (loss) from investment transactions ..................... 60,339
Net change in unrealized gain (loss) on investments ....................... 4,579,270
---------------
Net increase in net assets resulting from operations..................... 5,238,662
---------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 69,384,778 units) ....................................... 72,682,259
Participant transfers from other Travelers accounts
(applicable to 2,800,035 units) ........................................ 2,956,633
Administrative and asset allocation charges
(applicable to 49,763 units) ........................................... (53,718)
Contract surrenders
(applicable to 243,642 units) .......................................... (261,786)
Participant transfers to other Travelers accounts
(applicable to 2,926,663 units) ........................................ (3,050,444)
Other payments (to) from participants
(applicable to 3,105 units) ............................................ 3,283
---------------
Net increase in net assets resulting from unit transactions ............. 72,276,227
---------------
Net increase in net assets ........................................... 77,514,889
NET ASSETS:
Beginning of period ....................................................... -
---------------
End of period ............................................................. $ 77,514,889
===============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 70
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Separate Account Six for Variable Annuities ("Separate Account
Six") is a separate account of The Travelers Life and Annuity Company
("Travelers Life"), which is a wholly owned subsidiary of The Travelers
Insurance Company ("The Travelers"), an indirect wholly owned subsidiary of
Citigroup Inc., and is available for funding certain variable annuity contracts
issued by The Travelers. Separate Account Six is registered under the Investment
Company Act of 1940, as amended, as a unit investment trust. Separate Account
Six is comprised of the Travelers Retirement Account product.
Participant purchase payments applied to Separate Account Six are invested in
one or more eligible funds in accordance with the selection made by the contract
owner. As of December 31, 1999, the eligible funds available under Separate
Account Six were: Managed Assets Trust; High Yield Bond Trust; Money Market
Portfolio; U.S. Government Securities Portfolio, Utilities Portfolio, Social
Awareness Stock Portfolio, Travelers Quality Bond Portfolio, Lazard
International Stock Portfolio, Federated Stock Portfolio, Large Cap Portfolio,
Equity Income Portfolio, Disciplined Mid Cap Stock Portfolio, Disciplined Small
Cap Stock Portfolio, MFS Mid Cap Growth Portfolio, MFS Research Portfolio and
Strategic Stock Portfolio of The Travelers Series Trust; American Odyssey Core
Equity Fund, American Odyssey Emerging Opportunities Fund, American Odyssey
International Equity Fund, American Odyssey Long-Term Bond Fund, American
Odyssey Intermediate-Term Bond Fund and American Odyssey Global High-Yield Bond
Fund of American Odyssey Funds, Inc.; Alliance Growth Portfolio, Smith Barney
High Income Portfolio, MFS Total Return Portfolio, Smith Barney International
Equity Portfolio, Portfolio, Putnam Diversified Income Portfolio and Smith
Barney Large Capitalization Growth Portfolio of Travelers Series Fund Inc.;
Equity Index Portfolio-Class II of the Greenwich Street Series Fund; Salomon
Brothers Variable Investors Fund, Salomon Brothers Variable Total Return Fund
and Salomon Brothers Variable Capital Fund of Salomon Brothers Variable Series
Funds Inc. (all of which are managed by affiliates of The Travelers); Small Cap
Portfolio and Capital Appreciation Portfolio of Dreyfus Variable Investment
Fund; REIT Series and Small Cap Value Series of Delaware Group Premium Fund,
Inc; Montgomery Variable Series: Growth Fund of Montgomery Funds III; Equity
Portfolio of OCC Accumulation Trust; Strong Schafer Value Fund II of Strong
Variable Insurance Funds, Inc; and Emerging Markets Portfolio of Warburg Pincus
Trust. All of the funds are Massachusetts business trusts, except for American
Odyssey Funds, Inc., Dreyfus Stock Index Fund, Travelers Series Fund Inc.,
Salomon Brothers Variable Series Funds Inc. and Delaware Group Premium Fund,
Inc. which are incorporated under Maryland law; Strong Variable Insurance Funds,
Inc. which is a Wisconsin corporation and Montgomery Funds III which is a
Delaware business trust. Not all funds may be available in all states or to all
contract owners.
The following is a summary of significant accounting policies consistently
followed by Separate Account Six 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 Six 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 Six. Separate Account Six
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> 71
NOTES TO FINANCIAL STATEMENTS - CONTINUED
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments were
$75,993,394 and $3,764,035 respectively, for the period 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 $72,289,696 at
December 31, 1999. Gross unrealized appreciation for all investments at December
31, 1999 was $4,947,079. Gross unrealized depreciation for all investments at
December 31, 1999 was $367,809.
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed by
Travelers Life. Each business day, Travelers Life deducts a mortality and
expense charge which is reflected in the calculation of accumulation and annuity
unit values. This charge equals, on an annual basis, 0.80%, for the Standard
Death Benefit contracts (identified in Note 5 with a preface of "Standard") and
1.25% for the Optional Death Benefit and Credit contracts (identified in Note 5
with a preface of "Optional").
No sales charge is deducted from participant purchase payments when they are
received. However, Travelers Life may assess a contingent deferred sales charge
(up to 5% if a participant's purchase payment is surrendered within five years
of its payment date). Contract surrender payments include $2,863 of contingent
deferred sales charges for the period ended December 31, 1999. See the product
prospectus for a more detailed explanation of withdrawal charges.
Participants in American Odyssey Funds, Inc. (the "Funds"), may elect to enter
into a separate asset allocation advisory agreement with Copeland Financial
Services, Inc. ("Copeland"), an affiliate of Travelers Life. Under this
arrangement, Copeland provides asset allocation advice and charges participants
an annual fee. The annual fee, which decreases as a participant's assets in the
Funds increase, is equivalent to an amount of up to 0.80% of the participant's
assets in the Funds. There were no annual fee charges for the period ended
December 31, 1999.
If the Variable Annuitization Floor Benefit is selected, a charge is deducted.
This charge compensates Travelers Life for guaranteeing a minimum variable
annuity payment regardless of the performance of the funding option. This charge
will vary based upon market conditions, but will not exceed 3% annually. This
charge will be set at the time of election and will remain level throughout the
term of annuitization. If the Liquidity Benefit is selected, there is a
surrender charge of 5% of the amount withdrawn. This floor benefit feature is
available in Equity Index Portfolio Class II, Travelers Quality Bond Portfolio
and U.S. Government Securities Portfolio only. Accordingly, in Note 5, these
funding options list the values associated with each of these charges in effect
as of December 31, 1999.
4. OTHER
If the Optional Death Benefit and Credit is selected, Travelers Life will add a
credit to the contract with each purchase payment. Each credit is added to the
contract value when the applicable purchase payment is applied and will equal 2%
of each purchase payment. These credits are applied pro rata to the same funding
option(s) to which the purchase payment was applied. An additional annuitization
credit is applied to a contract value once an annuity option is purchased. This
credit equals 0.5% of the contract value if annuitized during contract years
2-5, 1% during contract years 6-10 and 2% after contract year 10. There is no
credit applied to contracts held less than one year.
-5-
<PAGE> 72
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>
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund
Standard, 3% AIR ........................... 228,230 $ 0.995 $ 227,177
Standard, 5% AIR ........................... - 0.995 -
Optional, 3% AIR ........................... 5,697,520 0.992 5,651,524
Optional, 5% AIR ........................... - 0.992 -
American Odyssey Emerging Opportunities Fund
Standard, 3% AIR ........................... 113,574 1.465 166,400
Standard, 5% AIR ........................... - 1.465 -
Optional, 3% AIR ........................... 2,542,636 1.460 3,712,323
Optional, 5% AIR ........................... - 1.460 -
American Odyssey Global High-Yield Bond Fund
Standard, 3% AIR ........................... 48,457 1.070 51,838
Standard, 5% AIR ........................... - 1.070 -
Optional, 3% AIR ........................... 1,363,227 1.066 1,453,256
Optional, 5% AIR ........................... - 1.066 -
American Odyssey Intermediate-Term Bond Fund
Standard, 3% AIR ........................... 187,387 1.005 188,336
Standard, 5% AIR ........................... - 1.005 -
Optional, 3% AIR ........................... 2,889,162 1.002 2,893,702
Optional, 5% AIR ........................... - 1.002 -
American Odyssey International Equity Fund
Standard, 3% AIR ........................... 90,221 1.272 114,745
Standard, 5% AIR ........................... - 1.272 -
Optional, 3% AIR ........................... 3,413,512 1.267 4,326,198
Optional, 5% AIR ........................... - 1.267 -
American Odyssey Long-Term Bond Fund
Standard, 3% AIR ........................... 139,623 0.979 136,737
Standard, 5% AIR ........................... - 0.979 -
Optional, 3% AIR ........................... 3,629,750 0.976 3,542,267
Optional, 5% AIR ........................... - 0.976 -
Delaware Group Premium Fund, Inc.
REIT Series
Standard, 3% AIR ........................... - 0.937 -
Standard, 5% AIR ........................... - 0.937 -
Optional, 3% AIR ........................... 22,639 0.935 21,169
Optional, 5% AIR ........................... - 0.935 -
Small Cap Value Series
Standard, 3% AIR ........................... - 0.991 -
Standard, 5% AIR ........................... - 0.991 -
Optional, 3% AIR ........................... 184,589 0.988 182,394
Optional, 5% AIR ........................... - 0.988 -
</TABLE>
-6-
<PAGE> 73
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>
Dreyfus Variable Investment Fund
Capital Appreciation Portfolio
Standard, 3% AIR ........................... 244,529 $ 1.081 $ 264,279
Standard, 5% AIR ........................... - 1.081 -
Optional, 3% AIR ........................... 2,447,252 1.077 2,635,698
Optional, 5% AIR ........................... - 1.077 -
Small Cap Portfolio
Standard, 3% AIR ........................... 45,091 1.240 55,901
Standard, 5% AIR ........................... - 1.240 -
Optional, 3% AIR ........................... 1,060,068 1.236 1,309,845
Optional, 5% AIR ........................... - 1.236 -
Greenwich Street Series Fund
Equity Index Portfolio Class II
Standard, 3% AIR ........................... 207,054 1.133 234,535
Standard, 5% AIR ........................... - 1.133 -
Optional, 3% AIR ........................... 5,953,238 1.129 6,719,849
Optional, 5% AIR ........................... - 1.129 -
Standard, 3% AIR, .62% Floor Charge ........ - 1.127 -
Standard, 3% AIR, 1.10% Floor Charge ....... - 1.123 -
Optional, 3% AIR, .83% Floor Charge ........ - 1.122 -
Optional, 3% AIR, 1.40% Floor Charge ....... - 1.117 -
High Yield Bond Trust
Standard, 3% AIR ........................... 92,789 0.980 90,941
Standard, 5% AIR ........................... - 0.980 -
Optional, 3% AIR ........................... 879,832 0.977 859,779
Optional, 5% AIR ........................... - 0.977 -
Managed Assets Trust
Standard, 3% AIR ........................... 232,345 1.102 256,064
Standard, 5% AIR ........................... - 1.102 -
Optional, 3% AIR ........................... 5,360,035 1.098 5,886,573
Optional, 5% AIR ........................... - 1.098 -
Money Market Portfolio
Standard, 3% AIR ........................... 239,890 1.032 247,464
Standard, 5% AIR ........................... - 1.032 -
Optional, 3% AIR ........................... 5,359,933 1.028 5,510,904
Optional, 5% AIR ........................... - 1.028 -
</TABLE>
-7-
<PAGE> 74
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>
OCC Accumulation Trust
Equity Portfolio
Standard, 3% AIR ........................... - $ 0.930 $ -
Standard, 5% AIR ........................... - 0.930 -
Optional, 3% AIR ........................... 150,291 0.927 139,386
Optional, 5% AIR ........................... - 0.927 -
Salomon Brothers Variable Series Funds Inc.
Salomon Brothers Variable Total Return Fund
Standard, 3% AIR ........................... - 1.002 -
Standard, 5% AIR ........................... - 1.002 -
Optional, 3% AIR ........................... 163,763 0.998 163,457
Optional, 5% AIR ........................... - 0.998 -
Salomon Brothers Variable Capital Fund
Standard, 3% AIR ........................... 13,279 1.222 16,225
Standard, 5% AIR ........................... - 1.222 -
Optional, 3% AIR ........................... 1,398,956 1.218 1,703,260
Optional, 5% AIR ........................... - 1.218 -
Salomon Brothers Variable Investors Fund
Standard, 3% AIR ........................... 5,119 1.088 5,570
Standard, 5% AIR ........................... - 1.088 -
Optional, 3% AIR ........................... 665,635 1.084 721,827
Optional, 5% AIR ........................... - 1.084 -
Strong Variable Insurance Funds, Inc. ......
Strong Schafer Value Fund II
Standard, 3% AIR ........................... 6,351 0.877 5,569
Standard, 5% AIR ........................... - 0.877 -
Optional, 3% AIR ........................... 114,839 0.875 100,478
Optional, 5% AIR ........................... - 0.875 -
Montgomery Funds III
Montgomery Variable Series: Growth Fund
Standard, 3% AIR ........................... 16,056 1.208 19,403
Standard, 5% AIR ........................... - 1.208 -
Optional, 3% AIR ........................... 573,739 1.204 690,934
Optional, 5% AIR ........................... - 1.204 -
</TABLE>
-8-
<PAGE> 75
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>
The Travelers Series Trust
Equity Income Portfolio
Standard, 3% AIR ........................... 216,322 $ 1.021 $ 220,819
Standard, 5% AIR ........................... - 1.021 -
Optional, 3% AIR ........................... 2,462,986 1.017 2,505,478
Optional, 5% AIR ........................... - 1.017 -
Federated Stock Portfolio
Standard, 3% AIR ........................... - 0.965 -
Standard, 5% AIR ........................... - 0.965 -
Optional, 3% AIR ........................... 342,000 0.962 329,001
Optional, 5% AIR ........................... - 0.962 -
Large Cap Portfolio
Standard, 3% AIR ........................... 247,021 1.224 302,279
Standard, 5% AIR ........................... - 1.224 -
Optional, 3% AIR ........................... 2,827,437 1.219 3,447,867
Optional, 5% AIR ........................... - 1.219 -
Lazard International Stock Portfolio
Standard, 3% AIR ........................... 13,922 1.194 16,618
Standard, 5% AIR ........................... - 1.194 -
Optional, 3% AIR ........................... 118,109 1.190 140,539
Optional, 5% AIR ........................... - 1.190 -
MFS Mid Cap Growth Portfolio
Standard, 3% AIR ........................... 22,378 1.603 35,874
Standard, 5% AIR ........................... - 1.603 -
Optional, 3% AIR ........................... 519,757 1.598 830,796
Optional, 5% AIR ........................... - 1.598 -
MFS Research Portfolio
Standard, 3% AIR ........................... - 1.213 -
Standard, 5% AIR ........................... - 1.213 -
Optional, 3% AIR ........................... 169,528 1.209 204,942
Optional, 5% AIR ........................... - 1.209 -
Social Awareness Stock Portfolio
Standard, 3% AIR ........................... 204,232 1.115 227,652
Standard, 5% AIR ........................... - 1.115 -
Optional, 3% AIR ........................... 1,692,027 1.111 1,879,493
Optional, 5% AIR ........................... - 1.111 -
Strategic Stock Portfolio
Standard, 3% AIR ........................... - 0.942 -
Standard, 5% AIR ........................... - 0.942 -
Optional, 3% AIR ........................... 75,116 0.940 70,625
Optional, 5% AIR ........................... - 0.940 -
</TABLE>
-9-
<PAGE> 76
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>
The Travelers Series Trust (continued)
Disciplined Mid Cap Stock Portfolio
Standard, 3% AIR ........................... - $ 1.132 $ -
Standard, 5% AIR ........................... - 1.132 -
Optional, 3% AIR ........................... 131,236 1.129 148,209
Optional, 5% AIR ........................... - 1.129 -
Disciplined Small Cap Stock Portfolio
Standard, 3% AIR ........................... - 1.150 -
Standard, 5% AIR ........................... - 1.150 -
Optional, 3% AIR ........................... 41,709 1.147 47,827
Optional, 5% AIR ........................... - 1.147 -
Travelers Quality Bond Portfolio
Standard, 3% AIR ........................... 30,445 1.002 30,502
Standard, 5% AIR ........................... - 1.002 -
Optional, 3% AIR ........................... 1,489,904 0.998 1,487,464
Optional, 5% AIR ........................... - 0.998 -
Standard, 3% AIR, .25% Floor Charge ........ - 1.000 -
Standard, 3% AIR, .43% Floor Charge ........ - 0.999 -
Optional, 3% AIR, .33% Floor Charge ........ - 0.996 -
Optional, 3% AIR, .53% Floor Charge ........ - 0.994 -
U.S. Government Securities Portfolio
Standard, 3% AIR ........................... 81,239 0.968 78,657
Standard, 5% AIR ........................... - 0.968 -
Optional, 3% AIR ........................... 1,134,380 0.965 1,094,507
Optional, 5% AIR ........................... - 0.965 -
Standard, 3% AIR, .25% Floor Charge ........ - 0.966 -
Standard, 3% AIR, .43% Floor Charge ........ - 0.965 -
Optional, 3% AIR, .33% Floor Charge ........ - 0.962 -
Optional, 3% AIR, .53% Floor Charge ........ - 0.961 -
Utilities Portfolio
Standard, 3% AIR ........................... 52,624 0.959 50,481
Standard, 5% AIR ........................... - 0.959 -
Optional, 3% AIR ........................... 426,556 0.956 407,972
Optional, 5% AIR ........................... - 0.956 -
Travelers Series Fund Inc.
Alliance Growth Portfolio
Standard, 3% AIR ........................... 274,568 1.303 357,649
Standard, 5% AIR ........................... - 1.303 -
Optional, 3% AIR ........................... 4,867,877 1.298 6,318,937
Optional, 5% AIR ........................... - 1.298 -
MFS Total Return Portfolio
Standard, 3% AIR ........................... 56,338 0.994 56,014
Standard, 5% AIR ........................... - 0.994 -
Optional, 3% AIR ........................... 822,665 0.991 815,317
Optional, 5% AIR ........................... - 0.991 -
</TABLE>
-10-
<PAGE> 77
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>
Travelers Series Fund Inc. (continued)
Putnam Diversified Income Portfolio
Standard, 3% AIR ........................... - $ 1.010 $ -
Standard, 5% AIR ........................... - 1.010 -
Optional, 3% AIR ........................... 188,752 1.007 190,137
Optional, 5% AIR ........................... - 1.007 -
Smith Barney International Equity Portfolio
Standard, 3% AIR ........................... 33,821 1.569 53,061
Standard, 5% AIR ........................... - 1.569 -
Optional, 3% AIR ........................... 942,437 1.563 1,473,449
Optional, 5% AIR ........................... - 1.563 -
Smith Barney High Income Portfolio
Standard, 3% AIR ........................... - 1.007 -
Standard, 5% AIR ........................... - 1.007 -
Optional, 3% AIR ........................... 174,517 1.004 175,176
Optional, 5% AIR ........................... - 1.004 -
Smith Barney Large Capitalization Growth Portfolio
Standard, 3% AIR ........................... 100,647 1.132 113,955
Standard, 5% AIR ........................... - 1.132 -
Optional, 3% AIR ........................... 2,808,440 1.128 3,168,942
Optional, 5% AIR ........................... - 1.128 -
Warburg Pincus Trust
Emerging Markets Portfolio
Standard, 3% AIR ........................... 54,662 1.506 82,309
Standard, 5% AIR ........................... - 1.506 -
Optional, 3% AIR ........................... 563,587 1.502 846,334
Optional, 5% AIR ........................... - 1.502 -
-----------
Net Contract Owners' Equity ....................................................... $77,514,889
===========
</TABLE>
* An assumed interest rate of either 3% or 5% is applied in the calculation
of annuity unit values depending on the type of annuitization selected. The
values associated with each are identified in the table above as "3% AIR"
and "5% AIR".
-11-
<PAGE> 78
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
------ -----
<S> <C> <C>
AMERICAN ODYSSEY FUNDS, INC. (29.0%)
American Odyssey Core Equity Fund (Cost $5,953,181) 330,727 $ 5,824,110
American Odyssey Emerging Opportunities Fund (Cost $3,205,646) 233,987 3,842,072
American Odyssey Global High-Yield Bond Fund (Cost $1,456,236) 145,240 1,495,973
American Odyssey Intermediate-Term Bond Fund (Cost $3,057,615) 295,192 3,058,189
American Odyssey International Equity Fund (Cost $3,792,989) 197,396 4,407,859
American Odyssey Long-Term Bond Fund (Cost $3,683,579) 358,458 3,649,093
---------- ----------
Total (Cost $21,149,246) 1,561,000 22,277,296
---------- ----------
DELAWARE GROUP PREMIUM FUND, INC. (0.3%)
REIT Series (Cost $21,207) 2,444 21,185
Small Cap Value Series (Cost $187,236) 11,878 182,449
---------- ----------
Total (Cost $208,443) 14,322 203,634
---------- ----------
DREYFUS VARIABLE INVESTMENT FUND (5.5%)
Capital Appreciation Portfolio(Cost $2,751,635) 71,596 2,854,538
Small Cap Portfolio (Cost $1,197,086) 20,593 1,366,148
---------- ----------
Total (Cost $3,948,721) 92,189 4,220,686
---------- ----------
GREENWICH STREET SERIES FUND (9.0%)
Equity Index Portfolio Class II
Total (Cost $6,352,175) 191,827 6,869,310
---------- ----------
HIGH YIELD BOND TRUST (1.2%)
Total (Cost $955,621) 100,422 951,000
---------- ----------
MANAGED ASSETS TRUST (7.9%)
Total (Cost $5,734,712) 286,803 6,057,284
---------- ----------
MONEY MARKET PORTFOLIO (7.4%)
Total (Cost $5,693,234) 5,693,234 5,693,234
---------- ----------
OCC ACCUMULATION TRUST (0.2%)
Equity Portfolio
Total (Cost $137,616) 3,712 139,429
---------- ----------
</TABLE>
-12-
<PAGE> 79
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
--------------- --------------
<S> <C> <C>
SALOMON BROTHERS VARIABLE SERIES FUNDS INC. (3.4%)
Salomon Brothers Variable Total Return Fund (Cost $172,101) 15,983 $ 163,508
Salomon Brothers Variable Capital Fund (Cost $1,613,207) 125,823 1,720,002
Salomon Brothers Variable Investors Fund (Cost $719,000) 59,494 727,609
--------------- --------------
Total (Cost $2,504,308) 201,300 2,611,119
--------------- --------------
STRONG VARIABLE INSURANCE FUNDS, INC. (0.1%)
Strong Schafer Value Fund II
Total (Cost $108,290) 11,631 106,078
--------------- --------------
MONTGOMERY FUNDS III (0.9%)
Montgomery Variable Series: Growth Fund
Total (Cost $657,835) 38,638 710,547
--------------- --------------
THE TRAVELERS SERIES TRUST (17.5%)
Equity Income Portfolio (Cost $2,808,818) 178,127 2,680,800
Federated Stock Portfolio (Cost $336,174) 20,141 329,100
Large Cap Portfolio (Cost $3,392,944) 177,701 3,751,261
Lazard International Stock Portfolio (Cost $144,264) 10,051 157,201
MFS Mid Cap Growth Portfolio (Cost $693,688) 50,486 829,491
MFS Research Portfolio (Cost $179,463) 15,697 205,004
Social Awareness Stock Portfolio (Cost $1,980,499) 71,644 2,107,758
Strategic Stock Portfolio (Cost $70,872) 7,116 70,661
Disciplined Mid Cap Stock Portfolio (Cost $131,520) 9,497 148,253
Disciplined Small Cap Stock Portfolio (Cost $42,869) 4,480 47,849
Travelers Quality Bond Portfolio (Cost $1,508,647) 140,335 1,518,429
U.S. Government Securities Portfolio (Cost $1,185,194) 103,759 1,173,517
Utilities Portfolio (Cost $486,199) 28,824 458,587
--------------- --------------
Total (Cost $12,961,151) 817,858 13,477,911
--------------- --------------
TRAVELERS SERIES FUND INC. (16.4%)
Alliance Growth Portfolio (Cost $5,840,142) 202,616 6,662,019
MFS Total Return Portfolio (Cost $877,536) 53,701 871,575
Putnam Diversified Income Portfolio (Cost $186,611) 16,611 190,194
Smith Barney International Equity Portfolio (Cost $1,144,979) 65,390 1,501,998
Smith Barney High Income Portfolio (Cost $178,693) 14,506 175,230
Smith Barney Large Capitalization Growth Portfolio
(Cost $2,858,156) 201,470 3,221,512
--------------- --------------
Total (Cost $11,086,117) 554,294 12,622,528
--------------- --------------
WARBURG PINCUS TRUST (1.2%)
Emerging Markets Portfolio
Total (Cost $792,227) 65,508 928,910
--------------- --------------
TOTAL INVESTMENT OPTIONS (100%)
(COST $72,289,696) $ 76,868,966
==============
</TABLE>
-13-
<PAGE> 80
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT SIX OPERATIONS AND CHANGES IN NET ASSETS FOR THE
PERIOD MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
EMERGING AMERICAN ODYSSEY
AMERICAN ODYSSEY OPPORTUNITIES GLOBAL HIGH-YIELD
CORE EQUITY FUND FUND BOND FUND
---------------------------- ------------------- -------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends ........................................... $ 70,815 $ 16,633 $ 6,008
---------------------------- ------------------- -------------------
EXPENSES:
Insurance charges ................................... 17,921 9,644 3,572
---------------------------- ------------------- -------------------
Net investment income (loss) .................. 52,894 6,989 2,436
---------------------------- ------------------- -------------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................... 80,469 15,884 4,199
Cost of investments sold ......................... 84,661 15,770 4,185
---------------------------- ------------------- -------------------
Net realized gain (loss) ...................... (4,192) 114 14
---------------------------- ------------------- -------------------
Change in unrealized gain (loss) on investments:
End of period .................................... (129,071) 636,426 39,737
---------------------------- ------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ..................... (80,369) 643,529 42,187
---------------------------- ------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ....................... 5,886,555 3,162,495 1,442,653
Participant transfers from other Travelers accounts . 167,251 96,426 33,650
Administrative and asset allocation charges ......... (15,478) (8,408) (2,493)
Contract surrenders ................................. (12,784) (6,916) (4,185)
Participant transfers to other Travelers accounts ... (67,458) (8,896) (6,882)
Other payments to participants ...................... 984 493 164
---------------------------- ------------------- -------------------
Net increase in net assets
resulting from unit transactions .............. 5,959,070 3,235,194 1,462,907
---------------------------- ------------------- -------------------
Net increase in net assets .................... 5,878,701 3,878,723 1,505,094
NET ASSETS:
Beginning of period .............................. - - -
---------------------------- ------------------- -------------------
End of period .................................... $ 5,878,701 $ 3,878,723 $ 1,505,094
============================ =================== ===================
</TABLE>
<TABLE>
<CAPTION>
AMERICAN AMERICAN
ODYSSEY ODYSSEY
INTERMEDIATE- INTERNATIONAL
TERM BOND FUND EQUITY FUND
-------------------------- -------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ........................................... $ 16,869 $ -
-------------------------- -------------------------
EXPENSES:
Insurance charges ................................... 9,175 11,955
-------------------------- -------------------------
Net investment income (loss) ................... 7,694 (11,955)
-------------------------- -------------------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................... 55,209 46,936
Cost of investments sold ......................... 55,252 46,406
-------------------------- -------------------------
Net realized gain (loss) ....................... (43) 530
-------------------------- -------------------------
Change in unrealized gain (loss) on investments:
End of period .................................... 574 614,870
-------------------------- -------------------------
Net increase (decrease) in net assets
resulting from operations ...................... 8,225 603,445
-------------------------- -------------------------
UNIT TRANSACTIONS:
Participant purchase payments ....................... 3,006,363 3,763,133
Participant transfers from other Travelers accounts . 97,524 115,970
Administrative and asset allocation charges ......... (6,700) (9,954)
Contract surrenders ................................. (13,986) (13,007)
Participant transfers to other Travelers accounts ... (10,045) (19,137)
Other payments to participants ...................... 657 493
-------------------------- -------------------------
Net increase in net assets
resulting from unit transactions ............... 3,073,813 3,837,498
-------------------------- -------------------------
Net increase in net assets ..................... 3,082,038 4,440,943
NET ASSETS:
Beginning of period .............................. - -
-------------------------- -------------------------
End of period .................................... $ 3,082,038 $ 4,440,943
========================== =========================
</TABLE>
-14-
<PAGE> 81
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
AMERICAN
ODYSSEY LONG- SMALL CAP VALUE
TERM BOND FUND REIT SERIES SERIES
- ------------------------ ----------------------- -----------------------
<S> <C> <C>
$ 34,964 $ - $ -
- ------------------------ ----------------------- -----------------------
12,306 119 962
- ------------------------ ----------------------- -----------------------
22,658 (119) (962)
- ------------------------ ----------------------- -----------------------
97,271 19,792 6,944
97,740 21,050 7,394
- ------------------------ ----------------------- -----------------------
(469) (1,258) (450)
- ------------------------ ----------------------- -----------------------
(34,486) (22) (4,787)
- ------------------------ ----------------------- -----------------------
(12,297) (1,399) (6,199)
- ------------------------ ----------------------- -----------------------
3,671,244 29,826 195,117
92,076 12,435 -
(10,685) - -
(11,674) - (777)
(50,152) (19,693) (5,747)
492 - -
- ------------------------ ----------------------- -----------------------
3,691,301 22,568 188,593
- ------------------------ ----------------------- -----------------------
3,679,004 21,169 182,394
- - -
- ------------------------ ----------------------- -----------------------
$ 3,679,004 $ 21,169 $ 182,394
======================== ======================= =======================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CAPITAL
APPRECIATION DREYFUS SMALL EQUITY INDEX HIGH YIELD BOND MANAGED ASSETS
PORTFOLIO CAP PORTFOLIO PORTFOLIO CLASS II TRUST TRUST
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
$ 26,105 $ - $ 7,202 $ 11,903 $ 48,516
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
13,280 4,612 21,777 3,826 19,283
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
12,825 (4,612) (14,575) 8,077 29,233
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
251,255 113,538 386,680 55,284 187,612
245,969 104,690 375,394 56,753 186,469
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
5,286 8,848 11,286 (1,469) 1,143
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
102,903 169,062 517,135 (4,621) 322,572
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
121,014 173,298 513,846 1,987 352,948
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
2,967,159 1,262,814 6,376,640 973,281 5,726,071
110,688 34,898 204,036 42,593 194,127
- - - - -
(7,984) (2,822) (24,952) (2,974) (27,424)
(290,900) (102,442) (115,186) (64,167) (103,085)
- - - - -
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
2,778,963 1,192,448 6,440,538 948,733 5,789,689
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
2,899,977 1,365,746 6,954,384 950,720 6,142,637
- - - - -
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
$ 2,899,977 $ 1,365,746 $ 6,954,384 $ 950,720 $ 6,142,637
====================== ====================== ====================== ======================= =======================
</TABLE>
-15-
<PAGE> 82
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT SIX OPERATIONS AND CHANGES IN NET ASSETS FOR
THE PERIOD MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999
(CONTINUED)
<TABLE>
<CAPTION>
SALOMON BROTHERS
MONEY MARKET VARIABLE TOTAL
PORTFOLIO EQUITY PORTFOLIO RETURN FUND
---------------------- ---------------------- -------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................ $ 84,491 $ - $ 3,922
---------------------- ---------------------- -------------------
EXPENSES:
Insurance charges .................................... 19,329 324 1,071
---------------------- ---------------------- -------------------
Net investment income (loss) .................... 65,162 (324) 2,851
---------------------- ---------------------- -------------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 700,917 248 968
Cost of investments sold .......................... 700,917 244 986
---------------------- ---------------------- -------------------
Net realized gain (loss) ........................ - 4 (18)
---------------------- ---------------------- -------------------
Change in unrealized gain (loss) on investments:
End of period ..................................... - 1,813 (8,593)
---------------------- ---------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ....................... 65,162 1,493 (5,760)
---------------------- ---------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ........................ 5,984,365 136,293 169,217
Participant transfers from other Travelers accounts .. 696,473 1,600 -
Administrative and asset allocation charges .......... - - -
Contract surrenders .................................. (20,302) - -
Participant transfers to other Travelers accounts .... (967,330) - -
Other payments to participants ....................... - - -
---------------------- ---------------------- -------------------
Net increase in net assets
resulting from unit transactions ................ 5,693,206 137,893 169,217
---------------------- ---------------------- -------------------
Net increase in net assets ........................ 5,758,368 139,386 163,457
NET ASSETS:
Beginning of period ............................... - - -
---------------------- ---------------------- -------------------
End of period ..................................... $ 5,758,368 $ 139,386 $ 163,457
====================== ====================== ===================
</TABLE>
<TABLE>
<CAPTION>
SALOMON BROTHERS SALOMON BROTHERS
VARIABLE INVESTORS VARIABLE INVESTORS
FUND FUND
---------------------- ----------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................ $ 54,934 $ 3,694
---------------------- ----------------------
EXPENSES:
Insurance charges .................................... 7,963 3,878
---------------------- ----------------------
Net investment income (loss) .................... 46,971 (184)
---------------------- ----------------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 141,974 159,695
Cost of investments sold .......................... 139,714 163,453
---------------------- ----------------------
Net realized gain (loss) ........................ 2,260 (3,758)
---------------------- ----------------------
Change in unrealized gain (loss) on investments:
End of period ..................................... 106,795 8,609
---------------------- ----------------------
Net increase (decrease) in net assets
resulting from operations ....................... 156,026 4,667
---------------------- ----------------------
UNIT TRANSACTIONS:
Participant purchase payments ........................ 1,615,314 840,488
Participant transfers from other Travelers accounts .. 9,960 25,539
Administrative and asset allocation charges .......... - -
Contract surrenders .................................. (3,222) (790)
Participant transfers to other Travelers accounts .... (58,593) (142,507)
Other payments to participants ....................... - -
---------------------- ----------------------
Net increase in net assets
resulting from unit transactions ................ 1,563,459 722,730
---------------------- ----------------------
Net increase in net assets ...................... 1,719,485 727,397
NET ASSETS:
Beginning of period ............................... - -
---------------------- ----------------------
End of period ..................................... $ 1,719,485 $ 727,397
====================== ======================
</TABLE>
-16
<PAGE> 83
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
MONTGOMERY
STRONG SCHAFER VARIABLE SERIES: EQUITY INCOME FEDERATED STOCK LARGE CAP
VALUE FUND II GROWTH FUND PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
$ 4,152 $ 7,138 $ 172,587 $ 558 $ 172,975
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
346 1,663 10,520 1,513 16,114
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
3,806 5,475 162,067 (955) 156,861
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
612 1,604 264,619 2,960 27,001
657 1,588 273,079 3,095 25,148
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
(45) 16 (8,460) (135) 1,853
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
(2,212) 52,712 (128,018) (7,074) 358,317
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
1,549 58,203 25,589 (8,164) 517,031
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
104,802 650,064 2,810,908 338,773 3,154,427
- 2,860 29,242 - 104,132
- - - - -
(304) (790) (19,684) (1,608) (19,491)
- - (119,758) - (5,953)
- - - - -
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
104,498 652,134 2,700,708 337,165 3,233,115
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
106,047 710,337 2,726,297 329,001 3,750,146
- - - - -
- ---------------------- ---------------------- ---------------------- ----------------------- -----------------------
$ 106,047 $ 710,337 $ 2,726,297 $ 329,001 $ 3,750,146
====================== ====================== ====================== ======================= =======================
</TABLE>
<TABLE>
<CAPTION>
LAZARD
INTERNATIONAL MFS MID CAP MFS RESEARCH
STOCK PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
----------------------- ----------------------- ----------------------
<S> <C> <C>
$ 58 $ 179 $ -
----------------------- ----------------------- ----------------------
430 1,535 791
----------------------- ----------------------- ----------------------
(372) (1,356) (791)
----------------------- ----------------------- ----------------------
15,873 140,356 793
14,937 138,726 786
----------------------- ----------------------- ----------------------
936 1,630 7
----------------------- ----------------------- ----------------------
12,937 135,803 25,541
----------------------- ----------------------- ----------------------
13,501 136,077 24,757
----------------------- ----------------------- ----------------------
147,097 859,381 176,746
12,061 10,461 4,391
- - -
- (12,906) (952)
(15,502) (126,343) -
- - -
----------------------- ----------------------- ----------------------
143,656 730,593 180,185
----------------------- ----------------------- ----------------------
157,157 866,670 204,942
- - -
----------------------- ----------------------- ----------------------
$ 157,157 $ 866,670 $ 204,942
======================= ======================= ======================
</TABLE>
-17-
<PAGE> 84
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT SIX OPERATIONS AND CHANGES IN NET ASSETS FOR
THE PERIOD MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999
(CONTINUED)
<TABLE>
<CAPTION>
DISCIPLINED MID
SOCIAL AWARENESS STRATEGIC STOCK CAP STOCK
STOCK PORTFOLIO PORTFOLIO PORTFOLIO
---------------------- ---------------------- -------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends ................................................. $ 10,571 $ - $ 257
---------------------- ---------------------- -------------------
EXPENSES:
Insurance charges ......................................... 8,608 178 467
---------------------- ---------------------- -------------------
Net investment income (loss) ......................... 1,963 (178) (210)
---------------------- ---------------------- -------------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ......................... 84,670 116 16,454
Cost of investments sold ............................... 82,466 116 16,908
---------------------- ---------------------- -------------------
Net realized gain (loss) ............................. 2,204 - (454)
---------------------- ---------------------- -------------------
Change in unrealized gain (loss) on investments:
End of period .......................................... 127,259 (211) 16,733
---------------------- ---------------------- -------------------
Net increase (decrease) in net assets
resulting from operations ............................ 131,426 (389) 16,069
---------------------- ---------------------- -------------------
UNIT TRANSACTIONS:
Participant purchase payments ............................. 2,060,733 70,414 135,790
Participant transfers from other Travelers accounts ....... 3,131 600 12,435
Administrative and asset allocation charges ............... - - -
Contract surrenders ....................................... (9,472) - -
Participant transfers to other Travelers accounts ......... (78,673) - (16,085)
Other payments to participants ............................ - - -
---------------------- ---------------------- -------------------
Net increase in net assets
resulting from unit transactions ..................... 1,975,719 71,014 132,140
---------------------- ---------------------- -------------------
Net increase in net assets ........................... 2,107,145 70,625 148,209
NET ASSETS:
Beginning of period .................................... - - -
---------------------- ---------------------- -------------------
End of period .......................................... $2,107,145 $70,625 $148,209
====================== ====================== ===================
</TABLE>
<TABLE>
<CAPTION>
DISCIPLINED SMALL
CAP STOCK TRAVELERS QUALITY
PORTFOLIO BOND PORTFOLIO
------------------------ -----------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ................................................. $ - $ 1,600
------------------------ -----------------------
EXPENSES:
Insurance charges ......................................... 203 7,278
------------------------ -----------------------
Net investment income (loss) ......................... (203) (5,678)
------------------------ -----------------------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ......................... 169 182,280
Cost of investments sold ............................... 169 180,385
------------------------ -----------------------
Net realized gain (loss) ............................. - 1,895
------------------------ -----------------------
Change in unrealized gain (loss) on investments:
End of period .......................................... 4,980 9,782
------------------------ -----------------------
Net increase (decrease) in net assets
resulting from operations ............................ 4,777 5,999
------------------------ -----------------------
UNIT TRANSACTIONS:
Participant purchase payments ............................. 43,050 1,490,108
Participant transfers from other Travelers accounts ....... - 70,771
Administrative and asset allocation charges ............... - -
Contract surrenders ....................................... - (564)
Participant transfers to other Travelers accounts ......... - (48,348)
Other payments to participants ............................ - -
------------------------ -----------------------
Net increase in net assets
resulting from unit transactions ..................... 43,050 1,511,967
------------------------ -----------------------
Net increase in net assets ........................... 47,827 1,517,966
NET ASSETS:
Beginning of period .................................... - -
------------------------ -----------------------
End of period .......................................... $ 47,827 $ 1,517,966
======================== =======================
</TABLE>
-18
<PAGE> 85
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES ALLIANCE GROWTH MFS TOTAL
PORTFOLIO UTILITIES PORTFOLIO PORTFOLIO RETURN PORTFOLIO
- ---------------------- ---------------------- ----------------------- -----------------------
<S> <C> <C> <C>
$ 50 $ 9,974 $ 34,153 $ 8,144
- ---------------------- ---------------------- ----------------------- -----------------------
6,382 1,962 17,583 2,916
- ---------------------- ---------------------- ----------------------- -----------------------
(6,332) 8,012 16,570 5,228
- ---------------------- ---------------------- ----------------------- -----------------------
30,859 3,217 4,840 53,615
31,175 3,436 4,838 55,493
- ---------------------- ---------------------- ----------------------- -----------------------
(316) (219) 2 (1,878)
- ---------------------- ---------------------- ----------------------- -----------------------
(11,677) (27,612) 821,877 (5,961)
- ---------------------- ---------------------- ----------------------- -----------------------
(18,325) (19,819) 838,449 (2,611)
- ---------------------- ---------------------- ----------------------- -----------------------
1,196,160 480,671 5,537,134 866,576
6,160 1,800 367,035 19,030
- - - -
(351) - (11,285) (3,149)
(10,480) (4,199) (54,747) (8,515)
- - - -
- ---------------------- ---------------------- ----------------------- -----------------------
1,191,489 478,272 5,838,137 873,942
- ---------------------- ---------------------- ----------------------- -----------------------
1,173,164 458,453 6,676,586 871,331
- - - -
- ---------------------- ---------------------- ----------------------- -----------------------
$1,173,164 $458,453 $6,676,586 $871,331
====================== ====================== ======================= =======================
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY
PUTNAM SMITH BARNEY SMITH BARNEY LARGE
DIVERSIFIED INCOME INTERNATIONAL HIGH INCOME CAPITALIZATION
PORTFOLIO EQUITY PORTFOLIO PORTFOLIO GROWTH PORTFOLIO
----------------------- ---------------------- ---------------------- -----------------------
<S> <C> <C> <C>
$ 847 $ 568 $ 8,537 $ 7,024
----------------------- ---------------------- ---------------------- -----------------------
914 3,613 1,018 12,215
----------------------- ---------------------- ---------------------- -----------------------
(67) (3,045) 7,519 (5,191)
----------------------- ---------------------- ---------------------- -----------------------
25,710 84,634 23,710 474,283
25,717 72,737 25,414 439,066
----------------------- ---------------------- ---------------------- -----------------------
(7) 11,897 (1,704) 35,217
----------------------- ---------------------- ---------------------- -----------------------
3,583 357,019 (3,463) 363,356
----------------------- ---------------------- ---------------------- -----------------------
3,509 365,871 2,352 393,382
----------------------- ---------------------- ---------------------- -----------------------
191,536 1,163,100 171,059 3,058,535
20,033 - 24,572 319,713
- - - -
- (2,461) - (12,050)
(24,941) - (22,807) (476,683)
- - - -
----------------------- ---------------------- ---------------------- -----------------------
186,628 1,160,639 172,824 2,889,515
----------------------- ---------------------- ---------------------- -----------------------
190,137 1,526,510 175,176 3,282,897
- - - -
----------------------- ---------------------- ---------------------- -----------------------
$ 190,137 $ 1,526,510 $ 175,176 $ 3,282,897
======================= ====================== ====================== =======================
</TABLE>
-19-
<PAGE> 86
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF SEPARATE ACCOUNT SIX OPERATIONS AND CHANGES IN NET ASSETS FOR
THE PERIOD MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999
(CONTINUED)
<TABLE>
<CAPTION>
EMERGING
MARKETS PORTFOLIO COMBINED
------------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ......................................................... $ 32,455 $ 857,883
----------- -----------
EXPENSES:
Insurance charges ................................................. 1,584 258,830
----------- -----------
Net investment income (loss) .................................. 30,871 599,053
----------- -----------
REALIZED GAIN (LOSS) AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................................. 785 3,764,035
Cost of investments sold ........................................ 713 3,703,696
----------- -----------
Net realized gain (loss) ...................................... 72 60,339
----------- -----------
Change in unrealized gain (loss) on investments:
End of period ................................................... 136,683 4,579,270
----------- -----------
Net increase (decrease) in net assets
resulting from operations ..................................... 167,626 5,238,662
----------- -----------
UNIT TRANSACTIONS:
Participant purchase payments ..................................... 766,167 72,682,259
Participant transfers from other Travelers accounts ............... 12,960 2,956,633
Administrative and asset allocation charges ....................... - (53,718)
Contract surrenders ............................................... (12,920) (261,786)
Participant transfers to other Travelers accounts ................. (5,190) (3,050,444)
Other payments to participants .................................... - 3,283
----------- -----------
Net increase in net assets
resulting from unit transactions .............................. 761,017 72,276,227
----------- -----------
Net increase in net assets .................................... 928,643 77,514,889
NET ASSETS:
Beginning of period ..... ....................................... - -
----------- -----------
End of period ................................................... $ 928,643 $ 77,514,889
=========== ===========
</TABLE>
-20-
<PAGE> 87
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION UNITS FOR SEPARATE ACCOUNT SIX FOR THE PERIOD
MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999
<TABLE>
<S> <C> <C> <C>
AMERICAN AMERICAN
AMERICAN ODYSSEY EMERGING ODYSSEY GLOBAL
ODYSSEY CORE OPPORTUNITIES HIGH-YIELD BOND
EQUITY FUND FUND FUND
-------------------- ----------------------- --------------------
Accumulation units beginning of period .... - - -
Accumulation units purchased and
transferred from other Travelers accounts 6,022,090 2,673,798 1,424,467
Accumulation units redeemed and
transferred to other Travelers accounts . (96,340) (17,588) (12,783)
-------------------- ----------------------- --------------------
Accumulation units end of period .......... 5,925,750 2,656,210 1,411,684
==================== ======================= ====================
AMERICAN
ODYSSEY LONG- SMALL CAP VALUE
TERM BOND FUND REIT SERIES SERIES
---------------------------------------------- --------------------
Accumulation units beginning of period .... - - -
Accumulation units purchased and
transferred from other Travelers accounts 3,843,031 44,121 191,309
Accumulation units redeemed and
transferred to other Travelers accounts . (73,658) (21,482) (6,720)
-------------------- ----------------------- --------------------
Accumulation units end of period .......... 3,769,373 22,639 184,589
==================== ======================= ====================
EQUITY INDEX HIGH YIELD MANAGED ASSETS
PORTFOLIO CLASS II BOND TRUST TRUST
---------------------------------------------- --------------------
Accumulation units beginning of period .... - - -
Accumulation units purchased and
transferred from other Travelers accounts 6,294,446 1,041,776 5,716,522
Accumulation units redeemed and
transferred to other Travelers accounts . (134,154) (69,155) (124,142)
-------------------- ----------------------- --------------------
Accumulation units end of period .......... 6,160,292 972,621 5,592,380
==================== ======================= ====================
AMERICAN AMERICAN
ODYSSEY ODYSSEY
INTERMEDIATE- INTERNATIONAl
TERM BOND FUND EQUITY FUND
-------------------- ---------------------
Accumulation units beginning of period .... - -
Accumulation units purchased and
transferred from other Travelers accounts 3,106,634 3,539,125
Accumulation units redeemed and
transferred to other Travelers accounts . (30,085) (35,392)
-------------------- ---------------------
Accumulation units end of period .......... 3,076,549 3,503,733
==================== =====================
DREYFUS CAPITAL
APPRECIATION DREYFUS SMALL
PORTFOLIO CAP PORTFOLIO
-------------------- ---------------------
Accumulation units beginning of period .... - -
Accumulation units purchased and
transferred from other Travelers accounts 2,977,259 1,196,018
Accumulation units redeemed and
transferred to other Travelers accounts . (285,478) (90,859)
-------------------- ---------------------
Accumulation units end of period .......... 2,691,781 1,105,159
==================== =====================
MONEY MARKET
PORTFOLIO EQUITY PORTFOLIO
-------------------- ---------------------
Accumulation units beginning of period .... - -
Accumulation units purchased and
transferred from other Travelers accounts 6,568,399 150,291
Accumulation units redeemed and
transferred to other Travelers accounts . (968,576) -
-------------------- ---------------------
Accumulation units end of period .......... 5,599,823 150,291
==================== =====================
</TABLE>
-21-
<PAGE> 88
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION UNITS FOR SEPARATE ACCOUNT SIX FOR THE PERIOD
MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<S> <C> <C> <C>
SALOMON BROTHERS SALOMON BROTHERS SALOMON BRothers
VARIABLE TOTAL VARIABLE CAPITAL VARIABLE INvestors
RETURN FUND FUND FUND
-------------------- ----------------------- --------------------
Accumulation units beginning of period .... - - -
Accumulation units purchased and
transferred from other Travelers accounts 163,763 1,468,098 808,386
Accumulation units redeemed and
transferred to other Travelers accounts . - (55,863) (137,632)
-------------------- ----------------------- --------------------
Accumulation units end of period .......... 163,763 1,412,235 670,754
==================== ======================= ====================
EQUITY INCOME FEDERATED STOCK LARGE CAP
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- ----------------------- --------------------
Accumulation units beginning of period .... - - -
Accumulation units purchased and
transferred from other Travelers accounts 2,821,527 343,693 3,095,719
Accumulation units redeemed and
transferred to other Travelers accounts . (142,219) (1,693) (21,261)
-------------------- ----------------------- --------------------
Accumulation units end of period .......... 2,679,308 342,000 3,074,458
==================== ======================= ====================
MFS RESEARCH SOCIAL AWARENESS STRATEGIC STOCK
PORTFOLIO STOCK PORTFOLIO PORTFOLIO
-------------------- -----------------------------------------------
Accumulation units beginning of period .... - - -
Accumulation units purchased and
transferred from other Travelers accounts 170,429 1,977,907 75,116
Accumulation units redeemed and
transferred to other Travelers accounts . (901) (81,648) -
-------------------- ----------------------- --------------------
Accumulation units end of period .......... 169,528 1,896,259 75,116
==================== ======================= ====================
MONTGOMERY
STRONG SCHAFER VARIABLE SERIES:
VALUE FUND II GROWTH FUND
-------------------- ---------------------
Accumulation units beginning of period .... - -
Accumulation units purchased and
transferred from other Travelers accounts 121,530 590,508
Accumulation units redeemed and
transferred to other Travelers accounts . (340) (713)
-------------------- ---------------------
Accumulation units end of period .......... 121,190 589,795
==================== =====================
LAZARD
INTERNATIONAL MFS MID CAP
STOCK PORTFOLIO GROWTH PORTFOLIO
-------------------- ---------------------
Accumulation units beginning of period .... - -
Accumulation units purchased and
transferred from other Travelers accounts 146,121 667,352
Accumulation units redeemed and
transferred to other Travelers accounts . (14,090) (125,217)
-------------------- ---------------------
Accumulation units end of period .......... 132,031 542,135
==================== =====================
DISCIPLINED MID DISCIPLINED SMALL
CAP STOCK CAP STOCK
PORTFOLIO PORTFOLIO
-------------------- ---------------------
Accumulation units beginning of period .... - -
Accumulation units purchased and
transferred from other Travelers accounts 147,731 41,709
Accumulation units redeemed and
transferred to other Travelers accounts . (16,495) -
-------------------- ---------------------
Accumulation units end of period .......... 131,236 41,709
==================== =====================
</TABLE>
-22-
<PAGE> 89
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION UNITS FOR SEPARATE ACCOUNT SIX FOR THE PERIOD
MARCH 22, 1999 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT
TRAVELERS QUALITY SECURITIES
BOND PORTFOLIO PORTFOLIO UTILITIES PORTFOLIO
-------------------- ----------------------- --------------------
<S> <C> <C> <C>
Accumulation units beginning of period ........ - - -
Accumulation units purchased and
transferred from other Travelers accounts 1,569,309 1,226,733 483,516
Accumulation units redeemed and
transferred to other Travelers accounts ..... (48,960) (11,114) (4,336)
-------------------- ----------------------- --------------------
Accumulation units end of period .............. 1,520,349 1,215,619 479,180
==================== ======================= ====================
PUTNAM SMITH BARNEY SMITH BARNEY
DIVERSIFIED INCOME INTERNATIONAL HIGH INCOME
PORTFOLIO EQUITY PORTFOLIO PORTFOLIO
-------------------- ----------------------- --------------------
Accumulation units beginning of period ........ - - -
Accumulation units purchased and
transferred from other Travelers accounts 213,946 978,517 197,839
Accumulation units redeemed and
transferred to other Travelers accounts ..... (25,194) (2,259) (23,322)
-------------------- ----------------------- --------------------
Accumulation units end of period .............. 188,752 976,258 174,517
==================== ======================= ====================
COMBINED
--------------------
Accumulation units beginning of period ........ -
Accumulation units purchased and
transferred from other Travelers accounts 72,184,813
Accumulation units redeemed and
transferred to other Travelers accounts ..... (3,216,963)
--------------------
Accumulation units end of period .............. 68,967,850
====================
</TABLE>
<TABLE>
<CAPTION>
MFS TOTAL RETURN
ALLIANCE GROWTH PORTFOLIO PORTFOLIO
------------------------ ----------------------
<S> <C> <C>
Accumulation units beginning of period ........ - -
Accumulation units purchased and
transferred from other Travelers accounts 5,197,145 890,786
Accumulation units redeemed and
transferred to other Travelers accounts ..... (54,700) (11,783)
------------------------ ----------------------
Accumulation units end of period .............. 5,142,445 879,003
======================== ======================
SMITH BARNEY LARGE
CAPITALIZATION GROWTH EMERGING MARKETS
PORTFOLIO PORTFOLIO
------------------------ ----------------------
Accumulation units beginning of period ........ - -
Accumulation units purchased and
transferred from other Travelers accounts 3,365,629 632,518
Accumulation units redeemed and
transferred to other Travelers accounts ..... (456,542) (14,269)
------------------------ ----------------------
Accumulation units end of period .............. 2,909,087 618,249
======================== ======================
</TABLE>
-23-
<PAGE> 90
INDEPENDENT AUDITORS' REPORT
To the Owners of Variable Annuity Contracts of The Travelers Separate Account
Six for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Separate Account Six for Variable Annuities as of December 31, 1999,
and the related statements of operations and changes in net assets for the
period March 22, 1999 (date operations commenced) to December 31, 1999. 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, 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 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
Six for Variable Annuities as of December 31, 1999, the results of its
operations and the changes in its net assets for the period March 22, 1999 (date
operations commenced) to December 31, 1999, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
February 18, 2000
-24-
<PAGE> 91
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 Six for Variable
Annuities or Separate Account Six's underlying funds. It should not be used in
connection with any offer except in conjunction with the Prospectus for The
Travelers Separate Account Six for Variable Annuities product(s) offered by The
Travelers Life and Annuity Company and the Prospectuses for the underlying
funds, which collectively contain all pertinent information, including the
applicable sales commissions.
VG-SEP6 (Annual) (12-99) Printed in U.S.A.
<PAGE> 92
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
The Travelers Life and Annuity Company:
We have audited the accompanying balance sheets of The Travelers Life and
Annuity Company as of December 31, 1999 and 1998, and the related 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 financial statements are the
responsibility of the Company's 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. 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 Life and Annuity
Company as of December 31, 1999 and 1998, and the results of its operations and
its 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> 93
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENTS OF INCOME
($ in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
REVENUES
Premiums $25,270 $23,677 $35,190
Net investment income 177,179 171,003 168,653
Realized investment gains (losses) (4,973) 18,493 44,871
Fee income 54,749 17,718 5,004
Other revenues 13,045 11,168 3,159
- ----------------------------------------------------------------------------------------------------------------------------
Total Revenues 265,270 242,059 256,877
- ----------------------------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future insurance benefits 78,072 81,371 95,639
Interest credited to contractholders 56,216 51,535 35,165
Amortization of deferred acquisition costs 38,902 15,956 4,944
Operating expenses 11,326 5,012 11,554
- ----------------------------------------------------------------------------------------------------------------------------
Total Benefits and Expenses 184,516 153,874 147,302
- ----------------------------------------------------------------------------------------------------------------------------
Income before federal income taxes 80,754 88,185 109,575
- ----------------------------------------------------------------------------------------------------------------------------
Federal income taxes:
Current 21,738 18,917 33,859
Deferred expense 6,410 11,783 4,344
- ----------------------------------------------------------------------------------------------------------------------------
Total Federal Income Taxes 28,148 30,700 38,203
============================================================================================================================
Net income $52,606 $57,485 $71,372
============================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE> 94
THE TRAVELERS LIFE AND ANNUITY COMPANY
BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at fair value (cost, $1,764,329; $1,707,347) $1,713,948 $1,838,681
Equity securities, at fair value (cost, $34,373; $25,826) 33,169 26,685
Mortgage loans 155,719 174,565
Short-term securities 81,119 126,176
Other invested assets 190,622 136,122
- --------------------------------------------------------------------------------------------------------------------------
Total Investments 2,174,577 2,302,229
- --------------------------------------------------------------------------------------------------------------------------
Separate accounts 4,795,165 2,178,474
Deferred acquisition costs 350,088 177,808
Deferred federal income taxes 74,478 12,395
Premium balances receivable 22,420 16,074
Other assets 84,605 57,524
- --------------------------------------------------------------------------------------------------------------------------
Total Assets $7,501,333 $4,744,504
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $950,959 $963,171
Contractholder funds 1,174,636 947,411
Separate accounts 4,795,165 2,178,474
Other liabilities 114,408 114,690
- --------------------------------------------------------------------------------------------------------------------------
Total Liabilities 7,035,168 4,203,746
- --------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $100; 100,000 shares authorized,
30,000 issued and outstanding 3,000 3,000
Additional paid-in capital 167,316 167,314
Retained earnings 335,161 282,555
Accumulated other changes in equity from non-owner sources (39,312) 87,889
- --------------------------------------------------------------------------------------------------------------------------
Total Shareholder's Equity 466,165 540,758
- --------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholder's Equity $7,501,333 $4,744,504
==========================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 95
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENTS OF CHANGES IN RETAINED EARNINGS AND ACCUMULATED
OTHER CHANGES IN EQUITY FROM NON-OWNER SOURCES
($ in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN RETAINED EARNINGS 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $282,555 $225,070 $167,698
Net income 52,606 57,485 71,372
Dividends to parent - - 14,000
===========================================================================================================
Balance, end of year $335,161 $282,555 $225,070
===========================================================================================================
- -----------------------------------------------------------------------------------------------------------
STATEMENTS OF ACCUMULATED OTHER CHANGES
IN EQUITY FROM NON-OWNER SOURCES
- -----------------------------------------------------------------------------------------------------------
Balance, beginning of year $87,889 $70,277 $33,856
Unrealized gains (losses), net of tax (127,201) 17,612 36,421
===========================================================================================================
Balance, end of year $(39,312) $87,889 $70,277
===========================================================================================================
- -----------------------------------------------------------------------------------------------------------
SUMMARY OF CHANGES IN EQUITY
FROM NON-OWNER SOURCES
- -----------------------------------------------------------------------------------------------------------
Net Income $52,606 $57,485 $71,372
Other changes in equity from
non-owner sources (127,201) 17,612 36,421
- -----------------------------------------------------------------------------------------------------------
Total changes in equity from
non-owner sources $(74,595) $75,097 $107,793
===========================================================================================================
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 96
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
($ in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Premiums collected $24,804 $22,300 $34,553
Net investment income received 150,107 146,158 170,460
Benefits and claims paid (94,503) (90,872) (90,820)
Interest credited to contractholders (50,219) (51,535) (35,165)
Operating expenses paid (235,166) (122,327) (64,698)
Income taxes paid (29,369) (25,214) (22,440)
Other, including fee income 46,028 (46,099) (16,128)
- ----------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Operating Activities (188,318) (75,391) 8,018
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 213,402 113,456 81,899
Mortgage loans 28,002 25,462 8,972
Proceeds from sales of investments
Fixed maturities 774,096 1,095,976 856,846
Equity securities 5,146 6,020 12,404
Mortgage loans - - 5,483
Real estate held for sale - - 4,493
Purchases of investments
Fixed maturities (1,025,110) (1,320,704) (1,020,803)
Equity securities (12,524) (13,653) (6,382)
Mortgage loans (8,520) (39,158) (41,967)
Policy loans, net (5,316) (2,010) (1,144)
Short-term securities (purchases) sales, net 45,057 43,054 (88,067)
Other investments (purchases) sales, net (44,621) 1,110 (51,502)
Securities transactions in course of settlement, net (7,033) 36,459 10,526
- ----------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (37,421) (53,988) (229,242)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits 308,953 211,476 325,932
Contractholder fund withdrawals (83,817) (83,036) (89,145)
Dividends to parent company - - (14,000)
- ----------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 225,136 128,440 222,787
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (603) (939) 1,563
============================================================================================================================
Cash at December 31, $21 $624 $1,563
============================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 97
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO 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 Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC), an indirect wholly
owned subsidiary of Citigroup Inc. (Citigroup). The financial statements
and accompanying footnotes of the Company are prepared in conformity with
generally accepted accounting principles. 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.
The Company offers a variety of variable annuity products where the
investment risk is borne by the contractholder, not the Company, and the
benefits are not guaranteed. The premiums and deposits related to these
products are reported in separate accounts. The Company considers it
necessary to differentiate, for financial statement purposes, the results
of the risks it has assumed from those it has not.
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 which 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 statement of financial
position related to the recognition of securities provided and received as
collateral. There was no impact on the results of operations from the
adoption of the collateral provisions of FAS 125.
F-6
<PAGE> 98
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO 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 had no impact on the Company's financial condition,
statement 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 non-redeemable preferred
stocks, are classified as "available for sale" and are 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
current real estate financing market. Impaired loans were insignificant at
December 31, 1999 and 1998.
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.
F-7
<PAGE> 99
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Other invested assets include partnership investments and real estate joint
ventures accounted for on the equity method of accounting. All changes in
equity of these investments are recorded in net investment income.
Accrual of investment income, included in other assets, 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, options, forward contracts and interest rate swaps, as a means of
hedging exposure to foreign currency, equity price changes and/or interest
rate risk on anticipated transactions or existing assets and liabilities.
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.
Forward contracts, and interest rate options were not significant at
December 31, 1999 and 1998. Information concerning derivative financial
instruments is included in Note 4.
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.
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.
SEPARATE ACCOUNTS
The Company has separate account assets and liabilities representing funds
for which investment income and investment gains and losses accrue directly
to, and investment risk is borne by, the contractholders. Each of these
accounts have specific investment objectives. The assets and liabilities of
these accounts are carried at fair value, and amounts assessed to the
contractholders for management services are included in fee income.
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.
F-8
<PAGE> 100
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
DEFERRED ACQUISITION COSTS
Costs of acquiring individual life insurance and annuity 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 are amortized in relation to
anticipated premiums; universal life in relation to estimated gross
profits; and annuity contracts employing a level yield method. A 15 to
20-year amortization period is used for life insurance, 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 annuity
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 an interest rate of 16% for the
annuity business acquired. The 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.
FUTURE POLICY BENEFITS
Benefit reserves represent liabilities for future insurance policy
benefits. Benefit reserves for life insurance and annuity policies have
been computed based upon mortality, morbidity, persistency and interest
assumptions applicable to these coverages, which range from 3.0% to 7.5%,
including a provision for adverse deviation. These assumptions consider
Company experience and industry standards. The assumptions vary by plan,
age at issue, year of issue and duration.
CONTRACTHOLDER FUNDS
Contractholder funds represent receipts from the issuance of universal
life, certain individual annuity contracts, and structured settlement
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 3.3% to 10.0%.
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's liability for guaranty fund assessments
was not significant.
F-9
<PAGE> 101
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company, domiciled in the State of Connecticut, prepares statutory
financial statements in accordance with the accounting practices prescribed
or permitted by the State of Connecticut Insurance Department. 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 the 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 issued 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 by the Connecticut insurance
commissioner. The Company has not yet determined the impact that this
change will have on its statutory capital and surplus.
PREMIUMS
Premiums are recognized as revenues when due. Reserves are established for
the portion of premiums that will be earned in future periods.
FEE INCOME
Fee income includes mortality and equity protection charges and fees earned
on Universal Life and Deferred Annuity businesses.
OTHER REVENUES
Other revenues include surrender, mortality and administrative charges, and
fees earned on investment and other insurance contracts.
FEDERAL INCOME TAXES
The provision for federal income taxes comprises 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. The 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). This statement
establishes accounting and reporting standards for derivative instruments,
F-10
<PAGE> 102
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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 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 forecasted transaction,
or (c) a hedge of the foreign currency exposure of a net investment in a
foreign 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. FAS 133 was to be effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. However, 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 that have not
adopted FAS 133 to defer its effective date to all fiscal quarters of all
fiscal years beginning after June 15, 2000. The Company expects to adopt
the deferral provisions of FAS 137 and has not yet determined the impact
that FAS 133 will have on its financial statements.
2. 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.
Total in-force business ceded under reinsurance contracts is $12.8 billion
and $8.8 billion at December 31, 1999 and 1998, including $63 million and
$70 million, respectively to TIC. Total life insurance premiums ceded were
$6.5 million, $4.2 million and $2.4 million in 1999, 1998 and 1997,
respectively. Ceded premiums paid to TIC were immaterial for these same
periods.
3. SHAREHOLDER'S EQUITY
Shareholder's Equity and Dividend Availability
The Company's statutory net income (loss) was $(23.4) million, $(3.2)
million and $80.3 million for the years ended December 31, 1999, 1998 and
1997, respectively.
Statutory capital and surplus was $294 million and $328 million 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 $29.4 million is available in 2000 for dividend payments by the
Company without prior approval of the Connecticut Insurance Department.
F-11
<PAGE> 103
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Accumulated Other Changes in Equity from Non-Owner Sources, Net of Tax
Changes in each component of Accumulated Other Changes in Equity From Non-Owner
Sources were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NET ACCUMULATED
UNREALIZED FOREIGN OTHER CHANGES
GAINS ON CURRENCY IN EQUITY FROM
INVESTMENT TRANSLATION NON-OWNER
($ in thousands) SECURITIES ADJUSTMENT SOURCES
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $33,856 $ -- $33,856
Unrealized gains on investment securities,
net of tax of $35,316 65,587 -- 65,587
Less: reclassification adjustment for gains
included in net income, net of tax of $(15,705) (29,166) -- (29,166)
- --------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE 36,421 -- 36,421
- --------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 70,277 -- 70,277
Unrealized gain on investment securities,
net of tax of $15,957 29,632 -- 29,632
Less: reclassification adjustment for gains
included in net income, net of tax of $(6,473) (12,020) -- (12,020)
- --------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE 17,612 -- 17,612
- --------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 87,889 -- 87,889
Unrealized gains on investment securities,
net of tax of $(70,234) (130,433) -- (130,433)
Less: reclassification adjustment for losses
included in net income, net of tax of $1,741 3,232 -- 3,232
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE (127,201) -- (127,201)
====================================================================================================================
BALANCE, DECEMBER 31, 1999 $ (39,312) $ -- $ (39,312)
====================================================================================================================
</TABLE>
4. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivative Financial Instruments
The Company uses derivative financial instruments, including financial
futures, interest rate 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
does not hold or issue derivative instruments for trading purposes. 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
F-12
<PAGE> 104
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
associated with these instruments can be less than these amounts. For
interest rate swaps, options, and forward contracts, credit risk is limited
to the amounts that it would cost the Company to replace the contracts.
Financial futures contracts and purchased listed option contracts have very
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 that 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 $48.7 million and $41.5 million,
respectively. The deferred gains and/or losses on these contracts were not
significant at December 31, 1999 and 1998. At December 31, 1999 and
1998, the Company's futures contracts had no fair value because these
contracts are marked to market and settled in cash daily.
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. 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.
As of December 31, 1999 and 1998, the Company held interest rate swap
contracts with notional amounts of $231.1 million and $165.3 million,
respectively. The fair value of these financial instruments was $9.5
million (loss position) at December 31, 1999, and was $3.4 million (gain
position) and $.7 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 $43.7 million and a fair value of $4.7 million
(loss position).
F-13
<PAGE> 105
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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 option contracts
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 values were determined using the discounted
cash flow method.
The off-balance sheet risks of interest rate options and forward contracts
were not significant at December 31, 1999 and 1998.
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 and
joint ventures. The off-balance sheet risk of these financial instruments
was not significant at December 31, 1999 and 1998.
Fair Value of Certain Financial Instruments
The Company uses various financial instruments in the normal course of its
business. Fair values of financial instruments that are considered
insurance contracts are not required to be disclosed and are not included
in the amounts discussed.
At December 31, 1999, investments in fixed maturities had a carrying value
and a fair value of $1.8 billion and $1.7 billion, respectively, compared
with a carrying value and a fair value of $1.7 billion and $1.8 billion,
respectively, at December 31, 1998. See Notes 1 and 10.
At December 31, 1999, mortgage loans had a carrying value of $155.7 million
and a fair value of $156.0 million and in 1998 had a carrying value of
$174.6 million and a fair value of $185.7 million. In estimating fair
value, the Company used interest rates reflecting the current real estate
financing market.
The carrying values of short-term securities and policy loans totaling
$91.3 million and $131.1 million in 1999 and 1998, respectively,
approximated their fair values and are included in other invested assets.
The carrying values of $57.6 million and $36.5 million of financial
instruments classified as other assets approximated their fair values at
December 31, 1999 and 1998, respectively. The carrying values of $100.2
million and $98.4 million 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.
F-14
<PAGE> 106
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
At December 31, 1999, contractholder funds with defined maturities had a
carrying value of $878.9 million and a fair value of $780.5 million,
compared with a carrying value of $725.6 million and a fair value of $698.1
million 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 $481.8 million and a fair value of $409.2 million at December 31, 1999,
compared with a carrying value of $483.0 million and a fair value of $442.5
million at December 31, 1998. These contracts generally are valued at
surrender value.
5. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance Sheet Risk
See Note 4.
Litigation
In the ordinary course of business, the Company is a defendant or
co-defendant in various litigation matters incidental to and typical of the
businesses in which it is engaged. In the opinion of the Company's
management, 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.
6. 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 The Travelers Insurance Group Inc. (TIGI), TIC's direct
parent. The Company's share of net expense for the qualified pension and
other postretirement benefit plans was not significant for 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.
7. RELATED PARTY TRANSACTIONS
The principal banking functions, including payment of salaries and
expenses, for certain subsidiaries and affiliates of TIGI, including the
Company, are handled by two companies. TIC 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. TIC provides various employee
benefit
F-15
<PAGE> 107
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
coverages to 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
provided by affiliated companies. Charges for these services are shared by
the companies on cost allocation methods based generally on estimated usage
by department.
TIC maintains a short-term investment pool in which the Company
participates. 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 $31.4 million and $93.1 million at
December 31, 1999 and 1998, respectively, and is included in short-term
securities in the balance sheet.
The Company's TTM Modified Guaranteed Annuity Contracts are subject to a
limited guarantee agreement by TIC in a principal amount of up to $450
million. TIC's obligation is to pay in full to any owner or beneficiary of
the TTM Modified Guaranteed Annuity Contracts principal and interest as and
when due under the annuity contract to the extent that the Company fails to
make such payment. In addition, TIC guarantees that the Company will
maintain a minimum statutory capital and surplus level.
The Company sold structured settlement annuities to the insurance
affiliates of Travelers Property Casualty Corp. (TAP). Premiums and
deposits were $8.9 million and $70.6 million for 1998 and 1997,
respectively. The reduction in premiums and deposits from 1997 to 1998 was
a result of a decision during 1998 to use TIC as the primary issuer of
structured settlement annuities and the Company as the assignment company.
Policy reserves and contractholder fund liabilities associated with these
structured settlements were $766.4 million and $808.7 million at December
31, 1999 and 1998, respectively.
The Company began distributing variable annuity products through its
affiliate, the Financial Consultants of Salomon Smith Barney (SSB) in 1995.
Premiums and deposits related to these products were $1.1 billion, $932.1
million and $615.6 million in 1999, 1998 and 1997, respectively. In 1996,
the Company began marketing various life products through SSB as well. New
premiums related to such products were $40.8 million, $44.5 million and
$24.4 million in 1999, 1998 and 1997, respectively.
During 1998, the Company began distributing deferred annuity products
through its affiliates Primerica Financial Services (Primerica), Citibank,
N.A. (Citibank) and The Copeland Companies (Copeland). Deposits received
from Primerica were $763 million and $216 million. Deposits from Citibank
and Copeland were immaterial for 1999 and 1998.
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 are granted
Citigroup stock options.
Most leasing functions for TIGI and its subsidiaries are handled by TAP.
Rent expense related to these leases is shared by the companies on a cost
allocation method based generally on estimated usage by department. The
Company's rent expense was insignificant in 1999, 1998 and 1997.
F-16
<PAGE> 108
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
At December 31, 1999 and 1998, the Company had investments in Tribeca
Investments, L.L.C., an affiliate of the Company, in the amounts of $22.3
million and $18.3 million, respectively, included in other invested assets.
The Company has loaned $16.6 million of Corporate Bonds to SSB as of
December 31, 1999.
8. FEDERAL INCOME TAXES
The net deferred tax assets at December 31, 1999 and 1998 were comprised of
the tax effects of temporary differences related to the following assets
and liabilities:
<TABLE>
<CAPTION>
($ in thousands) 1999 1998
---- ----
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets:
Benefit, reinsurance and other reserves $161,629 $121,150
Investments, net 14,270 --
Other 2,394 2,810
----------------------------------------------------------------------------------------------------------------
Total 178,293 123,960
----------------------------------------------------------------------------------------------------------------
Deferred Tax Liabilities:
Investments, net -- (56,103)
Deferred acquisition costs and value of insurance in force (100,537) (51,993)
Other (1,208) (1,399)
----------------------------------------------------------------------------------------------------------------
Total (101,745) (109,495)
----------------------------------------------------------------------------------------------------------------
Net Deferred Tax (Liability) Asset Before Valuation Allowance 76,548 14,465
Valuation Allowance for Deferred Tax Assets (2,070) (2,070)
----------------------------------------------------------------------------------------------------------------
Net Deferred Tax Asset After Valuation Allowance $74,478 $12,395
----------------------------------------------------------------------------------------------------------------
</TABLE>
F-17
<PAGE> 109
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
TIC and its life insurance subsidiaries, including the Company, file a
consolidated federal income tax return. Federal income taxes are allocated
to each member on a separate return basis adjusted for credits and other
amounts required by the consolidation process. Any resulting liability has
been, and will be, paid currently to TIC. Any credits for losses have been,
and will be, paid by TIC to the extent that such credits are for tax
benefits that have been utilized in the consolidated federal income tax
return.
The $2.1 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 provided by the reversal of
the valuation allowance will be recognized by reducing goodwill.
In management's judgment, the $74.5 million "net deferred tax asset after
valuation allowance" as of December 31, 1999, is fully recoverable against
expected future years' taxable ordinary income and capital gains. At
December 31, 1999, the Company had no ordinary or capital loss
carryforwards.
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 $2 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 $700 thousand.
9. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
($ in thousands) 1999 1998 1997
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GROSS INVESTMENT INCOME
Fixed maturities $136,039 $130,825 $120,900
Joint venture and partnership income 22,175 22,107 32,336
Mortgage loans 16,126 15,969 14,905
Other 4,417 3,322 2,284
--------------------------------------------------------------------------------------------------------------
178,757 172,223 170,425
--------------------------------------------------------------------------------------------------------------
Investment expenses 1,578 1,220 1,772
--------------------------------------------------------------------------------------------------------------
Net investment income $177,179 $171,003 $168,653
--------------------------------------------------------------------------------------------------------------
</TABLE>
F-18
<PAGE> 110
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
10. INVESTMENTS AND INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) for the periods were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
($ in thousands) 1999 1998 1997
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $2,657 $15,620 $29,236
Equity Securities 1,193 1,819 8,385
Other 1,025 525 2,180
Joint venture and partnerships (9,848) 529 5,070
--------------------------------------------------------------------------------------------------------------
Total Realized Investment Gains (Losses) $(4,973) $18,493 $44,871
--------------------------------------------------------------------------------------------------------------
</TABLE>
Changes in net unrealized investment gains (losses) that are included as
accumulated other changes in equity from non-owner sources in shareholder's
equity were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
($ in thousands) 1999 1998 1997
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNREALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $(181,715) $24,336 $34,451
Other (13,979) 2,760 21,581
--------------------------------------------------------------------------------------------------------------
Total unrealized investment gains (losses) (195,694) 27,096 56,032
Related taxes (68,493) 9,484 19,611
--------------------------------------------------------------------------------------------------------------
Change in unrealized investment gains (losses) (127,201) 17,612 36,421
Balance beginning of year 87,889 70,277 33,856
--------------------------------------------------------------------------------------------------------------
Balance End of Year $(39,312) $87,889 $70,277
--------------------------------------------------------------------------------------------------------------
</TABLE>
F-19
<PAGE> 111
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Fixed Maturities
The amortized cost and fair values of investments in fixed maturities were
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
GROSS GROSS
DECEMBER 31, 1999 AMORTIZED COST UNREALIZED UNREALIZED FAIR
($ in thousands) GAINS LOSSES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $211,864 $2,103 $(7,818) $206,149
U.S. Treasury securities and obligations
of U.S. Government and government agencies
and authorities 116,082 2,613 (3,704) 114,991
Obligations of states and political
subdivisions 29,801 7 (3,312) 26,496
Debt securities issued by foreign
governments 44,159 2,813 (198) 46,774
All other corporate bonds 1,358,769 10,351 (52,811) 1,316,309
Redeemable preferred stock 3,654 41 (466) 3,229
-----------------------------------------------------------------------------------------------------------------
Total Available For Sale $1,764,329 $17,928 $(68,309) $1,713,948
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
GROSS GROSS
DECEMBER 31, 1998 AMORTIZED COST UNREALIZED UNREALIZED FAIR
($ in thousands) GAINS LOSSES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $220,105 $ 11,571 $(193) $231,483
U.S. Treasury securities and obligations
of U.S. Government and government agencies
and authorities 289,376 53,782 (274) 342,884
Obligations of states and political
subdivisions 28,749 994 (17) 29,726
Debt securities issued by foreign
governments 40,786 2,966 (375) 43,377
All other corporate bonds 1,124,298 75,870 (13,000) 1,187,168
Redeemable preferred stock 4,033 119 (109) 4,043
-----------------------------------------------------------------------------------------------------------------
Total Available For Sale $1,707,347 $145,302 $(13,968) $1,838,681
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of fixed maturities classified as available for sale
were $774 million, $1.1 billion and $857 million in 1999, 1998 and 1997,
respectively. Gross gains of $24.6 million, $32.6 million and $38.1 million
and gross losses of $22.0 million, $17.0 million and $8.9 million in 1999,
1998 and 1997, respectively were realized on those sales.
F-20
<PAGE> 112
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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 $486.2
million and $427.0 million at December 31, 1999 and 1998, respectively.
The amortized cost and fair value of fixed maturities available for sale at
December 31, 1999, by contractual maturity, are shown below. Actual
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
AMORTIZED FAIR
($ in thousands) COST VALUE
-------------------------------------------------------------------------------------------
<S> <C> <C>
MATURITY:
Due in one year or less $40,556 $40,092
Due after 1 year through 5 years 327,632 322,082
Due after 5 years through 10 years 451,635 441,307
Due after 10 years 732,642 704,318
-------------------------------------------------------------------------------------------
1,552,465 1,507,799
-------------------------------------------------------------------------------------------
Mortgage-backed securities 211,864 206,149
-------------------------------------------------------------------------------------------
Total Maturity $1,764,329 $1,713,948
-------------------------------------------------------------------------------------------
</TABLE>
The Company makes significant 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 with a market value of
$167.7 million and $181.6 million, respectively. The Company's CMO holdings
were 65.9% and 62.9% collateralized by GNMA, FNMA or FHLMC securities at
December 31, 1999 and 1998, respectively.
F-21
<PAGE> 113
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Equity Securities
The cost and market values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
EQUITY SECURITIES: GROSS UNREALIZED GROSS UNREALIZED
($ in thousands) COST GAINS LOSSES FAIR VALUE
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
Common stocks $4,966 $ 730 $ (256) $5,440
Non-redeemable preferred stocks 29,407 533 (2,211) 27,729
------------------------------------------------------------------------------------------------------------------
Total Equity Securities $34,373 $1,263 $(2,467) $33,169
------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
Common stocks $5,185 $ 889 $(292) $5,782
Non-redeemable preferred stocks 20,641 707 (445) 20,903
------------------------------------------------------------------------------------------------------------------
Total Equity Securities $25,826 $1,596 $(737) $26,685
------------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $5.1 million, $6.0 million
and $12.4 million in 1999, 1998 and 1997, respectively. Gross gains of $1.5
million, $2.6 million and $8.6 million were realized on those sales during
1999, 1998 and 1997, respectively.
Gross losses were insignificant during the same periods.
Mortgage Loans
Underperforming assets include delinquent mortgage loans, loans in the
process of foreclosure and loans modified at interest rates below market.
At December 31, 1999 and 1998, the Company's mortgage loan portfolios
consisted of the following:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
($ in thousands) 1999 1998
-----------------------------------------------------------------------------------
<S> <C> <C>
Current Mortgage Loans $151,814 $170,635
Underperforming Mortgage Loans 3,905 3,930
-----------------------------------------------------------------------------------
Total $155,719 $174,565
-----------------------------------------------------------------------------------
</TABLE>
Aggregate annual maturities on mortgage loans at December 31, 1999 are as
follows:
<TABLE>
----------------------------------------------------------------
<S> <C>
($ in thousands)
2000 $20,791
2001 1,563
2002 6,292
2003 4,896
2004 4,167
Thereafter 118,010
================================================================
Total $155,719
================================================================
</TABLE>
F-22
<PAGE> 114
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Concentrations
Significant individual investment concentrations included:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
($ in thousands) 1999 1998
---------------------------------------------------------------------
<S> <C> <C>
Tishman Speyer Joint Venture $63,199 $62,400
Bell South Corp. 23,689 53,322
---------------------------------------------------------------------
</TABLE>
The Company participates in a short-term investment pool maintained by an
affiliate. See Note 7.
Included in fixed maturities are below investment grade assets totaling
$141.4 million and $102.4 million at December 31, 1999 and 1998,
respectively. The Company defines its below investment grade assets as
those securities rated "Ba1" or below by external rating agencies, or the
equivalent by internal analysts when a public rating does not exist. Such
assets include publicly traded below investment grade bonds and certain
other privately issued bonds and notes that are classified as below
investment grade bonds.
The Company's industry concentrations of investments, primarily fixed
maturities, were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
($ in thousands) 1999 1998
---------------------------------------------------------------------
<S> <C> <C>
Banking $152,848 $160,713
Transportation 139,519 155,116
Electric utilities 103,897 109,027
Finance 103,385 69,916
Oil & Gas 102,739 45,172
---------------------------------------------------------------------
</TABLE>
The Company held investments in Foreign Banks in the amount of $125 million
and $115 million at December 31, 1999 and 1998, respectively, which are
included in the table above.
Below investment grade assets included in the preceding table were not
significant.
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 December 31, 1999 and 1998 balance sheets that
were non-income producing were insignificant.
F-23
<PAGE> 115
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Restructured Investments
Mortgage loan and debt securities which were restructured at below market
terms at December 31, 1999 and 1998 were insignificant. The new terms of
restructured investments 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 assets was
insignificant. Interest on these assets, included in net investment income,
was insignificant.
11. DEPOSIT FUNDS AND RESERVES
At December 31, 1999, the Company had $2.1 billion of life and annuity
deposit funds and reserves. Of that total, $1.4 billion were not subject to
discretionary withdrawal based on contract terms. The remaining $.7 billion
were life and annuity products that were subject to discretionary
withdrawal by the contractholders. Included in the amount that is subject
to discretionary withdrawal were $.5 billion of liabilities that are
surrenderable with market value adjustments. The remaining $.2 billion of
life insurance and individual annuity liabilities are subject to
discretionary withdrawals with an average surrender charge of 4.9%. The
life insurance risks would have to be underwritten again if transferred to
another carrier, which is considered a significant deterrent for long-term
policyholders. Insurance liabilities that are surrendered or withdrawn from
the Company are reduced by outstanding policy loans and related accrued
interest prior to payout.
12. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
The following table reconciles net income to net cash provided by (used in)
operating activities:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
---- ---- ----
($ in thousands)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income From Continuing Operations $ 52,606 $ 57,485 $ 71,372
Adjustments to reconcile net income to cash provided by
operating activities:
Realized gains (4,973) (18,493) (44,871)
Deferred federal income taxes 6,410 11,783 4,344
Amortization of deferred policy acquisition costs 38,902 15,956 4,944
Additions to deferred policy acquisition costs (211,182) (120,278) (56,975)
Investment income accrued (27,072) (3,821) 908
Premium balances (466) (6,786) (3,450)
Insurance reserves (16,431) (8,431) 3,981
Other (26,112) (2,806) 27,765
------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operations $(188,318) $(75,391) $8,018
------------------------------------------------------------------------------------------------------------------
</TABLE>
13. NON-CASH INVESTING AND FINANCING ACTIVITIES
There were no significant non-cash investing and financing activities
for 1999, 1998 and 1997.
F-24
<PAGE> 116
TRAVELERS RETIREMENT PRODUCT
VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
SEPARATE ACCOUNT SIX
Individual and Group
Variable Annuity Contract
issued by
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
<PAGE> 117
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 are included in the Statement of Additional Information.
The financial statements of the Registrant include:
Statement of Assets and Liabilities as of December 31, 1999
Statement of Operations for the period March 22, 1999 (date
operations commenced to December 31, 1999
Statement of Changes in Net Assets for the period March 22,
1999 (date operations commenced to December 31, 1999
Statement of Investments as of December 31, 1999
Notes to Financial Statements
The financial statements of The Travelers Life and Annuity Company and
the report of Independent Auditors, are contained in the Statement of
Additional Information. The financial statements of The Travelers Life
and Annuity Company include:
Statements of Income for the years ended December 31, 1999,
1998 and 1997
Balance Sheets as of December 31, 1999 and 1998
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
Statements of Cash Flows for the years ended December 31,
1999, 1998 and 1997
Notes to Financial Statements
(b) Exhibits
1. Resolution of The Travelers Life and Annuity 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 July 9, 1998.)
2. Not Applicable.
3(a). Form of Distribution and Principal Underwriting Agreement among
the Registrant, The Travelers Life and Annuity Company and CFBDS,
Inc. (Incorporated herein by reference to Exhibit 3(a) to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-4, File No. 333-58809, filed November 3, 1998.)
3(b). Form of Selling Agreement. (Incorporated herein by reference to
Exhibit 3(b) to the Registration Statement on Form N-4, File No.
333-40191, filed June 10, 1998.)
4. Variable Annuity Contract. (Incorporated herein by reference to
Exhibit 4 to Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-4, File No. 333-58809, filed November 3,
1998.)
5. Application. (Incorporated herein by reference to Exhibit 5 to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-4, File No. 333-58809, filed November 3, 1998.)
<PAGE> 118
6(a). Charter of The Travelers Life and Annuity Company, as amended on
April 10, 1990. (Incorporated herein by reference to Exhibit 6(a)
to the Registration Statement on Form N-4, File No. 333-40191,
filed November 13, 1997.)
6(b). By-Laws of The Travelers Life and Annuity 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.
333-40191, filed November 13, 1997.)
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, filed July 9, 1998.)
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. 1 to the Registration Statement on
Form N-4, File No. 333-58809, filed November 3, 1998.)
15. 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 to the Registration Statement on Form N-4, filed
July 9, 1998.)
15(a). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for George C. Kokulis, Katherine M. Sullivan
and Glenn D. Lammey.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Insurance Company
- ------------------ ----------------------
<S> <C>
George C. Kokulis* Director, President and Chief Executive Officer
Katherine M. Sullivan* Director and Senior Vice President
Marc P. Weill** Director and Senior Vice President
Mary Jean Thornton* Executive Vice President and
Chief Information Officer
Stuart Baritz*** Senior Vice President
Barry Jacobson* Senior Vice President
Russell H. Johnson* Senior Vice President
Marla Berman Lewitus* Senior Vice President and General Counsel
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
</TABLE>
<PAGE> 119
Linn K. Richardson* Second Vice President and Actuary
Paul Weissman Second Vice President and Actuary
Ernest J. Wright* Vice President and Secretary
Kathleen A. McGah* Assistant Secretary and
Deputy General Counsel
Principal Business Address:
* The Travelers Life and Annuity 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. 333-40191,
filed April 12, 2000.
Item 27. Number of Contract Owners
As of February 29, 2000, 1,179 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> 120
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, CitiFunds(SM) Short-Term U.S. Government Income Portfolio,
CitiFunds(SM) Emerging Asian Markets Equity Portfolio CitiSelect(R) VIP Folio
200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP
Folio 500, CitiFunds(SM) Small Cap Growth VIP Portfolio, CitiSelect(R) Folio
100, CitiSelect(R) Folio 200, CitiSelect(R) Folio 300, CitiSelect(R) Folio 400,
and CitiSelect(R) 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, High Yield 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, Emerging Asian Markets Equity 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 Seven for Variable Annuities,
<PAGE> 121
The Travelers Separate Account Eight for Variable Annuities, The Travelers
Separate Account Nine for Variable Annuities, The Travelers Separate Account Ten
for Variable Annuities, The Travelers Fund UL for Variable Life Insurance, The
Travelers Fund UL II for Variable Life Insurance, The Travelers Fund UL III for
Variable Life Insurance, The Travelers Variable Life Insurance Separate Account
One, The Travelers Variable Life Insurance Separate Account Two, The Travelers
Variable Life Insurance Separate Account Three, The Travelers Variable Life
Insurance Separate Account Four, The Travelers Separate Account MGA, The
Travelers Separate Account MGA 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
CFBDS is also the distributor for the following funds: 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.
CFBDS is also the distributor for the following Smith Barney Mutual Fund
registrants: 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.,
Smith Barney Large Cap Blend Fund, Smith Barney Fundamental Value Fund Inc.,
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, 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, 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, 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, Large Cap Value Fund, Short-Term High
Grade Bond Fund, U.S. Government Securities Fund, Cash Portfolio, Government
Portfolio, Municipal Portfolio, Concert Peachtree Growth 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, TBC Managed
<PAGE> 122
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.
CFBDS is also the distributor for the following Salomon Brothers funds: Salomon
Brothers Institutional Money Market Fund, Salomon Brothers Cash Management Fund,
Salomon Brothers New York Municipal Money Market Fund, Salomon Brothers National
Intermediate Municipal Fund, Salomon Brothers U.S. Government Income Fund,
Salomon Brothers High Yield Bond Fund, Salomon Brothers Strategic Bond Fund,
Salomon Brothers Total Return Fund, Salomon Brothers Asia Growth Fund, Salomon
Brothers Capital Fund Inc, Salomon Brothers Investors Fund Inc, Salomon Brothers
Opportunity Fund Inc, Salomon Brothers Institutional High Yield Bond Fund,
Salomon Brothers Institutional Emerging Markets Debt Fund, Salomon Brothers
Variable Investors Fund, Salomon Brothers Variable Capital Fund, Salomon
Brothers Variable Total Return Fund, Salomon Brothers Variable High Yield Bond
Fund, Salomon Brothers Variable Strategic Bond Fund, Salomon Brothers Variable
U.S. Government Income Fund, and Salomon Brothers Variable Asia Growth Fund.
(b) The information required by this Item 29 with respect to each director and
officer of CFBDS, Inc. is incorporated by reference to Schedule A of Form BD
filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not Applicable
Item 30. Location of Accounts and Records
(1) The Travelers Life and Annuity 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
<PAGE> 123
(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> 124
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 20th day of
April, 2000.
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS LIFE AND ANNUITY 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 20th day of
April 2000.
*GEORGE C. KOKULIS Director, President and Chief Executive Officer
- -------------------------- (Principal Executive Officer)
(George C. Kokulis)
*KATHERINE M. SULLIVAN Director
- --------------------------
(Katherine M. Sullivan)
*MARC P. WEILL Director
- --------------------------
(Marc P. Weill)
*By: /s/Ernest J. Wright, Attorney-in-Fact
<PAGE> 125
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
10 Consent of KPMG LLP, Independent Certified Public Accountants Electronically
15(b) Powers of Attorney authorizing Ernest J. Wright or Kathleen A. Electronically
McGah as signatory for George C. Kokulis, Katherine M. Sullivan
and Glenn D. Lammey.
</TABLE>
<PAGE> 1
Exhibit 10
Consent of Independent Certified Public Accountants
Board of Directors
The Travelers Life and Annuity 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 20, 2000
<PAGE> 1
Exhibit 15(b)
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, GEORGE C. KOKULIS of Simsbury, Connecticut, Director,
President and Chief Executive Officer of The Travelers Life and Annuity Company
(hereafter the "Company"), do hereby make, constitute and appoint ERNEST J.
WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of
said Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form under
the Securities Act of 1933 and the Investment Company Act of 1940 for The
Travelers Separate Account Six for Variable Annuities, a separate account of the
Company dedicated specifically to the funding of variable annuity contracts to
be offered by said Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the Company on behalf
of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of
April 2000.
/s/George C. Kokulis
Director, President and Chief Executive Officer
The Travelers Life and Annuity Company
<PAGE> 2
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, KATHERINE M. SULLIVAN of Longmeadow, Massachusetts, a
Director of The Travelers Life and Annuity Company (hereafter the "Company"), do
hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company,
and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead, to sign registration statements on behalf of said Company on
Form N-4 or other appropriate form under the Securities Act of 1933 and the
Investment Company Act of 1940 for The Travelers Separate Account Six for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by said Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of
March 2000.
/s/Katherine M. Sullivan
Director
The Travelers Life and Annuity Company
<PAGE> 3
THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, GLENN D. LAMMEY of Simsbury, Connecticut, Chief Financial
Officer, Chief Accounting Officer and Controller of The Travelers Life and
Annuity Company (hereafter the "Company"), do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH,
Assistant Secretary of said Company, or either one of them acting alone, my true
and lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements on behalf of said Company on Form N-4 or other
appropriate form under the Securities Act of 1933 and the Investment Company Act
of 1940 for The Travelers Separate Account Six for Variable Annuities, a
separate account of the Company dedicated specifically to the funding of
variable annuity contracts to be offered by said Company, and further, to sign
any and all amendments thereto, including post-effective amendments, that may be
filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of
March 2000.
/s/J. Eric Daniels
Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Life and Annuity Company
