<PAGE> 1
TRAVELERS PREMIER ADVISERS -- ASSETMANAGER VARIABLE ANNUITY PROSPECTUS:
THE TRAVELERS SEPARATE ACCOUNT SEVEN FOR VARIABLE ANNUITIES
THE TRAVELERS SEPARATE ACCOUNT EIGHT FOR VARIABLE ANNUITIES
This prospectus describes TRAVELERS PREMIER ADVISERS -- ASSETMANAGER, a flexible
premium variable annuity contract (the "Contract") issued by The Travelers
Insurance Company or The Travelers Life and Annuity Company, depending on the
state in which you purchased your Contract. The Contract is available in
connection with certain retirement plans that qualify for special federal income
tax treatment ("qualified Contracts") as well as those that do not qualify for
such treatment ("nonqualified Contracts"). We may issue it as an individual
Contract or as a group Contract. In states where only group Contracts are
available, you will be issued a certificate summarizing the provisions of the
group Contract. For convenience, we refer to Contracts and certificates as
"Contracts."
You can choose to have your premium ("purchase payments") accumulate on a fixed
basis and/ or a variable basis. Your contract value will vary daily to reflect
the investment experience of the subaccounts ("funding options") you select and
any interest credited to the Fixed Account. The variable funding options are:
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund
High Yield Bond Fund
Investors Fund
Small Cap Growth Fund
Strategic Bond Fund
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
Emerging Markets Equity Portfolio
Equity Growth Portfolio
Global Equity Portfolio
Active International Allocation Portfolio
Mid Cap Growth Portfolio
Mid Cap Value Portfolio
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (CONTINUED)
Technology Portfolio
Value Portfolio
VAN KAMPEN LIFE INVESTMENT TRUST
Comstock Portfolio
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Morgan Stanley Real Estate Securities Portfolio
The Fixed Account is described in Appendix C. Unless specified otherwise, this
prospectus refers to the variable funding options. The contracts and/or some of
the funding options may not be available in all states. THIS PROSPECTUS IS VALID
ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE VARIABLE FUNDING
OPTIONS. READ AND RETAIN THEM FOR FUTURE REFERENCE.
This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about the Travelers
Separate Account Seven for Variable Annuities or the Travelers Separate Account
Eight for Variable Annuities ("Separate Account") by requesting a copy of the
Statement of Additional Information ("SAI") dated May 1, 2000. The SAI has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this prospectus. To request a copy, write to The Travelers
Insurance Company, Annuity Investor Services, One Tower Square, Hartford,
Connecticut 06183, call 1-800-599-9460 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.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
PROSPECTUS DATED MAY 1, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Index of Special Terms................ 2
Summary............................... 3
Fee Table............................. 6
Condensed Financial Information....... 8
The Annuity Contract.................. 8
Contract Owner Inquiries............ 9
Purchase Payments................... 9
Accumulation Units.................. 9
The Funding Options................. 9
Charges and Deductions................ 11
General............................. 11
Administrative Charges.............. 12
Mortality and Expense Risk Charge... 12
Funding Option Expenses............. 13
Premium Tax......................... 13
Changes in Taxes Based Upon Premium
or Value......................... 13
Transfers............................. 13
Dollar Cost Averaging............... 13
Access to Your Money.................. 14
Systematic Withdrawals.............. 14
Loans............................... 15
Ownership Provisions.................. 15
Types of Ownership.................. 15
Beneficiary......................... 15
Annuitant........................... 15
Death Benefit......................... 16
Death Proceeds Before the Maturity
Date............................. 16
Payment of Proceeds................. 17
Death Proceeds After the Maturity
Date............................. 18
The Annuity Period.................... 18
Maturity Date....................... 18
Allocation of Annuity............... 19
Variable Annuity.................... 19
Fixed Annuity....................... 19
Payment Options....................... 20
Election of Options................. 20
Annuity Options..................... 20
Income Options...................... 21
Miscellaneous Contract Provisions..... 21
Right to Return..................... 21
Termination......................... 21
Required Reports.................... 21
Suspension of Payments.............. 22
Transfers of Contract Values to
Other Annuities.................. 22
The Separate Accounts................. 22
Performance Information............. 22
Federal Tax Considerations............ 23
General Taxation of Annuities....... 23
Types of Contracts: Qualified or
Nonqualified..................... 23
Nonqualified Annuity Contracts...... 24
Qualified Annuity Contracts......... 24
Penalty Tax for Premature
Distributions.................... 24
Diversification Requirements for
Variable Annuities............... 25
Ownership of the Investments........ 25
Mandatory Distributions for
Qualified Plans.................. 25
Taxation of Death Benefit
Proceeds......................... 25
Other Information..................... 26
The Insurance Companies............. 26
Financial Statements................ 26
IMSA................................ 26
Distribution of Variable Annuity
Contracts........................ 26
Conformity with State and Federal
Laws............................. 26
Voting Rights....................... 27
Legal Proceedings and Opinions...... 27
Appendix A: Condensed Financial
Information for The Travelers
Insurance Company: Separate Account
Seven............................... A-1
Appendix B: Condensed Financial
Information for The Travelers Life
and Annuity Company:Separate Account
Eight............................... B-1
Appendix C: Fixed Account............. C-1
Appendix D: Contents of the Statement
of Additional Information........... D-1
</TABLE>
INDEX OF SPECIAL TERMS
The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.
<TABLE>
<S> <C>
Accumulation Unit..................... 9
Accumulation Period................... 9
Annuitant............................. 15
Annuity Payments...................... 8
Annuity Unit.......................... 9
Contingent Annuitant.................. 16
Contract Date......................... 8
Contract Owner (You, Your)............ 15
Contract Value........................ 8
Contract Year......................... 8
Death Report Date..................... 16
Fixed Account......................... C-1
Funding Option(s)..................... 9
Maturity Date......................... 8
Purchase Payment...................... 8
Underlying Fund....................... 9
Written Request....................... 9
</TABLE>
2
<PAGE> 3
SUMMARY:
TRAVELERS PREMIER ADVISERS -- ASSETMANAGER
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 Seven for Variable Annuities ("Separate Account Seven"); The Travelers
Life and Annuity Company sponsors the Travelers Separate Account Eight for
Variable Annuities ("Separate Account Eight"). When we refer to the Separate
Account, we are referring to either Separate Account Seven or Separate Account
Eight, depending upon your issuing company. Your issuing company is The
Travelers Life and Annuity Company unless you purchased your contract in the
following locations listed below, which contracts are issued by The Travelers
Insurance Company.
<TABLE>
<S> <C>
Kansas New York
Maine North Carolina
New Hampshire Puerto Rico
New Jersey Tennessee
Wyoming
</TABLE>
You may also refer to the cover page of your Contract for the name of your
issuing company. You may only purchase a Contract in locations where the
Contract has been approved for sale. This Contract may not currently be
available for sale in all locations.
CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE VARIABLE ANNUITY CONTRACT? The
Contract offered by the Company is intended for retirement savings or other
long-term investment purposes. The Contract provides a death benefit as well as
guaranteed payout options. You direct your payment(s) to one or more of the
variable funding options and/or to the Fixed Account. We guarantee money
directed to the Fixed Account as to principal and interest. The variable funding
options are designed to produce a higher rate of return than the Fixed Account;
however, this is not guaranteed. You can also lose money in the variable funding
options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase
generally, under a qualified contract, your pre-tax contributions accumulate on
a tax-deferred basis and are taxed as income when you make a withdrawal,
presumably when you are in a lower tax bracket. During the accumulation phase,
under a nonqualified contract, earnings on your after-tax contributions
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The payout phase occurs when you begin receiving payments from your
Contract. The amount of money you accumulate in your Contract determines the
amount of income (annuity payments) you receive during the payout phase.
During the payout phase, you may choose to receive annuity payments from the
Fixed Account or the variable funding options. If you want to receive payments
from your annuity, you can choose one of a number of annuity options or income
options.
Once you choose one of the annuity options or income options and begin to
receive payments, it cannot be changed. During the payout phase, you have the
same investment choices you had during the accumulation phase. If amounts are
directed to the variable funding options, the dollar amount of your payments may
increase or decrease.
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WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with (1) individual nonqualified purchases; (2) rollovers from
Individual Retirement Annuities (IRAs); and (3) rollovers from other qualified
retirement plans. Qualified contracts include contracts qualifying under Section
401(a), 403(b), or 408(b) of the Internal Revenue Code of 1986. Purchase of this
Contract through a tax qualified retirement plan ("Plan") does not provide any
additional tax deferral benefits beyond those provided by the Plan. Accordingly,
if you are purchasing this Contract through a Plan, you should consider
purchasing this Contract for its Death Benefit, Annuity Option Benefits, and
other non-tax-related benefits.
You may purchase the Contract with an initial payment of at least $20,000. You
may make additional payments of at least $500 at any time during the
accumulation phase.
IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within twenty
days after you receive it, you will receive a full refund of the contract value
(including charges). Where state law requires a longer right to return period,
or the return of purchase payments, the Company will comply. You bear the
investment risk on the purchase payment during the right to return period;
therefore, the Contract value returned may be greater or less than your purchase
payment.
If the Contract is purchased as an Individual Retirement Annuity, and is
returned within the first seven days after delivery, your full purchase payment
will be refunded. During the remainder of the right to return period, the
Contract value (including charges) will be refunded. The Contract value will be
determined at the close of business on the day we receive a written request for
a refund.
WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
the Fixed Account or any or all of the funding options shown on the cover page.
The funding options are described in the prospectuses for the funds. Depending
on market conditions, you may make or lose money in any of these options.
The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Standard and Nonstandard performance is shown in the Statement of
Additional Information that you may request free of charge.
You can transfer between the funding options as frequently as you wish without
any current tax implications. Currently there is no charge for transfers, nor a
limit to the number of transfers allowed. We may, in the future, charge a fee
for any transfer request, or limit the number of transfers allowed. At a
minimum, we would always allow one transfer every six months. We reserve the
right to restrict transfers that we determine will disadvantage other contract
owners. You may transfer between the Fixed Account and the funding options twice
a year (during the 30 days after the six-month contract date anniversary),
provided the amount is not greater than 15% of the Fixed Account Value on that
date.
WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. For
contracts with a value of less than $75,000 the Company deducts an annual
contract administrative charge of $50. The subaccount administrative charge and
the mortality and expense risk ("M&E") charge are deducted from the amounts in
the variable funding options. The subaccount administrative charge is 0.15%
annually. The annual M&E charge depends on the Death Benefit you choose:
<TABLE>
<CAPTION>
CONTRACT YEARS 0-6 CONTRACT YEARS 7 AND LATER
------------------ --------------------------
<S> <C> <C>
Standard Death Benefit.................. 1.45% 1.40%
Enhanced Death Benefit.................. 1.60% 1.40%
</TABLE>
Each funding option has a charge for investment management and other expenses.
Please refer to the Fee Table for more details.
4
<PAGE> 5
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 or income
payments. Under a nonqualified Contract, payments to the contract are made with
after-tax dollars, and earnings will accumulate tax-deferred. You will be taxed
on these earnings when they are withdrawn from the Contract.
For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the amount
withdrawn.
HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. While there is no withdrawal charges, income taxes, and/or a
penalty tax may apply to taxable amounts withdrawn.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? You may choose to purchase the
Standard or the Enhanced Death Benefit. The death benefit applies upon the first
death of the owner, joint owner, or annuitant. Assuming you are the Annuitant,
the death benefit is as follows: If you die before the Contract is in the payout
phase, the person you have chosen as your beneficiary will receive a death
benefit. The death benefit value is calculated at the close of the business day
on which the Company's Home Office receives due proof of death and written
payment instructions. Certain states may have varying age requirements. Please
refer to the Death Benefit section in the prospectus for more details.
ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:
- 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.
- 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.
- AUTOMATIC REBALANCING. You may elect to have the Company periodically
reallocate the values in your Contract to match your original (or your
latest) funding option allocation request.
5
<PAGE> 6
FEE TABLE
- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
ANNUAL CONTRACT ADMINISTRATIVE
CHARGE $50
(Waived if contract value is $75,000 or more)
ANNUAL SEPARATE ACCOUNT CHARGES
(as a percentage of the average daily net assets of the
Separate Account)
</TABLE>
<TABLE>
<CAPTION>
CONTRACT YEARS 0-6 CONTRACT YEARS 7 AND LATER
------------------ --------------------------
<S> <C> <C>
STANDARD DEATH BENEFIT
Mortality & Expense Risk Charge............ 1.45% 1.40%
Administrative Expense Charge.............. 0.15% 0.15%
---- ----
Total Separate Account Charges......... 1.60% 1.55%
ENHANCED DEATH BENEFIT
Mortality & Expense Risk Charge............ 1.60% 1.40%
Administrative Expense Charge.............. 0.15% 0.15%
---- ----
Total Separate Account Charges......... 1.75% 1.55%
</TABLE>
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the Funding Option as of
December 31, 1999, unless otherwise noted)
<TABLE>
<CAPTION>
TOTAL ANNUAL
OPERATING
MANAGEMENT FEE OTHER EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS: REIMBURSEMENT) 12B-1 FEES REIMBURSEMENT) REIMBURSEMENT)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
Active International Allocation Portfolio... 0.00% 1.15% 1.15%(1)
Emerging Markets Equity Portfolio........... 0.42% 1.37% 1.79%(1)
Equity Growth Portfolio..................... 0.29% 0.56% 0.85%(1)
Global Equity Portfolio..................... 0.47% 0.68% 1.15%(1)
Mid Cap Growth Portfolio.................... 0.00% 1.05% 1.05%(1)
Mid Cap Value Portfolio..................... 0.43% 0.62% 1.05%(1)
Technology Portfolio........................ 0.00% 1.15% 1.15%(1)
Value Portfolio............................. 0.18% 0.67% 0.85%(1)
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund................................ 0.00% 1.00% 1.00%(2)
High Yield Bond Fund........................ 0.00% 1.00% 1.00%(2)
Investors Fund.............................. 0.53% 0.45% 0.98%(2)
Small Cap Growth Fund....................... 0.00% 1.50% 1.50%(2)
Strategic Bond Fund......................... 0.27% 0.73% 1.00%(2)
VAN KAMPEN LIFE INVESTMENT TRUST
Comstock Portfolio.......................... 0.00% 0.95% 0.95%(3)
Domestic Income Portfolio................... 0.01% 0.60% 0.61%(3)
Emerging Growth Portfolio................... 0.67% 0.18% 0.85%(3)
Enterprise Portfolio........................ 0.48% 0.12% 0.60%(3)
Government Portfolio........................ 0.36% 0.24% 0.60%(3)
Growth and Income Portfolio................. 0.43% 0.32% 0.75%(3)
Money Market Portfolio...................... 0.19% 0.43% 0.62%(3)
Morgan Stanley Real Estate Securities
Portfolio................................. 0.97% 0.13% 1.10%(3)
</TABLE>
NOTES:
The purpose of this Fee Table is to assist Contract Owners in understanding the
various costs and expenses that a Contract Owner will bear, directly or
indirectly. See "Charges and Deductions" in this prospectus for additional
information. Expenses shown do not include premium taxes, which may be
applicable. "Other Expenses" include operating costs of the fund. These expenses
are
6
<PAGE> 7
reflected in each funding option's net asset value and are not deducted from the
account value under the Contract.
(1) The Advisers, with respect to the Portfolios listed in the Universal
Institutional Fund Inc. have voluntarily agreed to a reduction in its
management fees and to reimburse the Portfolios for which it acts as
Investment Adviser if such fees would cause Total Annual Operating Expenses
to exceed the amounts set forth in the tables above. Additionally, in
determining the actual amount of voluntary management fee waiver and/or
expense reimbursement for a portfolio, if any, the Advisers exclude from
total annualized operating expenses certain investment related expenses,
such as foreign country tax expense and interest expense on borrowing.
Included in "Other Expenses" of the EMERGING MARKETS EQUITY PORTFOLIO are
0.04% of such investment related expenses. Absent fee waivers and/or
reimbursements, the expenses would have been:
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Active International Allocation Portfolio......... 0.80% 1.83% 2.63%
Emerging Markets Equity Portfolio................. 1.25% 1.37% 2.62%
Equity Growth Portfolio........................... 0.55% 0.56% 1.11%
Global Equity Portfolio........................... 0.80% 0.68% 1.48%
Mid Cap Growth Portfolio.......................... 0.75% 7.31% 8.06%
Mid Cap Value Portfolio........................... 0.75% 0.62% 1.37%
Technology Portfolio.............................. 0.80% 11.77% 12.57%
Value Portfolio................................... 0.55% 0.67% 1.22%
</TABLE>
(2) Reflects the voluntary agreement by Salomon Brothers Asset Management to
impose an expense cap for the fiscal year ending December 31, 1999 on the
Total Annual Operating Expenses of each fund at the amount shown in the
table through the reimbursement of expenses. Absent fee waivers and/or
reimbursements, the expenses would have been:
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Fund...................................... 0.85% 1.14% 1.99%
High Yield Bond Fund.............................. 0.75% 1.05% 1.80%
Investors Fund.................................... 0.70% 0.45% 1.15%
Small Cap Growth Fund............................. 0.75% 15.61% 16.36%
Strategic Bond Fund............................... 0.75% 0.73% 1.48%
</TABLE>
(3) Van Kampen has voluntarily agreed to a reduction in its management fees and
to reimburse the Portfolios for which it acts as investment adviser if such
fees would cause the Total Annual Operating Expenses to exceed the amounts
set forth in the table above. The ratio of expenses to average net assets
does not reflect credits earned on overnight cash balances for the DOMESTIC
INCOME PORTFOLIO and the MONEY MARKET PORTFOLIO. Absent fee waivers and/or
reimbursements, the expenses would have been:
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Comstock Portfolio................................ 0.60% 9.76% 10.36%
Domestic Income Portfolio......................... 0.50% 0.60% 1.10%
Emerging Growth Portfolio......................... 0.70% 0.18% 0.88%
Enterprise Portfolio.............................. 0.50% 0.12% 0.62%
Government Portfolio.............................. 0.50% 0.24% 0.74%
Growth and Income Portfolio....................... 0.60% 0.32% 0.92%
Money Market Portfolio............................ 0.50% 0.43% 0.93%
Morgan Stanley Real Estate Securities Portfolio... 1.00% 0.13% 1.13%
</TABLE>
7
<PAGE> 8
EXAMPLE*:
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses whether the Contract is surrendered, annuitized, or if no
withdrawals have been made:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
STANDARD DEATH BENEFIT AT THE END ENHANCED DEATH BENEFIT AT THE END
OF THE PERIOD SHOWN OF THE PERIOD SHOWN
------------------------------------- -------------------------------------
FUNDING OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
Active International Allocation
Portfolio........................... 28 86 146 308 29 90 154 315
Emerging Markets Equity Portfolio..... 34 105 177 367 36 109 184 375
Equity Growth Portfolio............... 25 77 131 278 26 81 139 286
Global Equity Portfolio............... 28 86 146 308 29 90 154 315
Mid Cap Growth Portfolio.............. 27 83 141 298 28 87 149 306
Mid Cap Value Portfolio............... 27 83 141 298 26 81 139 286
Technology Portfolio.................. 28 86 146 308 29 90 154 315
Value Portfolio....................... 25 77 131 278 28 87 149 306
SALOMON BROTHERS VARIABLE SERIES FUND INC.
Capital Fund.......................... 26 81 139 293 28 86 146 301
High Yield Bond Fund.................. 26 81 139 293 28 86 146 301
Investors Fund........................ 26 81 138 291 28 85 145 299
Small Cap Growth Fund................. 31 96 163 341 33 101 171 348
Strategic Bond Fund................... 26 81 139 293 28 86 146 301
VAN KAMPEN LIFE INVESTMENT TRUST
Comstock Portfolio.................... 26 80 136 288 27 84 144 296
Domestic Income Portfolio............. 23 70 119 254 24 74 127 262
Emerging Growth Portfolio............. 25 77 131 278 26 81 139 286
Enterprise Portfolio.................. 22 69 119 253 24 74 126 261
Government Portfolio.................. 22 69 119 253 24 74 126 261
Growth and Income Portfolio........... 24 74 126 268 25 78 134 276
Money Market Portfolio................ 23 70 120 255 24 74 127 263
Morgan Stanley Real Estate Securities
Portfolio........................... 27 84 144 303 29 89 151 311
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE EXAMPLE
REFLECTS THE ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL CHARGE OF
0.018% OF ASSETS.
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
See Appendices A and B.
THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Travelers Premier Advisers -- AssetManager 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 or income payments, beginning on a future date that you choose, the
maturity date. The purchase payments accumulate tax deferred in the funding
options of your choice. We offer multiple variable funding options. The contract
owner assumes the risk of gain or loss according to the performance of the
variable funding options. The contract value is the amount of purchase payments,
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.
8
<PAGE> 9
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 1-800-599-9460.
PURCHASE PAYMENTS
The initial purchase payment must be at least $20,000. You may make additional
payments of at least $500 at any time. Under certain circumstances, we may waive
the minimum purchase payment requirement. Purchase payments over $1,000,000 may
be made with our prior consent. The initial purchase payment is due and payable
before the Contract becomes effective.
We will apply the initial purchase payment within two business days after we
receive it in good order at our Home Office. Subsequent purchase payments will
be credited to a Contract on the same business day, if received in good order by
our Home Office by 4:00 p.m. Eastern time. A business day is any day that the
New York Stock Exchange is open. Our business day ends at 4:00 p.m. Eastern time
unless we need to close earlier due to an emergency.
ACCUMULATION UNITS
The period between the contract effective date and the maturity date is the
accumulation period. During the accumulation period, an accumulation unit is
used to calculate the value of a Contract. An accumulation unit works like a
share of a mutual fund. Each funding option has a corresponding accumulation
unit value. The accumulation units are valued each business day and their values
may increase or decrease from day to day. The number of accumulation units we
will credit to your Contract once we receive a purchase payment is determined by
dividing the amount directed to each funding option by the value of its
accumulation unit. We calculate the value of an accumulation unit for each
funding option each day the New York Stock Exchange is open. The values are
calculated as of 4:00 p.m. Eastern time. After the value is calculated, we
credit your Contract. During the annuity period (i.e., after the maturity date),
you are credited with annuity units.
THE FUNDING OPTIONS
You choose which of the following variable funding options to have your purchase
payments allocated to. These funding options are subsections of the Separate
Account, which invest in the underlying mutual funds ("underlying funds"). You
will find detailed information about the options and their inherent risks in the
current prospectuses for the funding options which must accompany this
prospectus. Travelers has entered into agreements with either the investment
adviser or distributor of certain of the underlying funds in which the adviser
or distributor pays us a fee for providing administrative services, which fee
may vary. The fee is ordinarily based upon an annual percentage of the average
aggregate net amount invested in the underlying funds on behalf of the Separate
Account. You are not investing directly in the underlying fund. Since each
option has varying degrees of risk, please read the prospectuses carefully
before investing. Contact your registered representative or call 1-800-599-9460
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:
9
<PAGE> 10
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE 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 believed to have Management Inc. ("SBAM")
above-average price appreciation potential and which
may involve above average risk.
High Yield Bond Fund Seeks to maximize current income, and, secondarily, to SBAM
seek capital appreciation through investments in medium
or lower rating categories.
Investors Fund Seeks long-term growth of capital, and, secondarily, SBAM
current income, through investments in common stocks of
well-known companies.
Small Cap Growth Fund Seeks long-term growth of capital by investing SBAM
primarily in equity securities of companies with market
capitalizations similar to that of companies included
in the Russell 2000 Index.
Strategic Bond Fund Seeks a high level of current income. As a secondary SBAM
objective, the portfolio will seek capital
appreciation.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
Emerging Markets Seeks long-term capital appreciation by investing Morgan Stanley Dean Witter
Equity Portfolio primarily in equity securities of emerging market Investment Management Inc.
country issuers with a focus on those in which the ("MSDW")
adviser believes the economies are developing strongly
and in which the markets are becoming more
sophisticated.
Equity Growth Seeks to maximize long-term capital appreciation by MSDW
Portfolio investing primarily in the equity securities of U.S.
and, to a limited extent, foreign companies that
exhibit strong or accelerating growth earnings.
Global Equity Seeks long-term capital appreciation by investing MSDW
Portfolio primarily in equity securities of issuers throughout
the world, including the U.S.
Active International Seeks above-average capital appreciation by investing MSDW
Allocation Portfolio in a highly diversified mix of equity securities of
non-U.S. issuers.
Mid Cap Growth Seeks long-term capital growth by investing primarily Miller Aderson & Sherrerd
Portfolio in common stocks and other equity securities. LLP ("MAS")
Mid Cap Value Seeks above-average total return over a market cycle of MAS
Portfolio three to five years by investing in common stock and
other equity securities of issuers with equity
capitalizations in the range of the companies
represented in the S&P Mid Cap 400 Index (currently
$100 million to $8 billion).
Technology Portfolio Seeks long-term capital appreciation by investing MAS
primarily in equity securities of companies that the
investment adviser expects to benefit from their
involvement in technology or technolgy-related
industries.
Value Portfolio Seeks above-average total return over a market cycle of MAS
three to five years by investing primarily in a
diversified portfolio of common stocks and other equity
securities that the adviser believes to be relatively
undervalued based on various measures such as price
earnings ratios and price book ratios.
VAN KAMPEN LIFE INVESTMENT TRUST
Comstock Portfolio Seeks capital growth and income through investments in Van Kampen Asset
equity securities Management, Inc. ("VKAM")
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE ADVISER/SUBADVISER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Domestic Income Seeks current income primarily and capital appreciation VKAM
Portfolio as a secondary objective only when consistent with its
primary investment objective. The Portfolio attempts to
achieve these objectives through investment primarily
in a diversified portfolio of fixed-income securities.
The Portfolio may invest in investment grade securities
and lower rated and nonrated securities. Lower rated
securities (commonly known as "junk bonds") are
regarded by the rating agencies as predominantly
speculative with respect to the issuer's continuing
ability to meet principal and interest payments.
Emerging Growth Seeks capital appreciation by investing primarily in VKAM
Portfolio common stocks of companies considered to be emerging
growth companies.
Enterprise Portfolio Seeks capital appreciation through investments believed VKAM
by the Adviser to have above-average potential for
capital appreciation.
Government Portfolio Seeks to provide investors with a high current return VKAM
consistent with preservation of capital by investing
primarily in debt securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities.
Growth and Income Seeks long-term growth of capital and income by VKAM
Portfolio investing primarily in income-producing equity
securities, including common stocks and convertible
securities.
Money Market Seeks protection of capital and high current income VKAM
Portfolio through investments in money market instruments.
Investments in the Money Market Portfolio are neither
insured nor guaranteed by the U.S. Government. Although
the Money Market Portfolio seeks to maintain a stable
net asset value of $1.00 per share, there is no
assurance that it will be able to do so.
Morgan Stanley Real Seeks long-term growth of capital, with current income VKAM
Estate Securities as a secondary consideration, by investing principally
Portfolio in securities of companies operating in the real estate
industry ("Real Estate Securities). A "real estate
industry company" is a company that derives at least
50% of its assets (market to market), gross income or
net profits from the ownership, construction,
management or sale of residential, commercial or
industrial real estate.
</TABLE>
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts. Services and benefits we provide include:
- the ability for you to make withdrawals and surrenders under the
Contracts;
- the death benefit paid on the death of the contract owner, annuitant, or
first of the joint contract owners,
- the available funding options and related programs (including dollar-cost
averaging, portfolio rebalancing, and systematic withdrawal programs);
- administration of the annuity options available under the Contracts; and
- the distribution of various reports to contract owners.
11
<PAGE> 12
Costs and expenses we incur include:
- losses associated with various overhead and other expenses associated
with providing the services and benefits provided by the Contracts,
- sales and marketing expenses including commission payments to your sales
agent, and
- other costs of doing business.
Risks we assume include:
- that annuitants may live longer than estimated when the annuity factors
under the Contracts were established;
- that the amount of the death benefit will be greater than the contract
value, and
- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
We may also deduct a charge for taxes.
Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.
ADMINISTRATIVE CHARGES
We will deduct an annual contract administrative charge on the fourth Friday of
each August from Contracts with a value of less than $75,000 on that date. This
charge compensates us for expenses incurred in establishing and maintaining the
Contract. The $50 charge is deducted from the contract value by canceling
accumulation units applicable to each variable funding option on a pro rata
basis. For the first Contract year this charge will be prorated (i.e.
calculated) from the date of purchase. A prorated charge will also be made if
the Contract is completely withdrawn or terminated. We will not deduct a
contract administrative charge:
(1) from the distribution of death proceeds;
(2) after an annuity payout has begun, or
(3) if the contract value on the date of assessment equals or is greater
than $75,000.
An administrative expense charge (sometimes called "sub-account administrative
charge") is deducted on each business day from amounts allocated to the variable
funding options in order to compensate the Company for certain related
administrative and operating expenses. The charge equals, on an annual basis,
0.15% of the daily net asset value allocated to each of the variable funding
options.
MORTALITY AND EXPENSE RISK CHARGE
Each business day, the Company deducts a mortality and expense risk ("M&E")
charge from amounts held in the variable funding options. The deduction is
reflected in our calculation of accumulation and annuity unit values. The
charges stated are the maximum for this product. We reserve the right to lower
this charge at any time. This charge compensates the Company for risks assumed,
benefits provided and expenses incurred, including the payment of commissions to
your sales agent.
If you choose the Standard Death Benefit, the M&E charge is 1.45% annually for
the first six contract years. Beginning in the seventh contract year, the charge
is reduced to 1.40%.
If you choose the Enhanced Death Benefit, the M&E charge is 1.60% annually for
the first six contract years. Beginning in the seventh contract year, the charge
is reduced to 1.40%.
12
<PAGE> 13
FUNDING OPTION EXPENSES
The charges and expenses of the funding options are summarized in the fee table
and are described in the accompanying prospectuses.
PREMIUM TAX
Certain state and local governments charge premium taxes ranging from 0% to 5%,
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred. We
will deduct any applicable premium taxes from the contract value either upon
death, surrender, annuitization, or at the time purchase payments are made to
the Contract, but no earlier than when we have a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains or value of the contract, we reserve the right to
charge you proportionately for this tax.
TRANSFERS
- --------------------------------------------------------------------------------
Up to 30 days before the maturity date, you may transfer all or part of the
contract value between funding options. Transfers are made at the value(s) next
determined after we receive your request at the Home Office. There are no
charges or restrictions on the amount or frequency of transfers currently;
however, we reserve the right to charge a fee for any transfer request, and to
limit the number of transfers to one in any six-month period. We also reserve
the right to restrict transfers by any market timing firm or any other third
party authorized to initiate transfers on behalf of multiple contract owners. We
may, among other things, not accept: 1) the transfer instructions of any agent
acting under a power of attorney on behalf of more than one owner, or 2) the
transfer or exchange instructions of individual owners who have executed
pre-authorized transfer forms which are submitted by market timing firms or
other third parties on behalf of more than one owner. We further reserve the
right to limit transfers that we determine will disadvantage other contract
owners.
Since different funding options have different expenses, a transfer of contract
values from one funding option to another could result in your investment
becoming subject to higher or lower expenses. After the maturity date, you may
make transfers between funding options only with our consent.
DOLLAR COST AVERAGING
Dollar cost averaging or the pre-authorized transfer program (the "DCA Program")
allows you to transfer a set dollar amount to other funding options on a monthly
or quarterly basis during the accumulation phase of the Contract. Using this
method, more accumulation units are purchased in a funding option if the value
per unit is low and fewer accumulation units are purchased if the value per unit
is high. Therefore, a lower-than-average cost per unit may be achieved over the
long run.
You may elect the DCA Program through written request or other method acceptable
to the Company. You must have a minimum total Contract Value of $5,000 to enroll
in the DCA Program. The minimum amount that may be transferred through this
program is $400.
You may establish pre-authorized transfers of Contract Values from the Fixed
Account, subject to certain restrictions. Under the DCA Program, automated
transfers from the Fixed Account may not
13
<PAGE> 14
deplete your Fixed Account Value in less than twelve months from your enrollment
in the DCA Program.
In addition to the DCA Program, Travelers may credit increased interest rates to
contract owners under an administrative Special DCA Program established at the
discretion of Travelers, depending on availability and state law. Under this
program, the contract owner may pre-authorize level transfers to any of the
funding options under either a 6 Month Program or 12 Month Program. The 6 Month
Program and the 12 Month Program will generally have different credited interest
rates. Under the 6 Month Program, the interest rate can accrue up to 6 months on
funds in the Special DCA Program and all purchase payments and accrued interest
must be transferred on a level basis to the selected funding option in 6 months.
Under the 12 Month Program, the interest rate can accrue up to 12 months on
funds in the Special DCA Program and all purchase payments and accrued interest
in this Program must be transferred on a level basis to the selected funding
options in 12 months.
The pre-authorized transfers will begin after the initial Program purchase
payment and complete enrollment instructions are received by Travelers. If
complete Program enrollment instructions are not received by the Company within
15 days of receipt of the initial Program purchase payment, the entire balance
in the Program will be credited with the non-Program interest rate then in
effect for the Fixed Account.
You may start or stop participation in the DCA Program at any time, but you must
give the Company at least 30 days' notice to change any automated transfer
instructions that are currently in place. If you stop the Special DCA Program
and elect to remain in the Fixed Account, your Contract Value will be credited
for the remainder of 6 or 12 months with the interest rate for non-Program
funds.
A contract owner may only have one DCA Program or Special DCA Program in place
at one time. Any subsequent purchase payments received by the Company within the
Program period selected will be allocated to the current funding options over
the remainder of that Program transfer period, unless otherwise directed by the
contract owner.
All provisions and terms of the Contract apply to the DCA and Special DCA
Programs, including provisions relating to the transfer of money between
investment options. We reserve the right to suspend or modify transfer
privileges at any time and to assess a processing fee for this service.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Any time before the maturity date, you may redeem all or any portion of the
contract value, less any premium tax not previously deducted. Unless you submit
a written request specifying the fixed or variable funding option(s)from which
amounts are to be withdrawn, the withdrawal will be made on a pro rata basis.
The contract value will be determined as of the close of business after we
receive your surrender request at the Home Office. The contract value may be
more or less than the purchase payments made. Withdrawals during the annuity
period are not allowed.
We may defer payment of any contract value for a period of up to seven days
after the written request is received, but it is our intent to pay as soon as
possible. We cannot process requests for withdrawals that are not in good order.
We will contact you if there is a deficiency causing a delay and will advise
what is needed to act upon the withdrawal request.
SYSTEMATIC WITHDRAWALS
After the first contract year and before the maturity date, you may choose to
withdraw a specified dollar amount (at least $100) on a monthly, quarterly,
semiannual or annual basis. Any applicable premium taxes and withdrawal charge
will be deducted. To elect systematic withdrawals, you must have a contract
value of at least $15,000 and you must make the election on the form provided by
14
<PAGE> 15
the Company. We will surrender accumulation units pro rata from all investment
options in which you have an interest, unless you instruct us otherwise. You may
begin or discontinue systematic withdrawals at any time by notifying us in
writing, but at least 30 days' notice must be given to change any systematic
withdrawal instructions that are currently in place.
We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where allowed by state law).
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under age 59 1/2. You should consult with
your tax adviser regarding the tax consequences of systematic withdrawals.
LOANS
Loans may be available under your Contract. If available, all loan provisions
are described in your Contract or loan agreement.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
CONTRACT OWNER
Contract Owner (you). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive all
benefits given in the contract provided you have not named an irrevocable
beneficiary and provided the Contract is not assigned.
You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.
Joint Owner. For nonqualified contracts only, joint owners (e.g. spouses) may
be named in a written request before the contract is in effect. Joint owners may
independently exercise transfers allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them.
BENEFICIARY
You name the beneficiary in a written request. The beneficiary has the right to
receive any death benefits under the contract upon the death of the annuitant or
a contract owner. If more than one beneficiary survives the annuitant or
contract owner, they will share equally in benefits unless different shares are
recorded with the Company by written request before the death of the annuitant
or contract owner. In the case of a non-spousal beneficiary or a spousal
beneficiary who has chosen not to assume the contract, the death benefit
proceeds will be held in a fixed account until the beneficiary elects a
Settlement Option or takes a distribution.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.
ANNUITANT
The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.
15
<PAGE> 16
A contingent annuitant may not be changed, deleted or added after the Contract
becomes effective.
DEATH BENEFIT
- --------------------------------------------------------------------------------
At purchase, you select either the Standard or Enhanced Death Benefit. Before
the maturity date, when there is no contingent annuitant, a death benefit is
payable when either the annuitant or a contract owner dies. The death benefit is
calculated at the close of the business day on which the Company's Home Office
receives due proof of death and written payment instructions ("death report
date").
DEATH PROCEEDS BEFORE THE MATURITY DATE
STANDARD DEATH BENEFIT: The Company will pay a death benefit in an amount equal
to the greatest of (1), or (2) below, each reduced by any applicable premium
tax, withdrawals not previously deducted and any outstanding loans:
(1) the contract value; or
(2) the total purchase payments made under the Contract.
ENHANCED DEATH BENEFIT: The Company will pay a death benefit in an amount equal
to the greatest of (1), (2) or (3) below, each reduced by any applicable premium
tax, withdrawals not previously deducted and any outstanding loans:
(1) the contract value; or
(2) the total purchase payments made under the Contract; or
(3) the "Step-Up Value" described below.
STEP-UP VALUE. The step-up value will initially equal the first purchase
payment. When an additional purchase payment is made, the step-up value will be
increased by the amount of that purchase payment. When a partial surrender is
taken, the step-up value will be reduced by a partial surrender reduction as
described below. On each Contract anniversary before the annuitant's 80th
birthday and before the annuitant's death, if the contract value is greater than
the step-up value, the step-up value will be reset to equal that greater amount.
The step-up value will not be reduced on these anniversary recalculations
(provided no surrenders are made on that day). The only changes made to the
step-up value on or after the annuitant's 80th birthday will be those related to
additional purchase payments or partial surrenders.
PARTIAL SURRENDER REDUCTION. If you make a partial surrender, the step-up value
is reduced by a partial surrender reduction which equals (1) the step-up value,
multiplied by (2) the amount of the partial surrender, divided by (3) the
contract valuebefore the 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)59,090
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)516,666
Your new step-up value would be 50,000-16,666, or $33,334.
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<PAGE> 17
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds before the maturity date under
various situations for nonqualified contracts and qualified contracts is
summarized in the charts below. The charts do not encompass every situation and
are merely intended as a general guide. More detailed information is provided in
your Contract. Generally, the person(s) receiving the benefit may request that
the proceeds be paid in a lump sum, or be applied to one of the settlement
options available under the Contract.
NONQUALIFIED CONTRACTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL MANDATORY PAYOUT
THE DEATH OF THE PAY THE PROCEEDS TO: UNLESS. . . RULES APPLY*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OWNER (WHO IS NOT THE The Unless, the beneficiary is the Yes
ANNUITANT) (WITH NO JOINT beneficiary(ies), or contract owner's spouse and the
OWNER) if none, to the spouse elects to continue the
contract owner's contract as the new owner rather than
estate. receive the distribution.
- ---------------------------------------------------------------------------------------------------------------
OWNER (WHO IS THE ANNUITANT) The Unless, the beneficiary is the Yes
(WITH NO JOINT OWNER) beneficiary(ies), or contract owner's spouse and the
if none, to the spouse elects to continue the
contract owner's contract as the new owner rather than
estate. receive the distribution.
- ---------------------------------------------------------------------------------------------------------------
JOINT OWNER (WHO IS NOT THE The surviving joint Unless the surviving joint owner is Yes
ANNUITANT) owner. the spouse and elects to assume and
continue the contract.
- ---------------------------------------------------------------------------------------------------------------
JOINT OWNER (WHO IS THE The Unless the beneficiary is the Yes
ANNUITANT) beneficiary(ies), or contract owner's spouse and the
if none, to the spouse elects to assume and continue
contract owner's the contract.
estate.
Or, unless there is a contingent
annuitant the contingent annuitant
becomes the annuitant and the
proceeds will be paid to the
surviving joint owner. If the
surviving joint owner is the spouse,
the spouse may elect to assume and
continue the contract.
- ---------------------------------------------------------------------------------------------------------------
ANNUITANT (WHO IS NOT THE The Unless, there is a contingent No
CONTRACT OWNER) beneficiary(ies). annuitant. Then, the contingent
annuitant becomes the annuitant and
the Contract continues in effect
(generally using the original
maturity date). The proceeds will
then be paid upon the death of the
contingent annuitant or owner.
- ---------------------------------------------------------------------------------------------------------------
ANNUITANT (WHO IS THE CONTRACT See death of "owner N/A
OWNER) who is the
annuitant" above.
- ---------------------------------------------------------------------------------------------------------------
ANNUITANT (where owner is a The beneficiary(ies) Yes (Death of
nonnatural person/trust) (e.g. the trust). annuitant is
treated as death
of the owner in
these
circumstances.)
- ---------------------------------------------------------------------------------------------------------------
CONTINGENT ANNUITANT(ASSUMING No death proceeds N/A
ANNUITANT IS STILL ALIVE) are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
CONTINGENT BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
* Certain payout rules of the Internal Revenue Code (IRC) are triggered upon the
death of any Owner. Non-spousal Beneficiaries (as well as spousal
beneficiaries who choose not to assume the contract) must begin taking
distributions based on the Beneficiary's life expectancy within one year of
death or take a complete distribution of contract proceeds within 5 years of
death.
QUALIFIED CONTRACTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
MANDATORY PAYOUT
RULES APPLY*
BEFORE THE MATURITY DATE, UPON THE COMPANY WILL (SEE *
THE DEATH OF THE PAY THE PROCEEDS TO: UNLESS. . . ABOVE)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OWNER/ANNUITANT The Yes
beneficiary(ies), or
if none, to the
contract owner's
estate.
- ---------------------------------------------------------------------------------------------------------------
BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
CONTINGENT BENEFICIARY No death proceeds N/A
are payable;
contract continues.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
DEATH PROCEEDS AFTER THE MATURITY DATE
If any owner or the annuitant dies on or after the maturity date, the Company
will pay the beneficiary a death benefit consisting of any benefit remaining
under the annuity or income option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Under the Contract, you can receive regular income payments (annuity payments).
You can choose the month and the year in which those payments begin (maturity
date). You can also choose among income plans (annuity or income options). While
the annuitant is alive, you can change your selection any time up to the
maturity date. Annuity or income payments will begin on the maturity date stated
in the Contract unless the Contract has been fully surrendered or the proceeds
have been paid to the beneficiary before that date, or unless you elect another
date. Annuity payments are a series of periodic payments (a) for life; (b) for
life with either a minimum number of payments or a specific amount assured; or
(c) for the joint lifetime of the annuitant and another person, and thereafter
during the lifetime of the survivor. We may require proof that the annuitant is
alive before annuity payments are made. Not all options may be available in all
states.
You may choose to annuitize at any time after you purchase the contract. Unless
you elect otherwise, the maturity date will be the annuitant's 90th birthday or
ten years after the effective date, 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, a contract owner may elect
to extend the maturity date to any time prior to the annuitant's 90th birthday,
or to a later date with the Company's consent. Certain annuity options taken at
the maturity date may be used to meet the minimum required distribution
requirements of federal tax law, or a program of partial surrenders may be used
instead. These mandatory distribution requirements take effect generally upon
the death of the contract owner, or with qualified contracts upon either the
later of the contract owner's attainment of age 70 1/2 or year of retirement; or
the death of the contract owner. You should seek independent tax advice
regarding the election of minimum required distributions.
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<PAGE> 19
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. If, at the time annuity payments begin,
no election has been made to the contrary, the contract value will be applied to
provide an annuity funded by the same investment options as you have selected
during the accumulation period . At least 30 days before the maturity date, you
may transfer the contract value among the funding options in order to change the
basis on which annuity payments will be determined. (See "Transfers.")
VARIABLE ANNUITY
You may choose an annuity payout that fluctuates depending on the investment
experience of the variable funding options. The number of annuity units credited
to the Contract is determined by dividing the first monthly annuity payment
attributable to each funding option by the corresponding accumulation unit value
as of 14 days before the date annuity payments begin. An annuity unit is used to
measure the dollar value of an annuity payment. The number of annuity units (but
not their value) remains fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. If a variable annuity is elected,
the amount applied to it will be the value of the funding options as of 14 days
before the date annuity payments begin less any applicable premium taxes not
previously deducted.
The amount of the first monthly payment depends on the annuity option elected
and the annuitant's adjusted age. A formula for determining the adjusted age is
contained in the Contract. The total first monthly annuity payment is determined
by multiplying the benefit per $1,000 of value shown in the Contract tables by
the number of thousands of dollars of contract value applied to that annuity
option and factors in an assumed daily net investment factor. The Assumed Daily
Net Investment factor corresponds to an annual interest rate of 3%, used to
determine the guaranteed payout rates shown. If investment rates are higher at
the time annuitization is selected, payout rates will be higher than those
shown. The Company reserves the right to require satisfactory proof of age of
any person on whose life annuity payments are based before making the first
payment under any of the payment options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
all subsequent annuity payments changes from month to month based on the
investment experience of the applicable funding options. The total amount of
each annuity payment will be equal to the sum of the basic payments in each
funding option. The actual amounts of these payments are determined by
multiplying the number of annuity units credited to each funding option by the
corresponding annuity unit value as of the date 14 days before the date the
payment is due.
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity," except that the amount
applied to begin the annuity will be the contract value, determined as of the
date annuity payments begin. Payout rates will not be lower than those shown in
the Contract. If it would produce a larger payment, the first fixed annuity
payment will be determined using the Life Annuity Tables in effect on the
maturity date.
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PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
While the annuitant is alive, you can change your annuity or income option
selection any time up to the maturity date. Once annuity or income 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 or income payments based on the life of the annuitant,
in accordance with Annuity Option 2 (Life Annuity with 120 monthly payments
assured). For certain qualified contracts, Annuity Option 4 (Joint and Last
Survivor Joint Life Annuity -- Annuity Reduced on Death of Primary Payee) will
be the automatic option as described in the Contract.
The minimum amount that can be placed under an annuity or income option will be
$2,000 unless we agree to a lesser amount. If any monthly periodic payment due
is less than $100, the Company reserves the right to make payments at less
frequent intervals, or to pay the contract value in a lump-sum.
On the maturity date, we will pay the amount due under the Contract in
accordance with the payment option that you select. You may choose to receive a
single lump-sum payment. You must elect an option in writing, in a form
satisfactory to the Company. Any election made during the lifetime of the
annuitant must be made by the contract owner.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the contract value (less any applicable premium taxes) may be paid under
one or more of the following annuity options. Payments under the annuity options
may be elected on a monthly, quarterly, semiannual or annual basis. We may offer
additional options.
Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments
during the lifetime of the annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for beneficiaries.
Option 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Assured. The
Company will make monthly annuity payments during the lifetime of the annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months as elected, we will continue making
payments to the beneficiary during the remainder of the period.
Option 3 -- Joint and Last Survivor Life Annuity -- No Refund. The Company will
make regular annuity payments during the lifetime of the annuitant and a second
person. When either person dies, we will continue making payments to the
survivor. No further payments will be made following the death of the survivor.
Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of
Primary Payee. The Company will make annuity payments during the lifetimes of
the annuitant and a second person. One will be designated the primary payee, the
other will be designated the secondary payee. On the death of the secondary
payee, the Company will continue to make monthly annuity payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, the Company will continue
to make annuity payments to the secondary payee in an amount equal to 50% of the
payments which would have been made during the lifetime of the primary payee. No
further payments will be made once both payees have died.
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Option 5 -- Other Annuity Options. The Company will make any other arrangements
for annuity payments as may be mutually agreed upon.
INCOME OPTIONS
Instead of one of the annuity options described above, and subject to the
conditions described under "Election of Options," all or part of the Contract's
cash surrender value (or, if required by state law, contract value) may be paid
under one or more of the following income options, provided that they are
consistent with federal tax law qualification requirements. Payments under the
income options may be elected on a monthly, quarterly, semiannual or annual
basis:
Option 1 -- Payments of a Fixed Amount. The Company will make equal payments of
the amount elected until the cash surrender value applied under this option has
been exhausted. The first payment and all later payments will be paid from each
funding option or the Fixed Account in proportion to the cash surrender value
attributable to each funding option and/or Fixed Account. The final payment will
include any amount insufficient to make another full payment.
Option 2 -- Payments for a Fixed Period. The Company will make payments for the
period selected. The amount of each payment will be equal to the remaining cash
surrender value applied under this option divided by the number of remaining
payments.
Option 3 -- Other Income Options. The Company will make any other arrangements
for Income Options as may be mutually agreed upon.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
You may return the Contract for a full refund of the contract value (including
charges) within twenty 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 contract value less any applicable premium tax, and any applicable
administrative charge.
REQUIRED REPORTS
As often as required by law, but at least once in each contract year before the
due date of the first annuity payment, we will furnish a report showing the
number of accumulation units credited to the Contract and the corresponding
accumulation unit value(s) as of the report date for each funding
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<PAGE> 22
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 Seven for Variable
Annuities ("Separate Account Seven") and the Travelers Separate Account Eight
for Variable Annuities ("Separate Account Eight"), respectively. Both Separate
Account Seven and Separate Account Eight were established on June 30, 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 Seven and Separate Account Eight 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 covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the annual contract
administrative charge is converted to a
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<PAGE> 23
percentage of assets based on the actual fee collected, divided by the average
net assets for Contracts sold.
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. Nonstandardized total returns will not reflect the
deduction of the annual contract administrative charge, which, if reflected,
would decrease the level of performance shown.
For funding options that were in existence before they became available under
the Separate Account, the nonstandardized average annual total return quotations
will reflect the investment performance that such funding options would have
achieved (reduced by the applicable charges) had 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: Certain provisions of the Internal Revenue Code provide
that, generally, no gain or loss is recognized when an annuity contract is
received in exchange for a life, endowment, or annuity contract. Since different
annuity contracts have different expenses, fees and benefits, a tax-free
exchange could result in your investment becoming subject to higher or lower
fees and/or expenses.
TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED
If you purchase an annuity contract with proceeds of an eligible rollover
distribution from any pension plan, specially sponsored program, or individual
retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a
qualified contract. Some examples of qualified contracts are: IRAs, 403(b)
annuities, pension and profit-sharing plans (including 401(k) plans), Keogh
Plans, and certain other qualified deferred compensation plans. An exception to
this is a qualified plan called a Roth IRA. Under Roth IRAs, after-tax
contributions accumulate until maturity, when
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amounts (including earnings) may be withdrawn tax-free. If you purchase the
contract on an individual basis with after-tax dollars and not under one of the
programs described above, your contract is referred to as nonqualified.
NONQUALIFIED ANNUITY CONTRACTS
As the owner of a nonqualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on purchase payments, but you will not be
taxed on increases in the value of your contract until a distribution occurs --
either as a withdrawal (distribution made prior to the maturity date), or as
annuity payments. When a withdrawal is made, you are taxed on the amount of the
withdrawal that is considered earnings. Similarly, when you receive an annuity
payment, part of each payment is considered a return of your purchase payments
and will not be taxed. The remaining portion of the annuity payment (i.e., any
earnings) will be considered ordinary income for tax purposes.
If a nonqualified annuity is owned by other than an individual, however, (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includible in income
annually. Furthermore, for contracts issued after April 22, 1987, if you
transfer the contract without adequate consideration all deferred increases in
value will be includible in your income at the time of the transfer.
If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includible in your income. (See "Penalty
Tax for Premature Distributions" below.) There is income in the contract to the
extent the contract value exceeds your investment in the contract. The
investment in the contract equals the total purchase payments you paid less any
amount received previously which was excludible from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.
Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.
QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the contract have not yet
been taxed, the full amount of all distributions, including lump-sum withdrawals
and annuity payments, are taxed at the ordinary income tax rate unless the
distribution is transferred to an eligible rollover account or contract. The
Contract is available as a vehicle for IRA rollovers and for other qualified
contracts. There are special rules which govern the taxation of qualified
contracts, including withdrawal restrictions, requirements for mandatory
distributions, and contribution limits. We have provided a more complete
discussion in the SAI.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions, for life or life expectancy, or
unless the distribution follows the death or disability of the contract owner.
Other exceptions may be available in certain qualified plans.
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DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
separate account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how separate accounts must be diversified. The Company
monitors the diversification of investments constantly and believes that its
accounts are adequately diversified. The consequence of any failure to diversify
is essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the separate accounts, also referred to as segregated asset accounts,
must be owned by the Company and not by the Contract Owner for federal income
tax purposes. Otherwise, the deferral of taxes is lost and income and gains from
the accounts would be includable annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent Contract Owners from
being considered the owner of the assets of the separate account.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum
distributions until the later of April 1st of the calendar year following the
calendar year in which they attain age 70 1/2 or the year of retirement.
Distributions must begin or be continued according to required patterns
following the death of the contract owner or annuitant of both qualified and
nonqualified annuities.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an owner or
annuitant. Generally, such amounts are includible in the income of the recipient
as follows: (i) if distributed in a lump sum, they are taxed in the same manner
as a full surrender of the contract; or (ii) if distributed under a payment
option, they are taxed in the same way as annuity payments.
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OTHER INFORMATION
- --------------------------------------------------------------------------------
THE INSURANCE COMPANIES
Please refer to the table on the first page of the Summary of this prospectus to
determine which company issued your Contract.
The Travelers Insurance Company is a stock insurance company chartered in 1864
in Connecticut and continuously engaged in the insurance business since that
time. It is licensed to conduct life insurance business in all states of the
United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British
Virgin Islands and the Bahamas. The Company is an indirect wholly owned
subsidiary of Citigroup Inc. The Company's Home Office is located at One Tower
Square, Hartford, Connecticut 06183.
The Travelers Life and Annuity Company is a stock insurance company chartered in
1973 in Connecticut and continuously engaged in the insurance business since
that time. It is licensed to conduct life insurance business in a majority of
the states of the United States, the District of Columbia and Puerto Rico, and
intends to seek licensure in the remaining states, except New York. The Company
is an indirect wholly owned subsidiary of Citigroup Inc. The Company's Home
Office is located at One Tower Square, Hartford, Connecticut 06183.
FINANCIAL STATEMENTS
The financial statements for each insurance company and for each separate
account are located in their respective Statements of Additional Information.
IMSA
The Companies are members of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and IMSA membership in
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities. IMSA members have adopted policies and
procedures that demonstrate a commitment to honesty, fairness and integrity in
all customer contacts involving the sale and service of individual life
insurance and annuity products.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. Any sales
representative or employee who sells the Contracts will be qualified to sell
variable annuities under applicable federal and state laws. Each broker-dealer
is registered with the SEC under the Securities Exchange Act of 1934, and all
are members of the NASD. The principal underwriter of the Contracts is CFBDS,
Inc., 21 Milk St., Boston, MA. CFBDS, Inc. is not affiliated with the Company or
the Separate Account. However, it is currently anticipated that Travelers
Distribution LLC, an affiliated broker-dealer, may become the principal
underwriter for the Contracts during the year 2000.
Up-front compensation paid to sales representatives will not exceed 7% of the
purchase payments made under the Contracts. If asset based compensation is paid,
it will not exceed 2% of the average account value annually. From time to time,
the Company may pay or permit other promotional incentives, in cash, credit or
other compensation.
CONFORMITY WITH STATE AND FEDERAL LAWS
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, contract value or death
benefits that are available under the Contract are not less than the
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minimum benefits required by the statutes of the state in which the Contract is
delivered. We reserve the right to make any changes, including retroactive
changes, in the Contract to the extent that the change is required to meet the
requirements of any law or regulation issued by any governmental agency to which
the Company, the Contract or the contract owner is subject.
VOTING RIGHTS
The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.
LEGAL PROCEEDINGS AND OPINIONS
Legal matters in connection with the federal laws and regulations affecting the
issue and sale of the contract described in this prospectus, as well as the
organization of the Companies, their authority to issue variable annuity
contracts under Connecticut law and the validity of the forms of the variable
annuity contracts under Connecticut law, have been passed on by the General
Counsel of the Companies.
THE TRAVELERS INSURANCE COMPANY
There are no pending legal proceedings affecting the Separate Account. There is
one material pending legal proceeding, other than ordinary routine litigation
incidental to business, to which the Company is a party.
In March 1997, a purported class action entitled Patterman v. The Travelers,
Inc., et al. was commenced in the Superior Court of Richmond County, Georgia,
alleging, among other things, violations of the Georgia RICO statute and other
state laws by an affiliate of the Company, Primerica Financial Services, Inc.
and certain of its affiliates. Plaintiffs seek unspecified compensatory and
punitive damages and other relief. In October 1997, defendants answered the
complaint, denied liability and asserted numerous affirmative defenses. In
February 1998, on defendants' motion, the Superior Court of Richmond County
transferred the lawsuit to the Superior Court of Gwinnett County, Georgia.
Plaintiffs appealed the transfer order, and in December 1998 the Court of
Appeals of the State of Georgia reversed the lower court's decision. Defendants
petitioned the Georgia Supreme Court to hear an appeal from the decision of the
Court of Appeals, and the petition was granted in May 1998. In September 1999,
oral argument on defendants' petition was heard and, on February 28, 2000, the
Georgia Supreme Court affirmed the Georgia County Appeals and remanded the
matter to the Superior Court of Richmond County. In March 2000, defendants moved
the Georgia Supreme Court to reconsider its February 28, 2000 decision, and that
motion remains pending. Proceedings in the trial court have been stayed pending
appeal. Defendants intend to vigorously contest the litigation.
THE TRAVELERS LIFE AND ANNUITY COMPANY
There are no pending material legal proceedings affecting the Separate Account,
the principal underwriter or the Company.
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APPENDIX A -- CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
THE TRAVELERS SEPARATE ACCOUNT SEVEN FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 11, 1999
(EFFECTIVE DATE) TO
DECEMBER 31, 1999
----------------------------
STANDARD ENHANCED
DEATH BENEFIT DEATH BENEFIT
- -------------------------------------------------------------------------------------------
<S> <C> <C>
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
EMERGING MARKETS EQUITY PORTFOLIO (10/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.355 1.354
Number of units outstanding at end of year.............. 21,280 --
GLOBAL EQUITY PORTFOLIO (8/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.974 0.973
Number of units outstanding at end of year.............. 139,371 12,006
MID CAP VALUE PORTFOLIO (9/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.038 1.037
Number of units outstanding at end of year.............. 104,342 --
VALUE PORTFOLIO (6/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.882 0.882
Number of units outstanding at end of year.............. 17,311 36,000
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
CAPITAL FUND
Unit Value at beginning of year......................... -- --
Unit Value at end of year............................... -- --
Number of units outstanding at end of year.............. -- --
HIGH YIELD BOND FUND (11/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.021 1.020
Number of units outstanding at end of year.............. 34,570 --
INVESTORS FUND (9/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.936 0.936
Number of units outstanding at end of year.............. 23,365 --
STRATEGIC BOND FUND (9/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.006 1.005
Number of units outstanding at end of year.............. 179,398 --
VAN KAMPEN LIFE INVESTMENT TRUST
DOMESTIC INCOME PORTFOLIO (10/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.994 0.993
Number of units outstanding at end of year.............. 93,053 --
EMERGING GROWTH PORTFOLIO (9/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.610 1.609
Number of units outstanding at end of year.............. 138,452 --
ENTERPRISE PORTFOLIO (8/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.134 1.133
Number of units outstanding at end of year.............. 253,292 10,646
GOVERNMENT PORTFOLIO (8/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.990 0.989
Number of units outstanding at end of year.............. 92,300 11,329
GROWTH AND INCOME PORTFOLIO (6/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.035 1.035
Number of units outstanding at end of year.............. 120,714 54,000
MONEY MARKET PORTFOLIO (8/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.016 1.015
Number of units outstanding at end of year.............. 236,219 168,354
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO (10/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.903 0.902
Number of units outstanding at end of year.............. 21,751 --
</TABLE>
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APPENDIX A -- CONDENSED FINANCIAL INFORMATION
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THE TRAVELERS SEPARATE ACCOUNT SEVEN FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
The date shown next to each funding option is the date money first came into the
funding option through the Separate Account. The financial statements of
Separate Account Seven and the consolidated financial statements of The
Travelers Insurance Company are contained in the SAI.
Any funds not listed above were not yet available as of December 31, 1999.
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APPENDIX B -- CONDENSED FINANCIAL INFORMATION
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THE TRAVELERS SEPARATE ACCOUNT EIGHT FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 11, 1999
(EFFECTIVE DATE) TO
DECEMBER 31, 1999
-----------------------------
STANDARD ENHANCED
DEATH BENEFIT DEATH BENEFIT
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<S> <C> <C>
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
EMERGING MARKETS EQUITY PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.355 1.354
Number of units outstanding at end of year.............. 353,532 15,517
GLOBAL EQUITY PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.974 0.973
Number of units outstanding at end of year.............. 452,564 272,045
MID CAP VALUE PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.038 1.037
Number of units outstanding at end of year.............. 681,124 249,819
VALUE PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.882 0.882
Number of units outstanding at end of year.............. 371,587 209,684
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
CAPITAL FUND (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.035 1.035
Number of units outstanding at end of year.............. 255,200 30,255
HIGH YIELD BOND FUND (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.021 1.020
Number of units outstanding at end of year.............. 100,089 17,063
INVESTORS FUND (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.936 0.936
Number of units outstanding at end of year.............. 244,831 129,164
STRATEGIC BOND FUND (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.006 1.005
Number of units outstanding at end of year.............. 69,985 48,819
VAN KAMPEN LIFE INVESTMENT TRUST
DOMESTIC INCOME PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.994 0.993
Number of units outstanding at end of year.............. 37,791 152,070
EMERGING GROWTH PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.610 1.609
Number of units outstanding at end of year.............. 603,789 619,928
ENTERPRISE PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.134 1.133
Number of units outstanding at end of year.............. 687,390 415,538
GOVERNMENT PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.990 0.989
Number of units outstanding at end of year.............. 54,074 109,658
GROWTH AND INCOME PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.035 1.035
Number of units outstanding at end of year.............. 411,634 384,865
MONEY MARKET PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 1.016 1.015
Number of units outstanding at end of year.............. 392,981 347,383
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO (7/99)
Unit Value at beginning of year......................... 1.000 1.000
Unit Value at end of year............................... 0.903 0.902
Number of units outstanding at end of year.............. 39,126 12,247
</TABLE>
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APPENDIX B -- CONDENSED FINANCIAL INFORMATION
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THE TRAVELERS SEPARATE ACCOUNT EIGHT FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES (CONTINUED)
The date shown next to each funding option is the date money first came into the
funding option through the Separate Account. The financial statements of
Separate Account Eight and the financial statements of The Travelers Life and
Annuity Company are contained in the SAI.
Any funds not listed above were not yet available as of December 31, 1999.
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APPENDIX C
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THE FIXED ACCOUNT
The Fixed Account is secured by part of the general assets of the Company. The
general assets of the Company include all assets of the Company other than those
held in the separate accounts sponsored by the Company or its affiliates.
The staff of the SEC does not generally review the disclosure in the prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account and the
general account may, however, be subject to certain provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus.
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of the Separate Account or any of
the funding options does not affect the Fixed Account portion of the contract
owner's contract value, or the dollar amount of fixed annuity payments made
under any payout option.
We guarantee that, at any time, the Fixed Account contract value will not be
less than the amount of the purchase payments allocated to the Fixed Account,
plus interest credited as described below, less any applicable premium taxes or
prior surrenders.
Purchase payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of, the Securities
Act of 1933 or Investment Company Act of 1940. We will invest the assets of the
Fixed Account at our discretion. Investment income from such Fixed Account
assets will be allocated to us and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to us includes compensation
for mortality and expense risks borne by us in connection with Fixed Account
Contracts. The amount of such investment income allocated to the Contracts will
vary from year to year in our sole discretion at such rate or rates as we
prospectively declare from time to time.
The initial rate for any allocations into the Fixed Account is guaranteed for
one year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. We also guarantee that for the life of the
Contract we will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in our sole discretion. You assume the risk that interest credited
to the Fixed Account may not exceed the minimum guarantee of 3% for any given
year.
TRANSFERS
You may make transfers from the Fixed Account to any other available funding
option(s) twice a year during the 30 days following the semiannual anniversary
of the contract effective date. The transfers are limited to an amount of up to
15% of the Fixed Account Value on the semiannual contract effective date
anniversary. (This restriction does not apply to transfers under the Dollar Cost
Averaging Program.) Amounts previously transferred from the Fixed Account to
other funding options may not be transferred back to the Fixed Account for a
period of at least six months from the date of transfer. We reserve the right to
waive either of these restrictions.
Automated transfers from the Fixed Account to any of the funding options may
begin at any time. Automated transfers from the Fixed Account may not deplete
your Fixed Account value in a period of less than twelve months from your
enrollment in the Dollar Cost Averaging Program.
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APPENDIX D
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CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to The Travelers Insurance or The Travelers Life
and Annuity Company. A list of the contents of the Statement of Additional
Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Principal Underwriting Agreement
Valuation of Assets
Performance Information
Mixed and Shared Funding
Federal Tax Considerations
Independent Accountants
Financial Statements
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Copies of the Statement of Additional Information dated May 1, 2000 are
available without charge. To request a copy, please clip this coupon on the
dotted line above, enter your name and address in the spaces provided below, and
mail to: The Travelers Insurance Company, Annuity Investor Services, One Tower
Square, Hartford, Connecticut 06183. The Travelers Insurance Company Statement
of Additional Information is printed on Form L-21258S, and the The Travelers
Life and Annuity Statement of Additional Information is printed on Form L-21259S
Name:
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Address:
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L-21258 May 1, 2000
