TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES, N-30D, 1998-02-26

TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES
N-30D, 1998-02-26

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<PAGE> 1
UNIVERSAL ANNUITY

ANNUAL REPORTS
DECEMBER 31, 1997

[Travelers Insurance Logo]

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

[TRAVELERS LIFE & ANNUITY LOGO]

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

<PAGE> 2

[TIMCO LOGO]

The Travelers Investment Management Company ("TIMCO") provides equity
management and advisory services for The Travelers Growth and Income Stock
Account for Variable Annuities.

[TAMIC LOGO]

Travelers Asset Management International Corporation ("TAMIC") provides fixed
income management and advisory services for the following Travelers Variable
Products Separate Accounts contained in this report: The Travelers Quality
Bond Account for Variable Annuities and The Travelers Money Market Account for
Variable Annuities.
<PAGE> 3
[TRAVELERS LIFE & ANNUITY LOGO]

THE TRAVELERS VARIABLE PRODUCT SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF DECEMBER 31, 1997

ECONOMIC REVIEW AND OUTLOOK

The big story in the second half of 1997 was the Asian economic and financial
crisis. What started out as a localized disturbance in Thailand in July 1997
soon spread through the other countries in Southeast Asia and wreaked havoc in
their currency and capital markets. The events in Asia raise the specter of a
global economic slowdown and prospects of global deflation.

We begin with a discussion of the outlook for inflation and the potential for
deflation with a focus on the U.S. economy. The remarkable string of good news
on the inflation front in the U.S. continued in the fourth quarter. The Producer
Price Index fell slightly in the fourth quarter and declined by 1.2% for 1997.
Producer prices fell in 9 out of 12 months in 1997 while the Consumer Price
Index rose by a mere 1.7% in 1997, the smallest rise since 1986. As we have
mentioned several times before, inflation has never been so low at such a late
stage in the economic cycle.

In addition to technology-driven productivity gains contributing to the recent
disinflationary trend, another positive factor has now come into play for the
outlook on U.S. inflation. With the significant devaluation of several Asian
currencies, import prices should fall and push domestic inflation even lower.

With worldwide overproduction the cost of items such as cars and electronic
goods is actually showing near-zero growth. Prices of some of the most important
industrial commodities, including oil and copper, have tumbled in recent months
and the price of gold, a traditional hedge against inflation, was at an 18-year
low in December 1997, well below $300 per ounce.

We believe that inflation will continue to remain benign. Despite a tight labor
market in the U.S., wage inflation has not surged. Global deflationary pressures
should offset wage inflation in 1998. While we acknowledge the arguments in
favor of global deflation, we have not seen enough evidence to foresee zero or
negative inflation in 1998.

The economic crisis in Southeast Asia also raises the possibility of a global
slowdown. We examine the likely impact on the U.S. economy. The U.S. economy
derives almost 15% of its total output from exports. Approximately 10% of these
exports are made to Southeast Asia. While it is difficult to predict the
eventual impact on U.S. exports, most reasonable estimates of growth shortfalls
suggest that the impact on U.S. Gross Domestic Product ("GDP") growth will be no
more than a decrease of 0.5%. Economic growth forecasts for 1998 have been
revised down recently and the consensus GDP growth estimate for 1998 is now
about 2.5%.

The continued good news on the inflation front sent U.S. interest rates lower
during the fourth quarter. Long term rates fell from 6.4% to 5.9% as investors
began to discount a deflationary outlook and became comfortable with a stable
monetary environment. The sharp drop in interest rates in the second half of
1997 - long term yields fell by almost 100 basis points from 6.8% - triggered a
strong bond market rally.

Short-term interest rates have held steady even as inflation and long-term rates
have fallen. Even though the Federal Reserve Board ("Fed") has not raised short
rates for several months now, monetary policy has effectively become tighter as
the real Fed funds rate has risen to 3.3%. As in several previous instances, the
bond market vigilantes have done the work of the Fed by pricing inflation
expectations at the long end of the yield curve. With Asian currencies in
turmoil, we believe that the Fed is likely to stay put here and that the odds of
another Fed hike are remote.

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FIXED INCOME COMMENTARY

For the first time in seven quarters, bonds outperformed stocks as the Asian
crisis that began in Thailand in July 1997 spread throughout Asia and other
emerging markets. The crisis impacted all global markets in late October when
the Hong Kong dollar was under pressure. The Standard & Poor's 500 Stock Index
("S&P 500") went down roughly 10% in October leading to a sharp rally in the
U.S. bond market. While the U.S. stock market and emerging debt markets posted
positive returns in November and December both of these markets did not offset
the amount lost in October. As of this writing, Asia's problems continue to
challenge many investment professionals.

We believe that many investors have underestimated the damage caused by the
crisis in Asia. Imports from countries with devalued currencies will keep
downward pressure on the inflation rate in the U.S., taking that issue off the
radar screen for many investors. The reduction in corporate revenues will impact
some combination of profits and employment. To the extent that corporations
reduce their labor force to preserve profits, pressure will be taken off U.S.
labor markets and the Federal Reserve Board ("Fed") will be given a compelling
reason to cut rates. Lastly, much of the problems in Asia are the result of
building too much capacity in industries such as automobiles, chemicals and
semiconductors. This overcapacity, which has been exacerbated by the decline of
demand in Asia, will slow down U.S. capital spending growth, which has been in
the recent past the fastest-growing component of the GDP.

Looking ahead for the remainder of 1998, we expect that the difference between
short-term and long-term interest rates will probably widen. In our opinion, one
of two scenarios could develop that could cause this change in the relationship
between interest rates. We believe the most likely scenario is that ongoing
financial turmoil in Asia could hamper U.S. economic growth and lead the Fed to
compensate by lowering short-term interest rates. The other possibility is that
the U.S. economy continues to grow robustly, heightening investor concerns of
greater inflationary pressures. In this case, investors would shift their
attention to the tight U.S. labor market, reflecting their inflationary concerns
in the form of higher long-term interest rates. This latter scenario could
happen if Asian economies recover quickly or if interest-rate sensitive
industries of the U.S. economy pick up sufficiently to offset any adverse
affects that the Asian crisis might have on domestic economic growth.

EQUITY COMMENTARY

The year 1997 turned out to be another spectacular one for the U.S. stock
market. For the first time ever, the U.S. stock market posted three consecutive
years of gains in excess of 20%. The current bull market continues to be driven
by stable economic growth, robust earnings growth and low inflation.

Stock market volatility also increased in 1997 when the Dow Jones Industrial
Average ("DJIA") moved up or down by more than 1% every third trading day on
average. The uncertainty on the earnings front as a result of the Asian
financial and currency crisis should sustain a high level of volatility and
complicate the market outlook for 1998.

After a strong showing in the first half of 1997, the U.S. stock market posted
solid gains in the third quarter. The Standard & Poor's 500 Stock Index gained
7.5% in the third quarter, the Russell 2000 Stock Index ("Russell 2000") rose
sharply by 14.9% and the NASDAQ Composite Stock Index ("NASDAQ") performed even
better with a spectacular rise of 16.9%. The U.S. stock market posted a mixed
performance in the fourth quarter. The S&P 500 gained 2.9% in the fourth
quarter, while the Russell 2000 fell by 3.4% and the NASDAQ declined by 6.8%.
For calendar year 1997, the S&P 500 rose by 33.4%, the Russell 2000 advanced by
22.4% and the NASDAQ gained 21.6%.

Stock market volatility increased in the third quarter with the DJIA registering
its second-largest point decline and its single-largest daily gain within a
three-week period in the middle of the third quarter. Most stock market indexes
fell about 3% on August 15 on a groundswell of earnings concerns after a few,
large cap consumer companies warned about earnings disappointments for the third
quarter. Investor sentiment reversed on September 2 when a weaker economic
report from the National Association of Purchasing Managers dispelled fears of
further Fed tightening. The stock market reversed course with an equally
spectacular 3% gain as bond prices rose sharply also.

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<PAGE> 5
The events in Southeast Asia came into sharp focus for U.S. investors when a
sell-off in Hong Kong, a beacon of stability in the region, dropped the DJIA by
554 points on Monday, October 27 and created its largest point loss in history.
After a wild swing in trading the following day, stock prices began to
stabilize. Despite more bad news in terms of large-scale bankruptcies in South
Korea and Japan in the ensuing weeks, U.S. investors assessed a relatively
modest impact on the domestic economy and the stock market was able to recover
its losses from Gray Monday and even nudge higher by year-end in select sectors.

Second quarter earnings showed the same pattern of good news from earlier
quarters which investors have now almost come to expect as a routine outcome.
Positive surprises again far outnumbered disappointing earnings reports. Over
61% of all companies reported earnings above consensus while only 26% failed to
deliver on earnings expectations.

Third quarter earnings were also ahead of expectations. The final tally on the
earnings scorecard showed that 55% of all companies reported positive earnings
surprises while 28% turned in earnings disappointments. We observe yet again
that the current string of good earnings reports has now reached 19 consecutive
quarters and is unprecedented in terms of both magnitude and duration.

The consensus forecast for 1998 earnings growth is now 7.2%. The key to stock
market performance in 1998 will be the extent to which corporate profits remain
immune to the problems in Asia. The obvious contributors to likely shortfalls in
earnings will be currency translation losses and lower export revenues stemming
from lower demand in Asia. With current valuations at fairly high levels, the
stock market will be intolerant to earnings disappointments.

We suspect that the global stock markets are currently more vulnerable to the
woes of a weak economy than the risk of higher interest rates stimulated by
economic strength. It is difficult to gauge the precise impact of the Asian
crisis on corporate earnings and as a result, 1998 promises to be a year of
great uncertainty.

SANDIP A. BHAGAT, CFA, PRESIDENT & CHIEF INVESTMENT OFFICER, THE TRAVELERS
INVESTMENT MANAGEMENT COMPANY

DAVID A. TYSON, CFA, TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION

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<PAGE> 6
TABLE OF CONTENTS

PAGE
- --------------------------------------------------------------------------------

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES..................................................... 5

THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES.................. 20

THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES.................. 32

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<PAGE> 7
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES

The Travelers Growth and Income Stock Account For Variable Annuities ("Account
GIS") is managed by The Travelers Investment Management Company ("TIMCO"). TIMCO
manages Account GIS to provide diversified exposure to the large-company segment
of the U.S. equity market. Stock selection is based on a quantitative screening
process favoring companies that achieve earnings growth above consensus
expectations and whose stocks offer attractive relative value. In order to
achieve consistent relative performance, we manage Account GIS to mirror the
overall risk, sector weightings and growth/value style characteristics of the
Standard & Poor's 500 Stock Index ("S&P 500"). The S&P 500 is a value-weighted
equity index comprised primarily of large-company stocks.

For the year ended December 31, 1997, Account GIS achieved a total return of
33.7%, before fees and expenses, outperforming the S&P 500 total return of
33.4%. Net of fees and expenses, Account GIS's total return of 31.5% for the
year was well ahead of the 25.5% average return for variable annuity stock
accounts in the Lipper Growth & Income Category.

During the second half of 1997, positioning in the consumer discretionary,
consumer staples and basic materials sectors made the strongest positive
contribution to Account GIS's overall relative performance. In the consumer
discretionary sector, Account GIS benefited from our positions in retailers such
as Costco and TJX Companies, newspapers such as Gannett and New York Times, and
radio broadcasters such as Clear Channel Communications and Chancellor Media. In
consumer staples, our largest relative gains came from positions in Dean Foods,
a consolidator within the dairy industry, Interstate Bakeries, the nation's
largest baker, and ConAgra, a packaged foods producer. In the poorly performing
basic materials sector, where product and commodity prices were under pressure
as a result of the Asian currency and economic crisis, underweights in the gold,
copper and paper industries helped Account GIS's performance.

We lost ground relative to the benchmark primarily in the technology and
utilities sectors. In technology, as investors began to question growth
prospects for many industries with exposure to Asia, our relative performance
was penalized by Account GIS's holdings in the semiconductor and semiconductor
equipment groups such as VLSI and KLA-Tencor respectively. In the utilities and
telecommunications sectors, declines in WorldCom, the long distance telephone
company which plans to acquire MCI Communications, and CalEnergy, an independent
power producer with exposure to the Asian and Latin economies, hurt Account
GIS's performance.

We expect that the uncertainty on the earnings front as a result of the Asian
crisis will sustain the high level of volatility that we saw in 1997, a year
which saw the Dow Jones Industrial Average move up or down by more than 1% every
third trading day on average. We remain cautious about the stock market in the
short run. Over the long term, a friendly interest rate environment and
reasonable earnings strength preclude the prospect of a sustained bear market.

The key to stock market performance in 1998 will be the extent to which
corporate profits remain immune to the problems in Asia. The obvious
contributors to likely shortfalls in earnings will be currency translation
losses and lower export revenues as a result of lower demand in Asia. With
current valuations at fairly high levels, the stock market will be intolerant to
earnings disappointments.

The early earnings season appears to be on track with no major disappointments.
Bellwether technology stocks such as Intel and Motorola have reported earnings
that have come close to expectations. The market is likely to take its lead from
the technology sector which has been hardest hit by earnings concerns relating
to Asia. We are closely monitoring the earnings season to diagnose early
symptoms of the Asian flu. In this environment, we believe that it is
particularly important to identify companies with sustainable earnings growth at
attractive valuations across a wide variety of industries.

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<PAGE> 8
Our disciplined approach to stock selection emphasizes stocks that exhibit
improving fundamentals as measured by changes in analysts' earnings estimates
and the trend of recent earnings surprises, and which also trade at a reasonable
price-to-earnings ratio relative to expected earnings growth rates. In the
technology sector, we maintain an overweight position in Compaq Computer, the
leading manufacturer of personal computers, as earnings estimates continue to
climb and valuation has become more attractive given the weakness in the
technology sector in recent months. The scenario has allowed for the recent
acquisition of Digital Equipment Corp. by Compaq Computer.

In the healthcare sector, we continue to emphasize Guidant, a leading
manufacturer of medical devices used in regulating heart activity, whose market
share gains have translated into rapidly rising earnings. In the consumer
sector, our focus remains on media companies such as New York Times, radio and
television broadcasters like Clear Channel Communications, and food retailers
such as Albertsons, all of which have good earnings momentum, are relatively
well insulated from international economic uncertainty, and are attractively
valued relative to their growth rates.

PORTFOLIO MANAGERS: SANDIP A. BHAGAT, CFA - JACOB E. HURWITZ, CFA

[TIMCO LOGO]

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<PAGE> 9
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES

[GRAPH FOR VARIABLE ANNUITIES]

This is a comparison of The Travelers Growth and Income Stock Account for
Variable Annuities versus Lipper Analytical Services' variable annuity composite
index, which provides the average performance of variable annuity funds with
similar objectives as of December 31, 1997. Lipper Analytical Services is a
leading independent Variable Insurance Product Performance Analysis Service. The
performance of the composite is net of all asset based fees such as mortality
and expense charges and portfolio management fees. Performance reflects the
charges associated with Universal Annuity, which became available on May 16,
1983. Contracts issued prior to May 16, 1983 have different contract charges
that result in different performance than presented above.

Universal Annuity fund performance information is net of: 1) the 1.25% annual
mortality and expense risk charge, and 2) portfolio management fees. The
deduction of the $15 semi-annual administrative charge and the contingent
deferred sales charge (5% maximum) is not reflected. The deduction of those
charges would reduce any percentage increase or make greater any percentage
decrease. Performance data quoted represents past performance. Investment return
and principal value of an investment will fluctuate so that an investor's units,
when redeemed, may be worth more or less than their original cost.

The following is the performance data required by SEC rules governing uniform
performance reporting: one year 26.32%, five year 17.32% and ten year 15.00%.
This performance is based on a $1,000 hypothetical investment and reflects
deductions of all fees and charges including the semi-annual administrative
charge and the maximum deferred sales charge of 5%.

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<PAGE> 10
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $467,139,176) ...... $675,513,493
Receivables:
Dividends ................................................... 875,582
Investment securities sold .................................. 9,167,224
Purchase payments and transfers from other Travelers accounts 463,911
Other assets .................................................... 42,941
------------

Total Assets ............................................. 686,063,151
------------

LIABILITIES:
Cash overdraft .................................................. 632,968
Payables:
Investment securities purchased ............................. 7,260,555
Contract surrenders and transfers to other Travelers accounts 582,911
Investment management and advisory fees ..................... 16,547
Variation on futures margin ................................. 1,050
Accrued liabilities ............................................. 49,329
------------

Total Liabilities ........................................ 8,543,360
------------

NET ASSETS: ......................................................... $677,519,791
============
</TABLE>

See Notes to Financial Statements

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<PAGE> 11
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................... $ 9,919,601
Interest.......................................................... 336,447
------------
Total income.................................................. $ 10,256,048

EXPENSES:
Investment management and advisory fees........................... 2,723,508
Insurance charges................................................. 7,017,239
-----------
Total expenses................................................ 9,740,747
------------

Net investment income...................................... 515,301
------------

REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold...................... 392,694,584
Cost of investment securities sold............................ 312,626,786
------------

Net realized gain.......................................... 80,067,798

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1996.......................... 127,579,653
Unrealized gain at December 31, 1997.......................... 208,374,317
------------

Net change in unrealized gain for the year................. 80,794,664
------------

Net realized gain and change in unrealized gain........ 160,862,462
------------

Net increase in net assets resulting from operations.............. $161,377,763
============
</TABLE>

See Notes to Financial Statements

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<PAGE> 12
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ..................................................... $ 515,301 $ 2,069,674
Net realized gain from investment security transactions ................... 80,067,798 44,994,539
Net change in unrealized gain on investment securities .................... 80,794,664 42,956,261
------------- -------------

Net increase in net assets resulting from operations .................. 161,377,763 90,020,474
------------- -------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 3,027,691 and 2,813,343 units, respectively) ........... 40,692,594 28,931,829
Participant transfers from other Travelers accounts
(applicable to 5,078,380 and 3,490,521 units, respectively) ........... 68,355,384 35,759,376
Administrative charges
(applicable to 30,500 and 32,900 units, respectively) ................. (428,591) (358,274)
Contract surrenders
(applicable to 3,044,510 and 3,057,943 units, respectively) ........... (41,682,919) (31,680,018)
Participant transfers to other Travelers accounts
(applicable to 4,257,243 and 3,458,474 units, respectively) ........... (56,815,055) (35,315,088)
Other payments to participants
(applicable to 166,399 and 207,886 units, respectively) ............... (2,235,718) (2,212,219)
------------- -------------

Net increase (decrease) in net assets resulting from unit transactions 7,885,695 (4,874,394)
------------- -------------

Net increase in net assets ......................................... 169,263,458 85,146,080

NET ASSETS:
Beginning of year ......................................................... 508,256,333 423,110,253
------------- -------------

End of year ............................................................... $ 677,519,791 $ 508,256,333
============= =============
</TABLE>

See Notes to Financial Statements

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<PAGE> 13
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Growth and Income Stock Account for Variable Annuities
("Account GIS") is a separate account of The Travelers Insurance Company
("The Travelers"), an indirect wholly owned subsidiary of Travelers Group
Inc., and is available for funding certain variable annuity contracts issued
by The Travelers. Account GIS is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment
company.

The following is a summary of significant accounting policies consistently
followed by Account GIS in the preparation of its financial statements.

SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last-reported sale price as of the
close of business of the New York Stock Exchange on the last business day of
the year; securities traded on the over-the-counter market and listed
securities with no reported sales are valued at the mean between the last
reported bid and asked prices or on the basis of quotations received from a
reputable broker or other recognized source.

When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated
at fair value on the basis of valuations furnished by a pricing service.
These valuations are determined for normal institutional-size trading units
of such securities using methods based on market transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. Securities, including restricted
securities, for which pricing services are not readily available are valued
by management at prices which it deems in good faith to be fair.

Short-term investments for which a quoted market price is available are
valued at market. Short-term investments for which there is no reliable
quoted market price are valued at amortized cost which approximates market.

SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis. Effective July 1, 1996, premiums and
discounts are amortized to interest income utilizing the constant yield
method.

FUTURES CONTRACTS. Account GIS may use stock index futures contracts as a
substitute for the purchase or sale of individual securities. When Account
GIS enters into a futures contract, it agrees to buy or sell a specified
index of stocks at a future time for a fixed price, unless the contract is
closed prior to expiration. Account GIS is obligated to deposit with a
broker an "initial margin" equivalent to a percentage of the face, or
notional value of the contract.

It is Account GIS's practice to hold cash and cash equivalents in an amount
at least equal to the notional value of outstanding purchased futures
contracts, less the initial margin. Cash and cash equivalents include cash
on hand, securities segregated under federal and brokerage regulations, and
short-term highly liquid investments with maturities generally three months
or less when purchased. Generally, futures contracts are closed prior to
expiration.

Futures contracts purchased by Account GIS are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or
losses and no asset is recorded in the Statement of Investments. However,
when Account GIS holds open futures contracts, it assumes a market risk
generally equivalent to the underlying market risk of change in the value of
the specified indexes associated with the futures contract.

OPTIONS. Account GIS may purchase index or individual equity put or call
options, thereby obtaining the right to sell or buy a fixed number of shares
of the underlying asset at the stated price on or before the stated
expiration date. Account GIS may sell the options before expiration. Options
held by Account GIS are listed on either national securities exchanges or on
over-the-counter markets, and are short-term contracts with a duration of
less than nine months. The market value of the options will be the latest
sale price as of the close of business of the New York Stock Exchange, or in
the absence of such sale, the latest bid quotation.

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<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - CONTINUED

REPURCHASE AGREEMENTS. When Account GIS enters into a repurchase agreement
(a purchase of securities whereby the seller agrees to repurchase the
securities at a mutually agreed upon date and price), the repurchase price
of the securities will generally equal the amount paid by Account GIS plus a
negotiated interest amount. The seller under the repurchase agreement will
be required to provide to Account GIS securities (collateral) whose market
value, including accrued interest, will be at least equal to 102% of the
repurchase price. Account GIS monitors the value of collateral on a daily
basis. Repurchase agreements will be limited to transactions with national
banks and reporting broker dealers believed to present minimal credit risks.
Account GIS's custodian will take actual or constructive receipt of all
securities underlying repurchase agreements until such agreements expire.

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

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

2. INVESTMENTS

The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities), were $379,946,464 and $376,168,194,
respectively; the costs of purchases and proceeds from sales of direct and
indirect U.S. government securities were $1,987,742 and $5,932,812,
respectively, for the year ended December 31, 1997. Realized gains and
losses from investment security transactions are reported on an identified
cost basis.

Account GIS placed a portion of its security transactions with brokerage
firms which are affiliates of The Travelers. The commissions paid to these
affiliated firms were $94,251 and $125,284 for the years ended December 31,
1997 and 1996, respectively.

At December 31, 1997, Account GIS held 21 open S&P 500 Stock Index futures
contracts expiring in March, 1998. The underlying face value, or notional
value, of these contracts at December 31, 1997 amounted to $5,140,275. In
connection with these contracts, short-term investments with a par value of
$235,000 had been pledged as margin deposits.

Net realized gains resulting from futures contracts were $113,394 and
$504,688 for the years ended December 31, 1997 and 1996, respectively. These
gains are included in the net realized gain from investment security
transactions on both the Statement of Operations and the Statement of
Changes in Net Assets. The cash settlement for December 31, 1997, is shown
on the Statement of Assets and Liabilities as a payable for variation on
futures margin.

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<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - CONTINUED

3. CONTRACT CHARGES

Investment management and advisory fees are calculated daily at an annual
rate of 0.45% of Account GIS's average net assets. These fees are paid to
The Travelers Investment Management Company, an indirect wholly owned
subsidiary of Travelers Group Inc.

Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. On contracts issued prior to May 16, 1983, these charges are
equivalent to 1.0017% of the average net assets of Account GIS on an annual
basis. On contracts issued on or after May 16, 1983, the charges for
mortality and expense risks are equivalent to 1.25% of the average net
assets of Account GIS on an annual basis. Additionally, for certain
contracts in the accumulation phase, a semi-annual charge of $15 (prorated
for partial periods) is deducted from participant account balances and paid
to The Travelers to cover administrative charges.

On contracts issued prior to May 16, 1983, The Travelers retained from
Account GIS sales charges of $30,718 and $43,814 for the years ended
December 31, 1997 and 1996, respectively. The Travelers generally assesses a
5% contingent deferred sales charge if a participant's purchase payment is
surrendered within five years of its payment date. Contract surrender
payments include $143,351 and $163,657 of contingent deferred sales charges
for the years ended December 31, 1997 and 1996, respectively.

4. NET ASSETS HELD ON BEHALF OF AN AFFILIATE

Approximately $17,568,000 and $11,931,000 of the net assets of Account GIS
were held on behalf of an affiliate of The Travelers as of December 31, 1997
and 1996, respectively. Transactions with this affiliate during the years
ended December 31, 1997 and 1996, were comprised of participant purchase
payments of approximately $425,000 and $1,077,000 and contract surrenders of
approximately $466,000 and $694,000, respectively.

5. NET CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983...................... 14,832,879 $ 15.510 $ 230,063,055
Annuity phase of contracts issued prior to May 16, 1983........................... 360,804 15.510 5,596,202
Accumulation phase of contracts issued on or after May 16, 1983................... 29,478,723 14.955 440,868,631
Annuity phase of contracts issued on or after May 16, 1983........................ 66,324 14.955 991,903
-------------

Net Contract Owners' Equity............................................................................. $ 677,519,791
=============
</TABLE>

-13-
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS - CONTINUED

6. SUPPLEMENTARY INFORMATION

(Selected data for a unit outstanding throughout each year.)

Contracts issued prior to May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income ............................. $ .233 $ .216 $ .208 $ .192 $ .189
Operating expenses .................................. .201 .154 .123 .100 .092
----------- ----------- ----------- ----------- -----------

Net investment income ............................... .032 .062 .085 .092 .097

Unit value at beginning of year ..................... 11.763 9.668 7.120 7.194 6.664
Net realized and change in unrealized gains (losses) 3.715 2.033 2.463 (.166) .433
----------- ----------- ----------- ----------- -----------

Unit value at end of year ........................... $ 15.510 $ 11.763 $ 9.668 $ 7.120 $ 7.194
=========== =========== =========== =========== ===========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value ............... $ 3.75 $ 2.10 $ 2.55 $ (.07) $ .53
Ratio of operating expenses to average net assets ... 1.45% 1.45% 1.45% 1.41% 1.33%
Ratio of net investment income to average net assets .24% .60% 1.02% 1.30% 1.40%
Number of units outstanding at end of year
(thousands).......................................... 15,194 16,554 17,896 19,557 21,841
Portfolio turnover rate ............................. 64% 85% 96% 103% 81%
Average commission rate paid+ ....................... $ .051 $ .047 -- -- --
</TABLE>

Contracts issued on or after May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income ............................. $ .228 $ .212 $ .205 $ .189 $ .184
Operating expenses .................................. .228 .175 .140 .115 .106
----------- ----------- ----------- ----------- -----------

Net investment income ............................... .000 .037 .065 .074 .078

Unit value at beginning of year ..................... 11.371 9.369 6.917 7.007 6.507
Net realized and change in unrealized gains (losses) 3.584 1.965 2.387 (.164) .422
----------- ----------- ----------- ----------- -----------

Unit value at end of year ........................... $ 14.955 $ 11.371 $ 9.369 $ 6.917 $ 7.007
=========== =========== =========== =========== ===========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value ............... $ 3.58 $ 2.00 $ 2.45 $ (.09) $ .50
Ratio of operating expenses to average net assets ... 1.70% 1.70% 1.70% 1.65% 1.57%
Ratio of net investment income to average net assets .00% .36% .79% 1.05% 1.15%
Number of units outstanding at end of year
(thousands).......................................... 29,545 27,578 26,688 26,692 28,497
Portfolio turnover rate ............................. 64% 85% 96% 103% 81%
Average commission rate paid+ ....................... $ .051 $ .047 -- -- --
</TABLE>

+ The average commission rate paid is a required disclosure for fiscal years
beginning after September 1, 1995. It is calculated by dividing the total
dollar amount of commissions paid for equity securities by the total number of
shares purchased and sold during the year.

-14-
<PAGE> 17

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1997

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------- ------------
<S> <C> <C>
COMMON STOCKS (98.4%)

AEROSPACE (1.7%)
Allied Signal, Inc. 48,300 $ 1,880,681
Boeing Co. 85,130 4,166,049
Lockheed Martin Corporation 17,139 1,688,192
United Technologies Corp. 49,000 3,567,813
-----------
11,302,735
-----------
AIRLINES (0.4%)
Continental Airlines, Inc. (A) 52,100 2,507,312
-----------

AUTOMOTIVE (2.5%)
Chrysler Corp. 59,800 2,104,212
Eaton Corp. 20,600 1,838,550
Ford Motor Co. 151,900 7,395,631
General Motors Corp. 67,100 4,067,938
Navistar International Corp. (A) 62,000 1,538,375
-----------
16,944,706
-----------
BANKING (9.0%)
Banc One Corp. 25,240 1,370,847
Bank of New York Co., Inc. 32,900 1,902,031
BankAmerica Corp. 80,800 5,898,400
Bankers Trust NY Corp. 20,000 2,248,750
Barnett Banks Inc. 16,600 1,193,125
Chase Manhattan Corp. 37,952 4,155,744
Citicorp 39,300 4,968,994
Comerica Inc. 26,500 2,391,625
First Chicago NBD 14,100 1,177,350
First Empire State Corp. 3,131 1,455,915
First Union Corp. 52,800 2,706,000
Fleet Financial Group 22,200 1,663,612
Golden West Financial Corp. 26,500 2,592,031
KeyCorp 18,800 1,331,275
Mellon Bank Corp. 23,100 1,400,437
J.P. Morgan & Company 15,900 1,794,713
National City Corp. 19,200 1,262,400
NationsBank Corp. 65,500 3,983,219
Northern Trust Corp. 21,700 1,517,644
Norwest Corp. 66,300 2,560,838
PNC Bank Corp. 27,400 1,563,513
State Street Corp. 39,900 2,321,681
SunTrust Banks, Inc. 18,900 1,348,988
U.S. Bancorp 11,900 1,332,056
UnionBanCal Corp. 22,700 2,414,713
Washington Mutual 21,200 1,352,161
Wells Fargo & Co. 8,633 2,930,364
-----------
60,838,426
-----------
BEVERAGE (2.3%)
Anheuser-Busch Cos 42,900 1,887,600
Coca-Cola Co. 209,300 13,944,612
-----------
15,832,212
-----------
BROKERAGE (2.2%)
MGIC Investment Corp. 46,300 3,078,950
Marsh & McLennan Cos 31,700 2,363,631
Merrill Lynch & Co. 56,100 4,091,794
Morgan Stanley Group, Inc. 85,925 5,080,316
-----------
14,614,691
-----------
</TABLE>
<TABLE>
<CAPTION>

NO. OF MARKET
SHARES VALUE
------- -----------
<S> <C> <C>
BUILDING MATERIALS (0.4%)
Masco Corp. 56,400 $ 2,869,350
-----------

CAPITAL GOODS (2.7%)
Deere & Co. 53,300 3,108,056
Emerson Electric Co. 38,200 2,155,913
Honeywell, Inc. 31,300 2,144,050
Illinois Tool Works 46,100 2,771,763
Pitney Bowes Inc. 29,100 2,617,181
Tellabs Inc. (A) 40,000 2,111,248
Thiokol Corp. 24,800 2,015,000
Thomas & Betts Corp. 27,300 1,289,925
-----------
18,213,136
-----------
CHEMICALS (1.9%)
Crompton & Knowles Corp. 50,800 1,346,200
Dow Chemical 21,100 2,141,650
E.I. Dupont de Nemours & Co. 94,100 5,651,881
Lyondell Petrochemical 55,200 1,462,800
Monsanto Co. 50,200 2,108,400
-----------
12,710,931
-----------
CONSTRUCTION MACHINERY (0.3%)
Caterpillar, Inc. 35,100 1,704,544
-----------

CONSUMER (6.4%)
Archer-Daniels-Midland Co. 50,685 1,099,231
Colgate-Palmolive 45,400 3,336,900
General Electric Corp. 273,000 20,031,375
Gillette Co. 33,142 3,328,700
Meredith Corp. 45,200 1,613,075
Procter & Gamble Co. 119,600 9,545,575
Unilever N.V 47,200 2,947,050
Whirlpool Corp. 30,200 1,661,000
-----------
43,562,906
-----------
CONSUMER SERVICES (1.0%)
AVX Corp. 42,800 789,125
Kimberly Clark Corp. 47,860 2,360,096
Knight-Ridder, Inc. 33,700 1,752,400
Rohm & Haas Co. 20,600 1,972,450
-----------
6,874,071
-----------
DEFENSE (0.3%)
Raytheon Co. Class A 4,279 211,007
Raytheon Co. Class B 35,400 1,787,700
-----------
1,998,707
-----------
ENTERTAINMENT (1.5%)
Brunswick Corp. 48,700 1,476,219
Walt Disney Co. 58,455 5,790,698
Mirage Resorts, Inc. (A) 46,100 1,048,775
U.S. Industries, Inc. 50,400 1,518,300
-----------
9,833,992
-----------
FINANCE (0.9%)
American Express Company 42,800 3,819,900
Torchmark Corp. 60,900 2,561,606
-----------
6,381,506
-----------
</TABLE>

-15-
<PAGE> 18
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
-------- -----------
<S> <C> <C>
FOOD (3.2%)
Campbell Soup Co. 17,200 $ 999,750
ConAgra, Inc. 101,400 3,327,187
Dean Foods Co. 35,080 2,087,260
Interstate Bakeries Corp. 40,700 1,521,162
Kellogg Co. 36,000 1,786,500
McDonalds Corp. 25,200 1,203,300
PepsiCo, Inc. 135,500 4,937,281
Sara Lee Corp. 67,400 3,795,463
Sysco Corp. 49,900 2,273,569
-----------
21,931,472
-----------
HEALTHCARE (1.2%)
Beverly Enterprises (A) 87,400 1,136,200
Guidant Corp. 51,700 3,218,325
Health Management
Association Inc. (A) 63,750 1,609,687
Quorum Health Group (A) 52,916 1,389,045
Wellpoint Health Networks (A) 14,800 625,300
-----------
7,978,557
-----------
INDEPENDENT ENERGY (0.6%)
Burlington Resources, Inc. 49,400 2,213,738
Entergy Corp. 71,100 2,128,556
-----------
4,342,294
-----------
INDUSTRIAL (2.2%)
AccuStaff Inc. (A) 63,300 1,455,900
CBS Inc. 55,500 1,633,781
Fluor Corp. 34,800 1,300,650
MGM Grand Inc. (A) 18,700 674,369
Mercury General Corp. 27,900 1,541,475
Minnesota Mining &
Manufacturing Co. 23,300 1,912,056
National Services Industry, Inc. 34,600 1,714,863
Textron Inc. 42,700 2,668,750
Tyco International, Ltd. 47,900 2,158,494
-----------
15,060,338
-----------
INSURANCE (4.0%)
Allstate Corp. 38,575 3,505,503
AMBAC, Inc. 31,500 1,449,000
American International Group 75,225 8,180,719
Conseco, Inc. 44,900 2,040,144
Equitable Cos., Inc. 43,700 2,174,075
Everest Reinsurance Holdings 49,300 2,033,625
Hartford Financial Services Group 25,900 2,423,269
Health Care & Retirement Corp. (A) 34,300 1,380,575
SunAmerica, Inc. 32,550 1,391,512
Transatlantic Holdings, Inc. 18,440 1,318,460
20th Century Industries 53,900 1,401,400
-----------
27,298,282
-----------
INTEGRATED ENERGY (6.7%)
Amoco Corp. 42,000 3,575,250
Atlantic Richfield Co. 28,800 2,307,600
Chevron Corp. 56,000 4,312,000
Exxon Corp. 199,600 12,213,025
Mobil Corp. 66,900 4,829,344
Phillips Petroleum Co. 23,200 1,128,100
Royal Dutch Petroleum Co. 151,200 8,193,150
Texaco, Inc. 78,600 4,273,875
USX-Marathon Group 63,700 2,149,875
Unocal Corp. 66,300 2,573,269
-----------
45,555,488
-----------
</TABLE>

NO. OF MARKET
SHARES VALUE
------- -----------
<S> <C> <C>
MEDIA (2.4%)
Chancellor Media Corp. (A) 22,100 $ 1,649,902
Clear Channel Communications (A) 30,700 2,438,731
Gannet Co. 49,400 3,053,538
King World Productions, Inc. 18,200 1,051,050
New York Times Co. 49,200 3,253,350
Time Warner, Inc. 74,500 4,619,000
-----------
16,065,571
-----------
METALS (1.4%)
Aeroquip-Vickers, Inc. 28,709 1,408,535
Alumax Inc. (A) 35,300 1,200,200
Aluminum Co. of America 23,500 1,653,812
Bethlehem Steel Corp. (A) 142,100 1,225,613
LTV Corp. 59,300 578,175
Phelps Dodge Corp. 22,700 1,413,075
USX-U.S. Steel Group 54,700 1,709,375
-----------
9,188,785
-----------
NATURAL GAS PIPELINE (0.7%)
Columbia Gas Systems, Inc. 22,200 1,744,087
Enron Corp. 27,500 1,142,969
Sonat, Inc. 40,800 1,866,600
-----------
4,753,656
-----------
OIL FIELD (0.7%)
BJ Services Co. (A) 16,480 1,185,530
Schlumberger Ltd. 41,800 3,364,900
Union Pacific Resources Group 1 24
-----------
4,550,454
-----------
PAPER (0.6%)
Georgia-Pacific 22,800 1,385,100
Georgia-Pacific Timber (A) 22,800 517,275
International Paper Co. 25,600 1,104,000
Weyerhaeuser Co. 17,200 843,875
-----------
3,850,250
-----------
PHARMACEUTICALS (10.0%)
Abbott Laboratories 42,400 2,779,850
American Home Products Corp. 76,500 5,852,250
Baxter International, Inc. 25,400 1,281,112
Bristol-Myers Squibb Co. 102,700 9,717,987
CVS Corp. 48,700 3,119,844
Johnson & Johnson 138,100 9,097,338
Lilly (Eli) & Co. 78,700 5,479,488
Merck & Co. 107,800 11,453,750
Omnicare, Inc. 44,500 1,379,500
Pfizer, Inc. 97,330 7,257,168
PharMerica, Inc. (A) 39,776 416,400
Schering-Plough Corp. 90,800 5,640,950
Warner-Lambert Co. 33,900 4,203,600
-----------
67,679,237
-----------
RAILROADS (0.5%)
Burlington Northern Santa Fe 13,400 1,245,363
Norfolk Southern Corp. 33,300 1,026,056
Union Pacific Corp. 18,500 1,155,094
-----------
3,426,513
-----------
</TABLE>

-16-
<PAGE> 19
STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------- -----------
<S> <C> <C>
RETAILERS (4.5%)
Borders Group, Inc. (A) 46,200 $ 1,446,637
Costco Companies, Inc. (A) 66,500 2,965,481
Dayton Hudson Corp. 40,300 2,720,250
Family Dollar Stores, Inc. 60,900 1,785,131
Federated Department
Stores, Inc. (A) 49,100 2,114,369
The Gap, Inc. 36,300 1,286,381
Home Depot, Inc. 65,549 3,859,197
Liz Claiborne, Inc. 33,900 1,417,444
Ross Stores, Inc. 38,200 1,391,913
Stride Rite Corp. 1,400 16,800
TJX Companies, Inc. 56,600 1,945,625
Wal-Mart Stores, Inc. 200,000 7,887,500
Walgreen Co. 48,400 1,518,550
-----------
30,355,278
-----------
SERVICES (3.8%)
Cendant Corp. (A) 113,667 3,907,290
HealthCare COMPARE Corp. (A) 12,400 637,050
HBO & Co. 57,800 2,772,591
Lincare Holdings, Inc. (A) 27,100 1,551,475
Microsoft (A) 117,400 15,170,275
Oracle Corp. (A) 83,925 1,869,950
-----------
25,908,631
-----------
SUPERMARKETS (0.6%)
Albertson's Inc. 81,800 3,875,275
-----------

TECHNOLOGY (8.4%)
Applied Materials, Inc. (A) 76,300 2,296,149
Cisco Systems, Inc. (A) 83,550 4,663,134
Compaq Computer Corp. 110,150 6,216,591
Computer Associates International 30,362 1,605,391
Dell Computer Corp. (A) 31,100 2,613,370
Hewlett-Packard Co. 69,200 4,325,000
Intel Corp. 129,900 9,121,409
International Business
Machines Corp. 88,900 9,295,606
Motorola, Inc. 51,500 2,938,719
Parker-Hannifin Corp. 40,100 1,839,587
Raychem Corp. 44,100 1,899,056
SCI Systems (A) 30,200 1,315,588
Shared Medical Systems Corp. 28,100 1,854,600
Sun Microsystems (A) 30,600 1,222,088
Texas Instruments, Inc. 34,200 1,539,000
VLSI Technology, Inc. (A) 78,800 1,861,650
Xerox Corp. 29,100 2,147,944
-----------
56,754,882
-----------
</TABLE>

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
----------- -----------
<S> <C> <C>
TELECOMMUNICATIONS (8.2%)
AT&T Corp. 144,600 $ 8,856,750
Airtouch Communications (A) 45,500 1,891,094
Ameritech Corp. 48,700 3,920,350
Bell Atlantic Corp. 68,929 6,272,521
BellSouth Corp. 88,200 4,966,762
GTE Corp. 85,500 4,467,375
Lucent Technologies 53,537 4,276,268
MCI Communications Corp. 59,500 2,549,200
Northern Telecom Ltd. 22,100 1,966,900
SBC Communications, Inc. 106,660 7,812,845
Sprint Corp. 38,500 2,257,062
U S West Communications Group 40,600 1,832,075
WorldCom, Inc. (A) 146,500 4,436,196
-----------
55,505,398
-----------
TEXTILE (0.2%)
Jones Apparel Group, Inc. (A) 24,200 1,040,600
-----------

TOBACCO (1.8%)
Loews Corp. 22,100 2,345,362
Philip Morris, Inc. 213,900 9,692,344
-----------
12,037,706
-----------
U.S. AGENCY (1.0%)
Federal Home Loan Mortgage Corp. 65,800 2,759,488
Federal National Mortgage
Association 64,400 3,674,825
-----------
6,434,313
-----------
UTILITIES (2.2%)
Baltimore Gas & Electric Co. 46,900 1,597,531
Duke Power Co. 17,500 969,062
Edison International 107,100 2,911,781
ENSCO International, Inc. 33,300 1,115,550
FPL Group, Inc. 46,000 2,722,625
Houston Industries 23,000 613,813
MidAmerican Energy Holding Co. 39,700 873,400
PacifiCorp 24,200 660,963
Southern Co. 59,300 1,534,388
Texas Utilities Co. 46,400 1,928,500
-----------
14,927,613
-----------
TOTAL COMMON STOCKS
(COST $456,335,791) 664,709,818
-----------
</TABLE>

-17-
<PAGE> 20
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
SHORT-TERM INVESTMENTS (1.6%)

<S> <C> <C>
COMMERCIAL PAPER (1.5%)
Abbey National North America Inc.,
5.95% due February 3, 1998 $ 2,000,000 $ 1,989,656
Asset Securitization Corp.,
6.05% due January 21, 1998 3,000,000 2,990,415
Goldman Sachs Group LP,
6.00% due January 5, 1998 2,000,000 1,998,398
Pearson, Inc.,
5.96% due January 12, 1998 2,000,000 1,996,290
UBS Financial, Inc.,
6.85% due January 2, 1998 1,344,000 1,343,562
-----------
10,318,321
-----------
U.S. TREASURY (0.1%)
United States of America Treasury,
5.49% due July 23, 1998 (B) 500,000 485,354
-----------

TOTAL SHORT-TERM
INVESTMENTS (COST $10,803,385) 10,803,675
-----------
</TABLE>

NOTIONAL MARKET
VALUE VALUE
------------- -------------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)

S&P 500 Stock Index,
Exp. March, 1998 (C) $ 5,140,275 -
-------------

TOTAL INVESTMENTS (100%)
(COST $467,139,176) (D) $ 675,513,493
==============
</TABLE>

NOTES

(A) Non-income Producing Security.

(B) Par value of $235,000 pledged to cover margin deposits on futures
contracts.

(C) As more fully discussed in Note 1 to the financial statements, it is
Account GIS's practice to hold cash and cash equivalents (including
short-term investments) at least equal to the underlying face value, or
notional value, of outstanding purchased futures contracts, less the
initial margin. Account GIS uses futures contracts as a substitute for
holding individual securities.

(D) At December 31, 1997, net unrealized appreciation for all securities
was $208,374,317. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over cost of $213,685,673 and aggregate gross unrealized
depreciation for all securities in which there was an excess of cost
over market value of $5,311,356.

See Notes to Financial Statements

-18-
<PAGE> 21
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers and Owners of Variable Annuity Contracts of The
Travelers Growth and Income Stock Account for Variable Annuities:

We have audited the accompanying statement of assets and liabilities of The
Travelers Growth and Income Stock Account for Variable Annuities, including the
statement of investments, as of December 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the selected per unit data
and ratios for each of the five years in the period then ended. These financial
statements, per unit data and ratios are the responsibility of management. Our
responsibility is to express an opinion on these financial statements, per unit
data and ratios based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements, per unit data and
ratios are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements, per unit data and ratios referred to
above present fairly, in all material respects, the financial position of The
Travelers Growth and Income Stock Account for Variable Annuities as of December
31, 1997, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the per
unit data and ratios for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 19, 1998

-19-
<PAGE> 22
THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

The fourth quarter was disastrous in Asia. The problems that originated in
Thailand spread quickly to Malaysia, Indonesia and then Korea. Fortunately, The
Travelers Quality Bond Account for Variable Annuities ("Account QB") exposures
to Asian credits were eliminated earlier in the year. Prices of certain Korean
debt obligations dropped as much as 35% from their highs as questions arose
about companies' ability to roll over short-term debt.

Corporate bond spreads widened and U.S. Treasuries rallied sharply, with
two-year yields falling. The yield curve flattened dramatically during the last
quarter of 1997. (The yield curve shows the difference between short- and
long-term yields.)

In the fourth quarter, securities selection and a slightly longer duration
helped Account QB's performance. (Duration is a measure of a fund's volatility
relative to a given change in interest rates.) For the year, Account QB posted a
8.26% return before expenses versus the Lehman Government/Corporate Bond Index
of 9.76%. (The Lehman Government/Corporate Bond Index is a combination of
publicly issued intermediate- and long-term U.S. government bonds and corporate
bonds.) Account QB was hurt by our bearishness in the second quarter of 1997.
However, Account QB's net return of 6.58% outperformed the Lipper Short
Intermediate Investment Grade Debt Category Average of 5.40% for the same
period.

Account QB enters 1998 with a slightly longer duration than the benchmark (3.8
years versus 3.3 years). We have increased our exposure to U.S. Treasuries and
are overweighted in corporate bonds focusing on shorter maturities to capture
additional yield potential.

PORTFOLIO MANAGER: F. DENNEY VOSS

[TAMIC GRAPHIC]

-20-
<PAGE> 23
THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

[QUALITY BOND ACCOUNT GRAPH]

This is a comparison of The Travelers Quality Bond Account for Variable
Annuities versus Lipper Analytical Services' variable annuity composite index,
which provides the average performance of variable annuity funds with similar
objectives as of December 31, 1997. Lipper Analytical Services is a leading
independent Variable Insurance Product Performance Analysis Service. The
performance of the composite is net of all asset based fees such as mortality
and expense charges and portfolio management fees. Performance reflects the
charges associated with Universal Annuity, which became available on May 16,
1983. Contracts issued prior to May 16, 1983 have different contract charges
that result in different performance than presented above.

The following is the performance data required by SEC rules governing uniform
performance reporting: one year 1.41%, five year 4.83% and ten year 6.89%. This
performance is based on a $1,000 hypothetical investment and reflects deductions
of all fees and charges including the semi-annual administrative charge and the
maximum deferred sales charge of 5%.

-21-
<PAGE> 24
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $155,120,474) ........... $156,815,587
Receivables:
Interest ......................................................... 2,073,679
Investment securities sold ....................................... 4,208,409
Other assets ......................................................... 1,602
------------

Total Assets ................................................. 163,099,277
------------

LIABILITIES:
Cash overdraft ....................................................... 348,508
Payables:
Investment securities purchased .................................. 3,514,681
Contract surrenders and transfers to other Travelers accounts .... 190,299
Investment management and advisory fees .......................... 2,830
Accrued liabilities .................................................. 11,660
------------

Total Liabilities ............................................ 4,067,978
------------

NET ASSETS: ............................................................... $159,031,299
============
</TABLE>

See Notes to Financial Statements

-22-
<PAGE> 25
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>

<S> <C> <C>
INVESTMENT INCOME:
Interest ........................................................ $ 10,740,468

EXPENSES:
Investment management and advisory fees ......................... $ 529,458
Insurance charges ............................................... 1,928,028
------------
Total expenses .............................................. 2,457,486
------------

Net investment income ................................... 8,282,982
------------

REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold .................... 353,718,766
Cost of investment securities sold .......................... 353,026,106
------------

Net realized gain 692,660

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1996 ........................ 199,075
Unrealized gain at December 31, 1997 ........................ 1,695,113
------------

Net change in unrealized gain for the year .............. 1,496,038
------------

Net realized gain and change in unrealized gain ..... 2,188,698
------------

Net increase in net assets resulting from operations ............ $ 10,471,680
============
</TABLE>

See Notes to Financial Statements

-23-
<PAGE> 26
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 8,282,982 $ 10,480,786
Net realized gain from investment security transactions ......... 692,660 1,065,626
Net change in unrealized gain on investment securities .......... 1,496,038 (5,888,598)
------------- -------------

Net increase in net assets resulting from operations ........ 10,471,680 5,657,814
------------- -------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 2,595,588 and 3,643,171 units, respectively) . 13,459,247 17,905,073
Participant transfers from other Travelers accounts
(applicable to 1,981,335 and 3,024,146 units, respectively) . 10,315,973 14,870,447
Administrative charges
(applicable to 21,863 and 27,353 units, respectively) ....... (116,102) (135,785)
Contract surrenders
(applicable to 2,897,282 and 2,968,208 units, respectively) . (15,167,293) (14,715,900)
Participant transfers to other Travelers accounts
(applicable to 5,631,496 and 6,532,400 units, respectively) . (29,216,683) (32,090,166)
Other payments to participants
(applicable to 175,168 and 177,391 units, respectively) ..... (923,875) (884,681)
------------- -------------

Net decrease in net assets resulting from unit transactions . (21,648,733) (15,051,012)
------------- -------------

Net decrease in net assets .............................. (11,177,053) (9,393,198)

NET ASSETS:
Beginning of year ............................................... 170,208,352 179,601,550
------------- -------------

End of year ..................................................... $ 159,031,299 $ 170,208,352
============= =============
</TABLE>

See Notes to Financial Statements

-24-
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Quality Bond Account for Variable Annuities ("Account QB") is a
separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Travelers Group Inc., and is available for
funding certain variable annuity contracts issued by The Travelers. Account QB
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.

The following is a summary of significant accounting policies consistently
followed by Account QB in the preparation of its financial statements.

SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of business
of the New York Stock Exchange on the last business day of the year; securities
traded on the over-the-counter market and listed securities with no reported
sales are valued at the mean between the last-reported bid and asked prices or
on the basis of quotations received from a reputable broker or other recognized
source.

When market quotations are not considered to be readily available for long-term
corporate bonds and notes, such investments are generally stated at fair value
on the basis of valuations furnished by a pricing service. These valuations are
determined for normal institutional-size trading units of such securities using
methods based on market transactions for comparable securities and various
relationships between securities which are generally recognized by institutional
traders. Securities, including restricted securities, for which pricing services
are not readily available, are valued by management at prices which it deems in
good faith to be fair.

Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued at amortized cost which approximates market.

SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Interest income is recorded on the accrual basis. Effective July 1, 1996,
premiums and discounts are amortized to interest income utilizing the constant
yield method.

FUTURES CONTRACTS. Account QB may use interest rate futures contracts as a
substitute for the purchase or sale of individual securities. When Account QB
enters into a futures contract, it agrees to buy or sell specified debt
securities at a future time for a fixed price, unless the contract is closed
prior to expiration. Account QB is obligated to deposit with a broker an
"initial margin" equivalent to a percentage of the face, or notional value of
the contract.

It is Account QB's practice to hold cash and cash equivalents in an amount at
least equal to the notional value of outstanding purchased futures contracts,
less the initial margin. Cash and cash equivalents include cash on hand,
securities segregated under federal and brokerage regulations, and short-term
highly liquid investments with maturities generally three months or less when
purchased. Generally, futures contracts are closed prior to expiration.

Futures contracts purchased by Account QB are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statement of Investments. However, when Account
QB holds open futures contracts, it assumes a market risk generally equivalent
to the underlying market risk of change in the value of the debt securities
associated with the futures contract.

REPURCHASE AGREEMENTS. When Account QB enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities at
a mutually agreed upon date and price), the repurchase price of the securities
will generally equal the amount paid by Account QB plus a negotiated interest
amount. The seller under the repurchase agreement will be required to provide to
Account QB securities (collateral) whose market value, including accrued
interest, will be at least equal to 102% of the repurchase price. Account QB
monitors the value of collateral on a daily basis. Repurchase agreements will be
limited to transactions with national banks and reporting broker dealers
believed to present minimal credit risks. Account QB's custodian will take
actual or constructive receipt of all securities underlying repurchase
agreements until such agreements expire.

-25-
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS - CONTINUED

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

2. INVESTMENTS

The costs of purchases and proceeds from sales of investments (other than
short-term securities) were $162,640,114 and $179,377,010, respectively; the
costs of purchases and proceeds from sales of direct and indirect U.S.
government obligations were $139,398,794 and $143,376,270, respectively, for the
year ended December 31, 1997. Realized gains and losses from investment security
transactions are reported on an identified cost basis.

3. CONTRACT CHARGES

Investment management and advisory fees are calculated daily at an annual rate
of 0.3233% of Account QB's average net assets. These fees are paid to Travelers
Asset Management International Corporation, an indirect wholly owned subsidiary
of Travelers Group Inc.

Insurance charges are paid for the mortality and expense risks assumed by The
Travelers. On contracts issued prior to May 16, 1983, these charges are
equivalent to 1.0017% of the average net assets of Account QB on an annual
basis. On contracts issued on or after May 16, 1983, the charges for mortality
and expense risks are equivalent to 1.25% of the average net assets of Account
QB on an annual basis. Additionally, for certain contracts in the accumulation
phase, a semi-annual charge of $15 (prorated for partial periods) is deducted
from participant account balances and paid to The Travelers to cover
administrative charges.

On contracts issued prior to May 16, 1983, The Travelers retained from Account
QB sales charges of $12,423 and $13,748 for the years ended December 31, 1997
and 1996, respectively. The Travelers generally assesses a 5% contingent
deferred sales charge if a participant's purchase payment is surrendered within
five years of its payment date. Contract surrender payments include $86,884 and
$70,089 of contingent deferred sales charges for the years ended December 31,
1997 and 1996, respectively.

-26-
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS - CONTINUED

4. NET ASSETS HELD ON BEHALF OF AN AFFILIATE

Approximately $966,000 and $760,000 of the net assets of Account QB were held on
behalf of an affiliate of The Travelers as of December 31, 1997 and 1996,
respectively. Transactions with this affiliate during the years ended December
31, 1997 and 1996, were comprised of participant purchase payments of
approximately $106,000 and $276,000 and contract surrenders of approximately
$120,000 and $141,000, respectively.

5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>

DECEMBER 31, 1997
------------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----------- ---------- -------------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983 ......... 7,636,104 $ 5.593 $ 42,707,868
Annuity phase of contracts issued prior to May 16, 1983 .............. 47,544 5.593 265,911
Accumulation phase of contracts issued on or after May 16, 1983 ...... 21,511,667 5.393 116,008,412
Annuity phase of contracts issued on or after May 16, 1983 ........... 9,106 5.393 49,108
-----------
Net Contract Owners' Equity ............................................................................. $159,031,299
============
</TABLE>

-27-
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS - CONTINUED

6. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)

Contracts issued prior to May 16, 1983
<TABLE>
<CAPTION>

FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income...................................... $ .353 $ .379 $ .328 $ .318 $ .306
Operating expenses........................................... .071 .067 .063 .059 .058
-------- -------- -------- -------- --------

Net investment income........................................ .282 .312 .265 .259 .248

Unit value at beginning of year.............................. 5.234 5.050 4.400 4.498 4.150

Net realized and change in unrealized gains (losses)......... .077 (.128) .385 (.357) .100
-------- -------- -------- -------- --------

Unit value at end of year.................................... $ 5.593 $ 5.234 $ 5.050 $ 4.400 $ 4.498
======== ======== ======== ======== ========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value........................ $ .36 $ .18 $ .65 $ (.10) $ .35
Ratio of operating expenses to average net assets............ 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net assets......... 5.25% 6.12% 5.54% 5.87% 5.66%
Number of units outstanding at end of year (thousands)....... 7,683 8,549 9,325 10,694 12,489
Portfolio turnover rate...................................... 196% 176% 138% 27% 24%
</TABLE>

Contracts issued on or after May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income...................................... $ .342 $ .368 $ .319 $ .310 $ .299
Operating expenses........................................... .082 .078 .073 .069 .067
--------- -------- -------- -------- --------

Net investment income........................................ .260 .290 .246 .241 .232

Unit value at beginning of 5.060 4.894 4.274 4.381 4.052
year..............................
Net realized and change in unrealized gains (losses)......... .073 (.124) .374 (.348) .097
--------- -------- -------- -------- --------

Unit value at end of year.................................... $ 5.393 $ 5.060 $ 4.894 $ 4.274 $ 4.381
========= ======== ======== ======== ========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value........................ $ .33 $ .17 $ .62 $ (.11) $ .33
Ratio of operating expenses to average net assets............ 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average net assets......... 5.00% 5.87% 5.29% 5.62% 5.41%
Number of units outstanding at end of year (thousands)....... 21,521 24,804 27,066 27,033 28,472
Portfolio turnover rate...................................... 196% 176% 138% 27% 24%
</TABLE>

-28-
<PAGE> 31
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1997

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
BONDS (72.3%)

AIRLINES (1.2%)
Delta Air Lines, Inc., (A)
9.25% Sinking Fund, 2007 $1,760,399 $ 1,806,733
-----------

COLLATERALIZED MORTGAGE
OBLIGATIONS (0.0%)
Kidder Peabody Mortgage,
Asset Trust 23,
9.88% Pass Through, 2019 27,728 27,632
-----------

CREDIT CARD RECEIVABLES (3.6%)
Household Private Label,
CC MT 1994-2 B Certificate,
8.00% Pass Through, 2003 3,500,000 3,608,570
Signet Credit Card,
Master Trust, 1993-4 B,
5.80% Pass Through, 2002 2,000,000 1,995,740
-----------
5,604,310
-----------
ENTERTAINMENT (4.5%)
Six Flags Entertainment,
0.00% Notes, 1999 8,000,000 7,093,600
-----------

FINANCE (17.8%)
CIT Group Holdings Inc.,
6.20% Notes, 2000 3,000,000 3,005,490
Comdisco, Inc.,
6.50% Notes, 1999 4,300,000 4,327,262
Nationwide Health Properties Inc.,
6.90% Notes, 2037 7,000,000 7,215,054
USL Cap Corp.,
8.13% Notes, 2000 6,000,000 6,236,646
US West Cap Funding Inc.,
6.95% Notes, 2037 6,900,000 7,156,728
-----------
27,941,180
-----------
HEALTHCARE (4.8%)
Columbia/HCA Healthcare Corp.,
8.70% Notes, 2010 2,250,000 2,500,340
Columbia/HCA Healthcare Corp.,
6.87% Notes, 2003 5,000,000 4,992,370
-----------
7,492,710
-----------
INTEGRATED ENERGY (4.3%)
Texaco Capital,
8.50% Debentures, 2003 6,144,000 6,793,998
-----------

MACHINERY (3.2%)
Hewlett-Packard Co.,
6.50% Notes, 1999 5,000,000 5,065,640
-----------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
MEDIA (10.6%)
Continental Cablevision, Inc.,
11.00% Debentures, 2007 $ 5,000,000 $ 5,561,095
Cox Communications Inc.,
6.69% Debentures, 2004 3,300,000 3,355,057
Tele-Communications Inc.,
9.65% Debentures, 2003 7,200,000 7,668,900
-----------
16,585,052
-----------

TELECOMMUNICATIONS (1.1%)
GTE Corp.,
9.10% Debentures, 2003 1,600,000 1,800,246
-----------

TOBACCO (5.8%)
Philip Morris, Inc.,
6.95% Notes, 2006 8,800,000 9,072,246
-----------

UTILITIES (15.4%)
Avon Energy Partners Holdings,
6.73% Notes, 2002 (A) 7,000,000 7,069,580
CalEnergy Co.,
9.50% Notes, 2006 (A) 6,750,000 7,391,250
DQU II Funding,
7.23% Bonds, 1999 3,293,000 3,322,374
Illinois Power Co.,
6.50% Notes, 1999 2,800,000 2,816,335
United Illuminating Company,
7.38% Debentures, 1998 3,500,000 3,501,088
-----------
24,100,627
-----------
TOTAL BONDS
(COST $111,823,126) 113,383,974
-----------

U.S. GOVERNMENT
SECURITIES (23.5%)

United States of America Treasury,
6.13% Notes, 2007 3,100,000 3,187,187
United States of America Treasury,
5.75% Notes, 2002 26,675,000 26,716,666
United States of America Treasury,
5.75% Notes, 2000 7,000,000 7,015,309
-----------

TOTAL U.S. GOVERNMENT
SECURITIES
(COST $36,783,995) 36,919,162
-----------
</TABLE>

-29-
<PAGE> 32
STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (4.2%)

COMMERCIAL PAPER (4.2%)
UBS Financial Inc.,
6.85% due January 2, 1998 $ 3,516,000 $ 3,514,854
Goldman Sachs Group LP,
6.05% due January 5, 1998 3,000,000 2,997,597
--------------

TOTAL SHORT-TERM
INVESTMENTS (COST $6,513,353) 6,512,451

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

TOTAL INVESTMENTS (100%)
(COST $155,120,474) (B) $ 156,815,587
==============

</TABLE>

NOTES

(A) Restricted Security.

(B) At December 31, 1997, net unrealized appreciation
for all securities was $1,695,113. This consisted of
aggregate gross unrealized appreciation for all
securities in which there was an excess of market
value over cost of $1,704,263 and aggregate gross
unrealized depreciation for all securities in which
there was an excess of cost over market value of
$9,150.

See Notes to Financial Statements

-30-
<PAGE> 33
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers and Owners of Variable Annuity Contracts of The
Travelers Quality Bond Account for Variable Annuities:

We have audited the accompanying statement of assets and liabilities of The
Travelers Quality Bond Account for Variable Annuities, including the statement
of investments, as of December 31, 1997, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the selected per unit data and ratios
for each of the five years in the period then ended. These financial statements,
per unit data and ratios are the responsibility of management. Our
responsibility is to express an opinion on these financial statements, per unit
data and ratios based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements, per unit data and
ratios are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements, per unit data and ratios referred to
above present fairly, in all material respects, the financial position of The
Travelers Quality Bond Account for Variable Annuities as of December 31, 1997,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the per unit data
and ratios for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 19, 1998

-31-
<PAGE> 34
THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

The year 1997 seemed to catch investors by surprise at almost every turn; it was
a year filled with both highs and lows. The unemployment rate hit a 24-year low
of 4.6%, inflation reached a 10-year low of 1.7%, and Gross Domestic Product
growth remained strong at 3.9%. At year end the 30-year Treasury bond yield was
5.92% and the federal funds rate was 5.50%. It appeared to be only a matter of
time before the Federal Reserve Board ("Fed") intervened and raised the federal
funds rate. However, as a result of the Asian crisis in October, it appears
economic growth has slowed enough to put a rate hike on hold.

It is unclear what the next Fed move will be, however we expect the Fed to
remain on the sidelines for the next six months. The strategy in the management
of The Travelers Money Market Account for Variable Annuities' short-term assets
will be to extend maturities from the current average of 21 days, to between 60
and 90 days. At year end the asset size of the portfolio was $84.8 million with
an average yield of 5.83%.

PORTFOLIO MANAGER: EMIL J. MOLINARO JR.

[TAMIC LOGO]

-32-
<PAGE> 35
THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

[MONEY MARKET BAR CHART]

This is a comparison of The Travelers Money Market Account for Variable
Annuities versus Lipper Analytical Services' variable annuity composite index,
which provides the average performance of variable annuity funds with similar
objectives as of December 31, 1997. Lipper Analytical Services is a leading
independent Variable Insurance Product Performance Analysis Service. The
performance of the composite is net of all asset based fees such as mortality
and expense charges and portfolio management fees. Performance reflects the
charges associated with Universal Annuity, which became available on May 16,
1983. Contracts issued prior to May 16, 1983, have different contract charges
that result in different performance than presented above.

The following is the performance data required by SEC rules governing uniform
performance reporting: one year -1.07%, five year 2.25% and ten year 4.22%. This
performance is based on a $1,000 hypothetical investment and reflects deductions
of all fees and charges including the semi-annual administrative charge and the
maximum deferred sales charge of 5%.

-33-
<PAGE> 36
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997

<TABLE>

ASSETS:
<S> <C>
Investment securities, at market value (cost $84,777,709) ........... $84,777,499
Receivables:
Investments securities sold ..................................... 3,227,000
Purchase payments and transfers from other Travelers accounts ... 781,499
Other assets ........................................................ 142
-----------

Total Assets ................................................. 88,786,140
-----------

LIABILITIES:
Cash overdraft ...................................................... 548,355
Payables:
Investments securities purchased ................................ 2,676,996
Contract surrenders and transfers to other Travelers accounts ... 162,263
Investment management and advisory fees ......................... 1,513
Accrued liabilities ................................................. 6,080
-----------

Total Liabilities ............................................ 3,395,207
-----------

NET ASSETS: ............................................................. $85,390,933
===========
</TABLE>

See Notes to Financial Statements

-34-
<PAGE> 37
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>

<S> <C> <C>
INVESTMENT INCOME:
Interest.............................................. $ 5,009,099

EXPENSES:
Investment management and advisory fees............... $ 290,557
Insurance charges..................................... 1,117,611
------------
Total expenses.................................... 1,408,168
------------

Net investment income.......................... 3,600,931
------------

Net increase in net assets resulting from operations.. $ 3,600,931
============
</TABLE>

See Notes to Financial Statements

-35-
<PAGE> 38
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income....................................................... $ 3,600,931 $ 2,990,711
-------------- --------------

Net increase in net assets resulting from operations.................... 3,600,931 2,990,711
-------------- --------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 14,166,450 and 9,424,587 units, respectively)............ 32,465,312 20,964,777
Participant transfers from other Travelers accounts
(applicable to 94,992,947 and 55,407,340 units, respectively)........... 219,247,840 123,185,617
Administrative charges
(applicable to 37,992 and 39,967 units, respectively)................... (88,495) (89,466)
Contract surrenders
(applicable to 6,094,352 and 4,688,797 units, respectively)............. (14,060,055) (10,410,253)
Participant transfers to other Travelers accounts
(applicable to 104,773,969 and 57,859,014 units, respectively).......... (241,734,934) (128,506,136)
Other payments to participants
(applicable to 170,332 and 14,133 units, respectively).................. (395,081) (31,246)
-------------- --------------

Net increase (decrease) in net assets resulting from unit transactions.. (4,565,413) 5,113,293
-------------- --------------

Net increase (decrease) in net assets................................ (964,482) 8,104,004

NET ASSETS:
Beginning of year........................................................... 86,355,415 78,251,411
-------------- --------------

End of year................................................................. $ 85,390,933 $ 86,355,415
============== ==============
</TABLE>
See Notes to Financial Statements

-36-
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Money Market Account for Variable Annuities ("Account MM") is a
separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Travelers Group Inc., and is available for
funding certain variable annuity contracts issued by The Travelers. Account MM
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.

The following is a summary of significant accounting policies consistently
followed by Account MM in the preparation of its financial statements.

SECURITY VALUATION. Short-term investments for which a quoted market price is
available are valued at market. Short-term investments for which there is no
reliable quoted market price are valued at amortized cost which approximates
market.

REPURCHASE AGREEMENTS. When Account MM enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities at
a mutually agreed-upon date and price), the repurchase price of the securities
will generally equal the amount paid by Account MM plus a negotiated interest
amount. The seller under the repurchase agreement will be required to provide to
Account MM securities (collateral) whose market value, including accrued
interest, will be at least equal to 102% of the repurchase price. Account MM
monitors the value of collateral on a daily basis. Repurchase agreements will be
limited to transactions with national banks and reporting broker dealers
believed to present minimal credit risks. Account MM's custodian will take
actual or constructive receipt of all securities underlying repurchase
agreements until such agreements expire.

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

2. CONTRACT CHARGES

Investment management and advisory fees are calculated daily at an annual rate
of 0.3233% of Account MM's net assets. These fees are paid to Travelers Asset
Management International Corporation, an indirect wholly owned subsidiary of
Travelers Group Inc.

Insurance charges are paid for the mortality and expense risks assumed by The
Travelers. On contracts issued prior to May 16, 1983, these charges are
equivalent to 1.0017% of the average net assets of Account MM on an annual
basis. On contracts issued on or after May 16, 1983, the charges for mortality
and expense risks are equivalent to 1.25% of the average net assets of Account
MM on an annual basis. Additionally, for certain contracts in the accumulation
phase, a semi-annual charge of $15 (prorated for partial periods) is deducted
from participant account balances and paid to The Travelers to cover
administrative charges.

The Travelers assesses a 5% contingent deferred sales charge if a participant's
purchase payment is surrendered within five years of its payment date. Contract
surrender payments include $90,325 and $77,935 of contingent deferred sales
charges for the years ended December 31, 1997 and 1996, respectively.

-37-
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS - CONTINUED

3. NET ASSETS HELD ON BEHALF OF AN AFFILIATE

Approximately $2,883,000 and $4,150,000 of the net assets of Account MM were
held on behalf of an affiliate of The Travelers as of December 31, 1997 and
1996, respectively. Transactions with this affiliate during the years ended
December 31, 1997 and 1996, were comprised of participant purchase payments of
approximately $320,000 and $3,085,000 and contract surrenders of approximately
$1,367,000 and $826,000, respectively.

4. NET CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------
UNIT NET
UNITS VALUE ASSET
----- ----- -----
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983..... 105,124 $ 2.443 $ 256,855
Accumulation phase of contracts issued on or after May 16, 1983.. 36,015,731 2.355 84,855,052
Annuity phase of contracts issued on or after May 16, 1983....... 118,429 2.355 279,026
------------

Net Contract Owners' Equity...................................... $ 85,390,933
===========
</TABLE>

-38-
<PAGE> 41
NOTES TO FINANCIAL STATEMENTS - CONTINUED

5. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)

Contracts issued prior to May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------

1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income ............................... $ .134 $ .125 $ .130 $ .091 $ .067
Operating expenses .................................... .032 .030 .030 .028 .027
-------- -------- -------- -------- --------

Net investment income ................................. .102 .095 .100 .063 .040

Unit value at beginning of year ....................... 2.341 2.246 2.146 2.083 2.043
-------- -------- -------- -------- --------

Unit value at end of year ............................. $ 2.443 $ 2.341 $ 2.246 $ 2.146 $ 2.083
======== ======== ======== ======== ========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value ............................ $ .10 $ .10 $ .10 $ .06 $ .04
Ratio of operating expenses to average net assets ..... 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net assets .. 4.27% 4.10% 4.61% 2.98% 1.93%
Number of units outstanding at end of year ............ 105 112 206 206 218
(thousands)

</TABLE>

Contracts issued on or after May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------

1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income ............................... $ .128 $ .121 $ .127 $ .087 $ .065
Operating expenses .................................... .036 .035 .034 .032 .031
--------- ----------- ----------- ----------- -----------

Net investment income ................................. .092 .086 .093 .055 .034

Unit value at beginning of year ....................... 2.263 2.177 2.084 2.029 1.995
--------- ----------- ----------- ----------- -----------

Unit value at end of year ............................. $ 2.355 $ 2.263 $ 2.177 $ 2.084 $ 2.029
========= =========== =========== =========== ===========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value ............................. $ .09 $ .09 $ .09 $ .06 $ .03
Ratio of operating expenses to average net assets ...... 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average net assets ... 4.02% 3.84% 4.36% 2.72% 1.68%
Number of units outstanding at end of year (thousands).. 36,134 38,044 35,721 39,675 34,227
</TABLE>

-39-
<PAGE> 42
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1997

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ---------
SHORT-TERM INVESTMENTS (100%)
<S> <C> <C>
COMMERCIAL PAPER (100%)
Asset Securitization Corp.,
5.88% due February 2, 1998 $ 4,000,000 $ 3,979,920
Associate Corp. of North
America,
5.83% due January 16, 1998 4,000,000 3,990,264
Bell Atlantic Financial
Services Inc.,
5.80% due January 6, 1998 3,200,000 3,196,938
BHP Finance (USA), Inc.,
5.83% due January 27, 1998 3,000,000 2,987,679
BHP Finance (USA), Inc.,
5.83% due January 28, 1998 1,200,000 1,194,889
Corporate Asset Funding Co.,
5.75% due January 8, 1998 4,000,000 3,994,948
Corporate Receivables Corp.,
5.93% due February 25, 1998 4,000,000 3,965,928
General Electric Capital
Corp.,
5.85% due January 22, 1998 3,000,000 2,989,959
General Mills, Inc.,
5.83% due January 9, 1998 2,000,000 1,997,174
Goldman Sachs Group LP,
6.05% due January 29, 1998 4,000,000 3,982,356
Heinz (H.J.) Co.,
5.82% due January 6, 1998 2,000,000 1,998,086
IBM Credit Corp.,
5.84% due January 15, 1998 4,500,000 4,489,731
IMI Funding Corp. (USA),
5.74% due January 15, 1998 1,627,000 1,623,287
IMI Funding Corp. (USA),
5.84% due February 5, 1998 3,000,000 2,983,572
Johnson Controls Inc.,
5.91% due January 30, 1998 4,000,000 3,981,748
J.P. Morgan & Company,
5.73% due January 6, 1998 4,000,000 3,996,172
Manitoba Hydro Electric Board
5.83% due February 19, 1998 2,000,000 1,984,790
Merrill Lynch & Co.,
5.87% due March 3, 1998 3,825,000 3,788,926
Morgan Stanley Group, Inc.,
5.84% due January 22, 1998 4,000,000 3,986,612
Pearson, Inc.,
5.96% due January 9, 1998 4,000,000 3,994,348
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Progress Capital Holdings,
Inc.,
5.99% due January 14, 1998 $ 4,022,000 $ 4,013,389
Prudential Funding Corp.,
5.87% due January 21, 1998 2,000,000 1,993,610
Rubbermaid Inc.,
5.88% due January 12, 1998 4,000,000 3,992,580
Sara Lee Corp.,
6.09% due January 7, 1998 3,000,000 2,996,670
Southern New England,
Telecommunications Co.,
5.93% due January 5, 1998 4,000,000 3,996,796
UBS Financial, Inc.,
6.85% due January 2, 1998 2,678,000 2,677,127
--------------

TOTAL INVESTMENTS (100%)
(COST $84,777,709)
$ 84,777,499
==============
</TABLE>

See Notes to Financial Statements

-40-
<PAGE> 43
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers and Owners of Variable Annuity Contracts of The
Travelers Money Market Account for Variable Annuities:

We have audited the accompanying statement of assets and liabilities of The
Travelers Money Market Account for Variable Annuities, including the statement
of investments, as of December 31, 1997, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the selected per unit data and ratios
for each of the five years in the period then ended. These financial statements,
per unit data and ratios are the responsibility of management. Our
responsibility is to express an opinion on these financial statements, per unit
data and ratios based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements, per unit data and
ratios are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements, per unit data and ratios referred to
above present fairly, in all material respects, the financial position of The
Travelers Money Market Account for Variable Annuities as of December 31, 1997,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the per unit data
and ratios for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 19, 1998

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<PAGE> 47
Investment Advisers
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut

THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION
Hartford, Connecticut

Independent Accountants
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut

Custodian
THE CHASE MANHATTAN BANK, N.A.
New York, New York

This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Growth and Income Stock Account for
Variable Annuities, The Travelers Quality Bond Account for Variable Annuities
and The Travelers Money Market Account for Variable Annuities. It should not be
used in connection with any offer except in conjunction with the Universal
Annuity Prospectus which contains all pertinent information, including the
applicable sales commissions.