<PAGE> 1
UNIVERSAL ANNUITY
ANNUAL REPORT
DECEMBER 31, 1996
THE TRAVELERS FUND U
FOR VARIABLE ANNUITIES
[TRAVELERSLIFE LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
THE TRAVELERS FUND U
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
Travelers Variable Products Funds, 23,141,782 shares (cost $383,083,038)............... $ 443,580,690
Templeton Variable Products Series Fund, 24,508,804 shares (cost $418,900,507)......... 529,722,486
Fidelity's Variable Insurance Products Fund, 37,981,685 shares (cost $732,078,690)..... 911,426,163
Fidelity's Variable Insurance Products Fund II, 23,228,578 shares (cost $336,967,765).. 393,259,823
Dreyfus Stock Index Fund, 6,013,653 shares (cost $98,881,452).......................... 121,956,881
American Odyssey Funds, Inc., 70,273,539 shares (cost $817,264,309).................... 905,331,016
Travelers Series Fund Inc., 3,348,624 shares (cost $45,037,486)........................ 48,124,784
-----------------
Total Investments (cost $2,832,213,247).............................................. $3,353,401,843
RECEIVABLES:
Dividends.............................................................................. 84,579,629
Purchase payments and transfers from other Travelers accounts.......................... 4,854,734
Other assets............................................................................ 6,674
--------------
Total Assets......................................................................... 3,442,842,880
--------------
LIABILITIES:
Payable for contract surrenders and transfers to other Travelers accounts............... 3,237,415
Accrued liabilities..................................................................... 482,676
--------------
Total Liabilities.................................................................... 3,720,091
--------------
NET ASSETS: $3,439,122,789
==============
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 3
THE TRAVELERS FUND U
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 215,764,991
EXPENSES:
Insurance charges......................................... 36,953,737
--------------
Net investment income................................... 178,811,254
--------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENTS:
Realized gain from investment transactions:
Proceeds from investments sold........................... $ 231,887,981
Cost of investments sold................................. 183,031,972
-----------
Net realized gain....................................... 48,856,009
Change in unrealized gain on investments:
Unrealized gain at December 31, 1995..................... 374,401,124
Unrealized gain at December 31, 1996..................... 521,188,596
-----------
Net change in unrealized gain for the year.............. 146,787,472
--------------
Net realized gain and change in unrealized gain........ 195,643,481
--------------
Net increase in net assets resulting from operations...... $ 374,454,735
==============
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 4
THE TRAVELERS FUND U
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 178,811,254 $ 44,075,346
Net realized gain from investment transactions......................................... 48,856,009 20,808,441
Net change in unrealized gain (loss) on investments.................................... 146,787,472 383,077,143
------------------ ---------------
Net increase in net assets resulting from operations.................................. 374,454,735 447,960,930
------------------ ---------------
UNIT TRANSACTIONS:
Participant premium payments
(applicable to 414,155,184 and 337,352,334 units, respectively)....................... 651,103,231 452,028,311
Participant transfers from other Travelers accounts
(applicable to 405,484,901 and 304,664,477 units, respectively)....................... 642,203,572 412,659,453
Administrative and asset allocation charges
(applicable to 9,168,469 and 7,055,084 units, respectively)........................... (13,265,920) (9,143,467)
Contract surrenders
(applicable to 111,350,118 and 61,767,394 units, respectively)........................ (177,909,388) (88,487,237)
Participant transfers to other Travelers accounts
(applicable to 337,562,426 and 244,445,899 units, respectively)....................... (532,180,418) (339,344,437)
Other payments to participants
(applicable to 2,743,276 and 2,572,549 units, respectively)........................... (4,497,399) (3,565,280)
------------------ ---------------
Net increase in net assets resulting from unit transactions.......................... 565,453,678 424,147,343
------------------ ---------------
Net increase in net assets.......................................................... 939,908,413 872,108,273
NET ASSETS:
Beginning of year...................................................................... 2,499,214,376 1,627,106,103
------------------ ---------------
End of year............................................................................ $ 3,439,122,789 $ 2,499,214,376
================== ===============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Fund U for Variable Annuities ("Fund U") 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. Fund U
is registered under the Investment Company Act of 1940, as amended, as a
unit investment trust.
Participant purchase payments applied to Fund U are invested in one or
more eligible funds in accordance with the selection made by the contract
owner. As of December 31, 1996, the eligible funds available under Fund U
are: Managed Assets Trust; High Yield Bond Trust; Capital Appreciation
Fund; U.S. Government Securities Portfolio, Social Awareness Stock
Portfolio and Utilities Portfolio of The Travelers Series Trust; American
Odyssey Core Equity Fund, American Odyssey Emerging Opportunities Fund,
American Odyssey International Equity Fund, American Odyssey Long-Term Bond
Fund, American Odyssey Intermediate-Term Bond Fund and American Odyssey
Short-Term Bond Fund of American Odyssey Funds, Inc.; Alliance Growth
Portfolio, Smith Barney High Income Portfolio, Smith Barney International
Equity Portfolio, Smith Barney Income and Growth Portfolio, Putnam
Diversified Income Portfolio and MFS Total Return Portfolio of Travelers
Series Fund Inc. (formerly Smith Barney/Travelers Series Fund Inc.) (all of
which are managed by affiliates of The Travelers); Templeton Bond Fund,
Templeton Stock Fund and Templeton Asset Allocation Fund of Templeton
Variable Products Series Fund; High Income Portfolio, Growth Portfolio and
Equity-Income Portfolio of Fidelity's Variable Insurance Products Fund;
Asset Manager Portfolio of Fidelity's Variable Insurance Products Fund II;
and Dreyfus Stock Index Fund. All of the funds are Massachusetts business
trusts, except for American Odyssey Funds, Inc., Dreyfus Stock Index Fund
and Travelers Series Fund Inc. which are incorporated under Maryland law.
Effective May 1, 1996, G.T. Global Strategic Income Portfolio of
Travelers Series Fund Inc. was no longer available to new contract owners
under Fund U.
The following is a summary of significant accounting policies
consistently followed by Fund U in the preparation of its financial
statements.
SECURITY VALUATION. Investments are valued daily at the net asset
values per share of the underlying funds.
FEDERAL INCOME TAXES. The operations of Fund U form a part of the
total operations of The Travelers and are not taxed separately. The
Travelers is taxed as a life insurance company under the Internal
Revenue Code of 1986, as amended (the "Code"). Under existing federal
income tax law, no taxes are payable on the investment income of Fund U.
Fund U 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.
Security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date.
2. INVESTMENTS
Purchases and sales of investments aggregated $927,876,434 and
$231,887,981 respectively, for the year ended December 31, 1996. Realized
gains and losses from investment transactions are reported on an identified
cost basis. The cost of investments in eligible funds was $2,832,213,247
at December 31, 1996. Gross unrealized appreciation for all investments at
December 31, 1996 was $526,818,075. Gross unrealized depreciation for all
investments at December 31, 1996 was $5,629,479.
-4-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS - CONTINUED
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed
by The Travelers. These charges are equivalent to 1.25% of the average net
assets of Fund U 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.
Participants in American Odyssey Funds, Inc. (the "Funds"), may elect
to enter into a separate asset allocation advisory agreement with Copeland
Financial Services, Inc. ("Copeland"), an affiliate of The Travelers.
Under this arrangement, Copeland provides asset allocation advice and
charges participants an annual fee, plus a one-time set-up fee of $30. The
annual fee, which decreases as a participant's assets in the Funds
increase, is equivalent to an amount of up to 1.50% of the participant's
assets in the Funds. These fees totaled $8,243,048 and $5,306,354, for the
years ended December 31, 1996 and 1995, respectively.
No sales charge is deducted from participant purchase payments when
they are received. However, 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
$1,952,467 and $1,392,135 of contingent deferred sales charges for the
years ended December 31, 1996 and 1995, respectively.
4. NET ASSETS HELD BY AFFILIATE
Approximately $16,836,000 and $5,373,000 of the net assets of Fund U
were held on behalf of an affiliate of The Travelers as of December 31,
1996 and 1995, respectively. Transactions with this affiliate during the
years ended December 31, 1996 and 1995, comprised participant purchase
payments of approximately $12,908,000 and $1,355,000 and contract
surrenders of approximately $2,570,000 and $1,883,000, respectively.
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- ------
<S> <C> <C> <C> <C>
Travelers Variable Products Funds
Managed Assets Trust
Qualified.......................................... 55,054,987 97,484 $ 3.105 $ 171,244,299
Non-Qualified...................................... 4,631,923 52,519 3.342 15,655,504
High Yield Bond Trust
Qualified.......................................... 5,311,906 - 2.833 15,049,344
Non-Qualified...................................... 656,597 10,528 2.863 1,909,698
Capital Appreciation Fund
Qualified.......................................... 64,294,087 19,874 3.034 195,112,190
Non-Qualified...................................... 7,827,908 52,834 3.146 24,794,513
U.S. Government Securities Portfolio................. 19,047,713 6,716 1.323 25,214,195
Social Awareness Stock Portfolio..................... 6,355,111 - 1.731 10,999,128
Utilities Portfolio.................................. 13,258,249 - 1.363 18,065,325
Templeton Variable Products Series Fund
Templeton Bond Fund.................................. 10,251,711 8,541 1.351 13,858,008
Templeton Stock Fund................................. 154,535,095 79,059 2.001 309,361,607
Templeton Asset Allocation Fund...................... 113,724,645 84,342 1.815 206,543,128
Fidelity's Variable Insurance Products Fund
High Income Portfolio................................ 40,245,868 62,744 1.766 71,171,111
Growth Portfolio..................................... 274,815,076 76,990 1.805 496,228,890
Equity-Income Portfolio.............................. 205,346,961 289,049 1.674 344,274,610
Fidelity's Variable Insurance Products Fund II
Asset Manager Portfolio.............................. 248,852,187 197,419 1.577 392,828,875
Dreyfus Stock Index Fund.................................. 66,032,397 65,448 1.870 123,623,039
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund.................... 170,552,375 - 1.647 280,907,471
American Odyssey Emerging Opportunities Fund......... 122,868,651 8,748 1.460 179,354,629
American Odyssey International Equity Fund........... 121,895,846 - 1.534 186,962,205
American Odyssey Long-Term Bond Fund................. 137,075,188 - 1.221 167,432,442
American Odyssey Intermediate-Term Bond Fund......... 78,210,833 - 1.157 90,528,712
American Odyssey Short-Term Bond Fund................ 44,076,761 - 1.129 49,761,929
Travelers Series Fund Inc.
Alliance Growth Portfolio............................ 10,805,587 2,974 1.640 17,726,518
G.T. Global Strategic Income Portfolio............... 242,281 - 1.402 339,703
Smith Barney High Income Portfolio................... 552,595 - 1.256 693,824
Smith Barney International Equity Portfolio.......... 5,777,413 - 1.321 7,633,086
Smith Barney Income and Growth Portfolio............. 6,112,646 20,722 1.474 9,038,911
Putnam Diversified Income Portfolio.................. 2,374,774 - 1.206 2,863,491
MFS Total Return Portfolio........................... 7,302,057 - 1.362 9,946,404
---------------
Net Contract Owners' Equity............................................................................. $ 3,439,122,789
===============
</TABLE>
-6-
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
--------------- -----------------
<S> <C> <C>
TRAVELERS VARIABLE PRODUCTS FUNDS (13.2%)
Managed Assets Trust (Cost $151,988,009) 11,555,065 $ 173,094,873
High Yield Bond Trust (Cost $15,607,468) 1,803,603 15,312,586
Capital Appreciation Fund (Cost $166,029,880) 5,559,715 204,152,724
U.S. Government Securities Portfolio (Cost $24,195,562) 2,190,156 23,785,096
Social Awareness Stock Portfolio (Cost $9,098,086) 674,909 10,636,565
Utilities Portfolio (Cost $16,164,033) 1,358,334 16,598,846
--------------- -----------------
Total (Cost $383,083,038) 23,141,782 443,580,690
--------------- -----------------
TEMPLETON VARIABLE PRODUCTS SERIES FUND (15.8%)
Templeton Bond Fund (Cost $13,416,853) 1,190,975 13,851,038
Templeton Stock Fund (Cost $245,610,028) 13,517,560 309,281,783
Templeton Asset Allocation Fund (Cost $159,873,626) 9,800,269 206,589,665
--------------- -----------------
Total (Cost $418,900,507) 24,508,804 529,722,486
--------------- -----------------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (27.2%)
High Income Portfolio (Cost $64,330,977) 5,685,453 71,181,875
Growth Portfolio (Cost $386,678,798) 15,930,220 496,067,065
Equity-Income Portfolio (Cost $281,068,915) 16,366,012 344,177,223
--------------- -----------------
Total (Cost $732,078,690) 37,981,685 911,426,163
--------------- -----------------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (11.7%)
Asset Manager Portfolio (Cost $336,967,765)
Total (Cost $336,967,765) 23,228,578 393,259,823
--------------- -----------------
DREYFUS STOCK INDEX FUND (3.6%)
Total (Cost $98,881,452) 6,013,653 121,956,881
--------------- -----------------
AMERICAN ODYSSEY FUNDS, INC. (27.0%)
American Odyssey Core Equity Fund (Cost $203,298,730) 17,110,891 265,047,699
American Odyssey Emerging Opportunities Fund (Cost $168,076,521) 12,314,873 165,265,599
American Odyssey International Equity Fund (Cost $150,995,868) 12,083,414 182,217,884
American Odyssey Long-Term Bond Fund (Cost $160,450,800) 15,685,888 159,211,768
American Odyssey Intermediate-Term Bond Fund (Cost $86,081,399) 8,387,515 85,552,652
American Odyssey Short-Term Bond Fund (Cost $48,360,991) 4,690,958 48,035,414
--------------- -----------------
Total (Cost $817,264,309) 70,273,539 905,331,016
--------------- -----------------
TRAVELERS SERIES FUND INC. (1.5%)
Alliance Growth Portfolio (Cost $16,015,439) 1,047,211 17,572,197
G.T. Global Strategic Income Portfolio (Cost $356,566) 28,512 338,718
Smith Barney High Income Portfolio (Cost $793,542) 66,853 791,537
Smith Barney International Equity Portfolio (Cost $7,356,114) 604,172 7,588,400
Smith Barney Income and Growth Portfolio (Cost $8,454,988) 599,218 9,024,216
Putnam Diversified Income Portfolio (Cost $2,850,588) 247,049 2,858,351
MFS Total Return Portfolio (Cost $9,210,249) 755,609 9,951,365
--------------- -----------------
Total (Cost $45,037,486) 3,348,624 48,124,784
--------------- -----------------
TOTAL INVESTMENT OPTIONS (100%)
(COST $2,832,213,247) $ 3,353,401,843
=================
</TABLE>
-7-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF FUND U OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
MANAGED ASSETS TRUST HIGH YIELD BOND TRUST
---------------------------- ---------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................................................... $ 27,954,200 $ 7,184,513 $ 2,919,012 $ 941,371
------------- ------------ ------------ ------------
EXPENSES:
Insurance charges............................................. 2,202,996 1,930,851 181,420 153,284
------------- ------------ ------------ ------------
Net investment income (loss)............................ 25,751,204 5,253,662 2,737,592 788,087
------------- ------------ ------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold............................ 12,832,936 11,838,891 2,894,773 2,341,036
Cost of investments sold.................................. 8,871,286 9,792,813 2,809,988 2,295,750
------------- ------------ ------------ ------------
Net realized gain (loss)................................ 3,961,650 2,046,078 84,785 45,286
------------- ------------ ------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year.................. 30,109,740 2,677,803 567,770 (190,385)
Unrealized gain (loss) end of year........................ 21,106,864 30,109,740 (294,882) 567,770
------------- ------------ ------------ ------------
Net change in unrealized gain (loss) for the year....... (9,002,876) 27,431,937 (862,652) 758,155
------------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations............................... 20,709,978 34,731,677 1,959,725 1,591,528
------------- ------------ ------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments................................. 15,980,014 12,725,731 1,850,766 1,152,461
Participant transfers from other Travelers accounts........... 4,619,779 4,507,153 5,594,597 1,788,890
Administrative and asset allocation charges................... (206,854) (219,268) (18,805) (18,625)
Contract surrenders........................................... (10,950,759) (10,393,810) (1,114,404) (1,033,566)
Participant transfers to other Travelers accounts............. (12,961,561) (10,950,505) (3,785,886) (2,329,135)
Other payments to participants................................ (351,162) (200,724) (149,278) (11,747)
------------- ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from unit transactions.................................. (3,870,543) (4,531,423) 2,376,990 (451,722)
------------- ------------ ------------ ------------
Net increase (decrease) in net assets................... 16,839,435 30,200,254 4,336,715 1,139,806
Net Assets:
Beginning of year......................................... 170,060,368 139,860,114 12,622,327 11,482,521
------------- ------------ ------------ ------------
End of year............................................... $ 186,899,803 $ 170,060,368 $ 16,959,042 $ 12,622,327
============= ============= ============ ============
</TABLE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND
-----------------------------
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends..................................................... $ 24,372,149 $ 538,024
------------- -------------
EXPENSES:
Insurance charges............................................. 2,070,864 1,245,525
------------- -------------
Net investment income (loss)............................ 22,301,285 (707,501)
------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold............................ 10,128,794 13,097,985
Cost of investments sold.................................. 6,771,613 9,274,345
------------- -------------
Net realized gain (loss)................................ 3,357,181 3,823,640
------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year.................. 26,739,948 1,236,789
Unrealized gain (loss) end of year........................ 38,122,844 26,739,948
------------- -------------
Net change in unrealized gain (loss) for the year....... 11,382,896 25,503,159
------------- -------------
Net increase (decrease) in net assets
resulting from operations............................... 37,041,362 28,619,298
------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments................................. 37,351,082 17,519,986
Participant transfers from other Travelers accounts........... 75,856,393 29,112,536
Administrative and asset allocation charges................... (236,896) (160,042)
Contract surrenders........................................... (8,658,569) (3,638,067)
Participant transfers to other Travelers accounts............. (42,532,367) (28,049,805)
Other payments to participants................................ (202,959) (222,415)
------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions.................................. 61,576,684 14,562,193
------------- -------------
Net increase (decrease) in net assets................... 98,618,046 43,181,491
Net Assets:
Beginning of year......................................... 121,288,657 78,107,166
------------- -------------
End of year............................................... $ 219,906,703 $ 121,288,657
============= =============
</TABLE>
-8-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
U.S. GOVERNMENT SOCIAL AWARENESS
SECURITIES PORTFOLIO STOCK PORTFOLIO
--------------------------- ---------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................................................... $ 3,901,076 $ 1,398,521 $ 757,032 $ 119,821
------------ ------------ ------------ ------------
EXPENSES:
Insurance charges............................................. 329,950 325,837 111,545 74,063
------------ ------------ ------------ ------------
Net investment income (loss)............................ 3,571,126 1,072,684 645,487 45,758
------------ ------------ ------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold............................ 9,246,199 7,588,890 2,433,322 1,013,467
Cost of investments sold.................................. 9,753,525 7,393,404 1,884,337 808,197
------------ ------------ ------------ ------------
Net realized gain (loss)................................ (507,326) 195,486 548,985 205,270
------------ ------------ ------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year.................. 2,746,779 (1,427,050) 1,248,264 (63,248)
Unrealized gain (loss) end of year........................ (410,466) 2,746,779 1,538,479 1,248,264
------------ ------------ ------------ ------------
Net change in unrealized gain (loss) for the year....... (3,157,245) 4,173,829 290,215 1,311,512
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations............................... (93,445) 5,441,999 1,484,687 1,562,540
------------ ------------ ------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments................................. 3,312,661 1,592,087 2,775,977 1,519,956
Participant transfers from other Travelers accounts........... 6,741,836 5,497,597 3,309,505 1,501,420
Administrative and asset allocation charges................... (28,786) (31,716) (20,122) (12,158)
Contract surrenders........................................... (2,212,259) (1,864,732) (1,885,418) (79,490)
Participant transfers to other Travelers accounts............. (10,663,436) (6,668,246) (1,737,042) (1,298,335)
Other payments to participants................................ (26,833) (180,911) - (2,013)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from unit transactions.................................. (2,876,817) (1,655,921) 2,442,900 1,629,380
------------ ------------ ------------ ------------
Net increase (decrease) in net assets................... (2,970,262) 3,786,078 3,927,587 3,191,920
Net Assets:
Beginning of year......................................... 28,184,457 24,398,379 7,071,541 3,879,621
------------ ------------ ------------ ------------
End of year............................................... $ 25,214,195 $ 28,184,457 $ 10,999,128 $ 7,071,541
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
UTILITIES PORTFOLIO TEMPLETON BOND FUND
---------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................................................... $ 2,067,241 $ 150,434 $ 1,360,095 $ 554,133
------------ ------------ ------------ -------------
EXPENSES:
Insurance charges............................................. 216,033 130,215 163,191 153,608
------------ ------------ ------------ -------------
Net investment income (loss)............................ 1,851,208 20,219 1,196,904 400,525
------------ ------------ ------------ -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold............................ 5,883,901 2,361,428 2,178,436 1,764,933
Cost of investments sold.................................. 4,727,491 2,102,248 2,319,495 1,785,361
------------ ------------ ------------ -------------
Net realized gain (loss)................................ 1,156,410 259,180 (141,059) (20,428)
------------ ------------ ------------ -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year.................. 2,392,412 52,210 467,625 (698,498)
Unrealized gain (loss) end of year........................ 434,813 2,392,412 434,185 467,625
------------ ------------ ------------ -------------
Net change in unrealized gain (loss) for the year....... (1,957,599) 2,340,202 (33,440) 1,166,123
------------ ------------ ------------ -------------
Net increase (decrease) in net assets
resulting from operations............................... 1,050,019 2,619,601 1,022,405 1,546,220
------------ ------------ ------------ -------------
UNIT TRANSACTIONS:
Participant purchase payments................................. 4,102,407 2,973,322 1,710,597 1,739,161
Participant transfers from other Travelers accounts........... 8,402,214 9,184,581 1,954,471 1,789,574
Administrative and asset allocation charges................... (21,234) (14,379) (12,912) (14,121)
Contract surrenders........................................... (656,083) (183,673) (804,933) (450,326)
Participant transfers to other Travelers accounts............. (10,026,851) (5,017,497) (3,145,773) (2,647,625)
Other payments to participants................................ (86,212) (32,215) (32,397) (11,299)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets resulting
from unit transactions.................................. 1,714,241 6,910,139 (330,947) 405,364
------------ ------------ ------------ -------------
Net increase (decrease) in net assets................... 2,764,260 9,529,740 691,458 1,951,584
Net Assets:
Beginning of year......................................... 15,301,065 5,771,325 13,166,550 11,214,966
------------ ------------ ------------ -------------
End of year............................................... $ 18,065,325 $ 15,301,065 $ 13,858,008 $ 13,166,550
============ ============ ============ =============
</TABLE>
-9-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF FUND U OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
TEMPLETON ASSET
TEMPLETON STOCK FUND ALLOCATION FUND
----------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................... $ 22,552,572 $ 2,523,957 $ 9,092,507 $ 3,447,327
------------- ------------- ------------- -------------
EXPENSES:
Insurance charges........................................... 3,148,933 2,112,407 2,290,727 1,847,180
------------- ------------- ------------- -------------
Net investment income (loss).......................... 19,403,639 411,550 6,801,780 1,600,147
------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold.......................... 5,605,956 4,184,428 8,429,607 8,767,048
Cost of investments sold................................ 3,592,013 2,939,726 5,857,719 7,005,322
------------- ------------- ------------- -------------
Net realized gain (loss).............................. 2,013,943 1,244,702 2,571,888 1,761,726
------------- ------------- ------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................ 36,051,204 2,277,411 26,284,798 1,519,117
Unrealized gain (loss) end of year...................... 63,671,755 36,051,204 46,716,039 26,284,798
------------- ------------- ------------- -------------
Net change in unrealized gain (loss) for the year.... 27,620,551 33,773,793 20,431,241 24,765,681
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations............................. 49,038,133 35,430,045 29,804,909 28,127,554
------------- ------------- ------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments............................... 51,348,631 38,462,831 25,525,166 23,642,833
Participant transfers from other Travelers accounts......... 46,997,174 28,718,119 14,558,621 9,637,424
Administrative and asset allocation charges................. (350,295) (293,673) (200,176) (193,759)
Contract surrenders......................................... (12,621,786) (5,514,830) (11,393,990) (7,577,118)
Participant transfers to other Travelers accounts........... (28,144,892) (28,862,332) (17,509,384) (19,254,099)
Other payments to participants.............................. (396,825) (203,056) (386,932) (330,255)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions................................ 56,832,007 32,307,059 10,593,305 5,925,026
------------- ------------- ------------- -------------
Net increase (decrease) in net assets................. 105,870,140 67,737,104 40,398,214 34,052,580
NET ASSETS:
Beginning of year....................................... 203,491,467 135,754,363 166,144,914 132,092,334
------------- ------------- ------------- -------------
End of year............................................. $ 309,361,607 $ 203,491,467 $ 206,543,128 $ 166,144,914
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FIDELITY'S HIGH
INCOME PORTFOLIO
----------------------------
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................... $ 4,685,541 $ 2,457,673
------------ ------------
EXPENSES:
Insurance charges........................................... 765,304 532,559
------------ ------------
Net investment income (loss).......................... 3,920,237 1,925,114
------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold.......................... 11,271,440 4,968,874
Cost of investments sold................................ 11,299,150 4,751,441
------------ ------------
Net realized gain (loss).............................. (27,710) 217,433
------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................ 3,613,712 (1,388,217)
Unrealized gain (loss) end of year...................... 6,850,898 3,613,712
------------ ------------
Net change in unrealized gain (loss) for the year.... 3,237,186 5,001,929
------------ ------------
Net increase (decrease) in net assets
resulting from operations............................. 7,129,713 7,144,476
------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments............................... 14,323,674 10,516,308
Participant transfers from other Travelers accounts......... 23,502,774 14,386,232
Administrative and asset allocation charges................. (77,538) (60,830)
Contract surrenders......................................... (3,554,402) (1,665,013)
Participant transfers to other Travelers accounts........... (21,225,249) (12,931,444)
Other payments to participants.............................. (94,323) (201,683)
------------ ------------
Net increase (decrease) in net assets resulting
from unit transactions................................ 12,874,936 10,043,570
------------ ------------
Net increase (decrease) in net assets................. 20,004,649 17,188,046
NET ASSETS:
Beginning of year....................................... 51,166,462 33,978,416
------------ ------------
End of year............................................. $ 71,171,111 $ 51,166,462
============ ============
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
FIDELITY'S EQUITY-
FIDELITY'S GROWTH PORTFOLIO INCOME PORTFOLIO
----------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................... $ 26,609,907 $ 1,191,787 $ 11,007,124 $ 8,589,857
------------- ------------- ------------- -------------
EXPENSES:
Insurance charges........................................... 5,494,318 3,684,287 3,650,704 1,935,998
------------- ------------- ------------- -------------
Net investment income (loss).......................... 21,115,589 (2,492,500) 7,356,420 6,653,859
------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold.......................... 15,033,976 8,250,207 8,901,856 3,334,273
Cost of investments sold................................ 8,761,312 5,394,373 7,112,993 2,893,003
------------- ------------- ------------- -------------
Net realized gain (loss).............................. 6,272,664 2,855,834 1,788,863 441,270
------------- ------------- ------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................ 84,221,007 7,539,489 36,609,662 313,667
Unrealized gain (loss) end of year...................... 109,388,267 84,221,007 63,108,308 36,609,662
------------- ------------- ------------- -------------
Net change in unrealized gain (loss) for the year.... 25,167,260 76,681,518 26,498,646 36,295,995
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations............................. 52,555,513 77,044,852 35,643,929 43,391,124
------------- ------------- ------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments............................... 98,813,647 68,178,034 80,531,063 51,490,745
Participant transfers from other Travelers accounts......... 77,877,606 70,935,405 65,473,564 77,738,161
Administrative and asset allocation charges................. (756,932) (562,812) (507,452) (299,927)
Contract surrenders......................................... (28,271,491) (14,480,130) (17,465,306) (4,785,609)
Participant transfers to other Travelers accounts........... (68,957,439) (45,533,842) (46,894,521) (27,115,781)
Other payments to participants.............................. (450,758) (324,795) (283,199) (327,225)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions................................ 78,254,633 78,211,860 80,854,149 96,700,364
------------- ------------- ------------- -------------
Net increase (decrease) in net assets................. 130,810,146 155,256,712 116,498,078 140,091,488
NET ASSETS:
Beginning of year....................................... 365,418,744 210,162,032 227,776,532 87,685,044
------------- ------------- ------------- -------------
End of year............................................. $ 496,228,890 $ 365,418,744 $ 344,274,610 $ 227,776,532
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FIDELITY'S ASSET
MANAGER PORTFOLIO DREYFUS STOCK INDEX FUND
----------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................... $ 24,249,566 $ 7,188,187 $ 3,928,238 $ 1,629,405
------------- ------------- ------------- -------------
EXPENSES:
Insurance charges........................................... 4,731,985 4,490,031 1,141,925 627,250
------------- ------------- ------------- -------------
Net investment income (loss).......................... 19,517,581 2,698,156 2,786,313 1,002,155
------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold.......................... 43,154,403 31,499,795 4,411,866 2,234,634
Cost of investments sold................................ 36,465,300 27,445,980 3,662,881 2,199,090
------------- ------------- ------------- -------------
Net realized gain (loss).............................. 6,689,103 4,053,815 748,985 35,544
------------- ------------- ------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................ 35,524,654 (9,997,449) 8,941,622 (4,598,353)
Unrealized gain (loss) end of year...................... 56,292,058 35,524,654 23,075,429 8,941,622
------------- ------------- ------------- -------------
Net change in unrealized gain (loss) for the year.... 20,767,404 45,522,103 14,133,807 13,539,975
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations............................. 46,974,088 52,274,074 17,669,105 14,577,674
------------- ------------- ------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments............................... 47,983,080 59,550,456 27,715,679 11,429,071
Participant transfers from other Travelers accounts......... 15,854,663 15,094,558 34,290,381 14,735,957
Administrative and asset allocation charges................. (518,763) (621,271) (166,923) (93,721)
Contract surrenders......................................... (30,635,034) (16,635,725) (5,352,753) (1,652,874)
Participant transfers to other Travelers accounts........... (63,750,905) (71,870,374) (17,263,458) (8,263,626)
Other payments to participants.............................. (761,969) (920,794) (110,049) (47,582)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions................................ (31,828,928) (15,403,150) 39,112,877 16,107,225
------------- ------------- ------------- -------------
Net increase (decrease) in net assets................. 15,145,160 36,870,924 56,781,982 30,684,899
NET ASSETS:
Beginning of year....................................... 377,683,715 340,812,791 66,841,057 36,156,158
------------- ------------- ------------- -------------
End of year............................................. $ 392,828,875 $ 377,683,715 $ 123,623,039 $ 66,841,057
============= ============= ============= =============
</TABLE>
-11-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF FUND U OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
AMERICAN ODYSSEY EMERGING OPPORTUNITIES
CORE EQUITY FUND FUND
----------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................................... $ 15,730,732 $ 8,238,273 $ 13,878,014 $ 6,411,590
------------- ------------- ------------- -------------
EXPENSES:
Insurance charges............................................ 2,901,469 1,766,994 2,363,467 1,561,867
------------- ------------- ------------- -------------
Net investment income (loss)........................... 12,829,263 6,471,279 11,514,547 4,849,723
------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold........................... 17,543,045 2,554,698 40,044,484 7,612,195
Cost of investments sold................................. 12,076,602 1,929,933 27,095,237 4,943,095
------------- ------------- ------------- -------------
Net realized gain (loss)............................... 5,466,443 624,765 12,949,247 2,669,100
------------- ------------- ------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................. 33,550,801 (2,790,941) 31,168,692 7,749,282
Unrealized gain (loss) end of year....................... 61,748,969 33,550,801 (2,810,922) 31,168,692
------------- ------------- ------------- -------------
Net change in unrealized gain (loss) for the year..... 28,198,168 36,341,742 (33,979,614) 23,419,410
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations.............................. 46,493,874 43,437,786 (9,515,820) 30,938,233
------------- ------------- ------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments................................ 60,901,768 38,103,304 57,671,673 36,860,517
Participant transfers from other Travelers accounts.......... 35,168,297 25,706,834 54,039,978 34,699,760
Administrative and asset allocation charges.................. (2,982,289) (1,853,178) (2,085,416) (1,498,327)
Contract surrenders.......................................... (11,983,268) (5,219,198) (9,168,189) (4,131,758)
Participant transfers to other Travelers accounts............ (32,355,405) (13,084,927) (69,756,650) (24,587,291)
Other payments to participants............................... (318,650) (153,977) (267,635) (119,071)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions................................. 48,430,453 43,498,858 30,433,761 41,223,830
------------- ------------- ------------- -------------
Net increase (decrease) in net assets.................. 94,924,327 86,936,644 20,917,941 72,162,063
NET ASSETS:
Beginning of year........................................ 185,983,144 99,046,500 158,436,688 86,274,625
------------- ------------- ------------- -------------
End of year.............................................. $ 280,907,471 $ 185,983,144 $ 179,354,629 $ 158,436,688
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
INTERNATIONAL EQUITY
FUND
-----------------------------
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................... $ 4,538,026 $ 864,640
------------- -------------
EXPENSES:
Insurance charges............................................ 1,550,119 855,328
------------- -------------
Net investment income (loss)........................... 2,987,907 9,312
------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold........................... 1,656,337 798,713
Cost of investments sold................................. 1,162,459 697,051
------------- -------------
Net realized gain (loss)............................... 493,878 101,662
------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................. 9,163,943 (1,757,196)
Unrealized gain (loss) end of year....................... 31,222,016 9,163,943
------------- -------------
Net change in unrealized gain (loss) for the year..... 22,058,073 10,921,139
------------- -------------
Net increase (decrease) in net assets
resulting from operations.............................. 25,539,858 11,032,113
------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments................................ 34,480,536 21,452,760
Participant transfers from other Travelers accounts.......... 59,574,232 18,271,289
Administrative and asset allocation charges.................. (1,577,472) (856,676)
Contract surrenders.......................................... (5,590,669) (2,246,977)
Participant transfers to other Travelers accounts............ (15,004,067) (9,015,509)
Other payments to participants............................... (124,915) (37,631)
------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions................................. 71,757,645 27,567,256
------------- -------------
Net increase (decrease) in net assets.................. 97,297,503 38,599,369
NET ASSETS:
Beginning of year........................................ 89,664,702 51,065,333
------------- -------------
End of year.............................................. $ 186,962,205 $ 89,664,702
============= =============
</TABLE>
-12-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
AMERICAN ODYSSEY INTERMEDIATE-TERM
LONG-TERM BOND FUND BOND FUND
----------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................................... $ 8,108,556 $ 10,146,574 $ 4,934,855 $ 4,715,639
------------- ------------- ------------- -------------
EXPENSES:
Insurance charges............................................ 1,790,795 1,208,202 1,102,439 786,831
------------- ------------- ------------- -------------
Net investment income (loss)........................... 6,317,761 8,938,372 3,832,416 3,928,808
------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold........................... 1,884,305 472,042 11,330,595 398,026
Cost of investments sold................................. 1,891,896 444,741 10,936,197 385,152
------------- ------------- ------------- -------------
Net realized gain (loss)............................... (7,591) 27,301 394,398 12,874
------------- ------------- ------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................. 3,345,434 (5,640,279) 1,159,603 (2,767,442)
Unrealized gain (loss) end of year....................... (1,239,032) 3,345,434 (528,747) 1,159,603
------------- ------------- ------------- -------------
Net change in unrealized gain (loss) for the year..... (4,584,466) 8,985,713 (1,688,350) 3,927,045
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations.............................. 1,725,704 17,951,386 2,538,464 7,868,727
------------- ------------- ------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments................................ 41,094,788 27,882,120 21,980,548 16,057,224
Participant transfers from other Travelers accounts.......... 28,020,989 18,946,902 15,338,356 13,190,448
Administrative and asset allocation charges.................. (1,961,471) (1,299,849) (1,103,958) (789,474)
Contract surrenders.......................................... (6,849,650) (3,350,110) (5,124,477) (2,469,286)
Participant transfers to other Travelers accounts............ (18,236,052) (7,859,175) (20,649,675) (6,139,322)
Other payments to participants............................... (133,220) (107,392) (124,864) (83,945)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions................................. 41,935,384 34,212,496 10,315,930 19,765,645
------------- ------------- ------------- -------------
Net increase (decrease) in net assets.................. 43,661,088 52,163,882 12,854,394 27,634,372
NET ASSETS:
Beginning of year........................................ 123,771,354 71,607,472 77,674,318 50,039,946
------------- ------------- ------------- -------------
End of year.............................................. $ 167,432,442 $ 123,771,354 $ 90,528,712 $ 77,674,318
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
SHORT-TERM BOND FUND ALLIANCE GROWTH PORTFOLIO
----------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................................... $ 1,722,808 $ 1,279,091 $ 643,699 $ 87,142
------------- ------------- ------------- -------------
EXPENSES:
Insurance charges............................................ 400,364 279,815 113,551 14,572
------------- ------------- ------------- -------------
Net investment income (loss)........................... 1,322,444 999,276 530,148 72,570
------------- ------------- ------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold........................... 2,327,448 1,331,127 2,718,788 735,184
Cost of investments sold................................. 2,274,702 1,307,471 2,442,119 624,113
------------- ------------- ------------- -------------
Net realized gain (loss)............................... 52,746 23,656 276,669 111,071
------------- ------------- ------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................. 210,538 (722,729) 11,435 -
Unrealized gain (loss) end of year....................... (325,577) 210,538 1,556,758 11,435
------------- ------------- ------------- -------------
Net change in unrealized gain (loss) for the year..... (536,115) 933,267 1,545,323 11,435
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations.............................. 839,075 1,956,199 2,352,140 195,076
------------- ------------- ------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments................................ 6,059,827 4,746,886 4,657,066 1,616,779
Participant transfers from other Travelers accounts.......... 24,607,920 7,974,101 13,282,595 2,517,025
Administrative and asset allocation charges.................. (378,576) (241,333) (19,842) (3,040)
Contract surrenders.......................................... (2,766,214) (1,059,269) (244,573) (27,840)
Participant transfers to other Travelers accounts............ (5,406,419) (4,153,623) (5,494,797) (1,091,336)
Other payments to participants............................... (87,092) (46,550) (12,735) -
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from unit transactions................................. 22,029,446 7,220,212 12,167,714 3,011,588
------------- ------------- ------------- -------------
Net increase (decrease) in net assets.................. 22,868,521 9,176,411 14,519,854 3,206,664
NET ASSETS:
Beginning of year........................................ 26,893,408 17,716,997 3,206,664 -
------------- ------------- ------------- -------------
End of year.............................................. $ 49,761,929 $ 26,893,408 $ 17,726,518 $ 3,206,664
============= ============= ============= =============
</TABLE>
-13-
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF FUND U OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
G.T. GLOBAL STRATEGIC SMITH BARNEY HIGH
INCOME PORTFOLIO INCOME PORTFOLIO
---------------------------- ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................................... $ 24,604 $ 6,685 $ 37,827 $ 6,627
------------ ------------ -------------- ------------
EXPENSES:
Insurance charges.................................................. 3,282 1,042 4,845 798
------------ ------------ -------------- ------------
Net investment income (loss)................................. 21,322 5,643 32,982 5,829
------------ ------------ -------------- ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold................................. 1,667,070 94,529 1,072,586 228,159
Cost of investments sold....................................... 1,621,700 88,691 1,053,325 227,132
------------ ------------ -------------- ------------
Net realized gain (loss)..................................... 45,370 5,838 19,261 1,027
------------ ------------ -------------- ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year....................... 3,386 - 1,184 -
Unrealized gain (loss) end of year............................. (17,848) 3,386 (2,005) 1,184
------------ ------------ -------------- ------------
Net change in unrealized gain (loss) for the year.......... (21,234) 3,386 (3,189) 1,184
------------ ------------ -------------- ------------
Net increase (decrease) in net assets
resulting from operations.................................... 45,458 14,867 49,054 8,040
------------ ------------ -------------- ------------
UNIT TRANSACTIONS:
Participant purchase payments...................................... 54,432 53,544 226,871 123,596
Participant transfers from other Travelers accounts................ 1,756,446 229,702 1,655,656 263,996
Administrative and asset allocation charges........................ (412) (234) (1,354) (156)
Contract surrenders................................................ (7,171) (5,779) (51,914) (729)
Participant transfers to other Travelers accounts.................. (1,702,483) (98,667) (1,339,254) (239,982)
Other payments to participants..................................... - - - -
------------ ------------ -------------- ------------
Net increase (decrease) in net assets resulting
from unit transactions....................................... 100,812 178,566 490,005 146,725
------------ ------------ -------------- ------------
Net increase (decrease) in net assets........................ 146,270 193,433 539,059 154,765
NET ASSETS:
Beginning of year.............................................. 193,433 - 154,765 -
------------ ------------ -------------- ------------
End of year.................................................... $ 339,703 $ 193,433 $ 693,824 $ 154,765
============ ============ ============== ============
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY
INTERNATIONAL EQUITY PORTFOLIO
------------------------------
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................................. $ 7,696 $ 758
------------ ------------
EXPENSES:
Insurance charges.......................................................... 53,797 3,528
------------ ------------
Net investment income (loss)......................................... (46,101) (2,770)
------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold......................................... 6,766,183 737,524
Cost of investments sold............................................... 6,469,035 716,941
------------ ------------
Net realized gain (loss)............................................. 297,148 20,583
------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year............................... 12,644 -
Unrealized gain (loss) end of year..................................... 232,286 12,644
------------ ------------
Net change in unrealized gain (loss) for the year................. 219,642 12,644
------------ ------------
Net increase (decrease) in net assets
resulting from operations............................................ 470,689 30,457
------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments.............................................. 2,033,617 248,413
Participant transfers from other Travelers accounts........................ 14,188,397 1,207,815
Administrative and asset allocation charges................................ (8,206) (921)
Contract surrenders........................................................ (164,473) (1,611)
Participant transfers to other Travelers accounts.......................... (9,560,859) (810,232)
Other payments to participants............................................. - -
------------ ------------
Net increase (decrease) in net assets resulting
from unit transactions............................................... 6,488,476 643,464
------------ ------------
Net increase (decrease) in net assets................................ 6,959,165 673,921
NET ASSETS:
Beginning of year...................................................... 673,921 -
------------ ------------
End of year............................................................ $ 7,633,086 $ 673,921
============ ============
</TABLE>
-14-
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
SMITH BARNEY INCOME PUTNAM DIVERSIFIED
AND GROWTH PORTFOLIO INCOME PORTFOLIO
---------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends......................................................... $ 202,899 $ 36,534 $ 148,080 $ 38,421
------------ ------------ ------------ ------------
EXPENSES:
Insurance charges................................................. 61,744 8,818 20,990 3,893
------------ ------------ ------------ ------------
Net investment income (loss)................................ 141,155 27,716 127,090 34,528
------------ ------------ ------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold................................ 1,807,050 808,019 156,529 437,525
Cost of investments sold...................................... 1,546,203 774,305 151,221 429,667
------------ ------------ ------------ ------------
Net realized gain (loss).................................... 260,847 33,714 5,308 7,858
------------ ------------ ------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year...................... 112,139 - (1,010) -
Unrealized gain (loss) end of year............................ 569,228 112,139 7,763 (1,010)
------------ ------------ ------------ ------------
Net change in unrealized gain (loss) for the year.......... 457,089 112,139 8,773 (1,010)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations................................... 859,091 173,569 141,171 41,376
------------ ------------ ------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments..................................... 3,859,529 685,912 1,118,393 526,594
Participant transfers from other Travelers accounts............... 5,070,905 2,243,499 1,048,706 774,514
Administrative and asset allocation charges....................... (8,599) (1,255) (3,570) (762)
Contract surrenders............................................... (120,112) (15,712) (46,626) (1,244)
Participant transfers to other Travelers accounts................. (2,722,274) (909,600) (268,052) (467,009)
Other payments to participants.................................... (76,042) - - -
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from unit transactions...................................... 6,003,407 2,002,844 1,848,851 832,093
------------ ------------ ------------ ------------
Net increase (decrease) in net assets....................... 6,862,498 2,176,413 1,990,022 873,469
NET ASSETS:
Beginning of year............................................. 2,176,413 - 873,469 -
------------ ------------ ------------ ------------
End of year................................................... $ 9,038,911 $ 2,176,413 $ 2,863,491 $ 873,469
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
MFS TOTAL RETURN PORTFOLIO COMBINED
---------------------------- ------------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................................... $ 330,935 $ 75,369 $ 215,764,991 $ 69,822,353
------------ ------------ ---------------- ----------------
EXPENSES:
Insurance charges............................................ 86,980 12,224 36,953,737 25,747,007
------------ ------------ ---------------- ----------------
Net investment income (loss)........................... 243,955 63,145 178,811,254 44,075,346
------------ ------------ ---------------- ----------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold........................... 506,096 41,955 231,887,981 119,495,585
Cost of investments sold................................. 422,173 37,799 183,031,972 98,687,144
------------ ------------ ---------------- ----------------
Net realized gain (loss)............................... 83,923 4,156 48,856,009 20,808,441
------------ ------------ ---------------- ----------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year................. 143,138 - 374,401,124 (8,676,019)
Unrealized gain (loss) end of year....................... 741,116 143,138 521,188,596 374,401,124
------------ ------------ ---------------- ----------------
Net change in unrealized gain (loss) for the year..... 597,978 143,138 146,787,472 383,077,143
------------ ------------ ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations.............................. 925,856 210,439 374,454,735 447,960,930
------------ ------------ ---------------- ----------------
UNIT TRANSACTIONS:
Participant purchase payments................................ 3,639,739 1,177,680 651,103,231 452,028,311
Participant transfers from other Travelers accounts.......... 3,417,517 2,005,961 642,203,572 412,659,453
Administrative and asset allocation charges.................. (11,067) (1,960) (13,265,920) (9,143,467)
Contract surrenders.......................................... (214,865) (2,761) (177,909,388) (88,487,237)
Participant transfers to other Travelers accounts............ (1,085,667) (95,118) (532,180,418) (339,344,437)
Other payments to participants............................... (19,350) - (4,497,399) (3,565,280)
------------ ------------ ---------------- ----------------
Net increase (decrease) in net assets resulting
from unit transactions................................. 5,726,307 3,083,802 565,453,678 424,147,343
------------ ------------ ---------------- ----------------
Net increase (decrease) in net assets.................. 6,652,163 3,294,241 939,908,413 872,108,273
NET ASSETS:
Beginning of year........................................ 3,294,241 - 2,499,214,376 1,627,106,103
------------ ------------ ---------------- ----------------
End of year.............................................. $ 9,946,404 $ 3,294,241 $ 3,439,122,789 $ 2,499,214,376
============ ============ ================ ================
</TABLE>
-15-
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND U
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
MANAGED ASSETS TRUST HIGH YIELD BOND TRUST CAPITAL APPRECIATION
---------------------- --------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 61,226,466 63,168,528 5,100,869 5,293,204 50,454,082 43,765,022
Accumulation units purchased and
transferred from other Travelers accounts.. 7,056,977 6,804,157 2,773,552 1,254,645 40,496,725 21,692,792
Accumulation units redeemed and
transferred to other Travelers accounts.... (8,435,960) (8,739,735) (1,894,695) (1,446,258) (18,749,972) (14,999,326)
Annuity units................................. (10,570) (6,484) (695) (722) (6,132) (4,406)
----------- ----------- ----------- ----------- ------------ ------------
Accumulation and annuity units
end of year................................ 59,836,913 61,226,466 5,979,031 5,100,869 72,194,703 50,454,082
=========== =========== =========== =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SOCIAL AWARENESS
SECURITIES PORTFOLIO STOCK PORTFOLIO UTILITIES PORTFOLIO
---------------------- --------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 21,338,806 22,709,043 4,840,885 3,498,916 11,917,700 5,739,775
Accumulation units purchased and
transferred from other Travelers accounts.. 7,912,084 5,969,324 3,822,555 2,357,639 9,642,313 10,825,283
Accumulation units redeemed and
transferred to other Travelers accounts.... (10,194,741) (7,339,561) (2,308,329) (1,015,670) (8,301,764) (4,647,358)
Annuity units................................. (1,720) - - - - -
----------- ----------- ----------- ----------- ------------ ------------
Accumulation and annuity units
end of year................................ 19,054,429 21,338,806 6,355,111 4,840,885 13,258,249 11,917,700
=========== =========== =========== =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON ASSET
TEMPLETON BOND FUND TEMPLETON STOCK FUND ALLOCATION FUND
---------------------- --------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 10,536,435 10,185,995 122,960,800 101,461,716 107,468,938 103,406,989
Accumulation units purchased and
transferred from other Travelers accounts.. 2,880,562 2,985,095 54,933,900 44,948,066 24,240,105 23,794,549
Accumulation units redeemed and
transferred to other Travelers accounts.... (3,156,084) (2,633,968) (23,264,671) (23,447,028) (17,896,444) (19,731,907)
Annuity units................................. (661) (687) (15,875) (1,954) (3,612) (693)
----------- ----------- ----------- ----------- ------------ ------------
Accumulation and annuity units
end of year................................ 10,260,252 10,536,435 154,614,154 122,960,800 113,808,987 107,468,938
=========== =========== =========== =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
FIDELITY'S HIGH FIDELITY'S GROWTH FIDELITY'S EQUITY-
INCOME PORTFOLIO PORTFOLIO INCOME PORTFOLIO
---------------------- --------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 32,634,690 25,813,287 229,298,932 176,304,261 153,542,685 78,856,048
Accumulation units purchased and
transferred from other Travelers accounts.. 22,738,765 16,940,763 103,421,584 94,357,102 93,862,876 99,568,686
Accumulation units redeemed and
transferred to other Travelers accounts.... (15,061,159) (10,116,608) (57,792,628) (41,359,028) (41,787,112) (24,872,561)
Annuity units................................. (3,684) (2,752) (35,822) (3,403) 17,561 (9,488)
----------- ----------- ----------- ----------- ------------ ------------
Accumulation and annuity units
end of year................................ 40,308,612 32,634,690 274,892,066 229,298,932 205,636,010 153,542,685
=========== =========== =========== =========== ============ ============
</TABLE>
-16-
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND U
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
FIDELITY'S ASSET DREYFUS STOCK AMERICAN ODYSSEY
MANAGER PORTFOLIO INDEX FUND CORE EQUITY FUND
------------------------ ------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 271,006,817 282,474,420 43,246,729 31,599,969 137,330,147 100,081,556
Accumulation units purchased and
transferred from other Travelers accounts.. 43,678,827 58,634,743 36,409,694 19,084,473 65,146,447 54,332,583
Accumulation units redeemed and
transferred to other Travelers accounts.... (65,621,659) (70,087,353) (13,557,720) (7,437,713) (31,924,219) (17,083,992)
Annuity units................................. (14,379) (14,993) (858) - - -
------------ ------------ ------------ ----------- ----------- -------------
Accumulation and annuity units
end of year................................ 249,049,606 271,006,817 66,097,845 43,246,729 170,552,375 137,330,147
============ ============ ============ =========== =========== =============
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY
EMERGING OPPORTUNITIES AMERICAN ODYSSEY AMERICAN ODYSSEY
FUND INTERNATIONAL EQUITY FUND LONG-TERM BOND FUND
------------------------ ------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 103,824,182 73,837,797 70,364,454 47,095,715 101,376,422 70,927,733
Accumulation units purchased and
transferred from other Travelers accounts.. 71,642,585 51,700,251 67,664,318 33,740,404 58,583,635 41,680,825
Accumulation units redeemed and
transferred to other Travelers accounts.... (52,589,368) (21,710,744) (16,132,926) (10,471,665) (22,884,869) (11,232,136)
Annuity units................................. - (3,122) - - - -
------------ ------------ ------------ ----------- ----------- -------------
Accumulation and annuity units
end of year................................ 122,877,399 103,824,182 121,895,846 70,364,454 137,075,188 101,376,422
============ ============ ============ =========== =========== =============
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY AMERICAN ODYSSEY
INTERMEDIATE-TERM BOND FUND SHORT-TERM BOND FUND ALLIANCE GROWTH PORTFOLIO
--------------------------- ------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 68,877,506 50,402,986 24,416,215 17,610,778 2,498,303 -
Accumulation units purchased and
transferred from other Travelers accounts.. 33,097,050 27,369,748 27,440,823 11,996,257 12,300,233 3,402,780
Accumulation units redeemed and
transferred to other Travelers accounts.... (23,763,723) (8,895,228) (7,780,277) (5,190,820) (3,989,840) (904,477)
Annuity units................................. - - - - (135) -
------------ ------------ ------------ ----------- ----------- -------------
Accumulation and annuity units
end of year................................ 78,210,833 68,877,506 44,076,761 24,416,215 10,808,561 2,498,303
============ =========== =========== =========== =========== =============
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL STRATEGIC SMITH BARNEY SMITH BARNEY INTERNATIONAL
INCOME PORTFOLIO HIGH INCOME PORTFOLIO EQUITY PORTFOLIO
------------------------ ------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 161,842 - 137,755 - 592,682 -
Accumulation units purchased and
transferred from other Travelers accounts.. 1,420,493 254,272 1,608,495 367,626 12,822,567 1,334,884
Accumulation units redeemed and
transferred to other Travelers accounts.... (1,340,054) (92,430) (1,193,655) (229,871) (7,637,836) (742,202)
Annuity units................................. - - - - - -
------------ ----------- ---------- --------- ---------- -----------
Accumulation and annuity units
end of year................................ 242,281 161,842 552,595 137,755 5,777,413 592,682
============ ========== ========== ========= ========== ===========
</TABLE>
-17-
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS - CONTINUED
8. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND U
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY INCOME PUTNAM DIVERSIFIED
AND GROWTH PORTFOLIO INCOME PORTFOLIO MFS TOTAL RETURN PORTFOLIO
------------------------ ----------------------- ----------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year.......................... 1,747,342 - 774,330 - 2,733,609 -
Accumulation units purchased and
transferred from other Travelers accounts.. 6,548,012 2,586,551 1,877,455 1,210,571 5,617,453 2,822,742
Accumulation units redeemed and
transferred to other Travelers accounts.... (2,161,665) (839,209) (277,011) (436,241) (1,049,005) (89,133)
Annuity units................................. (321) - - - - -
------------ ----------- ----------- ----------- ------------- -----------
Accumulation and annuity units
end of year................................ 6,133,368 1,747,342 2,374,774 774,330 7,302,057 2,733,609
============ =========== =========== =========== ============= ===========
</TABLE>
-18-
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Owners of Variable Annuity Contracts of
The Travelers Fund U for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Fund U for Variable Annuities as of December 31, 1996, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended.
These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of shares owned as of December 31, 1996, by
correspondence with the underlying funds. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Travelers Fund U for
Variable Annuities as of December 31, 1996, the results of its operations for
the year then ended and the changes in its net assets for each of the two years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 12, 1997
-19-
<PAGE> 21
This page intentionally left blank.
<PAGE> 22
Independent Accountants
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Fund U for Variable Annuities or Fund
U's underlying funds. It should not be used in connection with any offer except
in conjunction with the Prospectuses for the Variable Annuity products offered
by The Travelers Insurance Company and the Prospectuses for the underlying
funds, which collectively contain all pertinent information, including the
applicable sales commissions.
VG-FNDU (Annual) (12-96) Printed in U.S.A.
