<PAGE> 1
ANNUAL REPORT
DECEMBER 31, 1998
THE TRAVELERS FUND UL
FOR VARIABLE LIFE INSURANCE
[Travelers Life & Annuity LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
THE TRAVELERS FUND UL
FOR VARIABLE LIFE INSURANCE
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
American Odyssey Funds, Inc, 32,132 shares (cost $465,733) $ 474,479
Capital Appreciation Fund, 175,485 shares (cost $8,146,283) 12,764,814
Dreyfus Stock Index Fund, 189,204 shares (cost $4,970,776) 6,152,928
Fidelity's Variable Insurance Products Fund, 1,006,012 shares (cost $21,774,158) 26,352,825
Fidelity's Variable Insurance Products Fund II, 303,586 shares (cost $4,775,665) 5,513,114
Greenwich Street Series Fund, 59,798 shares (cost $979,615) 1,049,447
High Yield Bond Trust, 21,748 shares (cost $202,284) 214,220
Managed Assets Trust, 131,393 shares (cost $2,168,075) 2,626,536
Money Market Portfolio, 2,934,461 shares (cost $2,934,461) 2,934,461
Templeton Variable Products Series Fund, 651,109 shares (cost $13,358,259) 13,393,279
The Travelers Series Trust, 509,501 shares (cost $5,701,816) 5,867,480
Travelers Series Fund Inc, 526,822 shares (cost $8,529,771) 10,158,229
-----------
Total Investments (cost $74,006,896) $ 87,501,812
Receivables:
Dividends 395,856
Premium payments and transfers from other Travelers accounts 94,601
Other assets 842
------------
Total Assets 87,993,111
------------
LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts 12,953
Insurance charges 13,506
Administrative charges 1,036
------------
Total Liabilities 27,495
------------
NET ASSETS: $ 87,965,616
============
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 3
THE TRAVELERS FUND UL
FOR VARIABLE LIFE INSURANCE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 5,453,417
EXPENSES:
Insurance charges $ 530,563
Administrative charges 38,285
-----------
Total expenses 568,848
-----------
Net investment income 4,884,569
-----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold 20,652,837
Cost of investments sold 18,056,633
-----------
Net realized gain (loss) 2,596,204
Change in unrealized gain (loss) on investments:
Unrealized gain at December 31, 1997 8,096,664
Unrealized gain at December 31, 1998 13,494,916
-----------
Net change in unrealized gain (loss) for the year 5,398,252
-----------
Net realized gain (loss) and change in unrealized gain (loss) 7,994,456
-----------
Net increase in net assets resulting from operations $ 12,879,025
============
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 4
THE TRAVELERS FUND UL
FOR VARIABLE LIFE INSURANCE
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,884,569 $ 2,447,570
Net realized gain (loss) from investment transactions 2,596,204 1,450,336
Net change in unrealized gain (loss) on investments 5,398,252 4,607,783
------------ ------------
Net increase in net assets resulting from operations 12,879,025 8,505,689
------------ ------------
UNIT TRANSACTIONS:
Participant premium payments
(applicable to 12,749,964 and 12,005,909 units, respectively) 22,622,231 19,096,022
Participant transfers from other Travelers accounts
(applicable to 8,850,476 and 8,679,346 units, respectively) 16,644,515 13,453,685
Contract surrenders
(applicable to 5,653,725 and 3,304,273 units, respectively) (10,097,307) (5,554,224)
Participant transfers to other Travelers accounts
(applicable to 10,422,931 and 9,048,261 units, respectively) (17,682,682) (13,733,134)
Other payments to participants
(applicable to 220,614 and 23,301 units, respectively) (458,339) (33,914)
------------ ------------
Net increase in net assets resulting from unit transactions 11,028,418 13,228,435
------------ ------------
Net increase in net assets 23,907,443 21,734,124
NET ASSETS:
Beginning of year 64,058,173 42,324,049
------------ ------------
End of year $ 87,965,616 $ 64,058,173
============ ============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Fund UL for Variable Life Insurance ("Fund UL") is a separate
account of The Travelers Insurance Company ("The Travelers"), an indirect wholly
owned subsidiary of Citigroup Inc. (formerly Travelers Group Inc.), and is
available for funding certain variable life insurance contracts issued by The
Travelers. Fund UL is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. The Travelers interest in the net assets of
Fund UL was $2,498,370 at December 31, 1998.
Participant premium payments applied to Fund UL are invested in one or more
eligible funds in accordance with the selection made by the owner. As of
December 31, 1998, the eligible funds available under Fund UL were: Managed
Assets Trust; High Yield Bond Trust; Capital Appreciation Fund; Money Market
Portfolio (formerly Cash Income Trust); U.S. Government Securities Portfolio,
Utilities Portfolio, Zero Coupon Bond Fund Portfolio Series 2000 and Zero Coupon
Bond Fund Portfolio Series 2005 of The Travelers Series Trust; Alliance Growth
Portfolio, Smith Barney Large Cap Value Portfolio (formerly Smith Barney Income
and Growth Portfolio), Smith Barney High Income Portfolio, MFS Total Return
Portfolio and AIM Capital Appreciation Portfolio of Travelers Series Fund Inc.;
Total Return Portfolio of Greenwich Street Series Fund (all of which are managed
by affiliates of The Travelers); Templeton Bond Fund (Class 1 shares), Templeton
Stock Fund (Class 1 shares) and Templeton Asset Allocation Fund (Class 1 shares)
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 Travelers Series Fund Inc. and Dreyfus Stock Index Fund which
are incorporated under Maryland law. Not all funds may be available in all
states or to all contract owners.
Effective July 12, 1995, the following funds are no longer available to new
contract owners under Fund UL. These funds are: American Odyssey Core Equity
Fund, American Odyssey Emerging Opportunities Fund, American Odyssey
International Equity Fund, American Odyssey Long-Term Bond Fund, American
Odyssey Intermediate-Term Bond Fund and American Odyssey Global High-Yield Bond
Fund (formerly American Odyssey Short-Term Bond Fund) of American Odyssey Funds,
Inc.
Effective December 18, 1998, Zero Coupon Bond Fund Portfolio Series 1998 of The
Travelers Series Trust was fully liquidated.
The following is a summary of significant accounting policies consistently
followed by Fund UL in the preparation of its financial statements.
SECURITY VALUATION. Investments are valued daily at the net asset values per
share of the underlying funds.
SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Dividend income is recorded on the ex-dividend date.
FEDERAL INCOME TAXES. The operations of Fund UL 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 UL. Fund UL 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 were
$36,173,612 and $20,652,837, respectively, for the year ended December 31, 1998.
Realized gains and losses from investment transactions are reported on an
identified cost basis. The cost of investments in eligible funds was $74,006,896
at December 31, 1998. Gross unrealized appreciation for all investments at
December 31, 1998 was $14,289,993. Gross unrealized depreciation for all
investments at December 31, 1998 was $795,077.
-4-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS - CONTINUED
3. CONTRACT CHARGES
Insurance charges and administrative charges up to a maximum of 0.80% and 0.10%,
respectively, of the average net assets of Fund UL on an annual basis, are
allowed for mortality and expense risks and administrative expenses assumed by
The Travelers. For Price I contracts (all InVest Contracts, MarketLife Contracts
issued prior to July 12, 1995, and MarketLife Contracts issued on or after July
12, 1995 where state approval for Enhanced MarketLife had not yet been
received), the insurance charges were 0.60% and the administrative charges were
waived by The Travelers for the year ended December 31, 1998. For Price II
contracts (all MarketLife Contracts issued on or after July 12, 1995, where
state approval for Enhanced MarketLife has been received), the insurance charges
are 0.80% for the first fifteen policy years, and 0.45% thereafter. The
administrative charges for these contracts are 0.10% for the first fifteen
policy years and 0% thereafter.
The Travelers receives contingent surrender charges on full or partial contract
surrenders. Such charges are computed by applying various percentages to
premiums and/or stated contract amounts (as described in the prospectus). The
Travelers received $307,722 and $131,429 in satisfaction of such contingent
surrender charges for the years ended December 31, 1998 and 1997, respectively.
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------
UNIT NET
UNITS VALUE ASSETS
<S> <C> <C> <C>
American Odyssey Funds, Inc
American Odyssey Core Equity Fund
Price I .................................... 30,336 $ 2.548 $ 77,290
American Odyssey Emerging Opportunities Fund
Price I .................................... 191,574 1.324 253,707
American Odyssey Intermediate-Term Bond Fund
Price I .................................... 1,415 1.257 1,779
American Odyssey International Equity Fund
Price I .................................... 79,390 1.608 127,670
American Odyssey Long-Term Bond Fund
Price I .................................... 7,329 1.480 10,850
American Odyssey Global High-Yield Bond Fund
Price I .................................... 2,703 1.155 3,122
Capital Appreciation Fund
Price I .................................... 1,211,338 4.356 5,275,992
Price II ................................... 1,735,755 4.311 7,482,917
Dreyfus Stock Index Fund
Price I .................................... 632,898 2.807 1,776,837
Price II ................................... 1,574,572 2.779 4,375,461
Fidelity's Variable Insurance Products Fund
Equity-Income Portfolio
Price I .................................... 2,281,753 2.198 5,015,439
Price II ................................... 2,185,272 2.176 4,754,349
Growth Portfolio
Price I .................................... 2,716,535 2.550 6,926,107
Price II ................................... 2,275,742 2.524 5,742,957
</TABLE>
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------------
UNIT NET
UNITS VALUE ASSETS
<S> <C> <C> <C>
Fidelity's Variable Insurance Products Fund (continued)
High Income Portfolio
Price I ............................................... 1,023,855 $ 1.441 $1,475,430
Price II .............................................. 1,707,651 1.426 2,435,697
Fidelity's Variable Insurance Products Fund II
Asset Manager Portfolio
Price I ............................................... 2,562,465 1.669 4,278,033
Price II .............................................. 747,088 1.652 1,234,519
Greenwich Street Series Fund
Total Return Portfolio
Price I ............................................... 37,785 1.563 59,075
Price II .............................................. 639,347 1.549 990,224
High Yield Bond Trust
Price I ............................................... 80,415 2.664 214,192
Managed Assets Trust
Price I ............................................... 562,180 3.248 1,825,786
Price II .............................................. 249,491 3.215 801,993
Money Market Portfolio
Price I ............................................... 217,444 1.620 352,204
Price II .............................................. 1,651,980 1.603 2,648,472
Templeton Variable Products Series Fund
Templeton Asset Allocation Fund (Class 1 shares)
Price I ............................................... 1,869,744 1.655 3,094,291
Price II .............................................. 817,109 1.638 1,338,449
Templeton Bond Fund (Class 1 shares)
Price I ............................................... 131,822 1.270 167,405
Price II .............................................. 395,071 1.257 496,603
Templeton Stock Fund (Class 1 shares)
Price I ............................................... 2,910,661 1.628 4,737,612
Price II .............................................. 2,208,000 1.611 3,557,220
The Travelers Series Trust
US Government Securities Portfolio
Price I ............................................... 178,511 1.424 254,233
Price II .............................................. 2,019,497 1.410 2,846,761
Utilities Portfolio
Price I ............................................... 104,282 1.995 208,012
Price II .............................................. 63,564 1.974 125,500
</TABLE>
-6-
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
The Travelers Series Trust (continued)
Zero Coupon Bond Fund Portfolio Series 2000
Price I ................................... 1,002,043 $ 1.198 $ 1,200,936
Price II .................................. 38,914 1.187 46,188
Zero Coupon Bond Fund Portfolio Series 2005
Price I ................................... 1,045,823 1.300 1,359,448
Price II .................................. 167,840 1.287 216,072
Travelers Series Fund Inc
AIM Capital Appreciation Portfolio
Price I ................................... 159,618 1.381 220,467
Price II .................................. 1,212,084 1.369 1,659,892
Alliance Growth Portfolio
Price I ................................... 255,880 2.207 564,660
Price II .................................. 1,856,738 2.185 4,056,066
MFS Total Return Portfolio
Price I ................................... 192,769 1.654 318,924
Price II .................................. 934,652 1.638 1,530,928
Smith Barney High Income Portfolio
Price I ................................... 24,613 1.262 31,059
Price II .................................. 606,346 1.251 758,380
Smith Barney Large Cap Value Portfolio
Price I ................................... 49,624 1.747 86,680
Price II .................................. 548,941 1.730 949,728
-----------
Net Contract Owners' Equity ............... $87,965,616
===========
</TABLE>
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
----------- -----------
<S> <C> <C>
AMERICAN ODYSSEY FUNDS, INC. (0.5%)
American Odyssey Core Equity Fund (Cost $59,251) ................. 3,751 $ 77,300
American Odyssey Emerging Opportunities Fund (Cost $279,592) ..... 19,384 253,739
American Odyssey Intermediate-Term Bond Fund (Cost $1,683) ....... 160 1,780
American Odyssey International Equity Fund (Cost $111,664) ....... 7,578 127,687
American Odyssey Long-Term Bond Fund (Cost $10,270) .............. 944 10,851
American Odyssey Global High-Yield Bond Fund (Cost $3,273) ....... 315 3,122
----------- -----------
Total (Cost $465,733) ............................................ 32,132 474,479
----------- -----------
CAPITAL APPRECIATION FUND (14.6%)
Total (Cost $8,146,283) .......................................... 175,485 12,764,814
----------- -----------
DREYFUS STOCK INDEX FUND (7.0%)
Total (Cost $4,970,776) .......................................... 189,204 6,152,928
----------- -----------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (30.1%)
Equity-Income Portfolio (Cost $8,246,416) ........................ 384,371 9,770,712
Growth Portfolio (Cost $9,391,962) ............................... 282,381 12,670,447
High Income Portfolio (Cost $4,135,780) .......................... 339,260 3,911,666
----------- -----------
Total (Cost $21,774,158) ......................................... 1,006,012 26,352,825
----------- -----------
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (6.3%)
Asset Manager Portfolio
Total (Cost $4,775,665) .......................................... 303,586 5,513,114
----------- -----------
GREENWICH STREET SERIES FUND (1.2%)
Total Return Portfolio
Total (Cost $979,615) ............................................ 59,798 1,049,447
----------- -----------
HIGH YIELD BOND TRUST (0.3%)
Total (Cost $202,284) ............................................ 21,748 214,220
----------- -----------
MANAGED ASSETS TRUST (3.0%)
Total (Cost $2,168,075) .......................................... 131,393 2,626,536
----------- -----------
MONEY MARKET PORTFOLIO (3.4%)
Total (Cost $2,934,461) .......................................... 2,934,461 2,934,461
----------- -----------
TEMPLETON VARIABLE PRODUCTS SERIES FUND (15.3%)
Templeton Asset Allocation Fund (Class 1 shares) (Cost $3,957,991) 197,370 4,432,920
Templeton Bond Fund (Class 1 shares) (Cost $651,336) ............. 59,993 664,127
Templeton Stock Fund (Class 1 shares) (Cost $8,748,932) .......... 393,746 8,296,232
----------- -----------
Total (Cost $13,358,259) ......................................... 651,109 13,393,279
----------- -----------
</TABLE>
-8-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
----------- -----------
<S> <C> <C>
THE TRAVELERS SERIES TRUST (6.7%)
U.S. Government Securities Portfolio (Cost $2,907,479) 241,714 $ 2,852,226
Utilities Portfolio (Cost $278,167) 19,416 333,563
Zero Coupon Bond Fund Portfolio Series 2000 (Cost $1,152,876) 114,967 1,179,564
Zero Coupon Bond Fund Portfolio Series 2005 (Cost $1,363,294) 133,404 1,502,127
----------- -----------
Total (Cost $5,701,816) 509,501 5,867,480
----------- -----------
TRAVELERS SERIES FUND INC. (11.6%)
AIM Capital Appreciation Portfolio (Cost $1,587,697) 129,868 1,880,488
Alliance Growth Portfolio (Cost $3,496,011) 175,649 4,621,322
MFS Total Return Portfolio (Cost $1,699,380) 108,634 1,850,044
Smith Barney High Income Portfolio (Cost $826,312) 62,346 789,305
Smith Barney Large Cap Value Portfolio (Cost $920,371) 50,325 1,017,070
----------- -----------
Total (Cost $8,529,771) 526,822 10,158,229
----------- -----------
TOTAL INVESTMENT OPTIONS (100%)
(Cost $74,006,896) $87,501,812
===========
</TABLE>
-9-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF FUND UL OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
AMERICAN ODYSSEY CORE AMERICAN ODYSSEY EMERGING AMERICAN ODYSSEY INTERMEDIATE
EQUITY FUND OPPORTUNITIES FUND -TERM BOND FUND
--------------------- --------------------- ---------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 8,470 $ 1,487 $ -- $ -- $ 8 $ 80
--------- --------- --------- --------- --------- ---------
EXPENSES:
Insurance charges ................................. 448 387 1,554 1,630 9 7
Administrative charges ............................ -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net investment income (loss) ...................... 8,022 1,100 (1,554) (1,630) (1) 73
--------- --------- --------- --------- --------- ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 9,623 17,936 57,345 46,981 65 157
Cost of investments sold .......................... 5,694 12,382 64,399 46,233 63 153
--------- --------- --------- --------- --------- ---------
Net realized gain (loss) .......................... 3,929 5,554 (7,054) 748 2 4
--------- --------- --------- --------- --------- ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 19,500 8,895 (12,045) (32,337) (22) (23)
Unrealized gain (loss) end of year ................ 18,049 19,500 (25,853) (12,045) 97 (22)
--------- --------- --------- --------- --------- ---------
Net change in unrealized gain (loss) for the year . (1,451) 10,605 (13,808) 20,292 119 1
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations ......................... 10,500 17,259 (22,416) 19,410 120 78
--------- --------- --------- --------- --------- ---------
Unit Transactions:
Participant premium payments ...................... 10,400 10,015 49,542 59,971 404 570
Participant transfers from other Travelers accounts 61 1,899 4,306 8,296 16 32
Contract surrenders ............................... (4,443) (4,755) (22,358) (25,273) (86) (97)
Participant transfers to other Travelers accounts . (5,618) (15,920) (43,052) (37,520) (10) (157)
Other payments to participants .................... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from unit transactions .................. 400 (8,761) (11,562) 5,474 324 348
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets ............. 10,900 8,498 (33,978) 24,884 444 426
NET ASSETS:
Beginning of year ................................. 66,390 57,892 287,685 262,801 1,335 909
--------- --------- --------- --------- --------- ---------
End of year ....................................... $ 77,290 $ 66,390 $ 253,707 $ 287,685 $ 1,779 $ 1,335
========= ========= ========= ========= ========= =========
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
AMERICAN ODYSSEY INTERNATIONAL AMERICAN ODYSSEY LONG-TERM AMERICAN ODYSSEY GLOBAL HIGH-
EQUITY FUND BOND FUND YIELD BOND FUND CAPITAL APPRECIATION FUND
- ----------------------------- ----------------------------- ----------------------------- -----------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 7,253 $ 2,623 $ 188 $ 4,752 $ 1 $ 170 $ 225,348 $ 36
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
738 661 96 400 20 19 56,699 30,965
-- -- -- -- -- -- 4,562 2,084
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
6,515 1,962 92 4,352 (19) 151 164,087 (33,013)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
28,558 20,677 77,573 4,416 96 470 672,903 839,367
21,351 16,342 75,868 4,534 102 475 405,494 553,249
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
7,207 4,335 1,705 (118) (6) (5) 267,409 286,118
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
12,462 14,319 1,244 (2,217) (31) (63) 930,111 276,095
16,023 12,462 581 1,244 (151) (31) 4,618,531 930,111
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
3,561 (1,857) (663) 3,461 (120) 32 3,688,420 654,016
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
17,283 4,440 1,134 7,695 (145) 178 4,119,916 907,121
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
21,538 27,193 1,382 28,271 94 658 1,722,876 1,371,774
4,669 7,563 -- -- -- -- 2,709,937 1,068,760
(23,931) (12,213) (811) (4,730) (152) (533) (792,310) (577,590)
(8,587) (13,029) (77,176) -- -- -- (417,132) (560,317)
-- -- -- -- -- -- (160,978) (651)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(6,311) 9,514 (76,605) 23,541 (58) 125 3,062,393 1,301,976
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
10,972 13,954 (75,471) 31,236 (203) 303 7,182,309 2,209,097
116,698 102,744 86,321 55,085 3,325 3,022 5,576,600 3,367,503
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 127,670 $ 116,698 $ 10,850 $ 86,321 $ 3,122 $ 3,325 $ 12,758,909 $ 5,576,600
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
-11-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF FUND UL OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
DREYFUS STOCK INDEX FUND EQUITY-INCOME PORTFOLIO GROWTH PORTFOLIO
------------------------ ------------------------- -------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 80,837 $ 131,569 $ 519,007 $ 551,315 $ 1,383,745 $ 234,290
----------- ----------- ----------- ------------ ------------ -----------
EXPENSES:
Insurance charges ................................. 37,009 17,644 61,249 45,297 74,825 53,174
Administrative charges ............................ 3,583 1,557 4,053 2,746 4,553 3,145
----------- ----------- ----------- ------------ ------------ -----------
Net investment income (loss) ...................... 40,245 112,368 453,705 503,272 1,304,367 177,971
----------- ----------- ----------- ------------ ------------ -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 1,348,144 480,285 1,027,285 1,066,364 2,882,351 775,032
Cost of investments sold .......................... 890,692 385,669 773,339 796,012 2,088,775 510,153
----------- ----------- ----------- ------------ ------------ -----------
Net realized gain (loss) .......................... 457,452 94,616 253,946 270,352 793,576 264,879
----------- ----------- ----------- ------------ ------------ -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 523,266 103,469 1,324,425 555,918 1,692,557 642,147
Unrealized gain (loss) end of year ................ 1,182,152 523,266 1,524,296 1,324,425 3,278,485 1,692,557
----------- ----------- ----------- ------------ ------------ -----------
Net change in unrealized gain (loss) for the year . 658,886 419,797 199,871 768,507 1,585,928 1,050,410
----------- ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations ......................... 1,156,583 626,781 907,522 1,542,131 3,683,871 1,493,260
----------- ----------- ----------- ------------ ------------ -----------
Unit Transactions:
Participant premium payments ...................... 1,357,520 815,909 1,821,387 1,553,084 2,688,152 2,092,960
Participant transfers from other Travelers accounts 2,205,447 947,641 782,438 1,216,927 577,474 1,286,782
Contract surrenders ............................... (758,259) (282,791) (1,111,405) (715,570) (1,397,298) (898,220)
Participant transfers to other Travelers accounts . (1,144,166) (335,492) (466,177) (767,826) (2,484,960) (494,401)
Other payments to participants .................... -- -- (125,412) (8,322) (59,946) (5,729)
----------- ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from unit transactions .................. 1,660,542 1,145,267 900,831 1,278,293 (676,578) 1,981,392
----------- ----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets ............. 2,817,125 1,772,048 1,808,353 2,820,424 3,007,293 3,474,652
NET ASSETS:
Beginning of year ................................. 3,335,173 1,563,125 7,961,435 5,141,011 9,661,771 6,187,119
----------- ----------- ----------- ------------ ------------ -----------
End of year ....................................... $ 6,152,298 $ 3,335,173 $ 9,769,788 $ 7,961,435 $ 12,669,064 $ 9,661,771
=========== =========== =========== ============ ============ ===========
</TABLE>
-12-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
HIGH INCOME PORTFOLIO ASSET MANAGER PORTFOLIO TOTAL RETURN PORTFOLIO HIGH YIELD BOND TRUST
- ---------------------------- ---------------------------- ---------------------------- ----------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 403,352 $ 195,704 $ 555,132 $ 414,291 $ 46,880 $ 30,928 $ 15,178 $ 151
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
27,571 20,332 31,590 24,513 7,284 4,608 1,309 1,465
2,305 1,556 953 501 863 544 -- --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
373,476 173,816 522,589 389,277 38,733 25,776 13,869 (1,314)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
2,208,102 906,455 673,448 332,402 84,997 40,508 118,763 234,846
2,203,983 892,824 558,510 276,655 67,822 33,582 106,699 225,775
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
4,119 13,631 114,938 55,747 17,175 6,926 12,064 9,071
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
370,469 109,472 714,532 454,097 87,967 32,702 25,465 (2,411)
(224,114) 370,469 737,449 714,532 69,832 87,967 11,936 25,465
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(594,583) 260,997 22,917 260,435 (18,135) 55,265 (13,529) 27,876
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(216,988) 448,444 660,444 705,459 37,773 87,967 12,404 35,633
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
856,339 686,634 867,895 792,294 181,561 141,056 26,399 34,411
2,321,318 933,013 394,346 128,939 176,508 212,209 57,870 93,271
(391,089) (260,544) (372,107) (414,673) (106,689) (40,498) (47,347) (143,838)
(2,081,017) (718,621) (423,123) (153,222) (17,224) (10,203) (77,740) (98,507)
-- (5,003) (841) (69) -- -- -- --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
705,551 635,479 466,170 353,269 234,156 302,564 (40,818) (114,663)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
488,563 1,083,923 1,126,614 1,058,728 271,929 390,531 (28,414) (79,030)
3,422,564 2,338,641 4,385,938 3,327,210 777,370 386,839 242,606 321,636
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 3,911,127 $ 3,422,564 $ 5,512,552 $ 4,385,938 $ 1,049,299 $ 777,370 $ 214,192 $ 242,606
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
-13-
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF FUND UL OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
TEMPLETON ASSET ALLOCATION
MANAGED ASSETS TRUST MONEY MARKET PORTFOLIO FUND (CLASS 1 SHARES)
------------------------- ------------------------ ------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 149,710 $ 56,368 $ 154,385 $ 148,941 $ 240,092 $ 257,405
----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Insurance charges ................................. 14,505 11,874 24,039 23,201 28,173 23,292
Administrative charges ............................ 527 339 2,618 2,570 1,263 868
----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) ...................... 134,678 44,155 127,728 123,170 210,656 233,245
----------- ----------- ----------- ----------- ----------- -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
Gain (Loss) on Investments:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 532,152 374,254 6,111,697 7,080,626 460,332 299,373
Cost of investments sold .......................... 429,702 292,317 6,111,697 7,080,626 337,833 211,031
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) .......................... 102,450 81,937 -- -- 122,499 88,342
----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 264,796 49,154 -- -- 587,676 469,194
Unrealized gain (loss) end of year ................ 458,461 264,796 -- -- 474,929 587,676
----------- ----------- ----------- ----------- ----------- -----------
Net change in unrealized gain (loss) for the year . 193,665 215,642 -- -- (112,747) 118,482
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ......................... 430,793 341,734 127,728 123,170 220,408 440,069
----------- ----------- ----------- ----------- ----------- -----------
Unit Transactions:
Participant premium payments ...................... 491,683 427,367 6,741,925 6,413,938 727,391 735,199
Participant transfers from other Travelers accounts 330,398 132,340 1,519,284 3,079,011 244,926 400,002
Contract surrenders ............................... (510,867) (269,781) (1,028,727) (365,525 (430,422) (356,661)
Participant transfers to other Travelers accounts . (140,305) (253,757) (7,713,789) (8,668,083 (308,864) (100,309)
Other payments to participants .................... -- -- -- -- (869) --
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions .................. 170,909 36,169 (481,307) 459,341 232,162 678,231
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets ............. 601,702 377,903 (353,579) 582,511 452,570 1,118,300
NET ASSETS:
Beginning of year ................................. 2,026,077 1,648,174 3,354,255 2,771,744 3,980,170 2,861,870
----------- ----------- ----------- ----------- ----------- -----------
End of year ....................................... $ 2,627,779 $ 2,026,077 $ 3,000,676 $ 3,354,255 $ 4,432,740 $ 3,980,170
=========== =========== =========== =========== =========== ===========
</TABLE>
-14-
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
TEMPLETON BOND FUND TEMPLETON STOCK FUND U.S. GOVERNMENT SECURITIES
(CLASS 1 SHARES) (CLASS 1 SHARES) PORTFOLIO UTILITIES PORTFOLIO
- --------------------------- --------------------------- --------------------------- ---------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 32,614 $ 22,190 $ 813,730 $ 513,518 $ 250,408 $ 71,639 $ 12,250 $ 234
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
4,333 2,586 59,343 42,347 14,906 7,196 1,659 947
421 201 3,758 2,080 1,708 781 87 44
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
27,860 19,403 750,629 469,091 233,794 63,662 10,504 (757)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
83,313 43,392 1,561,814 795,451 311,524 579,692 34,296 33,131
81,836 43,183 1,456,190 588,414 281,520 605,967 27,593 31,964
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
1,477 209 105,624 207,037 30,004 (26,275) 6,703 1,167
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
6,720 18,576 539,409 696,253 46,013 (33,195) 30,111 (3,421)
12,791 6,720 (452,700) 539,409 (55,253) 46,013 55,396 30,111
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
6,071 (11,856) (992,109) (156,844) (101,266) 79,208 25,285 33,532
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
35,408 7,756 (135,856) 519,284 162,532 116,595 42,492 33,942
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
165,218 121,519 2,075,969 1,839,867 488,039 555,591 59,758 47,754
79,798 123,156 1,558,785 1,088,920 1,294,349 723,123 98,449 1,654
(66,688) (41,897) (722,676) (668,841) (145,232) (92,796) (31,913) (28,432)
(38,486) (8,468) (1,548,621) (563,883) (224,377) (503,445) (13,516) (10,100)
-- (4,899) (55,834) -- -- -- -- --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
139,842 189,411 1,307,623 1,696,063 1,412,779 682,473 112,778 10,876
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
175,250 197,167 1,171,767 2,215,347 1,575,311 799,068 155,270 44,818
488,758 291,591 7,123,065 4,907,718 1,525,683 726,615 178,242 133,424
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 664,008 $ 488,758 $ 8,294,832 $ 7,123,065 $ 3,100,994 $ 1,525,683 $ 333,512 $ 178,242
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
-15-
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF FUND UL OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
ZERO COUPON BOND FUND ZERO COUPON BOND FUND ZERO COUPON BOND FUND
PORTFOLIO SERIES 1998 PORTFOLIO SERIES 2000 PORTFOLIO SERIES 2005
------------------------ ------------------------ ------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 63,083 $ 60,738 $ 68,351 $ 63,813 $ 74,703 $ 71,682
----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Insurance charges ................................. 6,692 6,579 7,338 6,564 8,639 7,294
Administrative charges ............................ 10 10 44 13 142 63
----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) ...................... 56,381 54,149 60,969 57,236 65,922 64,325
----------- ----------- ----------- ----------- ----------- -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 1,186,548 22,224 34,245 13,930 95,551 67,978
Cost of investments sold .......................... 1,186,192 21,753 33,205 13,566 88,033 67,394
----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) .......................... 356 471 1,040 364 7,518 584
----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 2,394 (1,641) 7,987 (4,359) 60,360 (2,241)
Unrealized gain (loss) end of year ................ -- 2,394 26,688 7,987 138,833 60,360
----------- ----------- ----------- ----------- ----------- -----------
Net change in unrealized gain (loss) for the year . (2,394) 4,035 18,701 12,346 78,473 62,601
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ......................... 54,343 58,655 80,710 69,946 151,913 127,510
----------- ----------- ----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Participant premium payments ...................... 342 634 4,538 1,592 63,688 43,451
Participant transfers from other Travelers accounts -- 8,679 26,367 36,989 114,346 37,071
Contract surrenders ............................... (1,170,656) (454) (5,944) (877) (10,152) (3,931)
Participant transfers to other Travelers accounts . (9,182) (15,356) (21,675) (16) (80,311) (57,627)
Other payments to participants .................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions .................. (1,179,496) (6,497) 3,286 37,688 87,571 18,964
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets ............. (1,125,153) 52,158 83,996 107,634 239,484 146,474
NET ASSETS:
Beginning of year ................................. 1,125,153 1,072,995 1,163,128 1,055,494 1,336,036 1,189,562
----------- ----------- ----------- ----------- ----------- -----------
End of year ....................................... $ -- $ 1,125,153 $ 1,247,124 $ 1,163,128 $ 1,575,520 $ 1,336,036
=========== =========== =========== =========== =========== ===========
</TABLE>
-16-
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
AIM CAPITAL APPRECIATION SMITH BARNEY HIGH INCOME
PORTFOLIO ALLIANCE GROWTH PORTFOLIO MFS TOTAL RETURN PORTFOLIO PORTFOLIO
- ------------------------------ ------------------------------- ------------------------------ ------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,994 $ -- $ 208,151 $ -- $ 59,754 $ -- $ 47,805 $ --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
11,508 7,136 26,480 13,955 10,341 4,442 5,337 1,982
1,313 807 2,973 1,519 1,097 432 646 222
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(10,827) (7,943) 178,698 (15,474) 48,316 (4,874) 41,822 (2,204)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
262,115 53,629 420,518 137,767 199,816 54,024 52,415 460,379
203,919 48,176 269,565 106,425 151,321 42,230 49,894 436,696
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
58,196 5,453 150,953 31,342 48,495 11,794 2,521 23,683
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
93,128 17,258 554,376 97,212 115,974 18,241 17,011 3,819
292,791 93,128 1,125,311 554,376 150,664 115,974 (37,007) 17,011
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
199,663 75,870 570,935 457,164 34,690 97,733 (54,018) 13,192
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
247,032 73,380 900,586 473,032 131,501 104,653 (9,675) 34,671
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
510,445 311,127 795,707 431,226 422,994 143,523 271,273 260,419
216,820 370,189 1,026,827 619,763 597,781 269,013 93,719 335,032
(179,247) (82,325) (471,438) (152,219) (134,335) (35,983) (37,279) (17,233)
(99,943) (13,899) (145,042) (43,871) (28,238) (6,460) (14,923) (281,223)
(54,459) -- -- (1,525) -- (6,400) -- --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
393,616 585,092 1,206,054 853,374 858,202 363,693 312,790 296,995
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
640,648 658,472 2,106,640 1,326,406 989,703 468,346 303,115 331,666
1,239,711 581,239 2,514,086 1,187,680 860,149 391,803 486,324 154,658
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,880,359 $ 1,239,711 $ 4,620,726 $ 2,514,086 $ 1,849,852 $ 860,149 $ 789,439 $ 486,324
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
-17-
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF FUND UL OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY LARGE CAP VALUE
PORTFOLIO COMBINED
----------------------------- -----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ......................................... $ 30,988 $ -- $ 5,453,417 $ 2,833,924
------------ ------------ ------------ ------------
EXPENSES:
Insurance charges ................................. 6,869 3,376 530,563 363,873
Administrative charges ............................ 806 399 38,285 22,481
------------ ------------ ------------ ------------
Net investment income (loss) ...................... 23,313 (3,775) 4,884,569 2,447,570
------------ ------------ ------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 117,248 58,318 20,652,837 14,840,064
Cost of investments sold .......................... 85,342 45,948 18,056,633 13,389,728
------------ ------------ ------------ ------------
Net realized gain (loss) .......................... 31,906 12,370 2,596,204 1,450,336
------------ ------------ ------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 80,809 3,968 8,096,664 3,488,881
Unrealized gain (loss) end of year ................ 96,699 80,809 13,494,916 8,096,664
------------ ------------ ------------ ------------
Net change in unrealized gain (loss) for the year . 15,890 76,841 5,398,252 4,607,783
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ......................... 71,109 85,436 12,879,025 8,505,689
------------ ------------ ------------ ------------
UNIT TRANSACTIONS:
Participant premium payments ...................... 197,772 148,015 22,622,231 19,096,022
Participant transfers from other Travelers accounts 208,276 323,411 16,644,515 13,453,685
Contract surrenders ............................... (123,446) (55,944) (10,097,307) (5,554,224)
Participant transfers to other Travelers accounts . (49,428) (1,422) (17,682,682) (13,733,134)
Other payments to participants .................... -- (1,316) (458,339) (33,914)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions .................. 233,174 412,744 11,028,418 13,228,435
------------ ------------ ------------ ------------
Net increase (decrease) in net assets ............. 304,283 498,180 23,907,443 21,734,124
NET ASSETS:
Beginning of year ................................. 732,125 233,945 64,058,173 42,324,049
------------ ------------ ------------ ------------
End of year ....................................... $ 1,036,408 $ 732,125 $ 87,965,616 $ 64,058,173
============ ============ ============ ============
</TABLE>
-18-
<PAGE> 20
\ NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF UNITS FOR FUND UL
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
AMERICAN ODYSSEY CORE AMERICAN ODYSSEY EMERGING AMERICAN ODYSSEY INTERMEDIATE
EQUITY FUND OPPORTUNITIES FUND -TERM BOND FUND
----------------------- ----------------------- ----------------------
1998 1997 1998 1997 1998 1997
------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 29,927 34,187 197,206 191,470 1,145 833
Units purchased and transferred from
other Travelers accounts ........... 4,410 6,394 40,292 48,792 349 536
Units redeemed and transferred to
other Travelers accounts ........... (4,001) (10,654) (45,924) (43,056) (79) (224)
------- ------- ------- ------- ------ ------
Units end of year .................. 30,336 29,927 191,574 197,206 1,415 1,145
======= ======= ======= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
AMERICAN ODYSSEY AMERICAN ODYSSEY LONG-TERM AMERICAN ODYSSEY GLOBAL HIGH-
INTERNATIONAL EQUITY FUND BOND FUND YIELD BOND FUND
---------------------- ---------------------- ---------------------
1998 1997 1998 1997 1998 1997
------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 82,883 76,225 63,209 44,927 2,753 2,640
Units purchased and transferred from
other Travelers accounts ........... 17,163 24,766 976 21,997 78 574
Units redeemed and transferred to
other Travelers accounts ........... (20,656) (18,108) (56,856) (3,715) (128) (461)
------- ------- ------- ------- ------ ------
Units end of year .................. 79,390 82,883 7,329 63,209 2,703 2,753
======= ======= ======= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND DREYFUS STOCK INDEX FUND EQUITY-INCOME PORTFOLIO
------------------------- ------------------------- -------------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 2,064,967 1,560,408 1,521,389 940,291 4,031,218 3,309,909
Units purchased and transferred from
other Travelers accounts ........... 1,302,276 984,555 1,449,234 918,949 1,251,314 1,560,873
Units redeemed and transferred to
other Travelers accounts ........... (420,150) (479,996) (763,153) (337,851) (815,507) (839,564)
--------- --------- --------- --------- --------- ---------
Units end of year .................. 2,947,093 2,064,967 2,207,470 1,521,389 4,467,025 4,031,218
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO HIGH INCOME PORTFOLIO ASSET MANAGER PORTFOLIO
------------------------- ------------------------- -------------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 5,270,282 4,136,339 2,267,970 1,809,239 3,007,464 2,734,435
Units purchased and transferred from
other Travelers accounts ........... 1,562,195 1,992,945 2,120,094 1,201,242 820,299 695,350
Units redeemed and transferred to
other Travelers accounts ........... (1,840,200) (859,002) (1,656,558) (742,511) (518,210) (422,321)
--------- --------- --------- --------- --------- ---------
Units end of year .................. 4,992,277 5,270,282 2,731,506 2,267,970 3,309,553 3,007,464
========= ========= ========= ========= ========= =========
</TABLE>
-19-
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF UNITS FOR FUND UL
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO HIGH YIELD BOND TRUST MANAGED ASSETS TRUST
---------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 521,673 300,659 96,477 148,199 754,052 739,368
Units purchased and transferred from
other Travelers accounts ........... 236,730 257,477 32,454 55,716 280,545 227,450
Units redeemed and transferred to
other Travelers accounts ........... (81,271) (36,463) (48,516) (107,438) (222,926) (212,766)
-------- -------- -------- -------- -------- --------
Units end of year .................. 677,132 521,673 80,415 96,477 811,671 754,052
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON ASSET ALLOCATION FUND TEMPLETON BOND FUND
MONEY MARKET PORTFOLIO (CLASS 1 SHARES) (CLASS 1 SHARES)
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 2,176,965 1,872,345 2,549,205 2,102,272 411,910 249,756
Units purchased and transferred from
other Travelers accounts ........... 5,259,108 6,298,315 599,350 744,438 201,540 209,477
Units redeemed and transferred to
other Travelers accounts ........... (5,566,649) (5,993,695) (461,702) (297,505) (86,557) (47,323)
---------- ---------- ---------- ---------- ---------- ----------
Units end of year .................. 1,869,424 2,176,965 2,686,853 2,549,205 526,893 411,910
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON STOCK FUND U.S. GOVERNMENT SECURITIES
(CLASS 1 SHARES) PORTFOLIO (UTILITIES PORTFOLIO)
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 4,415,842 3,378,671 1,181,099 627,860 105,266 98,022
Units purchased and transferred from
other Travelers accounts ........... 2,139,769 1,804,001 1,290,041 1,069,761 88,338 34,377
Units redeemed and transferred to
other Travelers accounts ........... (1,436,950) (766,830) (273,132) (516,522) (25,758) (27,133)
---------- ---------- ---------- ---------- ---------- ----------
Units end of year .................. 5,118,661 4,415,842 2,198,008 1,181,099 167,846 105,266
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ZERO COUPON BOND FUND ZERO COUPON BOND FUND PORTFOLIO ZERO COUPON BOND FUND
PORTFOLIO SERIES 1998 SERIES 2000 PORTFOLIO SERIES 2005
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 1,008,353 1,014,502 1,038,056 1,003,545 1,147,679 1,133,350
Units purchased and transferred from
other Travelers accounts ........... 306 8,600 27,282 35,337 141,687 72,486
Units redeemed and transferred to
other Travelers accounts ........... (1,008,659) (14,749) (24,381) (826) (75,703) (58,157)
---------- ---------- ---------- ---------- ---------- ----------
Units end of year .................. -- 1,008,353 1,040,957 1,038,056 1,213,663 1,147,679
========== ========== ========== ========== ========== ==========
</TABLE>
-20-
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF UNITS FOR FUND UL
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
AIM CAPITAL APPRECIATION
PORTFOLIO ALLIANCE GROWTH PORTFOLIO MFS TOTAL RETURN PORTFOLIO
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 1,053,016 548,936 1,469,867 888,431 580,164 317,532
Units purchased and transferred from
other Travelers accounts ........... 587,375 587,725 969,293 712,024 651,137 298,199
Units redeemed and transferred to
other Travelers accounts ........... (268,689) (83,645) (326,542) (130,588) (103,880) (35,567)
---------- ---------- ---------- ---------- ---------- ----------
Units end of year .................. 1,371,702 1,053,016 2,112,618 1,469,867 1,127,421 580,164
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY HIGH INCOME SMITH BARNEY LARGE CAP VALUE
PORTFOLIO PORTFOLIO COMBINED
--------------------------- --------------------------- ---------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 386,886 138,855 460,366 184,663 37,897,289 29,587,869
Units purchased and transferred from
other Travelers accounts ........... 285,317 498,526 241,488 314,373 21,600,440 20,685,255
Units redeemed and transferred to
other Travelers accounts ........... (41,244) (250,495) (103,289) (38,670) (16,297,270) (12,375,835)
----------- ----------- ----------- ----------- ----------- -----------
Units end of year .................. 630,959 386,886 598,565 460,366 43,200,459 37,897,289
=========== =========== =========== =========== =========== ===========
</TABLE>
-21-
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
To the Owners of Variable Life Insurance Contracts of The Travelers Fund UL for
Variable Life Insurance:
We have audited the accompanying statement of assets and liabilities of The
Travelers Fund UL for Variable Life Insurance as of December 31, 1998, 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of shares owned as of December 31, 1998, by correspondence with the
underlying funds. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our 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 UL for
Variable Life Insurance as of December 31, 1998, 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.
KPMG LLP
Hartford, Connecticut
February 17, 1999
-22-
<PAGE> 24
Independent Auditors
KPMG LLP
Hartford, Connecticut
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Fund UL for Variable Life Insurance or
Fund UL's underlying funds. It should not be used in connection with any offer
except in conjunction with the Prospectus for The Travelers Fund UL product(s)
for Variable Life Insurance offered by The Travelers Insurance Company and the
Prospectuses for the underlying funds, which collectively contain all pertinent
information, including the applicable sales commissions.
