<PAGE> 1
UNIVERSAL ANNUITY
SEMI-ANNUAL REPORTS
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES
JUNE 30, 1995
[TRAVELERS INSURANCE LOGO]
THE TRAVELERS INSURANCE COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
<PAGE> 2
[TIMCO LOGO] The Travelers Investment Management Company ("TIMCO")
provides equity management and advisory services for the
following Travelers Variable Products Separate Accounts
contained in this report: The Travelers Timed Growth and
Income Stock Account for Variable Annuities, The Travelers
Timed Short-Term Bond Account for Variable Annuities and
The Travelers Timed Aggressive Stock Account for
Variable Annuities.
[TAMIC LOGO] Travelers Asset Management International Corporation
("TAMIC") provides fixed income management and advisory
services for The Travelers Timed Bond Account for
Variable Annuities.
<PAGE> 3
THE TRAVELERS VARIABLE PRODUCTS SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF JUNE 30, 1995
ECONOMIC REVIEW AND OUTLOOK
While the economy has slowed more than we expected at the
beginning of the year, the magnitude and duration of this
slow-down is still unclear. The slowing that has occurred
already has enabled the ten-year U.S. Treasury Bond rate to
decrease 1.5% this year. Because of this, at least some of
the stimulative effect of the Federal Reserve Board ("Fed")
reducing rates has been set in motion already. A reduction of
the Federal Funds rate (a sensitive indicator of the direction
of interest rates), to a 5.50% or perhaps 5.00% level is
possible but may not add much more to economic growth since a
decrease in rates has already been priced into the bond
market. The question remains how weak is the economy and how
long will the weakness persist. We lean towards the scenario of a
modest slowdown, much like the modest recovery, with growth
resuming by the end of this year. The decline in interest
rates that has already occurred along with the improved export
competitiveness brought on by the weak dollar should help
growth to pick up. In addition, last year's strong growth did
not bring on typical late cycle excesses (business borrowings
for leverage or new plants, excessive inventory buildups, or
significant wage pressure increases). Therefore, we think
this is a mid-cycle growth slowdown in a longer recovery and
the second half of the recovery will see more confidence build
up and allow some of the previous excesses to reappear.
Capacity utilization and unemployment have not yet fallen that
far below the historic inflation triggers that they reached
last year, so that if growth picks up by late this year or in
the first half of next year, the Fed will have to resume their
bias towards tightening. This view implies rising short-term
and intermediate-term rates next year with the yield curve
flattening assuming the market stays comfortable with the Fed's
anti-inflation resolve.
On the bullish side, the market has rallied so strongly
because there is a significant risk that 1994's growth was an
aberration in a longer term disinflationary cycle. With
diminished consumer spending, the decline in interest rates
may have only a minor impact on consumer behavior. Foreign
economies may weaken in tandem with the United States,
reducing the impact of the weakness in the dollar to boost our
exports. The global trend towards tight fiscal and monetary
policy continues. The U.S. budget cuts that are currently
being considered may cut 0.5% from 1996's growth rate in
addition to allowing the bond market to lower long-term
inflation expectations. If numbers continue to come in weak
and the economy does not respond to the reduction in bond
rates seen so far, the Fed will get much more aggressive about
cutting rates. If this happens, the Fed Funds rate could be
in the 4-5% range by early next year with the yield curve
steepening as the long end lags the decline.
Because of the uncertainty that exists right now, we are
vigilantly watching key economic variables to give us a clue
as to which view is right. First, consumer spending on
housing and autos should pick up if the decline in interest
rates is of any value in boosting the economy. Numbers
released in late June and early July have started to show some
pick up. Second, we have been concerned about the sharp
drop-off in growth in Europe and what looks like another
recession in Japan. We will be monitoring developments
overseas closely to see what impact they will have on the
United States. Argentina and Mexico are not completely out of
the woods as their economies will be going through a high
stress period in the second half of the year. We think they
will make it through, but there remains a significant risk of
more problems developing that could hurt all emerging
economies as they did at the turn of this year. Finally, we
will be watching the behavior of the stock market. It has not
shown signs of recession yet and has been boosted by
technology stocks which have been the major beneficiaries of
the strong growth in the investment sector of the economy. To
date, this has supported our view of a modest slowdown but we
will be watching this closely for any changes.
-1-
<PAGE> 4
FIXED-INCOME MARKET COMMENTARY
After a negative year in 1994, the bond market bounced back
during the first half of the year as represented by the Lehman
Government/Corporate Bond Index, a broad based bond market
index. This index was up 11.8% for the six months ending
June 30, 1995, following a loss of 3.5% in 1994. The month of
May had the most impressive performance, as payroll employment
figures turned negative in April and May, the first back-to-
back reduction for non-farm payroll numbers since January of
1992. The month of May was the best month in the bond market
since February 1986. Market expectations shifted from
expecting continued Fed tightening at the beginning of the
year to expectations of the Fed reducing interest rates. By
the end of June, the market had already anticipated a Fed rate
cut of .5% to .75 % by year end. Numerous economists are
expecting second quarter gross domestic product to come in
close to zero, with growth forecasts for the rest of the year
not much better. Inflation still seems to be relatively well
contained, with our expectations of year-over-year Consumer
Price Index ("CPI"), a broad based indicator of inflation
to remain in the 3.0-3.5% range.
Within the U.S. bond market, the tax exempt bond market sector
was by far the worst-performing sector as it was hurt with
concerns about the flat tax in April and then individual
investors suffered "sticker shock" at the low yields implied
by the U.S. Treasury bond market rally in May. Corporate and
asset-backed securities outperformed U.S. Treasuries while
mortgage-backed securities lagged due to the sharp decline in
interest rates. The high yield market also lagged,
particularly the B quality sector whose spreads widened in May
and June. The yield curve steepened with the two-year to
thirty-year spread widening to 82 basis points from 18 at the
beginning of the year.
Until we develop more conviction about when economic growth is
bottoming, we are staying close to our duration targets. We
have been balancing a slightly long duration position with an
underweighting on the one- to three-year maturity range. The
two-year U.S. Treasury Bond has had a tremendous rally this
year due to the shift in expectations about Fed tightening.
When the economy bottoms and expectation for further rate cuts
are dampened, we think the two year will perform poorly.
In terms of sector strategy, the areas of the corporate bond
market that tend to be more recession proof are being favored
in asset selection. Relative spreads in the investment grade
corporate market are not compensating you for any recession
risk. We are using the recent corporate spread widening to
selectively buy media, utility, and consumer product names
that should still show solid earnings in the event of a
slowdown. In the mortgage backed market, the recent increase
in volatility and the decline in rates has caused this sector
to widen. We are selectively looking for well structured
securities to add as corporate proxies, as well as
sufficiently seasoned high coupon collateral as cushion paper
that should provide incremental return. We remain cautious on
the municipal market because pressure from flat tax concerns
will put a lid on the sector's relative performance.
-2-
<PAGE> 5
EQUITY MARKET COMMENTARY
Lower interest rates and better-than-expected corporate
profits propelled broad stock market averages to a series of
new highs during the first half of 1995. Including dividends,
the S&P 500 Stock Index recorded a gain of 20.2% over the
six-month period ended June 30, 1995. Small cap stocks
continued to lag somewhat, with the Russell 2000 up 14.4%
through the same period.
Technology stocks led the market during this record-setting
advance. The technology sector rose in market value by 40%,
driven by unprecedented levels of business spending for
semiconductors, computer systems and telecommunications
equipment. When evidence of a rapid slowdown in economic
growth surfaced in May, bond yields fell sharply; and the
yield curve steepened in anticipation of Fed's easing of
interest rates. Stocks in the financial sector rallied
strongly, paced by money center banks, mortgage lenders and
brokerage firms. Lower interest rates also benefited
economically sensitive groups such as home-builders and stocks
in the materials sector, including paper, forest products,
chemicals and containers.
Reflecting a lackluster retail environment, consumer-oriented
groups such as food, apparel and household products lagged the
overall market. The weakness in the consumer sector
culminated in a late June sell-off of consumer cyclicals,
following a series of preannounced earnings disappointments
for the second quarter. The weaker-than-expected earnings
were attributed to soft consumer demand and margin pressure
created by higher materials prices. Consequently, earnings
estimates in the consumer durables area have plunged 10% in
the past month.
The surprise in the first half was the strength of reported
earnings, despite low income growth, sluggish consumer
spending and tight monetary policy. Actual earnings in the
fourth quarter of 1994 and the first quarter of 1995
dramatically exceeded expectations. Earnings estimates
continue to rise, especially in the technology, commodities
and energy sectors. Concerns remain, however, that earnings
disappointments lie ahead as an inevitable fallout of slowing
economic growth. Although capital spending has been the key
driver of this business expansion, it is reasonable to ask
whether the industrial sector can continue a high rate of
investment spending in the face of falling final demand? On
the plus side, the recent Fed decision to cut interest rates
has given the financial markets confidence. Since the odds
favor continued easing by the Fed over the next year, lower
interest rates should provide ongoing support to equity price
to earnings ratios. In addition, the accelerated pace of
merger and acquisition activity seen recently in the
technology, health care and financial sectors seems likely to
continue, and provide an upward bias to stock prices.
-3-
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- -----------------------------------------------------------------------------------------
<S> <C>
THE TRAVELERS TIMED GROWTH AND INCOME STOCK
ACCOUNT FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
-4-
<PAGE> 7
THE TRAVELERS
TIMED GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES
The Travelers Timed Growth and Income Stock Account is managed
to provide broadly diversified exposure to the U.S. equity
market, while at all times maintaining a highly marketable
portfolio of common stocks and related financial instruments
in order to accommodate cash flows associated with market
timing moves. The performance benchmark for this core equity
strategy is the Standard & Poor's 500 Stock Index ("S&P 500").
During the first six months of 1995, the S&P 500 provided a
return of 20.2%, including dividends. Over this same period,
the Travelers Timed Growth and Income Stock Account achieved a
total return of 20.5%, before fees and expenses. After fees
and expenses, the portfolio's total return of 18.9% was well
ahead of the 16.1% average total return for variable annuity
stock accounts in the Lipper Growth & Income category. During
this period, two market timing signals were implemented.
Stock selection in the technology sector contributed
importantly to portfolio performance, in particular from
positions in Texas Instruments (+82%) and, in the
semiconductor equipment group, in both KLA Instruments (+61%)
and Applied Materials (+115%). In the producer durables
sector, the portfolio benefited from overweighted positions in
McDonnell Douglas (+61%), Boeing (+34%), Parker-Hannifin
(+20%) and Deere (+29%). Another key factor to the
portfolio's favorable relative performance was stock selection
in the financial sector, through holdings in Citibank (+39%),
Chase Manhattan Bank (+36%) and Lehman Brothers (+48%).
During the first half, S&P 500 futures were used to obtain
equity exposure for a portion of the the Travelers Timed
Growth and Income Stock Account. The value of the stock index
futures position ranged between 34% and 67% of the total net
asset value of the account, depending upon cash flows related
to the market timing program. The combination of S&P 500
futures and high quality money market securities can be
expected to provide a return that is very close to that of the
actual S&P 500.
Given the 22% advance by the S&P 500 since November and the
likelihood of slower economic growth through the remainder of
the year, we believe that careful stock selection is critical
at this stage of the market cycle. In the technology sector,
we have focused on stocks that exhibit improving fundamentals,
but which still trade at a reasonable multiple of their
expected growth rates, including 3COM and Cabletron Systems in
the networking group, Oracle Systems in the software group and
KLA Instruments in the semiconductor equipment group. In the
materials sector, we have emphasized Dow Chemical and Praxair.
In the consumer sector, our major overweighted positions
include Nike and Procter & Gamble. In the finance sector, we
have emphasized, Jefferson Pilot and Transamerica for relative
value and earnings momentum.
-5-
<PAGE> 8
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $137,421,111) . . . . . . . . $143,728,634
Receivables:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,573
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378,852
Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,191,925
Purchase payments and transfers from other Travelers accounts . . . . . . . . . . 68,754
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,502,759
-------------
LIABILITIES:
Cash overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,592
Payables:
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . 1,488,564
Contract surrenders and transfers to other Travelers accounts . . . . . . . . . . . . 318,338
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . . 5,193
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,990
Variation on futures margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,750
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,396
-------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,037,823
NET ASSETS:
(APPLICABLE TO 72,185,938 UNITS OUTSTANDING AT $2.015 PER UNIT) . . . . . . . . . . . . $145,464,936
=============
</TABLE>
See Notes to Financial Statements
-6-
<PAGE> 9
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 499,151
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,748,977
------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . $ 2,248,128
EXPENSES:
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . 614,358
Investment management and advisory fees . . . . . . . . . . . . 159,595
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . 614,358
------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 1,388,311
--------------
Net investment income . . . . . . . . . . . . . . . . . . 859,817
--------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . 63,389,347
Cost of investment securities sold . . . . . . . . . . . . . 53,940,059
------------
Net realized gain . . . . . . . . . . . . . . . . . . . . 9,449,288
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1994 . . . . . . . . . . . . 183,229
Unrealized gain at June 30, 1995 . . . . . . . . . . . . . . 6,307,523
------------
Net change in unrealized gain for the period . . . . . . 6,124,294
--------------
Net realized gain and change in unrealized gain . . . 15,573,582
--------------
Net increase in net assets resulting from operations . . . . . . $ 16,433,399
==============
</TABLE>
See Notes to Financial Statements
-7-
<PAGE> 10
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . $ 859,817 $ 1,302,116
Net realized gain (loss) from investment security transactions . . 9,449,288 (13,198,289)
Net change in unrealized gain on investment securities . . . . . . 6,124,294 183,229
------------ -------------
Net increase (decrease) in net assets resulting from operations 16,433,399 (11,712,944)
------------ -------------
UNIT TRANSACTIONS:
Participant purchase payments . . . . . . . . . . . . . . . . . . .
(applicable to 1,985,257 and 5,436,273 units, respectively) . . 3,711,331 9,166,985
Participant transfers from other Travelers accounts . . . . . . . .
(applicable to 150,757 and 168,881 units, respectively) . . . . 282,004 307,302
Market timing transfers from other Travelers timed accounts . . . .
(applicable to 48,886,031 and 244,492,247 units, respectively) 90,761,647 426,883,052
Administrative charges . . . . . . . . . . . . . . . . . . . . . .
(applicable to 64,994 and 117,707 units, respectively) . . . . (132,367) (193,352)
Contract surrenders . . . . . . . . . . . . . . . . . . . . . . . .
(applicable to 2,418,921 and 6,733,833 units, respectively) . . (4,539,611) (11,342,908)
Participant transfers to other Travelers accounts . . . . . . . . .
(applicable to 5,979,452 and 27,205,807 units, respectively) . (11,241,252) (45,844,869)
Market timing transfers to other Travelers timed accounts . . . . .
(applicable to 186,256,925 units) . . . . . . . . . . . . . . . - (316,794,041)
Other payments to participants . . . . . . . . . . . . . . . . . .
(applicable to 64,693 and 91,176 units, respectively) . . . . . (124,650) (154,790)
------------ -------------
Net increase in net assets resulting from unit transactions . . 78,717,102 62,027,379
------------ -------------
Net increase in net assets . . . . . . . . . . . . . . . . . . 95,150,501 50,314,435
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 50,314,435 -
------------ -------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $145,464,936 $ 50,314,435
============ =============
</TABLE>
See Notes to Financial Statements
-8-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Timed Growth and Income Stock Account for Variable Annuities
("Account TGIS") is a separate account of The Travelers Insurance Company ("The
Travelers"), an indirect wholly owned subsidiary of Travelers Group Inc., and
is available for funding certain variable annuity contracts issued by The
Travelers. Account TGIS is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company.
Participants in Account TGIS have entered into market timing service agreements
with an affiliate of The Travelers, which provide for the transfer of
participants' funds to certain other timed accounts of The Travelers, at the
discretion of the market timer.
The following is a summary of significant accounting policies consistently
followed by Account TGIS in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of business
of the New York Stock Exchange on the last business day of the period;
securities traded on the over-the-counter market and listed securities with no
reported sales are valued at the mean between the last-reported bid and asked
prices or on the basis of quotations received from a reputable broker or other
recognized source.
When market quotations are not considered to be readily available for long-term
corporate bonds and notes, such investments are generally stated at fair value
on the basis of valuations furnished by a pricing service. These valuations
are determined for normal institutional-size trading units of such securities
using methods based on market transactions for comparable securities and
various relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities, for which
pricing services are not readily available are valued by management at prices
which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued by computing a market value based upon quotations from dealers
or issuers for securities of a similar type, quality and maturity.
FUTURES CONTRACTS. Account TGIS may use stock index futures contracts, and may
also use interest rate futures contracts, as a substitute for the purchase or
sale of individual securities. When Account TGIS enters into a futures
contract, it agrees to buy or sell a specified index of stocks or debt
securities at a future time for a fixed price, unless the contract is closed
prior to expiration. Account TGIS is obligated to deposit with a broker an
"initial margin" equivalent to a percentage of the face, or notional value of
the contract.
It is Account TGIS's practice to hold cash and cash equivalents (including
short-term investments) in an amount at least equal to the notional value of
outstanding purchased futures contracts, less the initial margin. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by Account TGIS are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statement of Investments. However, when
Account TGIS holds open futures contracts, it assumes a market risk generally
equivalent to the underlying market risk of change in the value of the
specified indexes or debt securities associated with the futures contract.
OPTIONS. Account TGIS may purchase index or individual equity put or call
options, thereby obtaining the right to sell or buy a fixed number of shares of
the underlying asset at the stated price on or before the stated expiration
date. Account TGIS may sell the options before expiration. Options held by
Account TGIS are listed on either national securities exchanges or on
over-the-counter markets, and are short-term contracts with a duration of less
than nine months. The market value of the options will be the latest sale
price at the close of the New York Stock Exchange, or in the absence of such
sale, the latest bid quotation.
REPURCHASE AGREEMENTS. When Account TGIS enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price), the repurchase price of the
securities will generally equal the amount paid by Account TGIS plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide to Account TGIS securities (collateral) whose market value,
including accrued interest, will be at least equal to 102% of the repurchase
price. Account TGIS monitors the value of collateral on a daily basis.
Repurchase agreements will be limited to transactions with national banks and
reporting broker dealers believed to present minimal credit risks. Account
TGIS's custodian will take actual or constructive receipt of all securities
underlying repurchase agreements until such agreements expire.
-9-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
FEDERAL INCOME TAXES. The operations of Account TGIS 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 the existing federal income tax law no taxes are
payable on the investment income and capital gains of Account TGIS. Account
TGIS is not taxed as "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
2. INVESTMENTS
Purchases and sales of securities other than short-term investments aggregated
$51,141,056 and $19,399,522, respectively, for the six months ended June 30,
1995. Realized gains and losses from security transactions are reported on an
identified cost basis.
At June 30, 1995, Account TGIS held 275 open S&P 500 Stock Index futures
contracts with a maturity date of September 15, 1995. The underlying face
value, or notional value, of these contracts at June 30, 1995, amounted to
$75,233,125. In connection with these contracts, short-term investments with a
par value of $3,145,000 had been pledged as margin deposits.
Net realized gains (losses) resulting from futures contracts were $8,314,480
and ($13,010,751) for the six months ended June 30, 1995 and the year ended
December 31, 1994, respectively. These gains (losses) are included in the net
realized gain (loss) from investment security transactions on both the
Statement of Operations and the Statement of Changes in Net Assets. The cash
settlement for June 30, 1995, is shown on the Statement of Assets and
Liabilities as a payable for variation on futures margin.
3. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at an annual rate
of 0.3233% of Account TGIS's average net assets. These fees are paid to The
Travelers Investment Management Company, an indirect wholly owned subsidiary of
Travelers Group Inc.
A market timing fee equivalent on an annual basis to 1.25% of the net assets of
Account TGIS is deducted for market timing services. The Travelers deducts the
fee daily and, in turn, pays the fee to Copeland Financial Services, Inc., a
registered investment adviser and an affiliate of The Travelers which provides
market timing services to subscribing participants in Account TGIS.
Insurance charges are paid to The Travelers for the mortality and expense risks
assumed by The Travelers. These charges are equivalent to 1.25% of the average
net assets of Account TGIS on an annual basis. Additionally, for contracts in
the accumulation phase, a semi-annual charge of $15 (prorated for partial
periods and the level of participation in other separate accounts of The
Travelers) is deducted from participant account balances and paid to The
Travelers to cover administrative charges.
No sales charge is deducted from participant purchase payments when they are
received. However, The Travelers generally assesses a 5% contingent deferred
sales charge if a participant's purchase payment is surrendered within five
years of its payment date. Contract surrender payments are stated prior to the
deduction of $49,406 and $170,063 in satisfaction of contingent deferred sales
charges for the six months ended June 30, 1995 and the year ended December 31,
1994, respectively.
-10-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
4. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding
throughout each period.)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- -----------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . $ .042 $ .064 $ .043 $ .046 $ .045 $ .099
Operating expenses . . . . . . . . . . . . . . . . . . . .026* .041* .042* 045* .045* .034*
------ ------ ------ ------ ------ ------
Net investment income . . . . . . . . . . . . . . . . . . .016 .023 .001 .001 - .065
Unit value at beginning of period . . . . . . . . . . . . 1.695 1.776 1.689 1.643 1.391 1.447
Net realized and change in unrealized gains (losses) . . .304 (.104) .086 .045 .252 (.121)
------ ------ ------ ------ ------ ------
Unit value at end of period . . . . . . . . . . . . . . . $2.015 $1.695 $1.776 $1.689 $1.643 $1.391
====== ====== ====== ====== ====== ======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value . . . . . . . . . . .32 (.08) .09 .05 .25 (.06)
Ratio of operating expenses to average net assets** . . . 2.82%* 2.82%* 2.82%* 2.82%* 2.82%* 2.41%*
Ratio of net investment income to average net assets** . 1.69% 1.58% .08% .78% 1.33% 1.86%
Units outstanding at end of period (thousands) . . . . . 72,186 29,692 - 217,428 - 5,708
Portfolio turnover rate . . . . . . . . . . . . . . . . . 45% 19% 70% 119% 489% 653%
</TABLE>
* Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner and were not recorded in the
financial statements of Account TGIS, or by contractual surrender from
the contract to the extent allowed under federal tax law.
** Annualized.
5. SUBSEQUENT EVENT
On July 10, 1995, $46,455,755 of the net assets of The Travelers Timed
Short-Term Bond Account for Variable Annuities were transferred to The
Travelers Timed Growth and Income Stock Account for Variable Annuities as a
result of a transfer order made by a market timer on behalf of subscribing
participants.
-11-
<PAGE> 14
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (48.0%)
AMUSEMENTS (0.6%)
Mirage Resorts, Inc. (A) 6,200 $ 189,875
Walt Disney Co. 12,900 717,562
----------
907,437
----------
BANKING (2.2%)
Banc One Corp. 8,200 264,450
Bank of Boston Corp. 1,900 71,250
BankAmerica Corp. 2,800 147,350
Chase Manhattan Corp. 3,000 141,000
Citicorp 11,600 671,350
First Interstate Bancorp 2,300 184,575
First Union Corp. 2,800 126,700
J.P. Morgan & Co. 3,200 224,400
Mellon Bank Corp. 2,600 108,225
NationsBank Corp. 8,700 466,538
Norwest Corp. 11,600 333,500
U.S. Bancorp 8,200 197,313
Wells Fargo & Co. 1,000 180,250
----------
3,116,901
----------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (6.9%)
Abbott Laboratories 15,100 611,550
American Home Products Corp. 5,500 425,562
Amgen (A) 2,400 192,900
Bristol-Myers Squibb Co. 12,800 872,000
Dow Chemical Co. 9,900 711,562
E.I. Dupont de Nemours & Co. 12,400 852,500
Eastman Chemical Company 1,600 95,200
Eli Lilly & Co. 5,800 455,300
Forest Labs, Inc. (A) 4,700 208,562
Geon Co. 8,600 247,250
International Flavors & Fragrances 7,600 378,100
Johnson & Johnson 14,900 1,007,613
Merck & Co., Inc. 18,900 926,100
Mylan Labs, Inc. 3,900 119,925
Pfizer, Inc. 5,500 508,063
Praxair, Inc. 15,200 380,000
Procter & Gamble Co. 14,700 1,056,563
Schering-Plough Corp. 9,000 397,125
Union Carbide Corp. 9,700 323,738
W.R. Grace & Co. 1,600 98,200
----------
9,867,813
----------
COMMUNICATION (4.4%)
Ameritech Corp. 9,400 413,600
AT&T Corp. 34,500 1,832,812
Bell Atlantic Corp. 4,400 246,400
Bellsouth Corp. 10,100 641,350
Capital Cities ABC, Inc. 3,700 399,600
GTE Corp. 16,500 563,062
MCI Communications Corp. 11,800 258,863
NYNEX Corp. 11,800 474,950
SBC Communications., Inc. 16,500 785,813
Tele-Communications, Inc. (A) 12,400 290,625
U.S. West, Inc. 3,400 141,525
Viacom International, Inc. (A) 7,100 329,263
----------
6,377,863
----------
CONTRACTORS (0.2%)
Fluor Corp. 5,200 270,400
Halliburton Co. 500 17,875
----------
288,275
----------
ELECTRICAL AND ELECTRONIC MACHINERY (3.3%)
Amphenol Corp. (A) 11,000 320,375
Andrew Corp. (A) 3,000 173,625
General Electric Co. 33,500 1,888,562
Intel Corp. 14,200 899,038
Maxim Integrated Products (A) 3,100 158,100
Micron Technology 2,700 148,163
Motorola, Inc. 9,300 624,263
Scientific-Atlanta, Inc. 8,500 187,000
Texas Instruments, Inc. 2,500 334,688
----------
4,733,814
----------
FINANCE (2.2%)
American Express Co. 8,800 309,100
Dean Witter Discover & Co. 7,400 347,800
Federal Home Loan Corp. 8,300 570,625
Federal National Mortgage Assoc. 7,000 660,625
Green Tree Financial Corp. 4,600 204,125
Household International 4,000 198,000
ITT Corp. 4,800 564,000
Lehman Brothers Holding, Inc. 14,700 321,563
----------
3,175,838
----------
FOOD (4.9%)
Archer-Daniels Midland Co. 21,100 392,987
Campbell Soup Co. 4,400 215,600
Coca-Cola Co. 27,400 1,746,750
CONAGRA, Inc. 11,700 408,037
CPC International, Inc. 2,500 154,375
H.J. Heinz Co. 4,200 186,375
Kellogg Co. 1,600 114,200
McDonalds Corp. 16,600 649,475
PepsiCo, Inc. 13,200 602,250
Philip Morris, Inc. 16,600 1,234,625
Ralston-Purina Group 6,300 321,300
Sara Lee Corp. 8,500 242,250
Seagram Co. Ltd. 7,400 256,225
Unilever NV 3,200 416,400
----------
6,940,849
----------
FURNITURE AND FIXTURES (0.1%)
Masco Corp. 3,400 91,800
----------
INSURANCE (1.5%)
Aetna Life & Casualty Co. 2,000 125,750
American International Group 6,500 741,000
Chubb Corp. 4,700 376,587
CIGNA Corp. 1,300 100,912
Jefferson Pilot Corp. 5,300 290,175
Lincoln National Corp. 1,700 74,375
Saint Paul Companies 5,300 261,025
Transamerica Corp. 4,200 244,650
----------
2,214,474
----------
</TABLE>
-12-
<PAGE> 15
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
---------- -----------
<S> <C> <C>
LUMBER AND WOOD PRODUCTS (0.4%)
Georgia-Pacific Corp. 2,200 $ 190,850
Weyerhaeuser Co. 6,600 311,025
----------
501,875
----------
MACHINERY (3.2%)
Apple Computers, Inc. 2,400 111,600
Black & Decker Corp. 3,700 114,237
Cabletron System, Inc. (A) 6,100 324,825
Caterpillar, Inc. 7,000 449,750
Cisco Systems, Inc. (A) 4,800 242,700
Compaq Computer Corp. (A) 2,600 117,975
Deere & Co. 2,800 239,750
Dell Computer Corp. (A) 3,900 234,731
Digital Equipment Corp. (A) 6,300 256,725
Harnischfeger Industries 3,100 107,338
Hewlett Packard Co. 9,100 677,950
International Business Machines Corp. 8,400 806,400
Silicon Graphics, Inc. (A) 4,200 167,475
Stewart & Stevenson Services, Inc. 800 28,850
Tenneco, Inc. 4,100 188,600
3Com Corp. (A) 3,200 214,400
Varity Corp. (A) 7,300 321,200
----------
4,604,506
----------
METAL PRODUCTS (0.9%)
Ball Corp. 7,800 272,025
Gillette Co. 6,800 303,450
Nucor Corp. 1,600 85,600
Parker-Hannifin Corp. 5,300 192,125
Phelps Dodge Corp. 1,800 106,200
Reynolds Metals Co. 4,400 227,700
USX-U.S. Steel Group 4,900 168,438
----------
1,355,538
----------
MINING (0.1%)
Barrick Gold Corp. 3,200 80,800
Placer Dome, Inc. 4,000 104,500
----------
185,300
----------
MISCELLANEOUS MANUFACTURING (1.5%)
Becton Dickinson & Co. 4,900 285,425
Biomet, Inc. (A) 1,400 21,612
Eastman Kodak Co. 6,700 406,187
Emerson Electric Co. 3,800 271,700
Honeywell, Inc. 2,300 99,188
KLA Instruments Corp. (A) 2,800 216,650
Medtronics, Inc. 5,100 393,338
Raytheon Co. 2,400 186,300
Xerox Corp. 1,900 222,775
----------
2,103,175
----------
OIL & GAS (0.2%)
Anadarko Petroleum 1,800 77,625
Schlumberger Ltd. 3,300 205,013
----------
282,638
----------
PAPER AND ALLIED PRODUCTS (0.5%)
Champion International Corp. 1,700 88,612
International Paper Co. 3,200 274,400
Stone Container Corp. (A) 10,600 225,250
Temple Inland, Inc. 4,000 190,500
----------
778,762
----------
PETROLEUM REFINING AND
RELATED INDUSTRIES (4.5%)
Amoco Corp. 13,300 886,112
Ashland Oil, Inc. 1,000 35,125
Atlantic Richfield, Inc. 5,200 570,700
Chevron Corp. 12,600 587,475
Exxon Corp. 25,300 1,786,812
Mobil Corp. 9,200 883,200
Phillips Petroleum Co. 4,900 163,538
Royal Dutch Petroleum Co. 11,000 1,340,625
Texaco, Inc. 2,200 144,375
----------
6,397,962
----------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (0.3%)
A.H. Belo 600 18,375
Franklin Quest Co. (A) 3,300 79,200
Times Mirror Co. 1,200 28,650
Time Warner Inc. 7,600 312,550
----------
438,775
----------
RETAIL (2.6%)
Albertsons, Inc. 13,000 386,750
Circuit City Stores, Inc. 8,500 268,812
Darden Restaurants, Inc. (A) 1,400 15,225
Dayton Hudson Corp. 4,400 315,700
Dillard Department Stores 3,600 105,750
Home Depot, Inc. 4,400 178,750
J.C. Penney Co. 4,300 206,400
Kmart Corp. 3,800 55,575
Limited, Inc. 6,000 132,000
Safeway, Inc. (A) 3,100 115,863
Sears Roebuck & Co. 7,700 461,038
Tandy Corp. 3,000 155,625
The GAP, Inc. 4,000 139,500
Toys R Us (A) 6,900 201,825
Wal-Mart Stores, Inc. 37,500 1,003,125
----------
3,741,938
----------
RUBBER AND PLASTIC PRODUCTS (0.2%)
Nike, Inc. 3,800 319,200
----------
SERVICES (1.8%)
Columbia/HCA Healthcare Corp. 11,900 514,675
Computer Associates International 2,200 149,050
CUC International, Inc. (A) 3,600 151,200
Healthcare & Retirement CP (A) 3,500 102,375
Microsoft (A) 11,400 1,030,987
Novell, Inc. (A) 2,800 55,825
Oracle Systems Corp. (A) 15,300 590,006
----------
2,594,118
----------
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.3%)
Minnesota Mining & Manufacturing Co. 7,300 417,925
Owens Corning Fiberglass (A) 1,400 51,625
----------
469,550
----------
TOBACCO MANUFACTURERS (0.3%)
RJR Nabisco Holding Corp. 13,400 373,525
----------
</TABLE>
-13-
<PAGE> 16
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
---------- -----------
<S> <C> <C>
TRANSPORTATION (0.7%)
AMR, Inc. (A) 4,700 $ 350,737
CSX Corp. 2,000 150,250
Norfolk Southern Corp. 5,600 377,300
Pittston Co. 8,300 199,200
-----------
1,077,487
-----------
TRANSPORTATION MANUFACTURING (2.4%)
Boeing Co. 10,700 670,087
Chrysler Corp. 9,500 454,812
Eaton Corp. 1,200 69,750
Echlin, Inc. 1,300 45,175
Ford Motor Co. 22,600 672,350
General Motors Corp. 10,300 482,812
Martin-Marietta Corp. 2,800 176,750
McDonnell Douglas Corp. 6,900 529,575
United Technologies Corp. 3,900 304,688
-----------
3,405,999
-----------
UTILITIES (1.6%)
Baltimore Gas & Electric Co. 5,800 145,000
Cinergy Corp. 5,400 141,750
Dominion Resources, Inc. 3,400 124,100
Enron Corp. 4,400 154,550
Florida Power & Light Co. 7,400 285,825
NIPSCO Industries, Inc. 6,900 234,600
Panhandle Eastern Corp. 11,600 282,750
PECO Energy Co. 13,100 361,888
Public Service Enterprises Group 7,400 205,350
Southern Co. 19,300 431,838
-----------
2,367,651
-----------
WHOLESALE TRADE (0.2%)
Arrow Electronics (A) 4,900 243,775
Cardinal Health, Inc. 1,700 80,325
-----------
324,100
-----------
TOTAL COMMON STOCKS
(COST $62,721,517) 69,037,163
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (52.0%)
COMMERCIAL PAPER (49.9%)
Banc One Corp.,
5.98% due July 28, 1995 $3,500,000 3,481,279
Bausch & Lomb, Inc.,
5.75% due September 1, 1995 3,500,000 3,449,742
BHP Financial (USA), Inc.,
5.85% due August 1, 1995 3,500,000 3,467,286
Cargill, Inc.,
5.99% due July 14, 1995 3,100,000 3,088,947
Ciesco LP,
5.89% due July 18, 1995 3,500,000 3,475,244
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Daimler Benz North America Corp.,
5.93% due July 7, 1995 $2,500,000 $ 2,487,993
Deutsche Bank Financial, Inc.,
5.88% due July 5, 1995 3,500,000 3,482,798
Dresdner U.S. Financial, Inc.,
5.84% due September 5, 1995 3,500,000 3,447,222
Duke Power Co.,
5.95% due July 12, 1995 3,000,000 2,986,917
Export Development Corp.,
5.97% due July 6, 1995 3,500,000 3,490,623
First Union Corp.,
6.09% due July 31, 1995 2,000,000 1,999,886
Generale Bank,
6.10% due July 28, 1995 2,000,000 1,968,918
Glaxo Holdings PLC,
5.98% due September 6, 1995 2,000,000 1,977,487
Kimberly Clark Corp.,
6.04% due July 6, 1995 2,000,000 1,978,677
Manitoba Hydro Electric Board,
5.98% due July 12, 1995 3,000,000 2,989,847
May Dept. Stores,
5.83% due July 27, 1995 3,500,000 3,470,147
Nestle Capital Corp.,
5.73% due September 5, 1995 3,500,000 3,447,475
PACCAR Financial Corp.,
5.75% due September 7, 1995 3,500,000 3,446,265
PepsiCo, Inc.,
5.88% due July 6, 1995 3,500,000 3,482,199
Potomac Electric Power Co.,
6.01% due July 28, 1995 1,135,000 1,129,490
PHH Corp.,
5.90% due July 5, 1995 3,500,000 3,482,747
Teco Financial, Inc.,
5.85% due July 24, 1995 3,500,000 3,471,855
UBS Financial, Inc.,
6.21% due July 5, 1995 2,500,000 2,497,844
Weyerhaeuser Co.,
5.96% due July 14, 1995 3,500,000 3,489,276
-----------
71,690,164
-----------
U.S. GOVERNMENT SECURITIES (2.1%)
United States of America Treasury,
6.06% due September 21, 1995 (C) 2,555,000 2,423,242
United States of America Treasury,
6.34% due September 21, 1995 (C) 500,000 481,707
United States of America Treasury,
6.34% due September 21, 1995 (C) 100,000 96,358
-----------
3,001,307
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $74,699,594) 74,699,594
-----------
</TABLE>
-14-
<PAGE> 17
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NOTIONAL MARKET
VALUE VALUE
---------- -----------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 500 Stock Index,
Exp. September, 1995 (D) $ 75,233,125 -
-------------
TOTAL INVESTMENTS (100%)
(COST $137,421,111) (B) $ 143,728,634
=============
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) At June 30, 1995, net unrealized appreciation for all securities was
$6,307,523. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over
cost of $6,431,498 and aggregate gross unrealized depreciation for all
securities in which there was an excess of cost over market value of
$123,975.
(C) Par value of $3,145,000 pledged to cover margin deposits on futures
contracts.
(D) As more fully discussed in Note 1 to the financial statements, it is
Account TGIS's practice to hold cash and cash equivalents (including
short-term investments) at least equal to the underlying face value,
or notional value, of outstanding purchased futures contracts, less
the initial margin. Account TGIS uses futures contracts as a substitute
for holding individual securities.
See Notes to Financial Statements
-15-
<PAGE> 18
THE TRAVELERS
TIMED SHORT-TERM
BOND ACCOUNT
FOR VARIABLE ANNUITIES
The Travelers Timed Short-Term Bond Account for Variable Annuities ("Account
TSB") was affected by four market timing moves during the first half of 1995
that are summarized as follows:
- - On February 3, 1995, approximately $48.6 million was moved from Account TSB
into the Timed Growth and Income Stock Account.
- - On February 15, 1995, approximately $16.2 million was moved from Account
TSB into the Timed Bond Account.
- - On June 2, 1995, approximately $41.5 million was moved from Account TSB
into the Timed Growth and Income Stock Account.
- - On June 2, 1995, approximately $17.9 million was moved from Account TSB
into the Timed Aggressive Stock Account.
The assets in Account TSB decreased by approximately 51% during the first half
of 1995, primarily from market-timing moves.
The strategy in management of Account TSB's short-term assets did not change
for the first half of 1995, as we continued to invest in the 30- to 60-day
maturity range. Short-term rates were most attractive in this part of the
short-term yield curve.
Account TSB's average life was somewhat higher in the second quarter at 53
days, up from 41 days in the first quarter. With rates remaining attractive in
the 30- to 60-day maturity range the management of Account TSB's short-term
assets will continue to be invested in this part of the curve. Because of an
inverted yield curve in commercial paper beginning 60- to 90-days, and the
economy showing signs of a much greater slowdown than expected, we will
continue to invest in the 30- to 60-day maturity range. This should bring
greater returns and higher yields to Account TSB's participants.
Diversification, protection of principal, and liquidity remain the top
priorities of management.
-16-
<PAGE> 19
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $135,795,380) $135,836,086
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 689,814
Purchase payments and transfers from other Travelers accounts . . 85,654
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . 136,611,554
------------
LIABILITIES:
Cash overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,703
Payables:
Contract surrenders and transfers to other Travelers accounts . . 437,807
Investment management and advisory fees . . . . . . . . . . . . . 4,860
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . 4,667
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . 18,703
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 9,693
------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . 517,433
------------
NET ASSETS:
(Applicable to 103,523,175 units outstanding at $1.314 per unit) . . . $136,094,121
============
</TABLE>
See Notes to Financial Statements
-17-
<PAGE> 20
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,215,685
EXPENSES:
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,297,722
Investment management and advisory fees . . . . . . . . . . . . . . . 335,417
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . 1,297,722
------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 2,930,861
-----------
Net investment income . . . . . . . . . . . . . . . . . . . . . 3,284,824
-----------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . . 144,940,189
Cost of investment securities sold . . . . . . . . . . . . . . . . 144,932,511
------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . 7,678
Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . . (255,618)
Unrealized gain at June 30, 1995 . . . . . . . . . . . . . . . . . 40,706
------------
Net change in unrealized gain (loss) for the period . . . . . . . 296,324
-----------
Net realized gain and change in unrealized gain (loss) . . . 304,002
-----------
Net increase in net assets resulting from operations . . . . . . . . . $ 3,588,826
===========
</TABLE>
See Notes to Financial Statements
-18-
<PAGE> 21
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 3,284,824 $ 3,487,182
Net realized gain (loss) from investment security transactions . . . . 7,678 (16,060)
Net change in unrealized gain (loss) on investment securities . . . . 296,324 (255,618)
------------- -------------
Net increase in net assets resulting from operations . . . . . . . 3,588,826 3,215,504
------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 8,690,876 and 20,847,101 units, respectively) . . . 11,318,093 26,686,784
Participant transfers from other Travelers accounts
(applicable to 732,045 and 2,135,671 units, respectively) . . . . 953,213 2,734,518
Market timing transfers from other Travelers timed accounts
(applicable to 298,165,356 units) . . . . . . . . . . . . . . . . - 381,665,377
Administrative charges
(applicable to 101,405 and 383,685 units, respectively) . . . . . (133,215) (493,803)
Contract surrenders
(applicable to 6,409,695 and 20,164,576 units, respectively) . . . (8,350,731) (25,802,591)
Participant transfers to other Travelers accounts
(applicable to 20,189,832 and 84,918,862 units, respectively) . . (26,310,850) (108,667,839)
Market timing transfers to other Travelers timed accounts
(applicable to 95,704,961 and 352,098,599 units, respectively) . . (124,810,809) (449,633,557)
Other payments to participants
(applicable to 207,010 and 242,807 units, respectively) . . . . . (269,749) (311,994)
------------- -------------
Net decrease in net assets resulting from unit transactions . . . (147,604,048) (173,823,105)
------------- -------------
Net decrease in net assets . . . . . . . . . . . . . . . . . . (144,015,222) (170,607,601)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 280,109,343 450,716,944
------------- -------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 136,094,121 $ 280,109,343
============= =============
</TABLE>
See Notes to Financial Statements
-19-
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Timed Short-Term Bond Account for Variable Annuities ("Account
TSB"), is a separate account of The Travelers Insurance Company ("The
Travelers"), an indirect wholly owned subsidiary of Travelers Group Inc., and
is available for funding certain variable annuity contracts issued by The
Travelers. Account TSB is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment company.
Participants in Account TSB have entered into market timing service agreements
with an affiliate of The Travelers, which provide for the transfer of
participants' funds to certain other timed accounts of The Travelers, at the
discretion of the market timer.
The following is a summary of significant accounting policies consistently
followed by Account TSB in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of business
of the New York Stock Exchange on the last business day of the period;
securities traded on the over-the-counter market and listed securities with no
reported sales are valued at the mean between the last-reported bid and asked
prices or on the basis of quotations received from a reputable broker or other
recognized source.
When market quotations are not considered to be readily available for long-term
corporate bonds and notes, such investments are generally stated at fair value
on the basis of valuations furnished by a pricing service. These valuations
are determined for normal institutional-size trading units of such securities,
using methods based on market transactions for comparable securities and
various relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities, for which
pricing services are not readily available, are valued by management at prices
which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued by computing a market value based upon quotations from dealers
or issuers for securities of a similar type, quality and maturity.
REPURCHASE AGREEMENTS. When Account TSB enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price), the repurchase price of the
securities will generally equal the amount paid by Account TSB plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide to Account TSB securities (collateral) whose market value,
including accrued interest, will be at least equal to 102% of the repurchase
price. Account TSB monitors the value of collateral on a daily basis.
Repurchase agreements will be limited to transactions with national banks and
reporting broker dealers believed to present minimal credit risks. Account
TSB's custodian will take actual or constructive receipt of all securities
underlying repurchase agreements until such agreements expire.
FEDERAL INCOME TAXES. The operations of Account TSB form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986, as
amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account TSB. Account TSB
is not taxed as a "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date. Interest
income is recorded on the accrual basis.
-20-
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
2. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at an annual rate
of 0.3233% of Account TSB's average net assets. These fees are paid to The
Travelers Investment Management Company, an indirect wholly owned subsidiary of
Travelers Group Inc.
A market timing fee equivalent on an annual basis to 1.25% of the net assets of
Account TSB is deducted for market timing services. The Travelers deducts the
fee daily and, in turn, pays the fee to Copeland Financial Services, Inc., a
registered investment adviser and an affiliate of The Travelers which provides
market timing services to subscribing participants in Account TSB.
Insurance charges are paid to The Travelers for the mortality and expense risks
assumed by The Travelers. These charges are equivalent to 1.25% of the average
net assets of Account TSB on an annual basis. Additionally, for contracts in
the accumulation phase, a semi-annual charge of $15 (prorated for partial
periods and the level of participation in other separate accounts of The
Travelers) is deducted from participant account balances and paid to The
Travelers to cover administrative charges.
No sales charge is deducted from participant purchase payments when they are
received. However, The Travelers generally assesses a 5% contingent deferred
sales charge if a participant's purchase payment is surrendered within five
years of its payment date. Contract surrender payments are stated prior to the
deduction of $108,467 and $392,576 of contingent deferred sales charges for the
six months ended June 30, 1995 and the year ended December 31, 1994,
respectively.
-21-
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
3. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding
throughout each period.)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- --------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . $ .039 $ .055 $ .041 $ .054 $ .076 $ .099
Operating expenses . . . . . . . . . . . . . . . . . . . .018* .036* .037* .041* .036* .030*
------ ------ ------ ------ ------ ------
Net investment income . . . . . . . . . . . . . . . . . . .021 .019 .004 .013 .040 .069
Unit value at beginning of period 1.292 1.275 1.271 1.258 1.218 1.149
Net realized and change in unrealized gains (losses)# . . .001 (.002) - - - -
------ ------ ------ ------ ------ ------
Unit value at end of period . . . . . . . . . . . . . . . $1.314 $1.292 $1.275 $1.271 $1.258 $1.218
====== ====== ====== ====== ====== ======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value . . . . . . . . . . . . . . . .02 .02 - .01 .04 .07
Ratio of operating expenses to average net assets** . . . 2.82%* 2.82%* 2.82%* 2.82%* 2.82%* 2.41%*
Ratio of net investment income to average net assets** . 3.19% 1.45% .39% 1.12% 3.07% 5.89%
Units outstanding at end of period (thousands) . . . . . 103,523 216,713 353,374 173,359 439,527 369,769
</TABLE>
* Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner and were not recorded in the
financial statements of Account TSB, or by contractual surrender from the
contract to the extent allowed under federal tax law.
** Annualized.
# Effective May 2, 1994, Account TSB was authorized to invest in securities
with a maturity of greater than one year. As a result, net realized and
change in unrealized gains (losses) are no longer included in total
investment income.
4. SUBSEQUENT EVENTS
On July 10, 1995, $46,455,755 and $19,526,458, of the net assets of The
Travelers Timed Short-Term Bond Account for Variable Annuities were transferred
to The Travelers Timed Growth and Income Stock Account for Variable Annuities
and The Travelers Timed Aggressive Stock Account for Variable Annuities,
respectively. The transfer orders were made by a market timer on behalf of
subscribing participants.
On July 27, 1995, $16,038,495 of the net assets of The Travelers Timed Bond
Account for Variable Annuities were transferred to The Travelers Timed
Short-Term Bond Account for Variable Annuities as a result of a transfer order
made by a market timer on behalf of subscribing participants.
-22-
<PAGE> 25
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (100%)
BANKERS ACCEPTANCES (2.2%)
Rabobank Nederland NV,
5.97% due July 21, 1995 $3,000,000 $ 2,987,638
-------------
CERTIFICATES OF DEPOSIT (3.7%)
Istituto Bancario San Paolo Di,
6.19% due August 11, 1995 5,000,000 4,999,168
-------------
COMMERCIAL PAPER (83.1%)
Abbey National North America, Inc.,
6.03% due July 14, 1995 5,000,000 4,985,467
AT&T Capital Corp.,
5.94% due July 11, 1995 10,000,000 9,974,542
Cargill, Inc.,
5.98% due July 6, 1995 10,000,000 9,973,178
Colgate Palmolive Co.,
5.98% due July 14, 1995 5,000,000 4,970,625
General Electric Capital Corp.,
5.79% due August 15, 1995 5,000,000 4,995,298
General Mills, Inc.,
6.04% due July 18, 1995 935,000 932,025
Generale Bank,
6.10% due July 28, 1995 3,000,000 2,953,377
Glaxo Holdings PLC,
5.98% due September 6, 1995 10,000,000 9,887,436
H.J. Heinz Co.,
5.96% due August 2, 1995 7,000,000 6,952,369
Kimberly Clark Corp.,
5.99% due July 12, 1995 10,000,000 9,905,283
Motorola, Inc.,
5.97% due July 27, 1995 10,000,000 9,953,150
Pacific Gas & Electric Co.,
5.99% due July 31, 1995 10,000,000 9,941,805
Schering-Plough Corp.,
6.24% due October 30, 1995 5,000,000 4,850,934
Teco Financial, Inc.,
5.88% due September 22, 1995 5,000,000 4,927,267
UBS Financial, Inc.,
6.21% due July 5, 1995 7,700,000 7,693,361
Weyerhaeuser Co.,
5.96% due July 14, 1995 10,000,000 9,969,361
-------------
112,865,478
-------------
U.S. GOVERNMENT AGENCY SECURITIES (3.6%)
RFCO Strips,
5.97% due July 15, 1995 5,000,000 4,956,996
-------------
U.S. Government Securities (7.4%)
United States of America Treasury,
5.98% due June 30, 1996 5,000,000 5,006,197
United States of America Treasury,
6.30% due August 31, 1996 5,000,000 5,020,609
-------------
10,026,806
-------------
TOTAL INVESTMENTS (100%)
(COST $135,795,380) $ 135,836,086
=============
</TABLE>
NOTES
(A) At June 30, 1995, net unrealized appreciation for all securities was
$40,706. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over cost of $48,770
and aggregate gross unrealized depreciation for all securities in which
there was an excess of cost over market value of $8,064.
See Notes to Financial Statements
-23-
<PAGE> 26
THE TRAVELERS
TIMED AGGRESSIVE
STOCK ACCOUNT
FOR VARIABLE ANNUITIES
The Travelers Timed Aggressive Stock Account is managed to provide diversified
exposure to the mid- and smaller-cap sector of the U.S. equity market, while at
all times maintaining a highly marketable portfolio of common stocks and
related financial instruments in order to accommodate cash flows associated
with market timing moves. The performance benchmark for this portfolio is the
Standard & Poor's 400 MidCap Stock Index ("S&P 400").
During the first six months of 1995, the S&P 400 provided a return of 17.6%,
including dividends. Over this same period, the Travelers Timed Aggressive
Stock Account achieved a total return of 20.0%, before fees and expenses. Net
of fees and expenses, the portfolio's total return of 18.4% compared favorably
to the 17.1% average total return for variable annuity stock accounts in the
Lipper MidCap category. During this period, one market timing signal was
implemented.
During the first half, the most significant contribution to performance came
from stock selection in the Technology, Producer Durables and Finance sectors.
In the Technology sector, positions in Applied Materials (+ 115%), Cypress
Semiconductor (+84%), Atmel (+70%), and KLA Instruments (+61%) enabled the
portfolio to participate fully in the continued strength of the semiconductor
group. In the Producer Durables sector, the portfolio benefited from
overweighted positions in McDonnell Douglas (+61%) and Sundstrand (+34%). In
the Finance sector, performance was helped by overweighted positions in
specialty credit card issuers such as First USA (+36%) and MBNA (+48%); in
better performing bank stocks such as Signet (+48%), Mercantile Bancorp (+41%)
and Bank of New York (+37%); and in selected consumer finance and insurance
names such as Green Tree Financial (+47%) and SunAmerica (+37%).
During the first six months, S&P 400 futures were used to obtain equity
exposure for a portion of the Travelers Timed Aggressive Stock Account. The
value of the stock index futures position ranged between 7% and 49% of the
total net asset value of the account, depending upon cash flows related to the
market timing program. The combination of S&P 400 futures and high quality
money market securities can be expected to provide a return that is very close
to that of the actual S&P 400.
Given the equity market's strong advance since November and the likelihood of
slower economic growth through the remainder of the year, we believe that
careful stock selection is critical at this stage of the market cycle. In the
Technology sector, we have focused on stocks that exhibit improving
fundamentals, but which still trade at a reasonable multiple of their expected
growth rates, including Cabletron Systems in the networking group, Symbol
Technologies in the electronics group and KLA Instruments in the semiconductor
equipment group. In the Materials sector, we have emphasized Morton
International and Praxair. In the Consumer sector, our major overweights
include Nike and Coca-Cola Enterprises. In the Finance sector, we have
emphasized Green Tree Financial, Star Banc and First Bank Systems for relative
value and earnings momentum.
-24-
<PAGE> 27
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $56,863,501) . $ 62,541,768
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281,664
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,141
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,016
Investment securities sold . . . . . . . . . . . . . . . . . . . . 774,783
Purchase payments and transfers from other Travelers accounts . . 62,498
Variation on futures margin . . . . . . . . . . . . . . . . . . . 17,100
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . 63,784,970
------------
LIABILITIES:
Payables:
Investment securities purchased . . . . . . . . . . . . . . . . . 62,432
Contract surrenders and transfers to other Travelers accounts . . 361,501
Investment management and advisory fees . . . . . . . . . . . . . 2,284
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . 2,172
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . 8,678
------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . 437,067
------------
NET ASSETS:
(Applicable to 31,374,713 units outstanding at $2.019 per unit) . . . $ 63,347,903
============
</TABLE>
See Notes to Financial Statements
-25-
<PAGE> 28
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 382,750
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,343
------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 528,093
EXPENSES:
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . . 291,774
Investment management and advisory fees . . . . . . . . . . . . . . . 83,703
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . 291,774
------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 667,251
------------
Net investment loss . . . . . . . . . . . . . . . . . . . . . . (139,158)
------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . . 44,095,836
Cost of investment securities sold . . . . . . . . . . . . . . . . 40,624,705
------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . 3,471,131
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1994 . . . . . . . . . . . . . . . 954,837
Unrealized gain at June 30, 1995 . . . . . . . . . . . . . . . . . 5,678,267
------------
Net change in unrealized gain for the period . . . . . . . . . 4,723,430
------------
Net realized gain and change in unrealized gain . . . . . . 8,194,561
------------
Net increase in net assets resulting from operations . . . . . . . . . $ 8,055,403
============
</TABLE>
See Notes to Financial Statements
-26-
<PAGE> 29
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (139,158) $ (669,893)
Net realized gain from investment security transactions . . . . . . . 3,471,131 3,067,643
Net change in unrealized gain on investment securities . . . . . . . 4,723,430 (9,552,884)
------------- -------------
Net increase (decrease) in net assets resulting from operations . . 8,055,403 (7,155,134)
------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 2,110,269 and 11,273,841 units, respectively) . . . 3,900,195 19,879,301
Participant transfers from other Travelers accounts
(applicable to 182,343 and 4,166,181 units, respectively) . . . . 327,629 7,429,218
Market timing transfers from other Travelers timed accounts
(applicable to 9,151,880 and 12,495,931 units, respectively) . . . 17,904,838 22,750,505
Administrative charges
(applicable to 35,370 and 105,768 units, respectively) . . . . . . (72,121) (176,362)
Contract surrenders
(applicable to 658,884 and 2,506,410 units, respectively) . . . . (1,221,285) (4,425,394)
Participant transfers to other Travelers accounts
(applicable to 4,452,317 and 19,093,231 units, respectively) . . . (8,317,055) (33,573,248)
Market timing transfers to other Travelers timed accounts
(applicable to 24,144,775 units) . . . . . . . . . . . . . . . . . - (40,963,059)
Other payments to participants
(applicable to 32,515 and 35,178 units, respectively) . . . . . . (58,950) (62,046)
------------- -------------
Net increase (decrease) in net assets resulting from unit
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 12,463,251 (29,141,085)
------------- -------------
Net increase (decrease) in net assets . . . . . . . . . . . . . 20,518,654 (36,296,219)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 42,829,249 79,125,468
------------- -------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,347,903 $ 42,829,249
============= =============
</TABLE>
See Notes to Financial Statements
-27-
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Timed Aggressive Stock Account for Variable Annuities ("Account
TAS") is a separate account of The Travelers Insurance Company ("The
Travelers"), an indirect wholly owned subsidiary of Travelers Group Inc., and
is available for funding certain variable annuity contracts issued by The
Travelers. Account TAS is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment company.
Participants in Account TAS have entered into market timing service agreements
with an affiliate of The Travelers, which provide for the transfer of
participants' funds to certain other timed accounts of The Travelers, at the
discretion of the market timer.
The following is a summary of significant accounting policies consistently
followed by Account TAS in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of business
of the New York Stock Exchange on the last business day of the period;
securities traded on the over-the-counter market and listed securities with no
reported sales are valued at the mean between the last-reported bid and asked
prices or on the basis of quotations received from a reputable broker or other
recognized source.
When market quotations are not considered to be readily available for long-term
corporate bonds and notes, such investments are generally stated at fair value
on the basis of valuations furnished by a pricing service. These valuations
are determined for normal institutional-size trading units of such securities
using methods based on market transactions for comparable securities and
various relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities, for which
pricing services are not readily available are valued by management at prices
which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued by computing a market value based upon quotations from dealers
or issuers for securities of a similar type, quality and maturity.
FUTURES CONTRACTS. Account TAS may use stock index futures contracts, and may
also use interest rate futures contracts, as a substitute for the purchase or
sale of individual securities. When Account TAS enters into a futures
contract, it agrees to buy or sell a specified index of stocks, or debt
securities, at a future time for a fixed price, unless the contract is closed
prior to expiration. Account TAS is obligated to deposit with a broker an
"initial margin" equivalent to a percentage of the face, or notional value of
the contract.
It is Account TAS's practice to hold cash and cash equivalents (including
short-term investments) in an amount at least equal to the notional value of
outstanding purchased futures contracts, less the initial margin. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by Account TAS are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statement of Investments. However, when
Account TAS holds open futures contracts, it assumes a market risk generally
equivalent to the underlying market risk of change in the value of the
specified indexes or debt securities associated with the futures contract.
OPTIONS. Account TAS may purchase index or individual equity put or call
options, thereby obtaining the right to sell or buy a fixed number of shares of
the underlying asset at the stated price on or before the stated expiration
date. Account TAS may sell the options before expiration. Options held by
Account TAS are listed on either national securities exchanges or on
over-the-counter markets, and are short-term contracts with a duration of less
than nine months. The market value of the options will be the latest sale
price at the close of the New York Stock Exchange, or in the absence of such
sale, the latest bid quotation.
-28-
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
REPURCHASE AGREEMENTS. When Account TAS enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price), the repurchase price of the
securities will generally equal the amount paid by Account TAS plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide to Account TAS securities (collateral) whose market value,
including accrued interest, will be at least equal to 102% of the repurchase
price. Account TAS monitors the value of collateral on a daily basis.
Repurchase agreements will be limited to transactions with national banks and
reporting broker dealers believed to present minimal credit risks. Account
TAS's custodian will take actual or constructive receipt of all securities
underlying repurchase agreements until such agreements expire.
FEDERAL INCOME TAXES. The operations of Account TAS form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986, as
amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account TAS. Account TAS
is not taxed as a "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
2. INVESTMENTS
Purchases and sales of securities other than short-term investments aggregated
$34,172,453 and $28,489,543, respectively, for the six months ended June 30,
1995. Realized gains and losses from investment transactions are reported on
an identified-cost basis.
At June 30, 1995, Account TAS held 114 open S&P 400 MidCap Index futures
contracts with a maturity date of September 15, 1995. The underlying face
value, or notional value, of these contracts at June 30, 1995, amounted to
$11,374,350. In connection with these contracts, short-term investments with a
par value of $570,000 had been pledged as margin deposits.
Net realized gains resulting from futures contracts were $735,489 and $63,616
for the six months ended June 30, 1995 and the year ended December 31, 1994,
respectively. These gains are included in the net realized gain from
investment security transactions on both the Statement of Operations and the
Statement of Changes in Net Assets. The cash settlement for June 30, 1995, is
shown on the Statement of Assets and Liabilities as a receivable for variation
on futures margin.
3. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at annual rates
which start at 0.50% and decrease, as net assets increase, to 0.15% of Account
TAS's average net assets. These fees are paid to The Travelers Investment
Management Company, an indirect wholly owned subsidiary of Travelers Group Inc.
A market timing fee equivalent on an annual basis to 1.25% of the net assets of
Account TAS is deducted for market timing services. The Travelers deducts the
fee daily and, in turn, pays the fee to Copeland Financial Services, Inc., a
registered investment adviser and an affiliate of The Travelers which provides
market timing services to subscribing participants in Account TAS.
Insurance charges are paid to The Travelers for the mortality and expense risks
assumed by The Travelers. These charges are equivalent to 1.25% of the average
net assets of Account TAS on an annual basis. Additionally, for contracts in
the accumulation phase, a semi-annual charge of $15 (prorated for partial
periods and the level of participation in other separate accounts of The
Travelers) is deducted from participant account balances and paid to The
Travelers to cover administrative charges.
No sales charge is deducted from participant purchase payments when they are
received. However, The Travelers generally assesses a 5% contingent deferred
sales charge if a participant's purchase payment is surrendered within five
years of its payment date. Contract surrender payments are stated prior to the
deduction of $26,941 and $101,444 in satisfaction of contingent deferred sales
charges for the six months ended June 30, 1995 and the year ended December 31,
1994, respectively.
-29-
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
4. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding
throughout each period.)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- ----------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . $ .020 $ .036 $ .037 $ .041 $ .044 $ .045
Operating expenses . . . . . . . . . . . . . . . . . . . .026* .049* .048* .043* .039* .073*
------ ------ ------ ------ ------ ------
Net investment income (loss) . . . . . . . . . . . . . . (.006) (.013) (.011) (.002) .005 (.028)
Unit value at beginning of period . . . . . . . . . . . . 1.706 1.838 1.624 1.495 1.136 1.189
Net realized and change in unrealized gains (losses) . . .319 (.119) .225 .131 .354 (.025)
------ ------ ------ ------ ------ ------
Unit value at end of period . . . . . . . . . . . . . . . $2.019 $1.706 $1.838 $1.624 $1.495 $1.136
====== ====== ====== ====== ====== ======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value . . . . . . . . . . .31 (.13) .21 .13 .36 (.05)
Ratio of operating expenses to average net assets** . . . 2.86%* 2.80%* 2.82%* 2.93%* 2.99%* 2.64%*
Ratio of net investment income to average net assets** . (.64)% (.72)% (.80)% (.12)% .37% 3.73%
Units outstanding at end of period (thousands) . . . . . 31,375 25,109 43,059 20,225 19,565 5,585
Portfolio turnover rate . . . . . . . . . . . . . . . . . 67% 142% 71% 269% 261% -
</TABLE>
* Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner and were not recorded in the
financial statements of Account TAS, or by contractual surrender from the
contract to the extent allowed under federal tax law.
** Annualized.
5. SUBSEQUENT EVENT
On July 10, 1995, $19,526,458 of the net assets of The Travelers Timed
Short-Term Bond Account for Variable Annuities were transferred to The
Travelers Timed Aggressive Stock Account for Variable Annuities as a result of
a transfer order made by a market timer on behalf of subscribing participants.
-30-
<PAGE> 33
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (82.1%)
AGRICULTURE (0.3%)
Dole Food Co., Inc. 5,900 $ 171,837
-----------
AMUSEMENTS (1.1%)
Circus Circus Enterprises, Inc. (A) 3,300 116,325
King World Productions (A) 2,800 113,400
Mirage Resorts, Inc. (A) 15,700 480,813
-----------
710,538
-----------
BANKING (6.6%)
Bank of New York, Inc. 3,000 121,125
Comerica, Inc. 9,000 289,125
Crestar Financial Corp. 3,500 171,500
Fifth Third Bancorp 6,300 355,950
First Bank Systems, Inc. 13,400 549,400
First Hawaiian, Inc. 5,200 137,800
First Security Corp. 8,000 226,000
First Tennessee National Corp. 2,400 111,151
Marshall & Isley Corp. 9,300 210,994
Mercantile Bancorp 4,200 188,475
Meridian Bancorp, Inc. 5,700 195,225
Midlantic Corp. 4,700 187,413
Northern Trust Corp. 6,000 240,000
Signet Banking Corp. 6,700 146,563
Southtrust Corp. 13,800 320,850
Star Banc Corp. 5,600 257,600
State Street Boston Corp. 3,100 114,313
UJB Financial Corp. 10,400 315,900
-----------
4,139,384
-----------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (6.8%)
Biogen, Inc. (A) 4,000 178,500
Cabot Corp. 6,300 332,325
Centocor, Inc. (A) 13,100 188,312
Chiron Corp. (A) 3,367 218,013
Eastman Chemical Company 2,000 119,000
Ecolab, Inc. 3,300 80,850
Forest Labs, Inc. (A) 7,900 350,562
Genzyme Corp. 2,700 108,337
Geon Co. 5,700 163,875
Georgia Gulf Corp. (A) 4,100 133,762
International Flavors & Fragrances 2,000 99,500
IMC Fertilizer Group, Inc. 2,900 156,962
IVAX Corp. 5,500 135,438
Loctite Corp. 3,700 168,350
Lubrizol Corp. 3,800 134,425
Morton International, Inc. 6,400 187,200
Mylan Labs, Inc. 10,800 332,100
Olin Corp. 5,300 272,950
Praxair, Inc. 8,200 205,000
Smith International, Inc. (A) 9,700 162,475
Sterling Chemicals, Inc. (A) 14,300 166,238
Union Carbide Corp. 3,700 123,488
Wellman, Inc. 3,600 98,550
Witco Chemical Corp. 3,400 109,650
-----------
4,225,862
-----------
COMMUNICATION (2.9%)
Century Telephone Enterprises 12,100 343,337
Comsat Corp. 4,700 92,237
Frontier Corp. 12,000 288,000
Lincoln Telecommunications 9,300 145,313
Nextel Communications (A) 15,800 222,187
Southern New England Telephone 6,000 211,500
Telephone & Data Systems, Inc. 4,500 163,688
Worldcom, Inc. (A) 14,000 377,125
-----------
1,843,387
-----------
CONTRACTORS (0.6%)
Fluor Corp. 4,200 218,400
Halliburton Co. 4,000 143,000
JWP, Inc. (A) 32,200 644
-----------
362,044
-----------
ELECTRICAL AND ELECTRONIC MACHINERY (7.3%)
Altera Corp. (A) 4,500 195,187
American Power Conversion (A) 4,400 100,925
Amphenol Corp. (A) 9,800 285,425
Analog Devices, Inc. (A) 10,950 372,300
Antec Corp. (A) 7,500 122,344
Atmel Corp. (A) 8,000 443,500
ADC Telecommunications, Inc. (A) 5,300 188,812
Cidco, Inc. (A) 4,700 147,756
Cypress Semiconductor (A) 10,700 433,350
Glenayre Technologies, Inc. (A) 1,700 87,125
Hubbell, Inc. 1,500 84,750
Linear Technology Corp. 6,300 414,225
LSI Logic Corp. (A) 10,400 406,900
Maxim Integrated Products (A) 3,000 153,000
Molex, Inc. 12,800 494,400
Sensormatic Electronics Corp. 8,000 284,000
Sunbeam Corp. 6,000 83,250
Tellabs, Inc. (A) 3,700 177,831
Xilinx, Inc. (A) 1,200 112,650
-----------
4,587,730
-----------
FINANCE (5.0%)
American Financial Group, Inc. 8,800 228,800
Bear Stearns Cos., Inc. 5,700 121,837
Charles Schwab Corp. 4,000 173,500
Finova Group, Inc. 3,400 119,000
Franklin Resources, Inc. 4,200 186,900
Green Tree Financial Corp. 11,900 528,062
Hospitality Franchise Systems (A) 10,000 346,250
Household International 2,700 133,650
Lehman Brothers Holding, Inc. 10,800 236,250
Morgan Stanley Group, Inc. 9,100 737,100
Paine Webber Group 9,200 173,650
Rouse Co. 8,000 157,500
-----------
3,142,499
-----------
</TABLE>
-31-
<PAGE> 34
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
---------- -----------
<S> <C> <C>
FOOD (2.6%)
Coca-Cola Enterprises, Inc. 21,700 $ 474,687
Dean Foods Co. 2,400 67,200
Flowers Industries 6,700 132,325
IBP, Inc. 5,900 256,650
Lancaster Colony Corp. 5,100 181,050
McCormick & Co. 5,000 108,125
Ralston-Purina Group 3,000 153,000
Tyson Foods, Inc. 9,700 224,313
-----------
1,597,350
-----------
FURNITURE AND FIXTURES (0.3%)
Leggett & Platt, Inc. 4,500 198,000
-----------
INSURANCE (4.2%)
Aon Corp. 15,200 566,200
AFLAC, Inc. 12,600 551,250
Cincinnati Financial Corp. 1,900 105,687
Foundation Health Corp. (A) 5,300 143,100
Healthcare Compare (A) 7,800 234,000
Healthsource, Inc. (A) 3,400 119,000
PacifiCare Health Systems (A) 1,500 76,313
Progressive Corp., Ohio 4,200 161,175
Saint Paul Companies 3,500 172,375
Transatlantic Holdings, Inc. 4,500 292,500
Value Health, Inc. (A) 6,400 206,400
-----------
2,628,000
-----------
MACHINERY (5.0%)
Bay Networks, Inc. (A) 10,000 412,500
Black & Decker Corp. 3,300 101,887
Cabletron System, Inc. (A) 3,600 191,700
Dell Computer Corp. (A) 6,600 397,237
Digital Equipment Corp. (A) 2,400 97,800
Exabyte Corp. (A) 7,400 102,212
EMC Corp. (A) 25,600 620,800
Nordson Corp. 2,100 115,763
Seagate Technology (A) 3,800 149,150
Silicon Graphics, Inc. (A) 3,800 151,525
Stewart & Stevenson Services, Inc. 2,600 93,762
Symbol Technologies (A) 6,900 264,788
Tecumseh Products Co. 2,100 91,875
3Com Corp. (A) 2,300 154,100
Varity Corp. (A) 4,800 211,200
-----------
3,156,299
-----------
METAL PRODUCTS (1.0%)
Amax, Inc. (A) 5,000 155,625
Ball Corp. 4,700 163,912
Bethlehem Steel Corp. (A) 9,700 157,625
Phelps Dodge Corp. 2,600 153,400
-----------
630,562
-----------
MINING (0.7%)
Freeport McMoran, Inc. (A) 14,400 253,800
Vulcan Materials 3,400 185,300
-----------
439,100
-----------
MISCELLANEOUS MANUFACTURING (3.7%)
Biomet, Inc. (A) 13,400 206,862
Callaway Golf Co. 5,800 87,000
Cordis Corp. (A) 4,000 268,000
International Game Technology 12,700 195,262
KLA Instruments Corp. (A) 3,700 286,288
Litton Industries (A) 5,000 184,375
Measurex Corp. 5,900 179,213
Medtronics, Inc. 2,200 169,675
Stryker Corp. 5,100 195,075
Teradyne, Inc. (A) 1,800 117,675
Thermo Electronics Corp. (A) 7,850 315,963
United States Surgical Corp. 5,800 121,075
-----------
2,326,463
-----------
OIL & GAS (1.4%)
Anadarko Petroleum 6,900 297,562
Apache Corp. 11,100 303,862
Energy Services Co. (A) 12,200 193,675
Noble Affiliates, Inc. 4,300 109,650
-----------
904,749
-----------
PAPER AND ALLIED PRODUCTS (2.1%)
Consolidated Papers, Inc. 2,600 149,825
Mead Corp. 3,800 225,625
Sonoco Products Co. 12,930 320,018
Stone Container Corp. (A) 6,000 127,500
Temple Inland, Inc. 3,000 142,875
Union Camp Corp. 2,700 156,263
Willamette Industries 3,400 187,850
-----------
1,309,956
-----------
PETROLEUM REFINING AND
RELATED INDUSTRIES (1.3%)
Ashland Oil, Inc. 2,900 101,862
Lyondell Petrochemical 11,500 294,688
Murphy Oil Corp. 4,700 192,700
Sun Co., Inc. 3,400 93,075
Tosco Corp. 4,200 133,875
-----------
816,200
-----------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (1.8%)
A.H. Belo 800 24,500
Franklin Quest Co. (A) 3,000 72,000
Lee Enterprises, Inc. 5,500 209,688
Reynolds & Reynolds Co. 4,100 120,950
Times Mirror Co. 1,252 29,892
Tribune Co. 2,800 171,850
Washington Post Co. 1,900 495,900
-----------
1,124,780
-----------
</TABLE>
-32-
<PAGE> 35
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
---------- -----------
<S> <C> <C>
RETAIL (3.5%)
Albertsons, Inc. 5,200 $ 154,700
Ann Taylor Stores Corp. (A) 9,700 225,525
Brinker International, Inc. (A) 4,500 77,625
Circuit City Stores, Inc. 3,000 94,875
Dillard Department Stores 1,700 49,937
Dollar General Corp. 9,175 290,159
Federated Dept. Stores, Inc. (A) 4,500 115,875
Hannaford Brothers Co. 3,700 105,450
Kohls Corp. (A) 2,700 123,188
Luby's Cafeterias, Inc. 5,900 118,738
Morrison Restaurants, Inc. 4,000 96,000
Office Depot, Inc. (A) 14,900 419,063
Safeway, Inc. (A) 4,000 149,500
Tandy Corp. 2,100 108,938
Waban, Inc. (A) 3,500 52,063
-----------
2,181,636
-----------
RUBBER AND PLASTIC PRODUCTS (0.6%)
Nike, Inc. 1,900 159,600
Premark International, Inc. 3,600 186,750
-----------
346,350
-----------
SERVICES (6.3%)
Adobe Systems, Inc. 6,400 372,800
Cadence Design System, Inc. (A) 8,300 268,712
Columbia/HCA Healthcare Corp. 2,400 103,800
Compuware Corp. (A) 4,700 145,112
Coram Healthcare Corp. (A) 11,900 168,087
CUC International, Inc. (A) 3,600 151,200
Equifax, Inc. 11,900 397,162
First Financial Management Corp. 6,200 530,100
Healthcare & Retirement CP (A) 7,900 231,075
Health Management Assoc., Inc. (A) 5,800 169,650
Informix Corp. (A) 10,400 263,250
LEGENT Corp. (A) 3,600 157,725
Omnicom Group, Inc. 3,600 218,250
Ornda Healthcorp (A) 11,200 192,500
Parametric Technology Co. (A) 7,200 357,300
Paychex, Inc. 6,600 240,900
-----------
3,967,623
-----------
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.2%)
Owens Corning Fiberglass (A) 2,600 95,875
-----------
TEXTILE MILL PRODUCTS (0.8%)
Cintas Corp. 2,200 78,650
Shaw Industries, Inc. 11,700 198,900
Unifi, Inc. 8,800 211,200
-----------
488,750
-----------
TRANSPORTATION (1.3%)
AMR, Inc. (A) 2,200 164,175
Illinois Central Corp. 9,000 310,500
Kansas City Southern Industries, Inc. 3,100 115,475
Pittston Co. 8,300 199,200
-----------
789,350
-----------
TRANSPORTATION MANUFACTURING (2.1%)
Breed Techs, Inc. 7,400 177,600
Federal Signal Corp. 5,100 110,287
Harley Davidson, Inc. 8,600 209,625
McDonnell Douglas Corp. 3,000 230,250
Sundstrand Corp. 5,700 340,575
Trinity Industries 6,700 222,775
-----------
1,291,112
-----------
UTILITIES (10.4%)
Allegheny Power System, Inc. 12,100 284,350
AES Corp. (A) 7,600 144,400
Brooklyn Union Gas Co. 6,300 165,375
California Energy Co. (A) 12,000 196,500
Central Louisiana Electric Co. 4,500 105,750
CIPSCO, Inc. 5,200 155,350
CMS Energy Corp. 8,600 211,775
Florida Progress Corp. 8,000 250,000
General Public Utilities 6,200 184,450
Illinova Corp. 16,600 421,225
Kansas City Power & Light Co. 6,700 153,263
Louisville Gas & Electric Co. 4,200 163,800
MCN Corp. 11,600 229,100
New England Electric System 10,800 372,600
Northeast Utilities, Inc. 19,900 447,750
NIPSCO Industries, Inc. 10,800 367,200
Oklahoma Gas & Electric Co. 5,500 193,188
Panhandle Eastern Corp. 6,500 158,438
Pinnacle West Capital Corp. (A) 16,500 404,250
Portland General Electric Co. 12,300 272,138
Potomac Electric Power Co. 4,800 103,200
Public Service of New Mexico (A) 14,100 200,925
Public Service Co. of Colorado 6,900 224,250
SCANA Corp. 15,400 344,575
TECO Energy, Inc. 14,300 312,813
Wisconsin Energy 15,000 420,000
-----------
6,486,665
-----------
WHOLESALE TRADE (2.2%)
Arrow Electronics (A) 8,100 402,975
Avnet, Inc. 3,600 174,150
Cardinal Health, Inc. 7,600 359,100
International Dairy Q (A) 8,600 167,700
Staples, Inc. (A) 8,600 248,862
-----------
1,352,787
-----------
TOTAL COMMON STOCKS
(COST $45,634,843) 51,314,888
-----------
</TABLE>
-33-
<PAGE> 36
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (17.9%)
COMMERCIAL PAPER (16.8%)
Bausch & Lomb, Inc.,
5.74% due September 1, 1995 $1,500,000 $ 1,478,461
Ciesco LP,
5.89% due July 18, 1995 1,500,000 1,489,391
Coca-Cola Co.,
5.74% due August 25, 1995 1,500,000 1,480,130
Deutsche Bank Financial, Inc.,
5.87% due July 5, 1995 1,500,000 1,492,627
Dresdner U S Financial, Inc.,
5.83% due September 5, 1995 1,000,000 984,921
PepsiCo, Inc.,
5.87% due July 6, 1995 1,400,000 1,392,879
PHH Corp.,
5.89% due July 5, 1995 1,500,000 1,492,606
Teco Financial Inc.,
5.84% due July 24, 1995 725,000 719,170
-----------
10,530,185
-----------
U.S. GOVERNMENT SECURITIES (1.1%)
United States of America Treasury,
5.57% due September 21, 1995 (C) 500,000 492,004
United States of America Treasury,
6.05% due September 21, 1995 (C) 100,000 94,843
United States of America Treasury,
6.57% due September 21, 1995 35,000 33,322
United States of America Treasury,
6.70% due September 21, 1995 50,000 47,871
United States of America Treasury,
6.82% due September 21, 1995 20,000 19,114
United States of America Treasury,
6.89% due September 21, 1995 10,000 9,541
-----------
696,695
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $11,228,658) 11,226,880
-----------
<CAPTION>
NOTIONAL MARKET
VALUE VALUE
---------- -----------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 400 MidCap Index,
Exp. September, 1995 (D) $11,374,350 -
------------
TOTAL INVESTMENTS (100%)
(COST $56,863,501) (B) $ 62,541,768
============
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) At June 30, 1995, net unrealized appreciation for all securities was
$5,678,267. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over
cost of $6,820,259 and aggregate gross unrealized depreciation for all
securities in which there was an excess of cost over market value of
$1,141,992.
(C) Par value of $570,000 pledged to cover margin deposits on futures
contracts.
(D) As more fully discussed in Note 1 to the financial statements, it is
Account TAS's practice to hold cash and cash equivalents (including
short-term investments) at least equal to the underlying face value, or
notional value, of outstanding purchased futures contracts, less the
initial margin. Account TAS uses futures contracts as a substitute for
holding individual securities.
See Notes to Financial Statements
-34-
<PAGE> 37
THE TRAVELERS
TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
The rally that began in November continued through the first half of 1995.
Yields on U.S. Treasuries between one and ten years to maturity rallied 150
basis points or more, while the bond lagged, rallying only 126 basis points.
The yield curve steepened, with 2-year to 30-year Treasuries increasing 82
basis points, while trading in a range of 65 to 100 basis points over the
month. The five-year part of the yield curve was the best performer on a
duration-adjusted basis, as investors bought this issue heavily to adjust
portfolio durations. Mortgage-backed securities lagged behind similar duration
government bonds as yield volatility rose and fears of the next refinancing
wave prompted the investment community to shy away from this sector. During the
first half of the year, the Lehman Mortgage Index returned 10.7% versus the
11.8% return for the Lehman Government Corporate Bond Index.
On February 15, 1995, a "Buy" signal was received from the market timer, and
$16 million was received from the Timed Short-Term Bond Account. Between then
and March 31, 1995 yields on ten-year Treasuries declined 21 basis points,
adding price gains to coupon income.
When a "Buy" is in place, this fund invests primarily in long-term government
securities and in agency mortgage-backed securities. As of June 30, 1995, the
portfolio consisted of 40% Treasuries and 47% agency mortgage-backed securities
pass throughs, with the remainder in obligations of Federal agency securities.
We are keeping the interest rate exposure of the portfolio close to the
benchmark level. We will be looking to increase the weighting of
mortgage-backed securities in the portfolio, particularly current coupons. An
increased weighting of agency pass throughs will be financed primarily from
sales of U.S. Treasuries.
-35-
<PAGE> 38
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $15,284,470) . $ 16,406,345
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217,609
Purchase payments and transfers from other Travelers accounts . . 6,187
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . 16,630,141
------------
LIABILITIES:
Cash overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,675
Payables:
Contract surrenders and transfers to other Travelers accounts . . 22,189
Investment management and advisory fees . . . . . . . . . . . . . 913
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . 568
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . 2,282
------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . 56,627
------------
NET ASSETS:
(Applicable to 12,468,323 units outstanding at $1.330 per unit) . . . $ 16,573,514
============
</TABLE>
See Notes to Financial Statements
-36-
<PAGE> 39
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 444,236
EXPENSES:
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,084
Investment management and advisory fees . . . . . . . . . . . . . . . 30,445
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . 76,084
-----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 182,613
------------
Net investment income . . . . . . . . . . . . . . . . . . . . . 261,623
------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . . 5,404,445
Cost of investment securities sold . . . . . . . . . . . . . . . . 5,308,883
-----------
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . 95,562
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1994 . . . . . . . . . . . . . . . -
Unrealized gain at June 30, 1995 . . . . . . . . . . . . . . . . . 1,121,875
-----------
Net change in unrealized gain for the period . . . . . . . . . 1,121,875
------------
Net realized gain and change in unrealized gain . . . . . . 1,217,437
------------
Net increase in net assets resulting from operations . . . . . . . . . $ 1,479,060
============
</TABLE>
See Notes to Financial Statements
-37-
<PAGE> 40
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 261,623 $ 36,951
Net realized gain from investment security transactions . . . . . . . 95,562 1,513,641
Net change in unrealized gain on investment securities . . . . . . . 1,121,875 (1,920,043)
------------ ------------
Net increase (decrease) in net assets resulting from operations . 1,479,060 (369,451)
------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 458,512 and 343,897 units, respectively) . . . . . 580,575 426,588
Participant transfers from other Travelers accounts
(applicable to 56,537 and 485,822 units, respectively) . . . . . . 70,032 602,519
Market timing transfers from other Travelers timed accounts
(applicable to 13,283,463 units) . . . . . . . . . . . . . . . . . 16,144,323 -
Administrative charges
(applicable to 9,143 and 13 units, respectively) . . . . . . . . . (12,246) (19)
Contract surrenders
(applicable to 311,288 and 141,875 units, respectively) . . . . . (396,119) (175,642)
Participant transfers to other Travelers accounts
(applicable to 1,009,758 and 1,223,515 units, respectively) . . . (1,292,111) (1,510,001)
Market timing transfers to other Travelers timed accounts
(applicable to 19,671,603 units) . . . . . . . . . . . . . . . . . - (23,908,276)
------------ ------------
Net increase (decrease) in net assets resulting from unit
transactions . . . . . . . . . . . . . . . . . . . . . . . . . 15,094,454 (24,564,831)
------------ ------------
Net increase (decrease) in net assets . . . . . . . . . . . . 16,573,514 (24,934,282)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . - 24,934,282
------------ ------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,573,514 $ -
============ ============
</TABLE>
See Notes to Financial Statements
-38-
<PAGE> 41
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Timed Bond Account for Variable Annuities ("Account TB") is a
separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Travelers Group Inc., and is available for
funding certain variable annuity contracts issued by The Travelers. Account TB
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. Participants in Account
TB have entered into market timing service agreements with an affiliate of The
Travelers, which provide for the transfer of participants' funds to certain
other timed accounts of The Travelers, at the discretion of the market timer.
The following is a summary of significant accounting policies consistently
followed by Account TB in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of business
of the New York Stock Exchange on the last business day of the period;
securities traded on the over-the-counter market and listed securities with no
reported sales are valued at the mean between the last-reported bid and asked
prices or on the basis of quotations received from a reputable broker or other
recognized source.
When market quotations are not considered to be readily available for long-term
corporate bonds and notes, such investments are generally stated at fair value
on the basis of valuations furnished by a pricing service. These valuations
are determined for normal institutional-size trading units of such securities
using methods based on market transactions for comparable securities and
various relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities, for which
pricing services are not readily available are valued by management at prices
which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued by computing a market value based upon quotations from dealers
or issuers for securities of a similar type, quality and maturity.
FUTURES CONTRACTS. Account TB may use interest rate futures contracts as a
substitute for the purchase or sale of individual securities. When Account TB
enters into a futures contract, it agrees to buy or sell specified debt
securities, at a future time for a fixed price, unless the contract is closed
prior to expiration. Account TB is obligated to deposit with a broker an
"initial margin" equivalent to a percentage of the face, or notional value of
the contract.
It is Account TB's practice to hold cash and cash equivalents (including
short-term investments) in an amount at least equal to the notional value of
outstanding purchased futures contracts, less the initial margin. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by Account TB are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statement of Investments. However, when
Account TB holds open futures contracts, it assumes a market risk generally
equivalent to the underlying market risk of change in the value of the debt
securities associated with the futures contract.
WHEN-ISSUED SECURITIES. Account TB may from time to time purchase new-issue
Government or Agency securities on a "when-issued" basis. The prices are fixed
at the time the commitment is made to purchase these securities. Delivery and
payment may be at a future date beyond customary settlement time. It is the
practice of Account TB to make when-issued purchases for settlement no more
than 90 days beyond the commitment date.
The commitment to purchase a when-issued security is treated as a senior
security and will be valued and reflected in Account TB's net asset value daily
from the commitment date. While it is Account TB's intention to take physical
delivery of these securities, offsetting transactions may be made prior to
settlement.
Account TB does not make payment or begin to accrue interest on these
securities until settlement date. When Account TB commits to purchase a
security on a when-issued basis, it identifies and segregates high-grade money
market instruments and other liquid securities equal in value to the purchase
cost of the when-issued securities.
-39-
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
REPURCHASE AGREEMENTS. When Account TB enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price), the repurchase price of the
securities will generally equal the amount paid by Account TB plus a negotiated
interest amount. The seller under the repurchase agreement will be required to
provide to Account TB securities (collateral) whose market value, including
accrued interest, will be at least equal to 102% of the repurchase price.
Account TB monitors the value of collateral on a daily basis. Repurchase
agreements will be limited to transactions with national banks and reporting
broker dealers believed to present minimal credit risks. Account TB's
custodian will take actual or constructive receipt of all securities underlying
repurchase agreements until such agreements expire.
FEDERAL INCOME TAXES. The operations of Account TB form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986, as
amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account TB. Account TB
is not taxed as a "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date. Interest
income is recorded on the accrual basis.
2. INVESTMENTS
Purchases and sales of securities other than short-term investments aggregated
$16,905,244 and $1,716,343, respectively, for the six months ended June 30,
1995. Realized gains and losses from investment transactions are reported on
an identified-cost basis.
3. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at annual rates
which start at 0.50% and decrease, as net assets increase, to 0.25% of Account
TB's average net assets. These fees are paid to Travelers Asset Management
International Corporation, an indirect wholly owned subsidiary of Travelers
Group Inc.
A market timing fee equivalent on an annual basis to 1.25% of the net assets of
Account TB is deducted for market timing services. The Travelers deducts the
fee daily and, in turn, pays the fee to Copeland Financial Services, Inc., a
registered investment adviser and an affiliate of The Travelers which provides
market timing services to subscribing participants in Account TB.
Insurance charges are paid to The Travelers for the mortality and expense risks
assumed by The Travelers. These charges are equivalent to 1.25% of the average
net assets of Account TB on an annual basis. Additionally, for contracts in
the accumulation phase, a semi-annual charge of $15 (prorated for partial
periods and the level of participation in other separate accounts of The
Travelers) is deducted from participant account balances and paid to The
Travelers to cover administrative charges.
No sales charge is deducted from participant purchase payments when they are
received. However, The Travelers generally assesses a 5% contingent deferred
sales charge if a participant's purchase payment is surrendered within five
years of its payment date. Contract surrender payments are stated prior to the
deduction of $12,366 and $1,843 of contingent deferred sales charges for the
six months ended June 30, 1995 and the year ended December 31, 1994,
respectively.
-40-
<PAGE> 43
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
4. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding
throughout each period.)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- ----------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . $ .034 $ .007 $ .054 $ .051 $ .052 $ .072
Operating expenses . . . . . . . . . . . . . . . . . . . .014* .006* .036* .032* .031* .018*
------ ------- ------ ------ ------ ------
Net investment income . . . . . . . . . . . . . . . . . . .020 .001 .018 .019 .021 .054
Unit value at beginning of period . . . . . . . . . . . . 1.215 1.234 1.132 1.087 .994 1.036
Net realized and change in unrealized gains (losses) . . .095 (.020) .084 .026 .072 (.096)
------ ------- ------ ------ ------ ------
Unit value at end of period . . . . . . . . . . . . . . . $1.330 $ 1.215 $1.234 $1.132 $1.087 $ .994
====== ======= ====== ====== ====== ======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value . . . . . . . . . . .09 (.02) .10 .05 .09 (.04)
Ratio of operating expenses to average net assets** . . . 3.00%* 3.00%* 3.00%* 2.99%* 3.00%* 2.58%*
Ratio of net investment income to average net assets** . 4.30% 1.02% 1.48% 1.71% 3.07% 3.88%
Units outstanding, at end of period (thousands) . . . . . 12,468 - 20,207 21,868 19,521 14,115
Portfolio turnover rate . . . . . . . . . . . . . . . . . 15% - 190% 505% 627% 370%
</TABLE>
* Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner and were not recorded in the
financial statements of Account TB, or by contractual surrender from the
contract to the extent allowed under federal tax law.
** Annualized.
5. SUBSEQUENT EVENT
On July 27, 1995, $16,038,495 of the net assets of The Travelers Timed Bond
Account for Variable Annuities were transferred to The Travelers Timed
Short-Term Bond Account for Variable Annuities as a result of a transfer order
made by a market timer on behalf of subscribing participants.
-41-
<PAGE> 44
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<S> <C> <C>
BONDS (47.3%)
COLLATERALIZED MORTGAGE
OBLIGATIONS (47.3%)
Federal Farm Credit Banks,
5.93% Notes, 2003 $1,000,000 $ 968,280
FHLMC Gold 30yr PC,
8.50% Pass Through, 2025 1,966,830 2,030,741
FNMA 30yr Conventional Long Term,
8.50% Pass Through, 2017 180,135 185,989
FNMA 30yr Conventional Long Term,
8.50% Pass Through, 2025 1,457,304 1,504,658
GNMA 30yr Single Family Issue,
7.50% Pass Through, 2023 339,062 341,075
GNMA 30yr Single Family Issue,
7.50% Pass Through, 2023 94,898 95,461
GNMA 30yr Single Family Issue,
7.50% Pass Through, 2024 628,848 632,581
GNMA 30yr Single Family Issue,
7.50% Pass Through, 2024 221,310 222,624
GNMA 30yr Single Family Issue,
7.50% Pass Through, 2025 249,251 250,731
GNMA 30yr Single Family Issue,
8.50% Pass Through, 2024 1,466,717 1,524,002
-----------
TOTAL BONDS (COST $7,451,269) 7,756,142
-----------
U.S. GOVERNMENT AGENCY
SECURITIES (12.6%)
Federal Home Loan Banks,
5.77% Notes, 2004 1,500,000 1,434,615
RFCO Strips,
0.00% Notes, 2018 3,100,000 636,616
-----------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $1,820,321) 2,071,231
-----------
U.S. GOVERNMENT
SECURITIES (40.1%)
United States of America Treasury,
7.50% Bonds, 2024 1,500,000 1,661,718
United States of America Treasury,
8.50% Bonds, 2020 1,500,000 1,819,688
United States of America Treasury,
7.875% Bonds, 2021 1,165,000 1,327,006
United States of America Treasury,
10.00% Bonds, 2010 1,400,000 1,770,560
-----------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $6,012,880) 6,578,972
-----------
TOTAL INVESTMENTS (100%)
(COST $15,284,470) (A) $16,406,345
===========
</TABLE>
NOTES
(A) At June 30, 1995, net unrealized appreciation for all securities was
$1,121,875. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over
cost of $1,121,875.
See Notes to Financial Statements
-42-
<PAGE> 45
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<PAGE> 46
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<PAGE> 47
Investment Advisers
-------------------
(THE TRAVELERS TIMED GROWTH AND INCOME STOCK, TIMED SHORT-TERM BOND
AND TIMED AGGRESSIVE STOCK ACCOUNTS)
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut
(THE TRAVELERS TIMED BOND ACCOUNT)
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION
Hartford, Connecticut
Independent Accountants
-----------------------
COOPERS & LYBRAND, L.L.P.
Hartford, Connecticut
Custodian
---------
THE CHASE MANHATTAN BANK, N.A.
New York, New York
The financial information included herein has been taken from the records of
The Travelers Timed Growth and Income Stock, Timed Short-Term Bond, Timed
Aggressive Stock and Timed Bond Accounts. The financial information has not
been audited by the Accounts' independent accountants, who therefore express no
opinion concerning its accuracy. However, it is management's opinion that all
proper adjustments have been made.
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Timed Growth and Income Stock, Timed
Short-Term Bond, Timed Aggressive Stock and Timed Bond Accounts. 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 which contain all pertinent information, including the
applicable selling commissions.
VG-182 (S/A) (6-95) Printed in U.S.A.
