<PAGE> 1
UNIVERSAL ANNUITY
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
DECEMBER 31, 1995
[LOGO]
THE TRAVELERS INSURANCE COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
<PAGE> 2
[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.
[LOGO] Travelers Asset Management International Corporation ("TAMIC")
provides fixed income management and advisory services for The
Travelers Time Bond Account for Variable Annuities.
<PAGE> 3
[LOGO]
THE TRAVELERS VARIABLE PRODUCT SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF DECEMBER 31, 1995
FINANCIAL MARKET REVIEW AND OUTLOOK
Financial markets had a great year in 1995 with the Standard & Poors 500 Stock
Index having its best year since 1958 (+37.6%) and the Lehman
Government/Corporate Bond Index having its best performance since 1985
(+19.2%). Beyond Wall Street, however, signs of economic stress are becoming
apparent. Consumer delinquencies and defaults are increasing. A number of
corporate defaults have already occurred, causing some negative fallout in the
high yield bond market. December retail sales came in below already
pessimistic expectations. Cyclical industries such as paper, steel, and autos
are starting to see price declines, closing plants and laying off workers. In
Washington, many government workers are on furlough as the two parties debate
how much (not whether or not) the Federal deficit will be reduced. Against
this backdrop, the Federal Reserve Board ("Fed") dropped short-term interest
rates 25 basis points on December 19th, its first cut since July, 1995.
Looking towards 1996, the slowdown in economic growth combined with few sources
of upside surprises make lower money market rates our most confident forecast.
Current economic weakness will keep the Fed in an easing mode even if budget
talks remain in a stalemate. Theoretical policy rules for determining federal
funds targets argue that short-term interest rates should be between 4% and 5%,
not their current 5.5%. Unlike 1993, when growth had been slow for several
years, there is no pent-up demand for housing, autos, or even capital goods
that can cause an upside surprise in economic growth. The key question for the
bond market is whether slow economic growth causes short rates to go
significantly below 5%. We think they will because the economy continues to
weaken and any backup in rates caused by the budget negotiations in Washington
will further weaken the economy. We are focusing on intermediate maturities
because the yield curve is likely to steepen. We also continue to be
comfortable with an overweighting in corporate issues, although we need to be
diligent to protect against credit surprises. We also continue to think that
mortgaged-backed securities are cheap and have maintained our overweighting in
that area.
In the stock market, cyclical issues led by the railroad, aluminum, machinery,
and semiconductor groups rallied early in the third quarter on strong earnings
momentum, rising analyst estimates, and expectations for a rebound in economic
growth. Mergers in the banking, utility, and media industries also gave an
optimistic tone to the market. However by early September, investors turned
less optimistic about prospects for economic growth, earnings momentum, and
profit margins in late 1995 and 1996. During the fourth quarter, investors
continued to rotate out of cyclical and into defensive groups, such as drugs,
food, and beverages, which were expected to produce the best relative earnings
and gains in 1996. In the energy sector, rising prices for oil and natural
gas, as well as attractive relative yields, supported higher valuations.
Technology stocks declined dramatically on signs of weakening demand for
personal computers and softer prices for semiconductors and other PC
components.
The performance of the stock market in 1996 will be driven by corporate
earnings. The impetus for much of last year's advance to new record highs was
generated by positive earnings surprises. The weaker economic environment that
exists now makes it unlikely that the stock market will repeat its performance.
Generally, the U.S. stock market is fairly valued given the current level of
interest rates and should be able to muddle through with a "normal" 10% year as
long as we avoid a recession. If the economy does worsen, the extent of the
equity market decline will be a function of how quickly companies can adjust
their cost structure to changes in revenues. Judged by the ability of most
companies to sustain earnings growth even in the face of weakening demand in
1995, we think that the most negative "bears" on the outlook for the stock
market are too pessimistic, especially given the valuation support that will be
provided by lower interest rates.
-1-
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . 15
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . 22
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
-2-
<PAGE> 5
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 connected with
market-timing moves. The performance benchmark for this core equity strategy
is the Standard & Poors 500 Stock Index ("S&P 500").
For the year ended December 31, 1995 the Travelers Timed Growth and Income
Stock Account achieved a return of 37%, before fees and expenses, slightly
lagging the S&P 500 return. After all fees and expenses, the portfolio's total
return of 33% outperformed the 31% average total return for variable annuity
stock accounts in the Lipper Growth & Income category. During this period,
four market-timing signals were implemented.
During the second half of 1995, the strongest contributions to relative
performance were achieved in the consumer discretionary, consumer staples and
finance sectors. In the consumer discretionary sector, performance was
bolstered in particular by our holdings in Nike (+66%) and Safeway (+36%). In
the consumer staples sector, the portfolio benefited from overweighted
positions in Pepsi (+24%), Philip Morris (+21%) and Ralston-Purina (+21%).
Stock selection in the financial sector also contributed positively, through
holdings in NationsBank (+29%) and Chase Manhattan Bank (+27%). On the other
hand, performance in the technology sector was somewhat disappointing,
penalized by our holdings in Silicon Graphics (-32%), which experienced slower
than expected sales growth because of product transition problems, and by our
exposure to the weak semiconductor group, including Texas Instruments (-23%)
and Cypress Semiconductor (-24%).
During the final six months of 1995, the Timed Growth and Income Stock Account
held positions in S&P 500 futures in order to obtain equity exposure for a
portion of the account's net assets. The value of the stock index futures
position ranged between 29% and 62% of the total net assets 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 approximates that of the actual S&P 500.
Looking ahead, in light of the equity market's record-setting advance in 1995
and signs of an impending economic slowdown, we have placed increased emphasis
on diversifying our stock holdings, especially within sectors that are likely
to exhibit above-average cyclical earnings volatility. In the technology
sector, we have focused on stocks that are likely to maintain positive earnings
visibility in 1996, including 3Com in the enterprise networking group and
Oracle Systems in the software group. In the health care sector, we have
emphasized Johnson & Johnson and Medtronic in the medical devices group. In
the consumer discretionary sector, our major overweights include Nike and
Safeway. In the finance sector, we are emphasizing Green Tree Financial,
Citicorp and NationsBank.
[LOGO]
-3-
<PAGE> 6
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $218,088,826) . . . . . . . . $ 234,727,772
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,809,383
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259,024
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521,319
Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,534,864
Purchase payments and transfers from other Travelers accounts . . . . . . . . . . 145,221
Variation on futures margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,300
---------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239,108,883
---------------
LIABILITIES:
Payables:
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . 1,016,632
Contract surrenders and transfers to other Travelers accounts . . . . . . . . . . 248,699
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . 10,577
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,379
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,723
---------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,341,010
---------------
NET ASSETS
(Applicable to 105,043,638 units outstanding at $2.263 per unit) . . . . . . . . . . $ 237,767,873
===============
</TABLE>
See Notes to Financial Statements
-4-
<PAGE> 7
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,672,366
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,387,085
--------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,059,451
EXPENSES:
Market timing fees . . . . . . . . . . . . . . . . . . . . . . . . 1,843,842
Investment management and advisory fees . . . . . . . . . . . . . . 479,029
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . 1,843,842
--------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . 4,166,713
---------------
Net investment income . . . . . . . . . . . . . . . . . . . 1,892,738
---------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 176,122,054
Cost of investment securities sold . . . . . . . . . . . . . . . 157,239,157
--------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 18,882,897
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1994 . . . . . . . . . . . . . . 183,229
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 16,638,946
--------------
Net change in unrealized gain for the year . . . . . . . . . 16,455,717
---------------
Net realized gain and change in unrealized gain . . . . . 35,338,614
---------------
Net increase in net assets resulting from operations . . . . . . . $ 37,231,352
===============
</TABLE>
See Notes to Financial Statements
-5-
<PAGE> 8
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,892,738 $ 1,302,116
Net realized gain (loss) from investment security transactions . . . 18,882,897 (13,198,289)
Net change in unrealized gain on investment securities . . . . . . . 16,455,717 183,229
--------------- ---------------
Net increase (decrease) in net assets resulting from operations . 37,231,352 (11,712,944)
--------------- ---------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 4,557,812 and 5,436,273 units, respectively) . . . 9,246,578 9,166,985
Participant transfers from other Travelers accounts
(applicable to 263,610 and 168,881 units, respectively) . . . . . 530,000 307,302
Market timing transfers from other Travelers timed accounts
(applicable to 91,018,707 and 244,492,247 units, respectively) . . 182,133,693 426,883,052
Administrative charges
(applicable to 150,735 and 117,707 units, respectively) . . . . . (325,636) (193,352)
Contract surrenders
(applicable to 6,210,191 and 6,733,833 units, respectively) . . . (12,733,388) (11,342,908)
Participant transfers to other Travelers accounts
(applicable to 13,985,712 and 27,205,807 units, respectively) . . (28,338,250) (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 141,806 and 91,176 units, respectively) . . . . . . (290,911) (154,790)
--------------- ---------------
Net increase in net assets resulting from unit transactions . . . 150,222,086 62,027,379
--------------- ---------------
Net increase in net assets . . . . . . . . . . . . . . . . . . 187,453,438 50,314,435
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . 50,314,435 -
--------------- ---------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 237,767,873 $ 50,314,435
=============== ===============
</TABLE>
See Notes to Financial Statements
-6-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
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 year; securities traded on the over-the-counter
market and listed securities with no reported sales are valued at the
mean between the last- reported bid and asked prices or on the basis
of quotations received from a reputable broker or other recognized
source.
When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally
stated at fair value on the basis of valuations furnished by a pricing
service. These valuations are determined for normal
institutional-size trading units of such securities using methods
based on market transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities,
for which pricing services are not readily available are valued by
management at prices which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments for which there is no
reliable quoted market price are valued 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 uses 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 in an
amount at least equal to the notional value of outstanding purchased
futures contracts, less the initial margin. Cash and cash equivalents
include cash on hand, securities segregated under federal and
brokerage regulations, and short-term highly liquid investments with
maturities generally three months or less when purchased. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by Account 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 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.
-7-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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.
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. TGIS is not taxed as "regulated
investment company" under Subchapter M of the Code.
OTHER. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
2. INVESTMENTS
Purchases and sales of securities other than short-term investments
aggregated $149,948,054 and $60,388,180, respectively, for the year
ended December 31, 1995. Realized gains and losses from security
transactions are reported on an identified cost basis.
At December 31, 1995, Account TGIS held 318 open S&P 500 Stock Index
futures contracts with a maturity date of March 15, 1996. The
underlying face value, or notional value, of these contracts at
December 31, 1995 amounted to $98,333,550. In connection with these
contracts, short-term investments with a par value of $4,500,000 had
been pledged as margin deposits.
Net realized gains (losses) resulting from futures contracts were
$16,007,920 and ($13,010,751) for the years ended December 31, 1995
and 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 December 31, 1995, is shown on the Statement
of Assets and Liabilities as a receivable for variation on futures
margin.
-8-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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) 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 $143,108 and
$170,063 in satisfaction of contingent deferred sales charges for the
years ended December 31, 1995 and 1994, respectively.
4. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . $.083 $ .064 $ .043 $ .046 $ .045
Operating expenses . . . . . . . . . . . . . . . . . . . .057 .041 .042 .045 .045
------ ------- ------- ------- -------
Net investment income . . . . . . . . . . . . . . . . . . .026 .023 .001 .001 -
Unit value at beginning of year . . . . . . . . . . . . . 1.695 1.776 1.689 1.643 1.391
Net realized and change in unrealized gains (losses) . . .542 (.104) .086 .045 .252
------ ------- ------- ------- -------
Unit value at end of year . . . . . . . . . . . . . . . . $2.263 $ 1.695 $ 1.776 $ 1.689 $ 1.643
====== ======= ======= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value . . . . . . . . . . .57 (.08) .09 .05 .25
Ratio of operating expenses to average net assets* . . . 2.83% 2.82% 2.82% 2.82% 2.83%
Ratio of net investment income to average net assets* . . 1.37% 1.58% .08% .78% 1.33%
Number of units outstanding at end of year (thousands). . 105,044 29,692 - 217,428 -
Portfolio turnover rate . . . . . . . . . . . . . . . . . 79% 19% 70% 119% 489%
</TABLE>
* Annualized.
-9-
<PAGE> 12
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ -----------
<S> <C> <C>
COMMON STOCKS (59.2%)
AMUSEMENTS (0.8%)
Harrah's Entertainment, Inc. 20,000 $ 485,000
Walt Disney Co. 23,200 1,368,800
-----------
1,853,800
-----------
BANKING (3.8%)
Banc One Corp. 23,200 875,800
Bank of Boston Corp. 3,500 161,875
Bank of New York, Inc. 5,600 273,000
BankAmerica Corp. 20,200 1,307,950
Barnett Banks, Inc. 9,800 578,200
Chase Manhattan Corp. 5,600 339,500
Chemical Banking Corp. 7,800 458,250
Citicorp 22,300 1,499,675
First Interstate Bancorp 2,400 327,600
First Union Corp. 5,300 294,812
Golden West Financial Corp. 7,800 430,950
Mellon Bank Corp. 3,900 209,625
NationsBank Corp. 17,100 1,190,588
Norwest Corp. 19,400 640,200
SunTrust Banks, Inc. 3,500 239,750
Wells Fargo & Co. 1,400 302,400
-----------
9,130,175
-----------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (8.6%)
Abbott Laboratories 30,600 1,277,550
Air Products & Chemicals, 13,000 685,750
Inc.
American Home Products Corp. 9,100 882,700
Amgen (A) 16,300 966,794
Bristol-Myers Squibb Co. 10,100 867,337
Cabot Corp. 3,900 210,113
Clorox Co. 7,300 522,862
Colgate-Palmolive Co. 4,400 309,100
Dow Chemical Co. 8,200 577,075
E.I. Dupont de Nemours & Co. 16,700 1,166,913
Eastman Chemical Company 8,400 526,050
Eli Lilly & Co. 16,200 911,250
International Flavors & 11,300 542,400
Fragrances
Johnson & Johnson 19,900 1,703,937
Merck & Co., Inc. 37,200 2,445,900
Monsanto Co. 3,600 441,000
Morton International, Inc. 15,900 570,413
Pharmacia & Upjohn, Inc. (A) 15,500 600,625
Pfizer, Inc. 27,200 1,713,600
Procter & Gamble Co. 26,400 2,191,200
Schering-Plough Corp. 19,200 1,051,200
-----------
20,163,769
-----------
</TABLE>
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ -----------
<S> <C> <C>
COMMUNICATION (6.0%)
Ameritech Corp. 18,800 $ 1,109,200
AT&T Corp. 57,700 3,736,075
Bell Atlantic Corp. 13,600 909,500
Bellsouth Corp. 33,200 1,444,200
Capital Cities ABC, Inc. 4,900 604,537
GTE Corp. 25,600 1,126,400
ITT Industries, Inc. (A) 8,200 196,800
MCI Communications Corp. 18,700 489,706
NYNEX Corp. 19,400 1,047,600
Sprint Corp. 10,400 414,700
SBC Communications., Inc. 25,300 1,454,750
Tele-Communications, Inc. (A) 9,500 189,406
U.S. West, Inc. 5,500 196,625
US West Media (A) 5,500 104,500
Viacom International, Inc. (A) 20,800 985,400
-----------
14,009,399
-----------
CONSTRUCTION (0.2%)
Pulte Corp. 11,500 386,688
-----------
CONTRACTORS (0.3%)
Fluor Corp. 10,000 660,000
ELECTRICAL AND
ELECTRONIC MACHINERY (3.7%)
Alliance Semiconductor (A) 3,800 43,700
Amphenol Corp. (A) 28,700 695,975
Andrew Corp. (A) 13,800 533,025
Cypress Semiconductor (A) 36,900 470,475
General Electric Co. 50,500 3,636,000
Intel Corp. 21,500 1,221,469
LSI Logic Corp. (A) 3,900 127,725
Micron Technology 11,700 463,612
Motorola, Inc. 13,500 769,500
Tellabs, Inc. (A) 3,500 129,938
Texas Instruments, Inc. 5,300 274,275
Time Warner, Inc. 9,200 348,450
-----------
8,714,144
-----------
FINANCE (2.2%)
American Express Co. 14,900 616,487
Dean Witter Discover & Co. 13,300 625,100
Federal Home Loan Corp. 5,700 475,950
Federal National Mortgage 8,400 1,042,650
Assoc.
Green Tree Financial Corp. 22,400 590,800
Household International 9,500 561,688
Lehman Brothers Holding, Inc. 14,900 316,625
Merrill Lynch & Co., Inc. 12,900 657,900
Morgan Stanley Group, Inc. 2,400 193,500
-----------
5,080,700
-----------
</TABLE>
-10-
<PAGE> 13
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
FOOD (5.3%)
Anheuser-Busch Cos. 4,100 $ 274,187
Campbell Soup Co. 6,600 396,000
Coca-Cola Co. 37,400 2,776,950
CONAGRA, Inc. 17,900 738,375
CPC International, Inc. 8,300 569,588
General Mills, Inc. 4,900 282,975
H.J. Heinz Co. 23,100 765,187
IBP, Inc. 3,600 181,800
Kellogg Co. 7,000 540,750
PepsiCo, Inc. 31,500 1,760,063
Philip Morris, Inc. 30,200 2,733,100
Ralston Purina Group 9,600 598,800
Seagram Co. Ltd. 9,800 339,325
Unilever NV 4,200 591,150
-------------
12,548,250
-------------
INSURANCE (2.2%)
Aetna Life & Casualty Co. 3,200 221,600
Allstate Corp. 10,738 441,600
American International Group 18,150 1,678,875
Chubb Corp. 5,600 541,800
General Reinsurance Corp. 4,700 728,500
HealthCare COMPARE (A) 10,700 467,456
ITT Corp. (A) 8,200 434,600
ITT Hartford Group, Inc. (A) 8,200 396,675
United Healthcare Corp. 5,400 353,700
-------------
5,264,806
-------------
LUMBER AND WOOD PRODUCTS
(0.1%)
Georgia-Pacific Corp. 2,800 192,150
-------------
MACHINERY (3.3%)
Apple Computers, Inc. 3,500 111,344
Applied Materials (A) 15,000 589,688
Baker Hughes, Inc. 21,800 531,375
Black & Decker Corp. 11,000 387,750
Cabletron System, Inc. (A) 2,400 194,400
Caterpillar, Inc. 6,100 358,375
Cisco Systems, Inc. (A) 9,000 672,187
Compaq Computer Corp. (A) 4,300 206,400
Duriron, Inc. 4,500 104,062
Harnischfeger Industries 14,800 492,100
Hewlett Packard Co. 15,200 1,273,000
International Business 14,000 1,284,500
Machines Corp.
Silicon Graphics, Inc. (A) 20,600 566,500
Sun Microsystems (A) 6,400 292,400
3Com Corp. (A) 12,700 592,931
-------------
7,657,012
-------------
METAL PRODUCTS (1.2%)
Ball Corp. 11,900 327,250
Danaher Corp. 13,500 428,625
Gillette Co. 8,500 443,063
Inland Steel Industries, Inc. 10,400 261,300
Parker-Hannifin Corp. 13,900 476,075
Phelps Dodge Corp. 6,600 410,850
Reynolds Metals Co. 6,600 373,725
-------------
2,720,888
-------------
MINING (0.3%)
Freeport-McMoran Copper & 8,500 239,062
Gold
Homestake Mining Co. 29,300 457,813
-------------
696,875
-------------
</TABLE>
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
MISCELLANEOUS MANUFACTURING
(2.2%)
Baxter International, Inc. 3,500 $ 146,562
Eastman Kodak Co. 9,900 663,300
Emerson Electric Co. 12,200 997,350
Heart Technology, Inc. (A) 14,400 470,700
Honeywell, Inc. 12,800 622,400
Mattel, Inc. 20,900 642,675
Medtronic, Inc. 20,000 1,117,500
Xerox Corp. 3,100 424,700
-------------
5,085,187
-------------
OIL & GAS (0.3%)
Anadarko Petroleum 4,700 254,388
Schlumberger Ltd. 7,500 519,375
-------------
773,763
-------------
PAPER AND ALLIED PRODUCTS
(0.5%)
Bowater, Inc. 8,000 284,000
Champion International Corp. 10,100 424,200
International Paper Co. 7,500 284,062
Kimberly Clark Corp. 3,510 290,453
-------------
1,282,715
-------------
PETROLEUM REFINING AND
RELATED INDUSTRIES (4.7%)
Amoco Corp. 20,200 1,451,875
Atlantic Richfield, Inc. 4,900 542,675
Chevron Corp. 19,200 1,008,000
Exxon Corp. 36,700 2,940,587
Mobil Corp. 16,000 1,792,000
Phillips Petroleum Co. 7,700 262,762
Royal Dutch Petroleum Co. 19,600 2,766,050
Texaco, Inc. 3,300 259,050
-------------
11,022,999
-------------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (0.5%)
Gannett Co. 10,600 650,575
New York Times Co. 16,800 497,700
-------------
1,148,275
-------------
RETAIL (3.4%)
Federated Department Stores, 21,300 585,750
Inc. (A)
General Nutrition Cos., Inc. (A) 900 20,025
Home Depot, Inc. 25,300 1,211,237
J.C. Penney Co. 15,300 728,663
May Department Stores 17,200 726,700
McDonalds Corp. 19,100 861,887
OfficeMax, Inc. (A) 18,700 418,413
Price/Costco, Inc. (A) 30,700 472,012
Safeway, Inc. (A) 10,100 520,150
Tandy Corp. 9,800 406,700
The GAP, Inc. 4,500 189,000
Wal-Mart Stores, Inc. 52,700 1,179,163
Walgreen Co. 21,700 648,287
-------------
7,967,987
-------------
RUBBER AND PLASTIC PRODUCTS
(0.4%)
Nike, Inc. 12,800 891,200
-------------
</TABLE>
-11-
<PAGE> 14
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
SERVICES (1.7%)
Autodesk, Inc. 9,300 $ 318,525
Columbia/HCA Healthcare Corp. 13,400 680,050
Computer Associates International 6,100 346,938
Equifax, Inc. 3,600 76,950
Microsoft (A) 16,100 1,413,783
Oracle Systems Corp. (A) 25,000 1,059,375
--------------
3,895,621
--------------
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.4%)
Minnesota Mining &
Manufacturing Co. 12,700 841,375
--------------
TRANSPORTATION (1.0%)
AMR, Inc. (A) 7,100 527,175
Conrail, Inc. 7,800 546,000
CSX Corp. 14,600 666,125
Norfolk Southern Corp. 8,400 666,750
--------------
2,406,050
--------------
TRANSPORTATION MANUFACTURING (2.8%)
Boeing Co. 16,000 1,254,000
Chrysler Corp. 14,500 802,937
Eaton Corp. 8,400 450,450
Ford Motor Co. 35,900 1,041,100
General Motors Corp. 21,000 1,110,375
Lockheed Martin Corp. 6,100 481,900
McDonnell Douglas Corp. 7,800 717,600
United Technologies Corp. 6,000 569,250
Varity Corp. (A) 6,300 233,888
--------------
6,661,500
--------------
UTILITIES (2.8%)
Baltimore Gas & Electric Co. 23,000 655,500
Browning and Ferris Ind. 17,400 513,300
Duquesne Light Co. 17,400 535,050
Florida Power & Light Co. 17,700 820,837
Houston Industries 26,800 649,900
Pacific Enterprises 6,800 192,100
Panhandle Eastern Corp. 17,700 493,388
Public Service Enterprises Group 22,300 682,937
Southern Co. 38,000 935,750
Texas Utilities Co. 18,000 740,250
WMX Technologies, Inc. 14,800 442,150
--------------
6,661,162
--------------
WHOLESALE TRADE (0.5%)
Crane Co. 13,200 486,750
Enron Corp. 18,800 716,750
--------------
1,203,500
--------------
TOTAL COMMON STOCKS
(COST $122,285,106) 138,919,990
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (40.8%)
COMMERCIAL PAPER (38.2%)
ABN AMRO Holdings NV,
5.55% due April 30, 1996 $ 5,000,000 $ 4,999,237
Associates Corp. of North America,
5.87% due February 15, 1996 4,500,000 4,493,471
Bausch & Lomb, Inc.,
5.78% due January 16, 1996 2,000,000 1,982,031
Ciesco LP,
5.75% due January 31, 1996 5,500,000 5,455,633
Dresdner U.S. Financial, Inc.,
5.80% due January 22, 1996 4,500,000 4,435,178
Eiger Capital Corp.,
5.81% due January 23, 1996 5,500,000 5,462,539
General Electric Capital Corp.,
5.54% due May 3, 1996 4,500,000 4,399,178
H.J. Heinz Co.,
5.85% due January 12, 1996 4,500,000 4,467,784
Hanson PLC,
5.74% due February 16, 1996 4,500,000 4,441,383
PACCAR Financial Corp.,
5.90% due September 20, 1996 4,500,000 4,497,412
Pacific Gas & Electric Co.,
5.79% due January 10, 1996 5,500,000 5,474,150
Pacificorp,
5.80% due January 30, 1996 4,100,000 4,059,595
Potomac Electric Power Co.,
5.78% due January 11, 1996 5,500,000 5,473,264
Progress Capital Holdings, Inc.,
5.86% due January 18, 1996 5,500,000 5,466,893
PHH Corp.,
5.78% due January 19, 1996 4,100,000 4,069,601
Southern California Edison Co.,
5.75% due January 12, 1996 5,500,000 5,472,439
Toronto Dominion Bank,
5.82% due January 19, 1996 5,000,000 4,969,971
Toyota Motor Credit Corp.,
5.78% due January 19, 1996 5,500,000 5,466,236
Wachovia Bank of North Carolina NA,
5.83% due May 13, 1996 4,500,000 4,504,391
--------------
89,590,386
--------------
U.S. GOVERNMENT SECURITIES (1.8%)
United States of America Treasury,
5.51% due September 19, 1996 (C) 4,500,000 4,271,396
--------------
REPURCHASE AGREEMENTS (0.8%)
Merrill Lynch Government
Securities, Inc., 5.50% Repurchase
Agreement dated December 29,
1995, due January 2, 1996,
collateralized by: United States of
America Treasury, $1,955,000,
5.63% due October 31, 1997 1,946,000 1,946,000
--------------
TOTAL SHORT-TERM
INVESTMENTS (COST $95,803,720) 95,807,782
--------------
</TABLE>
-12-
<PAGE> 15
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NOTIONAL MARKET
VALUE VALUE
-------- ------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 500 Stock Index,
Exp. March, 1996 (D) $ 98,333,550 -
-------------
TOTAL INVESTMENTS (100%)
(COST $218,088,826) (B) $ 234,727,772
=============
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) At December 31, 1995, net unrealized appreciation for all securities
was $16,638,946. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over cost of $18,769,006 and aggregate gross unrealized
depreciation for all securities in which there was an excess of cost
over market value of $2,130,060.
(C) Par value of $4,500,000 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
-13-
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Managers and Owners of Variable Annuity Contracts of
The Travelers Timed Growth and Income Stock Account for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Timed Growth and Income Stock Account for Variable Annuties including
the statement of investments as of December 31, 1995, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the per unit data for
each of the five years in the period then ended. These financial statements
and per unit data are the responsibility of management. Our responsibility is
to express an opinion on these financial statements and per unit data based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per unit
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per unit data referred to above
present fairly, in all material respects, the financial position of The
Travelers Timed Growth and Income Stock Account for Variable Annuities as of
December 31, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the per unit data for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 16, 1996
-14-
<PAGE> 17
THE TRAVELERS
TIMED SHORT-TERM
BOND ACCOUNT
FOR VARIABLE ANNUITIES
At the outset of 1995, The Federal Reserve Board's ("Fed") economic theme was
declining inflation and moderate economic growth. Despite no net change in The
Fed's policy there was a dramatic improvement in market sentiment. The steady
flow of favorable economic data shifted Fed policy nearly 180 degrees. Fears
of an overheating economy along with an aggressive Fed tightening strategy
turned into an easing of monetary policy due to muted price pressures and
subdued growth. The Fed did manage to stay on course with its policy of
moderate growth and low inflation. The second half of 1995 was marked by two
basis point reductions in the Federal funds rate to 5.50%, though the Fed still
had more latitude to lower short-term rates as the pace of easing was
relatively cautious.
The Travelers Timed Short-Term Bond Account "timed-out" on December 11, 1995,
when $45 million of assets were moved to The Travelers Timed Growth and Income
Stock Account and $20 million of assets were moved to The Travelers Timed
Aggressive Stock Account.
[LOGO]
-15-
<PAGE> 18
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Cash........................................................................ $206,378
Receivable for purchase payments and transfers from other
Travelers accounts........................................................ 1,415
--------
Total Assets.............................................................. 207,793
--------
LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts.............. 15,920
Due to The Travelers....................................................... 191,573
Accrued liabilities......................................................... 300
--------
Total Liabilities......................................................... 207,793
--------
NET ASSETS................................................................... $ -
========
</TABLE>
See Notes to Financial Statements
-16-
<PAGE> 19
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................ $8,201,199
EXPENSES:
Market timing fees.................................. $ 1,716,258
Investment management and advisory fees............. 444,144
Insurance charges................................... 1,716,258
------------
Total expenses..................................... 3,876,660
----------
Net investment income............................. 4,324,539
----------
REALIZED GAIN AND CHANGE IN UNREALIZED LOSS ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold........... 303,595,598
Cost of investment securities sold................. 303,529,546
------------
Net realized gain................................. 66,052
Change in unrealized loss on investment securities:
Unrealized loss at December 31, 1994............... (255,618)
Unrealized loss at December 31, 1995............... -
------------
Net change in unrealized loss for the year........ 255,618
----------
Net realized gain and change in unrealized loss.. 321,670
----------
Net increase in net assets resulting from operations $4,646,209
==========
</TABLE>
See Notes to Financial Statements
-17-
<PAGE> 20
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income........................................... $ 4,324,539 $ 3,487,182
Net realized gain (loss) from investment security transactions.. 66,052 (16,060)
Net change in unrealized loss on investment securities.......... 255,618 (255,618)
------------- -------------
Net increase in net assets resulting from operations........... 4,646,209 3,215,504
------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 10,737,861 and 20,847,101 units, respectively).. 14,027,260 26,686,784
Participant transfers from other Travelers accounts
(applicable to 837,920 and 2,135,671 units, respectively)...... 1,093,151 2,734,518
Market timing transfers from other Travelers timed accounts
(applicable to 12,166,043 and 298,165,356 units, respectively). 16,038,495 381,665,377
Administrative charges
(applicable to 101,958 and 383,685 units, respectively)........ (133,957) (493,803)
Contract surrenders
(applicable to 8,137,104 and 20,164,576 units, respectively)... (10,638,375) (25,802,591)
Participant transfers to other Travelers accounts
(applicable to 25,776,691 and 84,918,862 units, respectively).. (33,660,474) (108,667,839)
Market timing transfers to other Travelers timed accounts
(applicable to 206,198,047 and 352,098,599 units, respectively) (271,166,611) (449,633,557)
Other payments to participants
(applicable to 241,181 and 242,807 units, respectively)........ (315,041) (311,994)
------------- -------------
Net decrease in net assets resulting from unit transactions.... (284,755,552) (173,823,105)
------------- -------------
Net decrease in net assets.................................... (280,109,343) (170,607,601)
NET ASSETS:
Beginning of year............................................... 280,109,343 450,716,944
------------- -------------
End of year..................................................... $ - $ 280,109,343
============= =============
</TABLE>
See Notes to Financial Statements
-18-
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
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 timers.
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 year; securities traded on the over-the-counter market and listed
securities with no reported sales are valued at the mean between the
last-reported bid and asked prices or on the basis of quotations received
from a reputable broker or other recognized source.
When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated
at fair value on the basis of valuations furnished by a pricing service.
These valuations are determined for normal institutional-size trading units
of such securities, using methods based on market transactions for
comparable securities and various relationships between securities which are
generally recognized by institutional traders. Securities, including
restricted securities, for which pricing services are not readily available,
are valued by management at prices which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are
valued at market. Short-term investments for which there is no reliable
quoted market price are valued 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. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Security transactions are accounted for on the trade date. Interest income
is recorded on the accrual basis.
-19-
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS - 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) 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 $143,893 and $392,576 of contingent
deferred sales charges for years ended December 31, 1995 and 1994,
respectively.
3. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............................... $ .074 $ .055 $ .041 $ .054 $ .076
Operating expenses.................................... .035 .036 .037 .041 .036
------ ------ ------ ------ ------
Net investment income................................. .039 .019 .004 .013 .040
Unit value at beginning of year....................... 1.292 1.275 1.271 1.258 1.218
Net realized and change in unrealized gains (losses)*. .002 (.002) - - -
------ ------ ------ ------ ------
Unit value at end of year............................. $1.333 $1.292 $1.275 $1.271 $1.258
====== ====== ====== ====== ======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value............................ .04 .02 - .01 .04
Ratio of operating expenses to average net assets**... 2.82% 2.82 % 2.82% 2.82% 2.82%
Ratio of net investment income to average net assets** 3.17% 1.45 % .39% 1.12% 3.07%
Number of units outstanding at end of year (thousands) - 216,713 353,374 173,359 439,527
</TABLE>
* 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.
** Annualized.
-20-
<PAGE> 23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Managers and Owners of Variable Annuity Contracts of
The Travelers Timed Short-Term Bond Account for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Timed Short-Term Bond Account for Variable Annuities as of December
31, 1995, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the per unit data for each of the five years in the period then
ended. These financial statements and per unit data are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements and per unit data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per unit
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and per unit data referred to above
present fairly, in all material respects, the financial position of The
Travelers Timed Short-Term Bond Account for Variable Annuities as of December
31, 1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the per
unit data for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 16, 1996
-21-
<PAGE> 24
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 small-capitalization 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 connected
with market-timing moves. The performance benchmark for this portfolio is the
Standard & Poors MidCap Stock Index ("S&P 400").
For the year ended December 31, 1995, the Travelers Timed Aggressive Stock
Account achieved a total return of 35.8%, before fees and expenses,
outperforming the 30.9% return of the S&P 400. Net of fees and expenses, the
portfolio's total return of 32.1% compared favorably to the 31.9% average total
return for variable annuity stock accounts in the Lipper Capital Appreciation
category. During 1995, three market-timing signals were implemented.
During the second half of 1995, the strongest contributions to relative
performance were achieved in the consumer discretionary and finance sectors.
In the consumer discretionary sector, the portfolio benefited from overweighted
positions in Nike (+66%), Callaway Golf (+51%), Clear Channel Communications
(+38%) and Rite Aid (+35%). In the finance sector, performance was helped by
overweights in better performing bank stocks such as First Security (+38%) and
Star Banc (+30%); and in selected commercial finance issues such as HFS Inc.
(+134%), Finova (+37%) and Green Tree Financial (+18%).
During the final six months of 1995, The Timed Aggressive Stock Account held
positions in S&P 400 futures in order to obtain equity exposure for a portion
of the account's net assets. The value of the stock index futures position
ranged between 2% and 29% of the total net assets 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 approximates that of the actual S&P 400.
Looking ahead, in light of the equity market's record-setting advance in 1995
and signs of an impending economic slowdown, we have placed increased emphasis
on diversifying our stock holdings, especially within sectors that are likely
to exhibit above-average cyclical earnings volatility. In the technology
sector, we have focused on stocks that are likely to maintain positive earnings
visibility in 1996, including Bay Networks and Cabletron Systems in the
enterprise networking group, Symbol Technologies in the electronics group and
Analog Devices in the semiconductor group. In the health care sector, we have
emphasized Health Management Associates and Medtronic. In the consumer
discretionary sector, our major overweights include Nike, Robert Mondavi and
Washington Post. In the finance sector, we are emphasizing Green Tree
Financial, Star Banc and American Bankers Insurance Group.
[LOGO]
-22-
<PAGE> 25
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $92,504,548) $102,210,432
Receivables:
Dividends.......................................................... 104,617
Interest........................................................... 79,332
Investment securities sold......................................... 1,100,922
Purchase payments and transfers from other Travelers accounts...... 70,569
Variation on futures margin........................................ 102,500
------------
Total Assets...................................................... 103,668,372
------------
LIABILITIES:
Cash overdraft...................................................... 112,791
Payables:
Investment securities purchased.................................... 765,503
Contract surrenders and transfers to other Travelers accounts...... 36,941
Investment management and advisory fees............................ 4,166
Market timing fees................................................. 10,474
Accrued liabilities................................................. 19,048
------------
Total Liabilities................................................. 948,923
------------
NET ASSETS
(Applicable to 45,575,269 units outstanding at $2.253 per unit)..... $102,719,449
============
</TABLE>
See Notes to Financial Statements
-23-
<PAGE> 26
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................................... $ 985,664
Interest............................................ 386,837
------------
Total income....................................... $ 1,372,501
EXPENSES:
Market timing fees.................................. 825,418
Investment management and advisory fees............. 215,616
Insurance charges................................... 825,418
------------
Total expenses..................................... 1,866,452
-----------
Net investment loss............................... (493,951)
-----------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold........... 107,552,351
Cost of investment securities sold................. 99,151,992
------------
Net realized gain................................. 8,400,359
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1994............... 954,837
Unrealized gain at December 31, 1995............... 9,705,884
------------
Net change in unrealized gain for the year........ 8,751,047
-----------
Net realized gain and change in unrealized gain.. 17,151,406
-----------
Net increase in net assets resulting from operations $16,657,455
===========
</TABLE>
See Notes to Financial Statements
-24-
<PAGE> 27
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss.................................................... $ (493,951) $ (669,893)
Net realized gain from investment security transactions................ 8,400,359 3,067,643
Net change in unrealized gain on investment securities................. 8,751,047 (9,552,884)
------------ ------------
Net increase (decrease) in net assets resulting from operations....... 16,657,455 (7,155,134)
------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 4,530,704 and 11,273,841 units, respectively).......... 9,157,753 19,879,301
Participant transfers from other Travelers accounts
(applicable to 352,561 and 4,166,181 units, respectively)............. 701,109 7,429,218
Market timing transfers from other Travelers timed accounts
(applicable to 27,252,603 and 12,495,931 units, respectively)......... 57,070,717 22,750,505
Administrative charges
(applicable to 80,867 and 105,768 units, respectively)................ (173,519) (176,362)
Contract surrenders
(applicable to 1,614,811 and 2,506,410 units, respectively)........... (3,295,917) (4,425,394)
Participant transfers to other Travelers accounts
(applicable to 9,931,060 and 19,093,231 units, respectively).......... (20,145,243) (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 43,168 and 35,178 units, respectively)................. (82,155) (62,046)
------------ ------------
Net increase (decrease) in net assets resulting from unit transactions 43,232,745 (29,141,085)
------------ ------------
Net increase (decrease) in net assets................................ 59,890,200 (36,296,219)
NET ASSETS:
Beginning of year...................................................... 42,829,249 79,125,468
------------ ------------
End of year............................................................ $102,719,449 $42,829,249
============ ============
</TABLE>
See Notes to Financial Statements
-25-
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS
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 timers.
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 year; securities traded on the over-the-counter market and listed
securities with no reported sales are valued at the mean between the
last-reported bid and asked prices or on the basis of quotations received
from a reputable broker or other recognized source.
When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated at
fair value on the basis of valuations furnished by a pricing service. These
valuations are determined for normal institutional-size trading units of such
securities using methods based on market transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. Securities, including restricted
securities, for which pricing services are not readily available are valued
by management at prices which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are
valued at market. Short-term investments for which there is no reliable
quoted market price are valued 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 uses 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 in an amount
at least equal to the notional value of outstanding purchased futures
contracts, less the initial margin. Cash and cash equivalents include cash
on hand, securities segregated under federal and brokerage regulations, and
short-term highly liquid investments with maturities generally three months
or less when purchased. Generally, futures contracts are closed prior to
expiration.
Futures contracts purchased by Account 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.
-26-
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS - 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. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on
the accrual basis.
2. INVESTMENTS
Purchases and sales of securities other than short-term investments
aggregated $93,163,480 and $67,179,935, respectively, for the year ended
December 31, 1995. Realized gains and losses from investment transactions
are reported on an identified-cost basis.
At December 31, 1995, Account TAS held 205 open S&P 400 MidCap Index futures
contracts with a maturity date of March 15, 1996. The underlying face value,
or notional value, of these contracts at December 31, 1995, amounted to
$22,350,125. In connection with these contracts, short-term investments with
a par value of $550,000 had been pledged as margin deposits.
Net realized gains resulting from futures contracts were $1,364,329 and
$63,616 for the years ended December 31, 1995 and 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 December 31, 1995, is shown on the
Statement of Assets and Liabilities as a receivable for variation on futures
margin.
-27-
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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) 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 $80,832 and $101,444 of contingent deferred sales charges
for the years ended December 31, 1995 and 1994, respectively.
4. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............................... $ .042 $.036 $.037 $.041 $.044
Operating expenses.................................... .057 .049 .048 .043 .039
------ ------ ------ ------ ------
Net investment income (loss).......................... (.015) (.013) (.011) (.002) .005
Unit value at beginning of year....................... 1.706 1.838 1.624 1.495 1.136
Net realized and change in unrealized gains (losses).. .562 (.119) .225 .131 .354
------ ------ ------ ------ ------
Unit value at end of year............................. $ 2.253 $1.706 $1.838 $1.624 $1.495
====== ====== ====== ====== ======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value................. .55 (.13) .21 .13 .36
Ratio of operating expenses to average net assets*.... 2.83 % 2.80 % 2.82 % 2.93 % 2.99%
Ratio of net investment (loss) income to average net
assets*............................................. (.74)% (.72)% (.80)% (.12)% .37%
Number of units outstanding at end of year (thousands) 45,575 25,109 43,059 20,225 19,565
Portfolio turnover rate............................... 113 % 142 % 71 % 269 % 261%
</TABLE>
* Annualized.
-28-
<PAGE> 31
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ---------
<S> <C> <C>
COMMON STOCKS (78.2%)
AGRICULTURE (0.5%)
Dole Food Co., Inc. 14,600 $ 511,000
----------
AMUSEMENTS (1.0%)
Castle & Cooke Inc. (A) 4,866 81,505
Circus Circus Enterprises, Inc. (A) 12,500 348,437
Mirage Resorts, Inc. (A) 20,200 696,900
----------
1,126,842
----------
BANKING (6.2%)
Crestar Financial Corp. 4,500 266,062
Fifth Third Bancorp 8,200 597,575
First of America Bank Corp. 15,800 701,125
First Security Corp. 15,000 573,750
First Tennessee National Corp. 9,200 555,450
Marshall & Isley Corp. 12,000 311,250
Mercantile Bancorp. 12,500 575,000
Mercantile Bankshares 14,000 387,625
Northern Trust Corp. 7,800 434,363
Signet Banking Corp. 8,600 204,250
SouthTrust Corp. 13,800 355,350
Star Banc Corp. 4,000 238,000
State Street Boston Corp. 4,000 180,000
UJB Financial Corp. 7,200 257,400
UN Planters Corp. 9,100 290,063
Wilmington Trust Corp. 13,600 421,600
----------
6,348,863
----------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (5.2%)
Biogen, Inc. (A) 4,400 269,500
Cabot Corp. 7,300 393,287
Chiron Corp. (A) 5,467 604,787
Eastman Chemical Company 3,400 212,925
Forest Labs, Inc. (A) 11,500 520,375
Genzyme Corp. (A) 3,400 211,650
International Flavors & Fragrances 6,700 321,600
IMC Fertilizer Group, Inc. 8,400 343,350
IVAX Corp. 7,100 202,350
Loctite Corp. 4,800 228,000
Morton International, Inc. 8,200 294,175
Mylan Labs, Inc. 20,900 491,150
Praxair, Inc. 10,600 356,425
Smith International, Inc. (A) 12,500 293,750
Wellman, Inc. 13,300 302,575
Witco Chemical Corp. 7,500 219,375
----------
5,265,274
----------
COMMUNICATION (3.7%)
Century Telephone Enterprises 15,600 495,300
Clear Channel Communications (A) 6,600 291,225
Comsat Corp. 6,100 113,612
Frontier Corp. 15,500 465,000
Infinity Broadcasting (A) 10,200 379,950
Lincoln Telecommunications 12,000 255,000
NEXTEL Communications (A) 18,500 274,031
Southern New England Telephone 7,800 310,050
Telephone & Data Systems, Inc. 5,800 229,100
WorldCom, Inc. (A) 28,700 1,015,263
----------
3,828,531
----------
</TABLE>
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ---------
<S> <C> <C>
CONTRACTORS (0.7%)
Fluor Corp. 5,400 $ 356,400
Granite Construction, Inc. 9,800 309,925
JWP, Inc. (A)(E) 32,200 644
----------
666,969
----------
ELECTRICAL AND
ELECTRONIC MACHINERY (4.8%)
ADC Telecommunications, Inc. (A) 6,900 250,988
Alliance Semiconductor (A) 2,300 26,450
American Power Conversion (A) 26,200 247,263
Amphenol Corp. (A) 16,400 397,700
Analog Devices, Inc. (A) 20,050 709,269
Andrew Corp. (A) 9,400 363,075
Atmel Corp. (A) 20,600 458,350
Cypress Semiconductor (A) 34,700 442,425
Linear Technology Corp. 3,700 145,687
LSI Logic Corp. (A) 2,300 75,325
Molex, Inc. 20,600 659,200
Sensormatic Electronics Corp. 7,900 137,262
Tellabs, Inc. (A) 1,500 55,687
U.S. Robotics, Inc. 6,100 536,038
Vishay Intertechnology, Inc. (A) 8,100 255,150
Xilinx, Inc. (A) 4,700 142,762
----------
4,902,631
----------
FINANCE (3.5%)
Bear Stearns Cos., Inc. 7,400 147,075
Charles Schwab Corp. 26,100 525,262
Finova Group, Inc. 4,200 202,650
Franklin Resources, Inc. 5,400 272,025
Green Tree Financial Corp. 32,800 865,100
HFS, Inc.(A) 10,900 891,075
Household International 4,000 236,500
Lehman Brothers Holding, Inc. 9,100 193,375
Paine Webber Group 11,900 238,000
----------
3,571,062
----------
FOOD (2.1%)
Coca-Cola Enterprises, Inc. 28,000 749,000
Flowers Industries 19,600 237,650
IBP, Inc. 8,000 404,000
Robert Mondavi Corp. (A) 4,400 123,200
Ralston-Purina Group 3,800 237,025
Tyson Foods, Inc. 12,500 328,906
----------
2,079,781
----------
FURNITURE AND FIXTURES (0.3%)
Leggett & Platt, Inc. 11,600 281,300
----------
HOTELS & LODGING (0.2%)
La Quinta Motor Inns, Inc. 7,300 199,837
----------
</TABLE>
-29-
<PAGE> 32
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ---------
<S> <C> <C>
INSURANCE (5.5%)
American Bankers Insurance Group, Inc. 10,000 $ 391,875
American Reinsurance Corp. 8,300 339,262
American Financial Group, Inc. 14,700 450,187
Aon Corp. 7,200 359,100
AFLAC, Inc. 20,100 871,838
Foundation Health Corp. (A) 6,900 296,700
HealthCare COMPARE (A) 12,500 546,094
PacifiCare Health Systems (A) 7,700 671,825
Progressive Corp., Ohio 5,400 263,925
SunAmerica, Inc. 7,700 365,750
Transatlantic Holdings, Inc. 6,000 440,250
Value Health, Inc. (A) 12,600 346,500
Zurich Reinsurance Centre Holdings 6,900 209,588
----------
5,552,894
----------
MACHINERY (5.1%)
Baker Hughes, Inc. 10,200 248,625
Bay Networks, Inc. (A) 29,659 1,217,863
Cabletron System, Inc. (A) 4,200 340,200
Cirrus Logic, Inc. (A) 8,200 162,462
Dell Computer Corp. (A) 5,900 205,394
Duriron, Inc. 3,300 76,312
EMC Corp. (A) 37,900 582,713
Gateway 2000, Inc. (A) 14,400 351,900
Harnischfeger Industries 5,800 192,850
Lam Research Corp. (A) 3,200 146,000
Seagate Technology (A) 10,400 494,000
Silicon Graphics, Inc. (A) 12,300 338,250
Stewart & Stevenson Services, Inc. 11,400 289,275
Symbol Technologies (A) 11,000 434,500
3Com Corp. (A) 2,900 135,394
----------
5,215,738
----------
METAL PRODUCTS (1.6%)
Amax Gold, Inc. (A) 6,500 199,063
Ball Corp. 6,100 167,750
Bethlehem Steel Corp. (A) 15,200 212,800
Danaher Corp. 15,500 492,125
Parker-Hannifin Corp. 7,100 243,175
Reynolds Metals Co. 6,000 339,750
----------
1,654,663
----------
MINING (0.2%)
Homestake Mining Co. 14,000 218,750
----------
MISCELLANEOUS MANUFACTURING (4.1%)
Biomet, Inc. (A) 17,300 308,156
Callaway Golf Co. 21,800 493,225
Cordis Corp. (A) 2,500 251,250
Heart Technology., Inc. (A) 8,500 277,844
International Game Technology 16,400 178,350
Litton Industries (A) 6,800 302,600
Mattel, Inc. 7,500 230,625
Measurex Corp. 7,600 214,700
Medtronic, Inc. 9,600 536,400
Stryker Corp. 6,600 346,087
Tencor Instruments (A) 7,900 192,563
Teradyne, Inc. (A) 10,600 265,000
Thermo Electronics Corp. (A) 10,150 527,800
----------
4,124,600
----------
</TABLE>
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ---------
<S> <C> <C>
OIL & GAS (1.7%)
Anadarko Petroleum 11,900 $ 644,088
Apache Corp. 14,300 421,850
ENSCO International(A) 15,700 361,100
Louisiana Land & Exploration 7,700 330,137
----------
1,757,175
----------
PAPER AND ALLIED PRODUCTS (1.1%)
Bowater, Inc. 9,100 323,050
Champion International Corp. 4,500 189,000
James River Corp. 6,500 156,812
Mead Corp. 4,900 256,025
Potlatch Corp. 5,800 232,000
----------
1,156,887
----------
PETROLEUM REFINING AND
RELATED INDUSTRIES (0.6%)
Lyondell Petrochemical 5,200 118,950
Murphy Oil Corp. 6,100 253,150
Sun Co., Inc. 8,483 232,222
----------
604,322
----------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (1.4%)
Lee Enterprises, Inc. 22,800 524,400
Tribune Co. 3,600 220,050
Washington Post Co. 2,500 705,000
----------
1,449,450
----------
RETAIL (5.3%)
Apple South, Inc. 12,600 269,325
AutoZone, Inc. (A) 9,400 271,425
Boston Chicken, Inc. (A) 9,500 304,594
Claires Stores, Inc. 14,900 262,613
Dayton Hudson Corp. 2,900 217,500
Dollar General Corp. 8,400 174,300
Federated Department Stores, Inc. (A) 8,200 225,500
General Nutrition Cos., Inc. (A) 500 11,125
Hannaford Brothers Co. 9,900 243,787
Kohl's Corp. (A) 10,800 567,000
Morrison Restaurants, Inc. 3,900 54,600
Office Depot, Inc. (A) 19,200 379,200
OfficeMax, Inc. (A) 11,200 250,600
Outback Steakhouse, Inc. (A) 5,700 204,844
Revco D.S., Inc. (A) 9,000 254,250
Rite Aid Corp. 8,700 297,975
Safeway, Inc. (A) 5,200 267,800
Staples, Inc. (A) 16,650 407,925
Stop & Shop Companies (A) 9,000 208,125
Tandy Corp. 4,600 190,900
Waban, Inc. (A) 16,900 316,875
----------
5,380,263
----------
RUBBER AND PLASTIC PRODUCTS (0.6%)
Nike, Inc. 6,100 424,712
Premark International, Inc. 4,500 227,813
----------
652,525
----------
SERVICES (6.5%)
Adobe Systems, Inc. 12,200 757,925
Autodesk, Inc. 4,600 157,550
Cadence Design System, Inc. (A) 16,050 674,100
Compuware Corp. (A) 6,100 114,375
Coram Healthcare Corp. (A) 15,300 66,938
CUC International, Inc. (A) 5,300 180,862
</TABLE>
-30-
<PAGE> 33
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
SERVICES (CONTINUED)
Equifax, Inc. 11,900 $ 254,363
Flightsafety International, Inc 8,300 417,075
Health Management Association., Inc. (A) 11,200 292,600
HBO & Co. 2,900 221,850
HEALTHSOUTH Corp (A) 13,800 401,925
Informix Corp. (A) 17,200 517,075
Manpower, Inc. 10,600 298,125
Olsten Corp. 6,000 237,000
Omnicom Group, Inc. 16,200 603,450
Or Nda Healthcorp (A) 11,000 255,750
Parametric Technology Co. (A) 9,300 617,287
Paychex, Inc. 11,900 591,281
-------------
6,659,531
-------------
STONE, CLAY, GLASS AND
CONCRETE PRODUCTS (0.3%)
Owens-Corning Fiberglass (A) 7,600 341,050
-------------
TEXTILE MILL PRODUCTS (0.4%)
Shaw Industries, Inc. 15,100 222,725
Unifi, Inc. 8,400 185,850
-------------
408,575
-------------
TRANSPORTATION (1.5%)
AMR, Inc. (A) 2,800 207,900
CSX Corp. 5,200 237,250
Kansas City Southern Industries, Inc. 10,500 480,375
Northwest Airlines Corp. (A) 6,100 310,719
Tidewater, Inc. 9,800 308,700
-------------
1,544,944
-------------
TRANSPORTATION MANUFACTURING (1.9%)
Echlin, Inc. 6,600 240,900
Harley-Davidson, Inc. 9,500 273,125
McDonnell Douglas Corp. 3,800 349,600
Sundstrand Corp. 7,400 520,775
Trinity Industries 10,800 340,200
Varity Corp. (A) 5,500 204,188
-------------
1,928,788
-------------
UTILITIES (10.8%)
Allegheny Power System, Inc. 16,100 460,863
Baltimore Gas & Electric Co. 11,200 319,200
Boston Edison Co. 11,700 345,150
Brooklyn Union Gas Co. 16,000 468,000
Consolidated Natural Gas Co. 6,100 276,787
CMS Energy Corp. 20,600 615,425
Delmarva Power & Light 20,800 473,200
El Paso Natural Gas Co. 13,200 374,550
Florida Progress Corp. 12,500 442,188
Illinova Corp. 22,300 669,000
Kansas City Power & Light Co. 21,700 566,912
Louisville Gas & Electric Co. 11,000 464,750
MCN Corp. 21,800 506,850
NIPSCO Industries, Inc. 16,100 615,825
Panhandle Eastern Corp. 8,300 231,363
Pinnacle West Capital Corp. 23,500 675,625
Portland General Electric Co. 18,200 530,075
Public Service Co. of Colorado 18,400 650,900
SCANA Corp. 25,600 732,800
Texas Utilities Co. 6,400 263,200
TECO Energy, Inc. 26,200 671,375
Wisconsin Energy 23,600 722,750
-------------
11,076,788
-------------
</TABLE>
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
WHOLESALE TRADE (1.4%)
Arrow Electronics (A) 11,200 $ 483,000
Avnet, Inc. 4,600 205,850
Cardinal Health, Inc. 9,800 536,550
Crane Co. 5,700 210,188
-------------
1,435,588
-------------
TOTAL COMMON STOCKS
(COST $70,236,848) 79,944,621
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
SHORT-TERM INVESTMENTS (21.8%)
COMMERCIAL PAPER (19.0%)
ABN AMRO Holding NV,
5.55% due April 30, 1996 $ 2,000,000 1,999,696
AT&T Co.,
5.74% due January 19, 1996 2,500,000 2,484,694
Ciesco LP,
5.75% due January 31, 1996 2,500,000 2,479,833
Pacific Gas & Electric Co.,
5.79% due January 10, 1996 2,500,000 2,488,250
Potomac Electric Power Co.,
5.78% due January 11, 1996 2,500,000 2,487,847
Progress Capital Holdings, Inc.,
5.86% due January 18, 1996 2,500,000 2,484,951
Southern California Edison Co.,
5.75% due January 12, 1996 2,500,000 2,487,472
Toyota Motor Credit Corp.,
5.78% due January 19, 1996 2,500,000 2,484,653
-------------
19,397,396
-------------
U.S. GOVERNMENT SECURITIES (0.7%)
United States of America Treasury,
5.33% due September 19, 1996 (C) 750,000 720,955
United States of America Treasury,
5.51% due September 19, 1996 (C) 50,000 47,460
-------------
768,415
-------------
REPURCHASE AGREEMENTS (2.1%)
Merrill Lynch Government
Securities, Inc., 5.50% Repurchase
Agreement dated December 29,
1995, due January 2, 1996,
collateralized by: United States of
America Treasury, $2,110,000,
5.63% due October 31, 1997 2,100,000 2,100,000
-------------
TOTAL SHORT-TERM
INVESTMENTS (COST $22,267,700) 22,265,811
-------------
</TABLE>
<TABLE>
<CAPTION>
NOTIONAL
VALUE
--------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 400 MidCap Index,
Exp. March, 1996 (D) $ 22,350,125 -
-------------
TOTAL INVESTMENTS (100%)
(COST $92,504,548) (B) $ 102,210,432
=============
</TABLE>
-31-
<PAGE> 34
STATEMENT OF INVESTMENTS - CONTINUED
NOTES
(A) Non-income Producing Security.
(B) At December 31, 1995, net
unrealized appreciation for all
securities was $9,705,884. This
consisted of aggregate gross
unrealized appreciation for all
securities in which there was an
excess of market value over cost
of $13,225,738 and aggregate
gross unrealized depreciation for
all securities in which there was
an excess of cost over market
value of $3,519,854.
(C) Par value of $550,000 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.
(E) Management Priced Security.
See Notes to Financial Statements
-32-
<PAGE> 35
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Managers and Owners of Variable Annuity Contracts of
The Travelers Timed Aggressive Stock Account for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Timed Aggressive Stock Account for Variable Annuities including the
statement of investments as of December 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the per unit data for each
of the five years in the period then ended. These financial statements and per
unit data are the responsibility of management. Our responsibility is to
express an opinion on these financial statements and per unit data based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per unit
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per unit data referred to above
present fairly, in all material respects, the financial position of The
Travelers Timed Aggressive Stock Account for Variable Annuities as of December
31, 1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the per
unit data for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 16, 1996
-33-
<PAGE> 36
THE TRAVELERS
TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
The fund moved back into bonds on August 31,1995. For the fourth quarter of
1995, The Travelers Timed Bond Account returned 5.9% versus 6.1% for the
benchmark. We continue to run The Travelers Timed Bond Account as close to the
index as possible, to maintain a liquid portfolio that can easily be converted
to cash. The modest underperformance of the fund resulted from a slight
overweighting in mortgages versus the index. As mortgages came under pressure
in the rally, this was reflected in the performance. The Treasury component of
the index turned in a strong performance as the market resumed its rally in the
fourth quarter. The best performing asset on a duration adjusted basis was the
cheapest-to-deliver security in the bond contract, the 11.2% of February 2,
1995. As the market rallied, open interest in the bond contract increased,
providing increased demand for the underlying deliverables.
Mortgages had a tough time for the bulk of the fourth quarter. As the market
hiccuped in late December as talks on the budget stalled, mortgage spreads
snapped in 5-15 basis points. Prepayment protection and high option adjusted
spreads are found in some of the seasoned premium collateral that is owned.
Seasoned pass-throughs (1991 and earlier originations) offer protection from
lower rates because they have already had a chance to prepay in at least one
period that was more attractive to refinance than the current one, yet did not.
Newer production securities have prepaid much quicker, particularly those
originated in 1994 and 1995, and we are avoiding them in higher coupon
securities.
[LOGO]
-34-
<PAGE> 37
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $14,974,638) $15,673,604
Receivables:
Interest........................................................... 227,862
Purchase payments and transfers from other Travelers accounts...... 8,416
Other assets........................................................ 10
-----------
Total Assets...................................................... 15,909,892
-----------
LIABILITIES:
Cash overdraft...................................................... 27,413
Payables:
Contract surrenders and transfers to other Travelers accounts...... 13,481
Investment management and advisory fees............................ 1,082
Market timing fees................................................. 1,625
Insurance charges.................................................. 2,705
-----------
Total Liabilities................................................. 46,306
-----------
NET ASSETS
(Applicable to 11,466,306 units outstanding at $1.383 per unit)..... $15,863,586
===========
</TABLE>
See Notes to Financial Statements
-35-
<PAGE> 38
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................ $ 878,805
EXPENSES:
Market timing fees.................................. $ 157,286
Investment management and advisory fees............. 62,947
Insurance charges................................... 157,286
-----------
Total expenses..................................... 377,519
----------
Net investment income............................. 501,286
----------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold........... 37,514,034
Cost of investment securities sold................. 36,612,294
-----------
Net realized gain................................. 901,740
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1994............... -
Unrealized gain at December 31, 1995............... 698,966
-----------
Net change in unrealized gain for the year........ 698,966
----------
Net realized gain and change in unrealized gain.. 1,600,706
----------
Net increase in net assets resulting from operations $2,101,992
==========
</TABLE>
See Notes to Financial Statements
-36-
<PAGE> 39
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income.................................................. $ 501,286 $ 36,951
Net realized gain from investment security transactions................ 901,740 1,513,641
Net change in unrealized gain on investment securities................. 698,966 (1,920,043)
------------ ------------
Net increase (decrease) in net assets resulting from operations....... 2,101,992 (369,451)
------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 796,980 and 343,897 units, respectively)............... 1,033,094 426,588
Participant transfers from other Travelers accounts
(applicable to 55,290 and 485,822 units, respectively)................ 68,142 602,519
Market timing transfers from other Travelers timed accounts
(applicable to 25,376,865 units)...................................... 31,962,202 -
Administrative charges
(applicable to 16,869 and 13 units, respectively)..................... (22,828) (19)
Contract surrenders
(applicable to 614,080 and 141,875 units, respectively)............... (802,989) (175,642)
Participant transfers to other Travelers accounts
(applicable to 1,869,809 and 1,223,515 units, respectively)........... (2,437,532) (1,510,001)
Market timing transfers to other Travelers timed accounts
(applicable to 12,262,071 and 19,671,603 units, respectively)......... (16,038,495) (23,908,276)
------------ ------------
Net increase (decrease) in net assets resulting from unit transactions 13,761,594 (24,564,831)
------------ ------------
Net increase (decrease) in net assets................................. 15,863,586 (24,934,282)
NET ASSETS:
Beginning of year...................................................... - 24,934,282
------------ ------------
End of year............................................................ $ 15,863,586 $ -
============ ============
</TABLE>
See Notes to Financial Statements
-37-
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS
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 year; securities traded on the over-the-counter market and listed
securities with no reported sales are valued at the mean between the
last-reported bid and asked prices or on the basis of quotations received
from a reputable broker or other recognized source.
When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated
at fair value on the basis of valuations furnished by a pricing service.
These valuations are determined for normal institutional-size trading units
of such securities using methods based on market transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. Securities, including restricted
securities, for which pricing services are not readily available are valued
by management at prices which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are
valued at market. Short-term investments for which there is no reliable
quoted market price are valued 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 uses 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 in an amount
at least equal to the notional value of outstanding purchased futures
contracts. Cash and cash equivalents include cash on hand, securities
segregated under federal and brokerage regulations, and short-term highly
liquid investments with maturities generally three months or less when
purchased. Generally, futures contracts are closed prior to expiration.
Futures contracts purchased by Account 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 specified indexes associated with the futures contract.
-38-
<PAGE> 41
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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.
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. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Security transactions are accounted for on the trade date. Interest income
is recorded on the accrual basis.
2. INVESTMENTS
Purchases and sales of securities other than short-term investments
aggregated $31,369,575 and $17,999,074, respectively, for the year ended
December 31, 1995. Realized gains and losses from investment transactions
are reported on an identified-cost basis.
-39-
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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) 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 $21,911 and $1,843 of contingent deferred
sales charges for the years ended December 31, 1995 and 1994, respectively.
4. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............................... $ .071 $ .007 $ .054 $ .051 $ .052
Operating expenses.................................... .031 .006 .036 .032 .031
------ ------ ------ ------ ------
Net investment income................................. .040 .001 .018 .019 .021
Unit value at beginning of year....................... 1.215 1.234 1.132 1.087 .994
Net realized and change in unrealized gains (losses).. .128 (.020) .084 .026 .072
------ ------ ------ ------ ------
Unit value at end of year............................. $1.383 $1.215 $1.234 $1.132 $1.087
====== ====== ====== ====== ======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value................. .17 (.02) .10 .05 .09
Ratio of operating expenses to average net assets*.... 3.00% 3.00% 3.00% 2.99% 3.00%
Ratio of net investment income to average net assets*. 3.98% 1.02% 1.48% 1.71% 3.07%
Number of units outstanding at end of year (thousands) 11,466 - 20,207 21,868 19,521
Portfolio turnover rate............................... 117% - 190% 505% 627%
</TABLE>
* Annualized.
-40-
<PAGE> 43
THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES (51.2%)
Federal Home Loan Banks,
7.315% Notes, 2005 $2,000,000 $2,200,620
FHLMC Gold 30yr PC,
7.50% Pass Through, 2001 115,669 118,661
FHLMC Gold 30yr PC,
7.50% Pass Through, 2002 1,016,994 1,042,723
FHLMC Gold 7yr Balloon,
7.50% Pass Through, 2002 781,461 801,231
FNMA 15yr Conventional Interm. Term,
7.50% Pass Through, 2010 314,724 323,969
FNMA 15yr Conventional Interm. Term,
7.50% Pass Through, 2010 394,373 405,957
FNMA 15yr Conventional Interm. Term,
7.50% Pass Through, 2010 400,834 412,608
FNMA 15yr Conventional Interm. Term,
7.50% Pass Through, 2010 240,602 247,669
FNMA 15yr Conventional Interm. Term,
7.50% Pass Through, 2010 494,133 508,648
GNMA 30yr Single Family Issue,
7.00% Pass Through, 2023 531,140 537,945
GNMA 30yr Single Family Issue,
7.00% Pass Through, 2023 113,469 114,922
GNMA 30yr Single Family Issue,
7.00% Pass Through, 2024 323,567 327,713
GNMA 30yr Single Family Issue,
7.00% Pass Through, 2024 526,952 533,704
GNMA 30yr Single Family Issue,
7.00% Pass Through, 2025 333,669 337,944
GNMA 30yr Single Family Issue,
7.00% Pass Through, 2025 107,166 108,540
----------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES
(COST $7,864,825) 8,022,854
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<S> <C> <C>
U.S. GOVERNMENT
SECURITIES (44.3%)
United States of America Treasury,
7.25% Bonds, 2022 $6,000,000 $ 6,948,750
-----------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $6,407,813) 6,948,750
-----------
SHORT-TERM INVESTMENTS (4.5%)
REPURCHASE AGREEMENTS (4.5%)
Merrill Lynch Government
Securities, Inc., 5.50% Repurchase
Agreement dated December 29,
1995 due January 2, 1996,
collateralized by: United States of
America Treasury, $705,000,
5.63% due October 31, 1997 702,000 702,000
-----------
TOTAL SHORT-TERM
INVESTMENTS (COST $702,000) 702,000
-----------
TOTAL INVESTMENTS (100%)
(COST $14,974,638) (A) $15,673,604
===========
</TABLE>
NOTES
(A) At December 31, 1995, gross and net unrealized appreciation for all
securities was $ 698,966.
See Notes to Financial Statements
-41-
<PAGE> 44
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Managers and Owners of Variable Annuity Contracts of
The Travelers Timed Bond Account for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Timed Bond Account for Variable Annuities including the statement of
investments as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the per unit data for each of the five
years in the period then ended. These financial statements and per unit data
are the responsibility of management. Our responsibility is to express an
opinion on these financial statements and per unit data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per unit
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and per unit data referred to above
present fairly, in all material respects, the financial position of The
Travelers Timed Bond Account for Variable Annuities as of December 31, 1995,
the results of its operations for the year ended, the changes in its net assets
for each of the two years in the period then ended, and the per unit data for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 16, 1996
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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
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 sales commissions.
VG-182 (Annual) (12-95) Printed in U.S.A.
