TRAVELERS TIMED GROWTH & INCOME STOCK ACC FOR VARIABLE ANNU, N-30D, 1997-02-28

TRAVELERS TIMED GROWTH & INCOME STOCK ACC FOR VARIABLE ANNU
N-30D, 1997-02-28

Previous: TRAVELERS TIMED GROWTH & INCOME STOCK ACC FOR VARIABLE ANNU, NSAR-B, 1997-02-28

Next: TRAVELERS TIMED MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES, 24F-2NT, 1997-02-28

<PAGE> 1
UNIVERSAL ANNUITY

ANNUAL REPORTS
DECEMBER 31, 1996

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

[TRAVELERSLIFE AND ANNUITY LOGO]

The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
[TIMCO LOGO]

The Travelers Investment Management Company ("TIMCO") provides equity
management and advisory services for the following Travelers Variable Products
Separate Accounts contained in this report: The Travelers Timed Growth and
Income Stock Account for Variable Annuities, The Travelers Timed Short-Term
Bond Account for Variable Annuities and The Travelers Timed Aggressive Stock
Account for Variable Annuities.

[TAMIC LOGO]

Travelers Asset Management International Corporation ("TAMIC") provides fixed
income management and advisory services for The Travelers Timed Bond Account
for Variable Annuities.
<PAGE> 3
[TRAVELERSLIFE AND ANNUITY LOGO]

THE TRAVELERS VARIABLE PRODUCT SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF DECEMBER 31, 1996

ECONOMIC REVIEW AND OUTLOOK

As 1996 began, the Federal Government found itself paralyzed by a prolonged
budget dispute. In the financial markets, investors were focused on signs of a
slowing economy. With two-year Treasury notes priced to yield less than the
federal funds rate, the bond market clearly expected the Federal Reserve Board
("Fed") to cut interest rates significantly. The Fed lowered the federal funds
rate by 0.25% in January, but strong employment growth over the next several
months sent the bond market into a tailspin reminiscent of 1994. Interest
rates hit their highest levels for the year in the June to September period as
investors prepared for the Fed to raise interest rates at their September
meeting.

The policymakers at the Fed decided to hold steady at their September meeting
and interest rates declined through the autumn as economic growth once again
slowed. The financial markets also responded positively to the Republicans'
success in retaining control of Congress in the November election. Going into
December, the bond and stock markets reflected a "best of all worlds" scenario
of moderate economic growth with low inflation, low unemployment and a benign
to positive political landscape. Interest rates started to move back up again
in December as some economic indicators strengthened, but ended the year well
below the levels seen in the second and third quarters.

We expect real economic growth to average around 2% in 1997. The consumer
sector, which makes up two thirds of Gross Domestic Product ("GDP"), should
show modest growth. The factors that would otherwise contribute to strong
consumer spending -- low unemployment, high consumer confidence, and the wealth
effects from the strong stock market -- should be muted by high consumer debt
levels (particularly at lower income levels) and lack of pent-up demand. The
export sector should continue to grow 5% to 10% in 1997, helped by the United
States' strong competitive position and continued robust growth in emerging
markets. Growth should improve slightly in Europe and Japan, helped by the
recent strengthening of the dollar against those currencies. The stronger
dollar is likely to be a mixed blessing, by making the prices of foreign
imports more attractive and thereby helping to dampen inflation. The capital
goods sector has slowed in recent quarters, but is still expected to grow
faster than overall U.S. economy. The government sector should continue to be
a drag on GDP growth.

Overall, we believe that the U.S. economy is likely to remain on a path of
moderate non-inflationary growth in 1997. However, because of the current low
level of unemployment, we also expect that the Fed will remain cautious and
biased towards a tighter monetary policy. Whether the Fed acts may depend in
part on market psychology. Upward shifts in long-term bond yields have served
to moderate economic growth in recent years and reduced the need for any major
changes in Fed policy.

-1-

<PAGE> 4

FIXED INCOME COMMENTARY

The U.S. bond market had its best quarter of the year in the fourth quarter.
The Lehman Intermediate Government/Corporate Index returned 2.5% for the
quarter and 4.1% for the full year. For the year, the Lehman Long
Government/Corporate Index provided a total return of only 0.1%. Treasury
bonds with maturities longer than 10 years had negative total returns.

Within the fixed income market, all private issuer sectors outperformed
Treasury bonds as quality spreads continued to narrow. While Treasuries
performed almost as poorly in 1996 as in 1994, the effect on other sectors was
relatively neutral, unlike 1994 when there were problems with mortgage-backed
derivatives, Mexico, and Orange County. The yield curve was also remarkably
stable in 1996, unlike 1994 when short-term interest rates rose considerably.
The mortgage-backed, high yield, and municipal sectors were the best performing
areas in 1996 on a duration-adjusted basis. Within the corporate sector, lower
quality and foreign issues were the best performers based on both higher
coupons and spread tightening.

We expect interest rates to stay in the trading range established in 1996 (the
yield of the 30-year Treasury bond ranged between 6.0% and 7.2%). On one hand,
investors are concerned that low unemployment will eventually give rise to
inflationary wage growth. We believe this sets a floor for long-term bond
yields at about 6.0%. At the upper end of the range, the 7.2% level has proved
to be sufficient to generate increased demand for bonds and depress high risk
asset classes and interest sensitive sectors of the economy. We feel that
central bank vigilance against inflation, globalization, and productivity
improvements will keep inflation under control, preventing interest rates from
rising much above their 1996 high.

Within the fixed income markets, demand for corporate, mortgage-backed and
asset-backed issue continues to be high. Yield spreads (relative to Treasury
issues) for lower and higher quality corporate bonds are quite narrow. The
mortgage-backed and asset-backed markets are similarly compressed, with
investors digging for yield. There is nothing in our economic outlook that is
likely to change the tight spread environment in the near future. We are being
careful, however, to weed out riskier credits and issues that do not offer
enough yield premium to offset their potential for negative surprises. The
foreign area continues to offer opportunities, particularly foreign corporate
bonds that sometimes have very strong balance sheets but are capped by the
rating of their home country. Foreign sovereign credits are also continuing to
improve based on solid global economic growth and increased acceptance of the
need for sound fiscal and monetary policy.

EQUITY COMMENTARY

During 1996, financial markets were repeatedly jolted by changes in sentiment
about the strength of the U.S. economy and the direction of Fed policy. When
investors gained confidence that the economy was continuing on a track of
moderate, non-inflationary growth, the stock market advanced strongly and
posted another year of outstanding performance. For the twelve-month period
ending December 31, 1996, the Standard & Poor's 500 Stock Index ("S&P 500")
provided a total return of 23.0%. Over the same period, the Russell 2000 Stock
Index, a measure of the performance of the small company segment of the equity
market, provided a total return of 16.5%.

After a weak start in January, the stock market moved broadly higher through
the first months of spring. Small company shares advanced strongly in April
and May, led by the technology sector. In late June and July, when long-term
bond yields moved back over 7%, the stock market traded back down to where it
began the year. Recent initial public offerings and more speculative issues
were particularly hard hit during the reversal. Large company stocks quickly
recovered their losses when the bond market stabilized at the end of July.
However, small company stocks continued to struggle. During the autumn,
against the backdrop of lower bond yields, low inflation and surprisingly
resilient corporate earnings, the stock market made its strongest advance of
the year, with large company issues leading the way.

-2-

<PAGE> 5

As measured by the S&P 500, the U.S. stock market has provided a cumulative
total return of nearly 70% over the past two years, capping a six-year bull
market that began in October of 1990. Notwithstanding the strong overall
environment for equities, 1996 marked the third consecutive year of
underperformance by small and mid sized company stocks relative to "blue chip"
indices. The underperformance of small company stocks can be explained in part
by the sharper falloff in earnings growth experienced by smaller companies in
the 1995-96 period. The performance lag also reflected a backing away by
investors from higher risk growth stocks, in an environment of rising interest
rates and market volatility.

Given the frequent alarms raised in 1996 about slowing earnings growth,
investors showed an understandable preference for industry sectors with visible
earnings momentum. In the energy sector, analysts' earnings estimates and
share prices moved sharply higher in response to firmer prices for oil and
natural gas. Stocks in the finance sector also performed exceptionally well
despite emerging credit quality concerns. In the consumer sector, specialty
and broad-line retail stocks were up strongly in response to higher than
expected levels of consumer spending. The technology sector provided superior
returns for investors last year, led by Intel and Microsoft. Within the
technology sector, software, semiconductor and computer product stocks had the
strongest relative performance. Industrial cyclical stocks underperformed, as
soft domestic and export demand led to declining commodity prices for paper,
copper, aluminum, steel and fertilizer products. The health care sector was
mixed. Drug stocks kept pace with the market due to strong earnings gains,
while the HMO group declined sharply on repeated earnings disappointments.
Utilities were the weakest overall sector during the year, held back by the
relatively poor performance of local telephone carriers and electrical
companies.

We are taking a more cautious position toward the U.S. stock market at this
point. Over the past year, the price-to-earnings ratio of the S&P 500 on
12-month forward earnings has increased from 15 to 17 times earnings per share.
This level of valuation is consistent with earlier periods of moderate growth
and low inflation, but leaves no cushion for earnings or inflation
disappointments. After a prolonged period of underperformance, relative
valuations for small company stocks are becoming more attractive. However, we
believe that caution should still be exercised since the small capitalization
segment of the equity market has a relatively high exposure to cyclical
industries and would be vulnerable to any combination of higher interest rates
and slower profit growth.

KENT A. KELLEY, CFA, THE TRAVELERS INVESTMENT MANAGEMENT COMPANY

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

-3-

<PAGE> 6

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
- ------------------------------------------------------------------------------
<S> <C>
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES ............................................... 5

THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES ... 16

THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES .. 24

THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES .............. 36
</TABLE>

-4-

<PAGE> 7

THE TRAVELERS
TIMED GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES

The Travelers Timed Growth and Income Stock Account for Variable Annuities
("Account TGIS") is managed by the Travelers Investment Management Company
("TIMCO") to provide diversified exposure to the large company segment of the
U.S. equity market, while maintaining a highly marketable portfolio of common
stocks and related financial instruments in order to accommodate cash flows
associated with market timing moves. Stock selection is based on a
quantitative screening process favoring companies that achieve earnings growth
above consensus expectations and whose stocks offer attractive relative value.
In order to achieve consistent relative performance, we manage Account TGIS to
mirror the overall risk, sector weightings and growth/value style
characteristics of the Standard & Poor's 500 Stock Index ("S&P 500"). The S&P
500 is a value-weighted equity index comprised primarily of large company
stocks.

For the year ended December 31, 1996, Account TGIS achieved a total return of
23.4%, before fees and expenses, outperforming the S&P 500 total return of
23.1%. Net of fees and expenses, Account TGIS's total return of 19.9% for the
year equaled the average return of variable annuity stock accounts in the
Lipper Growth & Income category.

During the second half of 1996, stock selection in the energy and producer
durables sectors made the strongest positive contribution to Account TGIS's
overall relative performance. In the energy sector, Account TGIS benefited
from holdings in better performing stocks in the oilfield services group, such
as Ensco International and Cooper Cameron. In the exploration and production
group, an overweighted position in Anadarko Petroleum also helped performance.
In the producer durables sector, our largest relative gain came from holdings
in Harnischfeger, United Technologies and Honeywell. We lost ground relative
to the benchmark in the technology and consumer staples sectors. In the
technology sector, we were penalized by being underweight in a number of
computer and networking stocks that moved up sharply after reporting
surprisingly strong sales and earnings, including Compaq, Dell and 3COM. In
the consumer staples sector, performance was hurt by our position in PepsiCo.
which traded lower in reaction to weak international soft drink sales.

We continue to focus on stocks that exhibit improving earnings (primarily
measured by changes in analysts' earnings estimates and the trend of recent
earnings surprises), and which also trade at a reasonable price-to-earnings
ratios relative to expected earnings growth rates. In the technology sector,
we have emphasized market leaders that are currently benefiting from strong
pricing and product demand, such as Intel in the semiconductor group and Cisco
in the client/server networking group. In the health care sector, we have an
overweight in Bristol-Myers Squibb which has improved earnings momentum from
its new drug therapy to combat high blood cholesterol. In the consumer
sectors, we are focusing on a number of retailers that have good sales momentum
and whose shares still trade at a reasonable multiple of earnings, such as The
Gap and Borders Group. In financial services, we have overweighted positions
in a number of banks and specialty insurance companies that combine
above-average earnings growth and low relative valuations, including
BankAmerica, Ambac and Transatlantic Holdings.

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

[TIMCO LOGO]

-5-

<PAGE> 8

THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $156,639,025)........ $ 187,539,883
Cash.............................................................. 26,054
Receivables:
Dividends...................................................... 161,960
Interest....................................................... 260
Investment securities sold..................................... 600,257
Purchase payments and transfers from other Travelers accounts.. 24,942
Other assets...................................................... 34
---------------
Total Assets.................................................. 188,353,390
---------------
LIABILITIES:
Payables:
Investment securities purchased................................ 604,174
Contract surrenders and transfers to other Travelers accounts.. 1,957,316
Investment management and advisory fees........................ 6,785
Market timing fees............................................. 32,646
Variation on futures margin.................................... 708,205
Accrued liabilities............................................... 26,113
---------------
Total Liabilities.............................................. 3,335,239
---------------
NET ASSETS:
(Applicable to 68,111,142 units outstanding at $2.717 per unit) $ 185,018,151
===============
</TABLE>

See Notes to Financial Statements

-6-

<PAGE> 9

THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................... $ 2,874,405
Interest.................................................... 1,854,957
---------------
Total income............................................ $ 4,729,362

EXPENSES:
Market timing fees.......................................... 2,295,058
Investment management and advisory fees..................... 596,659
Insurance charges........................................... 2,295,058
---------------
Total expenses.......................................... 5,186,775
--------------
Net investment loss.................................. (457,413)
--------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold................ 233,836,738
Cost of investment securities sold...................... 216,418,166
---------------
Net realized gain.................................... 17,418,572

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1995.................... 16,638,946
Unrealized gain at December 31, 1996.................... 30,900,858
---------------
Net change in unrealized gain for the year........... 14,261,912
--------------
Net realized gain and change in unrealized gain... 31,680,484
--------------
Net increase in net assets resulting from operations......... $ 31,223,071
==============
</TABLE>

See Notes to Financial Statements

-7-

<PAGE> 10

THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income (loss)................................................ $ (457,413) $ 1,892,738
Net realized gain from investment security transactions..................... 17,418,572 18,882,897
Net change in unrealized gain on investment securities...................... 14,261,912 16,455,717
--------------- -------------

Net increase in net assets resulting from operations..................... 31,223,071 37,231,352
--------------- -------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 3,669,841 and 4,557,812 units, respectively).............. 8,913,140 9,246,578
Participant transfers from other Travelers accounts
(applicable to 997,173 and 263,610 units, respectively).................. 2,447,373 530,000
Market timing transfers from other Travelers timed accounts
(applicable to 15,373,491 and 91,018,707 units, respectively)............ 41,324,850 182,133,693
Administrative charges
(applicable to 104,468 and 150,735 units, respectively).................. (270,930) (325,636)
Contract surrenders
(applicable to 6,643,488 and 6,210,191 units, respectively).............. (16,458,034) (12,733,388)
Participant transfers to other Travelers accounts
(applicable to 10,551,980 and 13,985,712 units, respectively)............ (25,735,778) (28,338,250)
Market timing transfers to other Travelers timed accounts
(applicable to 39,522,364 units)......................................... (93,836,213) -
Other payments to participants
(applicable to 150,701 and 141,806 units, respectively).................. (357,201) (290,911)
--------------- -------------

Net increase (decrease) in net assets resulting from unit transactions... (83,972,793) 150,222,086
--------------- -------------

Net increase (decrease) in net assets................................. (52,749,722) 187,453,438

NET ASSETS:
Beginning of year........................................................... 237,767,873 50,314,435
--------------- -------------

End of year................................................................. $ 185,018,151 $ 237,767,873
=============== =============
</TABLE>

See Notes to Financial Statements

-8-

<PAGE> 11

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 at amortized cost which approximates market.

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

It is Account TGIS's practice to hold cash and cash equivalents 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 or debt securities associated with the futures
contract.

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

-9-

<PAGE> 12

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. Account 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. Effective July 1, 1996, premiums and discounts are amortized
to interest income utilizing the constant yield method.

2. INVESTMENTS

The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities) for the year ended December 31, 1996,
were $117,593,762 and $136,079,799, respectively. Realized gains and losses
from investment transactions are reported on an identified cost basis.

Account TGIS placed a portion of its security transactions with brokerage
firms which are affiliates of The Travelers. The commissions paid to these
affiliated firms were $39,297 and $13,231 for the years ended December 31,
1996 and 1995, respectively.

At December 31, 1996, Account TGIS held 96 open S&P 500 Stock Index futures
contracts expiring in March, 1997. The underlying face value, or notional
value, of these contracts at December 31, 1996 amounted to $35,736,000. In
connection with these contracts, short-term investments with a par value of
$1,545,000 had been pledged as margin deposits.

Net realized gains resulting from futures contracts were $3,859,624 and
$16,007,920 for the years ended December 31, 1996 and 1995, 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, 1996, is shown
on the Statement of Assets and Liabilities as a payable for variation on
futures margin.

-10-

<PAGE> 13

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 average
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 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 include
$161,380 and $143,108 of contingent deferred sales charges for the years
ended December 31, 1996 and 1995, respectively.

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

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income........................... $ .061 $ .083 $ .064 $ .043 $ .046
Operating expenses................................ .069 .057 .041 .042 .045
---------- ----------- ---------- --------- -----------

Net investment income (loss)...................... (.008) .026 .023 .001 .001

Unit value at beginning of year................... 2.263 1.695 1.776 1.689 1.643
Net realized and change in unrealized
gains (losses).................................. .462 .542 (.104) .086 .045
---------- ----------- ---------- --------- -----------

Unit value at end of year......................... $ 2.717 $ 2.263 $ 1.695 $ 1.776 $ 1.689
========== =========== ========== ========= ===========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value............. $ .45 $ .57 $ (.08) $ .09 $ .05
Ratio of operating expenses to average
net assets*..................................... 2.82 % 2.82 % 2.82 % 2.82 % 2.82 %
Ratio of net investment income (loss) to average
net assets* .................................... (.34) % 1.37 % 1.58 % .08 % .78 %
Number of units outstanding at end of
year (thousands)................................ 68,111 105,044 29,692 - 217,428
Portfolio turnover rate........................... 81 % 79 % 19 % 70 % 119 %
Average commission rate paid+..................... $ .046 - - - -
</TABLE>

* Annualized.

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

-11-

<PAGE> 14

THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------- -------------
<S> <C> <C>
COMMON STOCKS (78.9%)
AGRICULTURE (0.4%)
Pioneer Hi Bred International 9,900 $ 693,000
-------------
AMUSEMENTS (0.7%)
Walt Disney Co. 18,041 1,256,105
-------------
BANKING (6.3%)
Banc One Corp. 10,520 452,360
Bank of Boston Corp. 10,500 674,625
BankAmerica Corp. 15,000 1,496,250
Barnett Banks Inc. 5,100 209,737
Chase Manhattan Corp. 18,324 1,635,417
Citicorp 19,700 2,029,100
First Bank Systems, Inc. 3,700 252,525
First Chicago NBD 8,600 462,250
Golden West Financial Corp. 7,000 441,875
Mellon Bank Corp. 11,900 844,900
NationsBank Corp. 8,700 850,425
Northern Trust Corp. 12,600 457,538
Norwest Corp. 23,400 1,017,900
SunTrust Banks, Inc. 5,800 285,650
Wells Fargo & Co. 2,600 701,350
-------------
11,811,902
-------------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (10.3%)
Abbott Laboratories 13,100 664,825
American Home Products Corp. 10,100 592,113
Amgen (A) 14,400 783,900
Bristol-Myers Squibb Co. 18,900 2,055,375
Colgate-Palmolive 4,000 369,000
Cytec Industries, Inc. (A) 12,700 515,937
E.I. Dupont de Nemours & Co. 14,800 1,396,750
Eli Lilly & Co. 9,200 671,600
Johnson & Johnson 42,600 2,119,350
Merck & Co. 37,300 2,956,025
Monsanto Co. 26,000 1,010,750
Morton International 14,100 574,575
Pfizer, Inc. 16,800 1,392,300
Procter & Gamble Co. 18,700 2,010,250
Schering-Plough Corp. 16,400 1,061,900
Union Carbide Corp. 14,900 609,037
Warner-Lambert Co. 7,200 540,000
-------------
19,323,687
-------------
COMMUNICATION (5.4%)
Ameritech Corp. 15,000 909,375
AT&T Corp. 31,700 1,378,950
Bell Atlantic Corp. 11,900 770,525
BellSouth Corp. 27,100 1,094,162
Clear Channel Communications (A) 15,200 549,100
GTE Corp. 22,600 1,028,300
MCI Communications Corp. 32,800 1,072,150
NYNEX Corp. 11,900 572,687
Pacific Telesis Group 9,400 345,450
Sprint Corp. 9,200 366,850
SBC Communications, Inc. 22,300 1,154,025
TCI Satellite Entertainment (A) 18,000 235,125
Tele-Communications Inc. (A) 1,800 17,888
U.S. West Communications Group 4,900 158,025
WorldCom, Inc. (A) 21,800 568,162
-------------
10,220,774
-------------
CONTRACTORS (0.6%)
Fluor Corp. 8,800 552,200
Halliburton Co. 9,800 590,450
-------------
1,142,650
-------------
ELECTRICAL AND
ELECTRONIC MACHINERY (6.4%)
Andrew Corp. (A) 8,850 469,603
Atmel Corp. (A) 16,000 532,000
Duracell International, Inc. 7,400 517,075
General Electric Corp. 44,700 4,419,713
Intel Corp. 25,200 3,299,625
Motorola, Inc. 15,300 939,037
Raychem Corp. 6,800 544,850
Texas Instruments, Inc. 4,700 299,625
Time Warner, Inc. 14,400 540,000
U.S. Robotics, Inc. (A) 7,100 511,644
-------------
12,073,172
-------------
FINANCE (2.6%)
American Express Co. 13,200 745,800
Federal Home Loan Mortgage Corp. 5,000 550,625
Federal National Mortgage Association 29,700 1,106,325
HFS Inc. (A) 12,800 764,800
Household International 7,100 654,975
Merrill Lynch & Co. 4,400 358,600
Morgan Stanley Group, Inc. 4,300 245,637
Student Loan Marketing Association 5,000 465,625
-------------
4,892,387
-------------
FOOD (6.4%)
Anheuser-Busch Cos. 13,300 532,000
Campbell Soup Co. 2,900 232,725
Coca-Cola Co. 64,700 3,404,837
ConAgra, Inc. 20,100 999,975
CPC International, Inc. 9,300 720,750
Dean Foods Co. 16,900 545,025
General Mills, Inc. 4,200 266,175
PepsiCo, Inc. 41,900 1,225,575
Philip Morris, Inc. 26,000 2,928,250
Sara Lee Corp. 13,000 484,250
Unilever N.V. 3,700 648,425
-------------
11,987,987
-------------
FURNITURE AND FIXTURES (0.2%)
Lear Corp. (A) 11,500 392,438
-------------
HOTELS & LODGING (0.3%)
Hilton Hotels Corp. 19,800 517,275
-------------
INSURANCE (3.5%)
Allstate Corp. 11,938 690,912
Ambac, Inc. 11,800 783,225
American International Group 12,650 1,369,363
Chubb Corp. 9,900 532,125
Cigna Corp. 5,200 710,450
General Reinsurance Corp. 2,100 331,275
ITT Hartford Group, Inc. 10,400 702,000
MedPartners, Inc. (A) 18,200 382,200
SunAmerica, Inc. 9,900 439,313
Transatlantic Holdings, Inc. 7,800 627,900
-------------
6,568,763
-------------
LUMBER AND WOOD PRODUCTS (0.4%)
Georgia-Pacific Corp. 7,000 504,000
Weyerhaeuser Co. 5,400 255,825
-------------
759,825
-------------
</TABLE>

-12-

<PAGE> 15

STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
-------- -------------
<S> <C> <C>
MACHINERY (5.1%)
Black & Decker Corp. 18,600 $ 560,325
Caterpillar, Inc. 5,400 406,350
Cisco Systems, Inc. (A) 27,200 1,732,300
Compaq Computer Corp. (A) 7,800 579,150
Deere & Co. 16,500 670,313
Gateway 2000, Inc. (A) 8,100 433,856
Hewlett-Packard Co. 26,800 1,346,700
International Business Machines Corp. 13,800 2,083,800
Lucent Technologies 16,580 766,825
Sun Microsystems (A) 28,200 724,387
3Com Corp. (A) 4,500 329,906
-------------
9,633,912
-------------
METAL PRODUCTS (1.2%)
Aluminum Co. of America 7,200 459,000
Gillette Co. 18,300 1,422,825
Nucor Corp. 2,400 122,400
USX-U.S. Steel Group 7,300 229,038
-------------
2,233,263
-------------
MINING (0.5%)
Freeport-McMoRan Copper & Gold 20,100 600,487
Homestake Mining Co. 25,900 369,075
-------------
969,562
-------------
MISCELLANEOUS MANUFACTURING (1.9%)
American Brands 4,500 223,312
Eastman Kodak Co. 8,700 698,175
Emerson Electric Co. 5,900 570,825
Guidant Corp. 10,000 570,000
Honeywell, Inc. 9,700 637,775
Medtronics, Inc. 6,500 442,000
Xerox Corp. 8,200 431,525
-------------
3,573,612
-------------
OIL & GAS (0.7%)
Chesapeake Energy Corp. (A) 8,300 461,688
Louisiana Land & Exploration 9,200 493,350
Schlumberger Ltd. 4,000 399,500
-------------
1,354,538
-------------
PAPER AND ALLIED PRODUCTS (0.7%)
Kimberly Clark Corp. 7,510 715,327
Willamette Industries, Inc. 8,300 577,888
-------------
1,293,215
-------------
PETROLEUM REFINING AND
RELATED INDUSTRIES (6.5%)
Amerada Hess 10,300 596,113
Amoco Corp. 12,900 1,038,450
Ashland Oil, Inc. 11,600 508,950
Atlantic Richfield Co. 3,100 410,750
Chevron Corp. 17,300 1,124,500
Exxon Corp. 28,000 2,744,000
Mobil Corp. 14,200 1,735,950
Royal Dutch Petroleum Co. 11,300 1,929,475
Texaco, Inc. 14,700 1,442,437
Unocal Corp. 16,000 650,000
-------------
12,180,625
-------------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (0.7%)
Gannet Co. 9,400 703,825
New York Times Co. 14,200 539,600
-------------
1,243,425
-------------
RETAIL (3.6%)
American Stores 14,700 600,862
Borders Group, Inc. (A) 11,800 423,325
Dollar General Corp. 13,900 444,800
Federated Department Stores, Inc. (A) 17,400 593,775
Home Depot, Inc. 13,400 671,675
Lowe's Cos. 16,200 575,100
McDonalds Corp. 16,900 764,725
Sears Roebuck & Co. 10,100 465,863
The GAP, Inc. 22,300 671,787
Tiffany & Co. 12,500 457,813
Wal-Mart Stores, Inc. 46,600 1,065,975
-------------
6,735,700
-------------
RUBBER AND PLASTIC PRODUCTS (1.2%)
Armstrong World Industries 7,200 500,400
Illinois Tool Works 9,400 750,825
Nike, Inc. 15,400 920,150
-------------
2,171,375
-------------
SERVICES (4.2%)
AccuStaff, Inc. (A) 22,200 468,975
Automatic Data Process 8,300 355,863
Columbia/HCA Healthcare Corp. 17,750 723,312
Computer Associates International 16,600 825,850
Corrections Corp. of America (A) 14,400 441,000
Equifax, Inc. 3,100 94,938
First Data Corp. 11,800 430,700
HBO & Co. 11,400 676,875
Microsoft (A) 31,800 2,629,462
Oracle Corp. (A) 17,200 717,025
Vencor, Inc. (A) 13,800 436,425
-------------
7,800,425
-------------
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.5%)
Minnesota Mining & Manufacturing Co. 11,300 936,487
-------------
TEXTILE MILL PRODUCTS (0.3%)
V.F. Corp 8,400 567,000
-------------
TRANSPORTATION (0.9%)
Burlington Northern Santa Fe 9,100 786,012
Conrail, Inc. 2,124 211,604
Continental Air, Inc. (A) 16,100 454,825
Union Pacific Corp. 5,700 342,713
-------------
1,795,154
-------------
TRANSPORTATION MANUFACTURING (3.4%)
Allied Signal, Inc. 7,400 495,800
Boeing Co. 14,200 1,510,525
Chrysler Corp. 25,700 848,100
Ford Motor Co. 31,700 1,010,438
General Motors Corp. 18,500 1,031,375
Lockheed Martin Corp. 5,400 494,100
United Technologies Corp. 15,600 1,029,600
-------------
6,419,938
-------------
</TABLE>

-13-

<PAGE> 16

STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
-------- ------------
<S> <C> <C>
UTILITIES (3.2%)
AES Corp. (A) 12,000 $ 558,000
Allegheny Power Systems, Inc. 14,000 425,250
Baltimore Gas & Electric Co. 14,300 382,525
CalEnergy Co. (A) 14,600 490,925
Columbia Gas Systems, Inc. 8,600 547,175
Consolidated Natural Gas Co. 10,500 580,125
CMS Energy Corp. 9,300 312,713
Duke Power Co. 5,400 249,750
Florida Power & Light Co. 4,700 216,200
Houston Industries 7,100 160,637
Pacific Enterprises 6,000 182,250
Sonat, Inc. 11,500 592,250
Southern Co. 29,300 662,913
Texas Utilities Co. 16,400 668,300
------------
6,029,013
------------
WHOLESALE TRADE (0.8%)
Crane Co. 20,250 587,250
Enron Corp. 6,800 293,250
Grainger (W.W) 7,100 569,775
------------
1,450,275
------------
TOTAL COMMON STOCKS
(COST $117,115,324) 148,027,484
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (21.1%)
COMMERCIAL PAPER (19.4%)
Allied Signal, Inc.,
5.53% due January 22, 1997 $ 1,000,000 996,521
Allied Signal, Inc.,
6.06% due January 2, 1997 2,000,000 1,999,252
BHP Finance (USA), Inc.,
5.37% due January 15, 1997 3,500,000 3,491,474
Ciesco LP,
5.47% due February 4, 1997 3,000,000 2,984,016
Ford Motor Credit Co.,
5.36% due February 11, 1997 3,500,000 3,477,722
General Electric Capital Corp.,
5.37% due January 23, 1997 3,500,000 3,487,320
Heinz H.J. Co.,
5.43% due January 6, 1997 3,500,000 3,496,237
Household Finance Corp.,
5.35% due January 8, 1997 3,500,000 3,495,086
Prudential Funding Corp.,
5.36% due January 13, 1997 3,500,000 3,492,440
PACCAR Financial Corp.,
5.40% due January 8, 1997 2,500,000 2,496,490
Raytheon Co.,
5.37% due January 14, 1997 2,500,000 2,494,253
Raytheon Co.,
5.50% due January 13, 1997 1,000,000 997,840
Xerox Corp.,
5.39% due January 16, 1997 3,500,000 3,490,942
------------
36,399,593
------------
U.S. GOVERNMENT SECURITIES (0.8%)
United States of America Treasury,
5.25% due August 21, 1997 (B) 100,000 96,740
United States of America Treasury,
5.29% due August 21, 1997 (B) 1,400,000 1,354,363
United States of America Treasury,
5.29% due August 21, 1997 (B) 100,000 96,703
------------
1,547,806
------------
REPURCHASE AGREEMENTS (0.9%)
Merrill Lynch Government Securities, Inc.,
6.00% Repurchase Agreement
dated December 31, 1996 due January 2,
1997, collateralized by: United
States of America Treasury, $1,450,000,
7.875% due November 15, 2004 $ 1,565,000 $ 1,565,000
------------
TOTAL SHORT-TERM
INVESTMENTS (COST $39,523,701) 39,512,399
------------
<CAPTION>
NOTIONAL
VALUE
-----------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 500 Stock Index,
Exp. March, 1997 (C) $35,736,000 -
-------------
TOTAL INVESTMENTS (100%)
(COST $156,639,025) (D) $ 187,539,883
=============
</TABLE>

NOTES

(A) Non-income Producing Security.

(B) Par value of $1,545,000 pledged to cover margin deposits on futures
contracts.

(C) 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.

(D) At December 31, 1996, net unrealized appreciation for all securities was
$30,900,858. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$31,695,186 and aggregate gross unrealized depreciation for all securities
in which there was an excess of cost over market value of $794,328.

See Notes to Financial Statements

-14-

<PAGE> 17

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 Annuities
including the statement of investments as of December 31, 1996, 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, 1996, 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, 1996, 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 12, 1997

-15-

<PAGE> 18

THE TRAVELERS
TIMED SHORT-TERM
BOND ACCOUNT
FOR VARIABLE ANNUITIES

The year 1996 started out with investor concerns about a possible recession,
and the market timing strategy was to hold no securities for The Travelers
Timed Short-Term Bond Account for Variable Annuities. The market expected the
Federal Reserve Board ("Fed") to cut interest rates significantly and in
January there was a 0.25% reduction to 5.25%. However, strong employment
growth in the first and second quarters shifted concerns from recession to
inflation. Due to mixed economic data for the balance of 1996, the Fed
maintained a steady course and inacted no other rate changes.

A "Do Not Disturb" sign hung over the financial markets for most of the fourth
quarter. The federal funds rate remained unchanged at 5.25% and for most of
the quarter economic data exhibited modest growth and subdued inflation.
Long-term bond yields started the quarter at 6.97% and ended the quarter at
6.64%. However the January, 1997 release of December, 1996 employment data
reflected the creation of 262,000 new jobs which was significantly above
estimates, an increase in the average work week and the average hours worked
index increased 0.9% created further inflation concerns.

Our expectation is for the Fed to continue to stifle any potential increase in
inflation and if economic data continues to reflect above average growth the
Fed will take action and increase the federal funds rate.

In light of this, the strategy in the management of The Travelers Timed
Short-Term Bond Account for Variable Annuities' short-term assets will be to
maintain maturities in the 30 to 60 day range. At year end the asset size of
the portfolio was $74.5 million, with an average yield of 5.51% and an average
life of 31.1 days.

PORTFOLIO MANAGER: EMIL J. MOLINARO JR.

[TIMCO LOGO]

-16-

<PAGE> 19

THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $74,461,534)......... $ 74,451,200
Cash.............................................................. 276
Receivables:
Interest....................................................... 320,076
Purchase payments and transfers from other Travelers accounts.. 13,753
--------------

Total Assets................................................ 74,785,305
--------------

LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts.. 484,930
Investment management and advisory fees........................ 2,660
Market timing fees............................................. 12,798
Accrued liabilities............................................... 10,239
--------------

Total Liabilities........................................... 510,627
--------------

NET ASSETS:
(Applicable to 54,565,187 units outstanding at $1.361 per unit) $ 74,274,678
==============
</TABLE>

See Notes to Financial Statements

-17-

<PAGE> 20

THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................... $ 4,437,534

EXPENSES:
Market timing fees..................................... $ 1,028,875
Investment management and advisory fees................ 267,590
Insurance charges...................................... 1,028,875
------------
Total expenses...................................... 2,325,340
--------------
Net investment income............................ 2,112,194
--------------

REALIZED GAIN AND CHANGE IN UNREALIZED LOSS ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold............ 71,795,133
Cost of investment securities sold.................. 71,775,170
------------
Net realized gain................................ 19,963
Change in unrealized loss on investment securities:
Unrealized loss at December 31, 1995................ -
Unrealized loss at December 31, 1996................ (10,334)
------------

Net change in unrealized loss for the year......... (10,334)
--------------
Net realized gain and change in unrealized loss... 9,629
--------------

Net increase in net assets resulting from operations $ 2,121,823
==============
</TABLE>

See Notes to Financial Statements

-18-

<PAGE> 21

THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
---- ----

<S> <C> <C>
OPERATIONS:
Net investment income.................................................... $ 2,112,194 $ 4,324,539
Net realized gain from investment security transactions.................. 19,963 66,052
Net change in unrealized loss on investment securities................... (10,334) 255,618
---------------- -----------------
Net increase in net assets resulting from operations.................. 2,121,823 4,646,209
---------------- -----------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 3,580,147 and 10,737,861 units, respectively).......... 4,822,829 14,027,260
Participant transfers from other Travelers accounts
(applicable to 805,634 and 837,920 units, respectively)............... 1,084,231 1,093,151
Market timing transfers from other Travelers timed accounts
(applicable to 127,845,161 and 12,166,043 units, respectively)........ 171,245,508 16,038,495
Administrative charges
(applicable to 85,517 and 101,958 units, respectively)................ (115,494) (133,957)
Contract surrenders
(applicable to 4,878,210 and 8,137,104 units, respectively)........... (6,581,955) (10,638,375)
Participant transfers to other Travelers accounts
(applicable to 10,743,375 and 25,776,691 units, respectively)......... (14,473,627) (33,660,474)
Market timing transfers to other Travelers timed accounts
(applicable to 61,747,981 and 206,198,047 units, respectively)........ (83,544,949) (271,166,611)
Other payments to participants
(applicable to 210,672 and 241,181 units, respectively)............... (283,688) (315,041)
---------------- -----------------
Net increase (decrease) in net assets resulting from unit transactions 72,152,855 (284,755,552)
---------------- -----------------
Net increase (decrease) in net assets.............................. 74,274,678 (280,109,343)

NET ASSETS:
Beginning of year........................................................ - 280,109,343
---------------- -----------------

End of year.............................................................. $ 74,274,678 $ -
================ =================
</TABLE>

See Notes to Financial Statements

-19-

<PAGE> 22

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.

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.

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.

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

2. INVESTMENTS

Realized gains and losses from security transactions are reported on an
identified cost basis.

-20-

<PAGE> 23

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 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 average
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 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 include
$72,688 and $143,893 of contingent deferred sales charges for the years
ended December 31, 1996 and 1995, respectively.

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

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income.................. $ .057 $ .074 $ .055 $ .041 $ .054
Operating expenses....................... .030 .035 .036 .037 .041
---------- ------------ ----------- ------------ ------------

Net investment income.................... .027 .039 .019 .004 .013

Unit value at beginning of year.......... 1.333 1.292 1.275 1.271 1.258
Net realized and change in unrealized
gains (losses)*........................ .001 .002 (.002) - -
---------- ------------ ----------- ------------ ------------
Unit value at end of year.................. $ 1.361 $ 1.333 $ 1.292 $ 1.275 $ 1.271
========== ============ =========== ============ ============

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value............... $ .03 $ .04 $ .02 $ - $ .01
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**........................... 2.47 % 3.17 % 1.45 % .39 % 1.12 %
Number of units outstanding at end of
year (thousands)....................... 54,565 - 216,713 353,374 173,359
</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.

-21-

<PAGE> 24

THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (100%)

COMMERCIAL PAPER (94.8%)
Allied Signal, Inc.,
6.06% due January 2, 1997 $ 2,000,000 $ 1,999,252
Bankers Trust NY Corp.,
5.55% due February 19, 1997 3,000,000 2,977,389
BHP Finance (USA), Inc.,
5.39% due February 5, 1997 5,000,000 4,972,615
Citicorp,
5.79% due March 10, 1997 540,000 543,303
Dillard Investment Co., Inc.,
5.54% due January 10, 1997 2,000,000 1,996,566
General Electric Capital Corp.,
5.34% due January 14, 1997 5,000,000 4,988,505
General Motors Acceptance Corp.,
5.73% due January 27, 1997 2,000,000 2,002,542
Heinz H.J. Co.,
5.42% due January 23, 1997 2,185,000 2,177,084
Heinz H.J. Co.,
5.54% due January 30, 1997 3,000,000 2,986,209
Household Finance Corp.,
5.35% due January 7, 1997 5,000,000 4,993,795
National Rural Utilities Coop. Fin. Corp.,
5.39% due January 16, 1997 5,000,000 4,987,060
PacifiCorp,
5.44% due January 28, 1997 3,500,000 3,484,862
PacifiCorp,
5.61% due January 27, 1997 3,000,000 3,003,813
Penney JC Funding Corp.,
5.74% due October 15, 1997 2,000,000 2,064,970
Prudential Funding Corp.,
5.35% due January 6, 1997 5,000,000 4,994,625
Schering Corp.,
5.52% due February 11, 1997 7,000,000 6,955,445
Southern California Edison Co.,
5.67% due January 15, 1997 4,500,000 4,501,085
Transamerica Financial Corp.,
5.53% due February 18, 1997 5,000,000 4,963,040
Wachovia Bank of NC NA,
5.49% due January 3, 1997 5,000,000 5,000,000
Wachovia Bank of NC NA,
5.69% due April 14, 1997 1,000,000 1,000,040
-------------
70,592,200
-------------
REPURCHASE AGREEMENTS (5.2%)
Merrill Lynch Government Securities, Inc.,
6.00% Repurchase Agreement
dated December 31, 1996 due January 2,
1997, collateralized by: United
States of America Treasury, $3,570,000,
7.875% due November 15, 2004 3,859,000 3,859,000
-------------

TOTAL INVESTMENTS (100%)
(COST $74,461,534) $ 74,451,200
=============
</TABLE>

See Notes to Financial Statements

-22-

<PAGE> 25

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 including the
statement of investments as of December 31, 1996, 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, 1996, 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 Short-Term Bond Account for Variable Annuities as of December
31, 1996, 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 12, 1997

-23-

<PAGE> 26

THE TRAVELERS
TIMED AGGRESSIVE
STOCK ACCOUNT
FOR VARIABLE ANNUITIES

The Travelers Timed Aggressive Stock Account for Variable Annuities ("Account
TAS") is managed by the Travelers Investment Management Company (TIMCO) to
provide diversified exposure to the mid- and small-capitalization sector of the
U.S. equity market, while maintaining a highly marketable portfolio of common
stocks and related financial instruments in order to accommodate cash flows
associated with market timing moves. Stock selection is based on a disciplined
quantitative screening process which favors companies that achieve earnings
growth above consensus expectations and whose stocks offer attractive relative
value. In order to achieve consistent relative performance, we manage Account
TAS to mirror the overall risk, sector weightings and growth/value style
characteristics of the Standard & Poor's 400 Stock Index ("S&P 400"). The S&P
400 is a value-weighted index comprised of mid- and small-company stocks.

For the year ended December 31, 1996, Account TAS achieved a total return of
19.7%, before fees and expenses, comparing favorably to the 19.2% total return
of the S&P 400. Net of fees and expenses, Account TAS's total return of 16.9%
for the year was well ahead of the 14.0% average return achieved by variable
annuity stock funds in the Lipper Capital Appreciation Category.

During the first half of the year, stock selection in the finance and health
care sectors made the strongest positive contribution to Account TAS's overall
relative performance. In the financial services sector, Account TAS benefited
from overweighted positions in a number of better performing banks, including
Star Banc, City National and Signet. We were also helped by our holdings in
SunAmerica and the ITT Hartford Group. In the health care sector, our biggest
relative performance gains came from positions in U.S. Surgical and Guidant in
the medical devices group. We lost ground to the benchmark in the technology
and producer durables sectors. In the technology sector, we were hurt by
weakness in the shares of Structural Dynamics, a developer of computer-aided
manufacturing software which announced disappointing earnings in the third
quarter, and by the selloff in the shares of Auspex Systems, a manufacturer of
high-end network servers, whose earnings fell short of analysts' expectation.
Performance was also penalized by our position in America Online which traded
lower over concerns about price competition among providers of online services.

We continue to focus on stocks that exhibit improving earnings (primarily
measured by changes in analysts' earnings estimates and the trend of recent
earnings surprises), and which also trade at a reasonable price-to-earnings
ratios relative to expected earnings growth rates. In the technology sector,
we have emphasized market leaders that are currently benefiting from strong
pricing and product demand, such as Parametric Technology, the largest
developer of computer-aided design software. In the consumer sectors, we are
focusing on a number of retailers that have good sales momentum and whose
shares still trade at a reasonable multiple of earnings, such as Lands' End and
Tiffany. In financial services, we have overweighted positions in a number of
specialty finance and insurance companies that combine above-average earnings
growth and low relative valuations, including Capital One Financial and
Transatlantic Holdings.

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

[TIMCO LOGO]

-24-

<PAGE> 27

THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $68,942,305).................. $ 78,407,136
Cash....................................................................... 13,467
Receivables:
Dividends............................................................... 38,835
Interest................................................................ 92
Investment securities sold.............................................. 951,851
Purchase payments and transfers from other Travelers accounts........... 25,129
Other assets............................................................... 89
--------------

Total Assets........................................................ 79,436,599
--------------

LIABILITIES:
Payables:
Investment securities purchased......................................... 210,818
Contract surrenders and transfers to other Travelers accounts........... 297
Investment management and advisory fees................................. 3,032
Market timing fees...................................................... 13,528
Variation on futures margin............................................. 79,650
Accrued liabilities........................................................ 10,829
--------------

Total Liabilities.................................................... 318,154
--------------
NET ASSETS:
(Applicable to 30,167,498 units outstanding at $2.623 per unit)............ $ 79,118,445
==============
</TABLE>

See Notes to Financial Statements

-25-

<PAGE> 28

THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................................... $ 940,457
Interest................................................ 424,278
---------------
Total income........................................ $ 1,364,735

EXPENSES:
Market timing fees...................................... 981,119
Investment management and advisory fees................. 259,403
Insurance charges....................................... 981,119
---------------
Total expenses...................................... 2,221,641
--------------
Net investment loss............................. (856,906)
--------------

REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold............ 113,672,291
Cost of investment securities sold.................. 101,142,690
---------------
Net realized gain................................ 12,529,601

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1995................ 9,705,884
Unrealized gain at December 31, 1996................ 9,464,831
---------------
Net change in unrealized gain for the year....... (241,053)
--------------
Net realized gain and change in unrealized
gain........................................ 12,288,548
--------------
Net increase in net assets resulting from operations.... $ 11,431,642
==============
</TABLE>

See Notes to Financial Statements

-26-

<PAGE> 29

THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
---- ----

<S> <C> <C>
OPERATIONS:
Net investment loss...................................................... $ (856,906) $ (493,951)
Net realized gain from investment security transactions.................. 12,529,601 8,400,359
Net change in unrealized gain on investment securities................... (241,053) 8,751,047
--------------- ---------------

Net increase in net assets resulting from operations.................. 11,431,642 16,657,455
--------------- ---------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 3,129,051 and 4,530,704 units, respectively)........... 7,526,237 9,157,753
Participant transfers from other Travelers accounts
(applicable to 278,752 and 352,561 units, respectively)............... 669,093 701,109
Market timing transfers from other Travelers timed accounts
(applicable to 6,967,148 and 27,252,603 units, respectively).......... 18,098,875 57,070,717
Administrative charges
(applicable to 54,428 and 80,867 units, respectively)................. (138,199) (173,519)
Contract surrenders
(applicable to 1,838,951 and 1,614,811 units, respectively)........... (4,446,573) (3,295,917)
Participant transfers to other Travelers accounts
(applicable to 6,716,867 and 9,931,060 units, respectively)........... (16,166,563) (20,145,243)
Market timing transfers to other Travelers timed accounts
(applicable to 17,104,352 units)...................................... (40,404,417) -
Other payments to participants
(applicable to 68,124 and 43,168 units, respectively)................. (171,099) (82,155)
--------------- ---------------

Net increase (decrease) in net assets resulting from unit transactions (35,032,646) 43,232,745
--------------- ---------------

Net increase (decrease) in net assets.............................. (23,601,004) 59,890,200

NET ASSETS:
Beginning of year........................................................ 102,719,449 42,829,249
--------------- ---------------

End of year.............................................................. $ 79,118,445 $ 102,719,449
=============== ===============
</TABLE>

See Notes to Financial Statements

-27-

<PAGE> 30

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.

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

It is Account TAS's practice to hold cash and cash equivalents 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.

-28-

<PAGE> 31

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.

2. INVESTMENTS

The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities) for the year ended December 31, 1996,
were $70,037,071 and $98,021,716, respectively. Realized gains and losses
from investments transactions are reported on an identified cost basis.

Account TAS placed a portion of its security transactions with brokerage
firms which are affiliates of The Travelers. The commissions paid to these
affiliated firms were $20,390 and $8,758 for the years ended December 31,
1996 and 1995, respectively.

At December 31, 1996, Account TAS held 118 open S&P 400 MidCap Index futures
contracts expiring in March, 1997. The underlying face value, or notional
value, of these contracts at December 31, 1996, amounted to $15,139,400. In
connection with these contracts, short-term investments with a par value of
$450,000 had been pledged as margin deposits.

Net realized gains resulting from futures contracts were $1,080,235 and
$1,364,329 for the years ended December 31, 1996 and 1995, 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, 1996, is shown
on the Statement of Assets and Liabilities as a payable for variation on
futures margin.

-29-

<PAGE> 32

NOTES TO FINANCIAL STATEMENTS - CONTINUED

3. CONTRACT CHARGES

Effective May 1, 1996, investment management and advisory fees are
calculated daily at an annual rate of 0.35% of Account TAS's average net
assets. Prior to May 1, 1996, investment management and advisory fees were
calculated daily at annual rates which started at 0.50% and decreased, as
net assets increased, 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 average
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 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 include
$77,439 and $80,832 of contingent deferred sales charges for the the years
ended December 31, 1996 and 1995, respectively.

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

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............................... $ .041 $ .042 $ .036 $ .037 $ .041
Operating expenses.................................... .069 .057 .049 .048 .043
--------- ---------- ---------- ---------- ----------

Net investment loss................................... (.028) (.015) (.013) (.011) (.002)

Unit value at beginning of year....................... 2.253 1.706 1.838 1.624 1.495
Net realized and change in unrealized gains (losses).. .398 .562 (.119) .225 .131
--------- ---------- ---------- ---------- ----------

Unit value at end of year............................. $ 2.623 $ 2.253 $ 1.706 $ 1.838 $ 1.624
========= ========== ========== ========== ==========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value................. $ .37 $ .55 $ (.13) $ .21 $ .13
Ratio of operating expenses to average net assets*.... 2.84 % 2.83 % 2.80 % 2.82 % 2.93 %
Ratio of net investment loss to average net assets*... (1.13) % (.74) % (.72) % (.80) % (.12) %
Number of units outstanding at end of year (thousands) 30,167 45,575 25,109 43,059 20,225
Portfolio turnover rate............................... 98 % 113 % 142 % 71 % 269 %
Average commission rate paid+......................... $ .047 - - - -
</TABLE>

* Annualized.

-30-

<PAGE> 33

THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------------
<S> <C> <C>
COMMON STOCKS (80.6%)

AMUSEMENTS (1.0%)
Circus Circus Enterprises, Inc. (A) 8,900 $ 305,937
Mirage Resorts, Inc. (A) 22,500 486,562
------------
792,499
------------
BANKING (6.6%)
City National Corp. 17,400 376,275
Crestar Financial Corp. 4,000 297,500
First of America Bank Corp. 5,800 348,725
First Tennesse National Corp. 11,300 423,044
Firstar Corp. 3,600 189,000
Marshall & Ilsley Corp. 8,600 298,850
Mercantile Bancorp, Inc. 3,700 190,088
Mercantile Bankshares Corp. 10,100 321,937
Northern Trust Corp. 15,600 566,475
Regions Financial Corp. 5,800 299,787
Signet Banking Corp. 6,200 190,650
SouthTrust Corp. 14,200 495,225
State Street Boston Corp. 8,500 548,250
Summit Bancorp 9,200 402,500
Union Planters Corp. 4,900 191,100
------------
5,139,406
------------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (5.4%)
Biogen, Inc. (A) 3,400 131,325
Cabot Corp. 12,700 319,088
Centocor, Inc. (A) 11,200 401,100
Chiron Corp. (A) 15,868 294,550
Cytec Industries, Inc. (A) 7,000 284,375
Genzyme Corp. (A) 6,500 141,781
Georgia Gulf Corp. 2,800 75,250
Interprov Steel & Pipeline Light 18,200 222,950
IMC Global, Inc. 13,000 508,625
Lubrizol Corp. 6,200 192,200
Morton International, Inc. 4,500 183,375
Mylan Labs, Inc. 12,700 212,725
Olin Corp. 9,600 361,200
Praxair, Inc. 5,800 267,525
Watson Pharmaceuticals, Inc. (A) 11,100 498,806
Witco Chemical Corp. 5,400 164,700
------------
4,259,575
------------
COMMUNICATION (1.9%)
Century Telephone Enterprises 11,200 345,800
Echelon International Corp. (A) 613 9,583
Emmis Broadcasting Corp. (A) 4,100 132,738
Frontier Corp. 16,600 375,575
Nextel Communications (A) 20,400 266,475
Southern New England Telephone 5,600 217,700
Telephone & Data Systems, Inc. 4,200 152,250
------------
1,500,121
------------
CONTRACTORS (0.8%)
Fluor Corp. 2,600 163,150
Halliburton Co. 3,300 198,825
Jacobs Engineering Group, Inc. (A) 10,600 250,425
------------
612,400
------------
ELECTRICAL AND
ELECTRONIC MACHINERY (6.2%)
ADC Telecommunications, Inc. (A) 17,500 $ 544,688
Altera Corp. (A) 3,000 218,062
American Power Conversion (A) 1,800 49,163
Analog Devices, Inc. (A) 11,775 398,878
Andrew Corp. (A) 3,250 172,453
Atmel Corp. (A) 16,600 551,950
Duracell International, Inc. 2,900 202,638
Emcor Group, Inc. (A)(B)(C) 154 -
Hubbell, Inc. 6,000 259,500
International Rectifier Corp. (A) 13,800 210,450
KEMET Corp. (A) 10,800 249,075
Linear Technology Corp. 6,500 285,188
Maxim Integrated Products (A) 5,900 255,544
Molex, Inc. 4,500 176,063
Raychem Corp. 2,500 200,312
Solectron Corp. (A) 1,700 90,737
U. S. Robotics, Inc. (A) 10,900 785,481
Xilinx, Inc. (A) 6,300 231,919
------------
4,882,101
------------
FINANCE (2.3%)
Bear Stearns Cos. 5,535 154,288
Charles Schwab Corp. 15,900 508,800
Franklin Resources, Inc. 3,900 266,662
HFS Inc. (A) 4,000 239,000
Lehman Brothers Holding, Inc. 6,900 216,488
Paine Webber Group 8,500 239,062
Student Loan Marketing Association 2,100 195,563
------------
1,819,863
------------
FOOD (3.1%)
Coca-Cola Enterprises, Inc. 15,600 756,600
Dean Foods Co. 10,900 351,525
Dole Food Co. 13,000 440,375
Interstate Bakeries Corp. 4,400 216,150
McCormick & Co. 7,400 174,362
Tyson Foods, Inc. 14,100 482,925
------------
2,421,937
------------
FURNITURE AND FIXTURES (1.1%)
Lear Corp. (A) 5,800 197,925
Leggett & Platt, Inc. 8,300 287,388
Miller (Herman), Inc. 6,500 366,844
------------
852,157
------------
HOTELS & LODGING (0.2%)
Hilton Hotels Corp. 6,200 161,975
------------
INSURANCE (5.1%)
AMBAC, Inc. 4,900 325,238
AFLAC, Inc. 7,150 305,662
Everest Reinsurance Holdings 6,900 198,375
Foundation Health Corp. (A) 5,000 158,750
HealthCare COMPARE (A) 9,700 412,250
ITT Hartford Group, Inc. 3,900 263,250
MedPartners, Inc. (A) 10,100 212,100
PacifiCare Health Systems (A) 2,800 238,350
Progressive Corp., Ohio 7,000 471,625
PMI Group, Inc. 3,500 193,812
SunAmerica, Inc. 14,800 656,750
Transatlantic Holdings, Inc. 5,400 434,700
Zurich Reinsurance Centre Holdings 5,000 156,250
------------
4,027,112
------------
</TABLE>

-31-

<PAGE> 34

STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------------
<S> <C> <C>
LUMBER AND WOOD PRODUCTS (0.2%)
Clayton Homes, Inc. 10,750 $ 145,125
Deltic Timber (A) 1,200 25,950
------------
171,075
------------
MACHINERY (3.2%)
Ascend Communications, Inc. (A) 2,800 173,950
Auspex Systems, Inc. (A) 20,700 243,225
Cabletron System, Inc. (A) 4,600 152,950
Diebold, Inc. 4,100 257,788
Duriron, Inc. 9,000 243,000
Encad, Inc. (A) 4,000 164,000
Gateway 2000, Inc. (A) 4,500 241,031
JLG Industries, Inc. 9,300 148,800
Lam Research Corp. (A) 6,400 180,000
Storage Tech Corp. (A) 5,400 257,175
York International, Inc. 7,500 419,062
------------
2,480,981
------------
METAL PRODUCTS (1.2%)
Alumax, Inc. (A) 5,100 170,212
Bethlehem Steel Corp. (A) 10,900 98,100
Danaher Corp. 10,000 466,250
USX-U.S. Steel Group 5,700 178,838
------------
913,400
------------
MINING (0.2%)
Homestake Mining Co. 10,000 142,500
------------

MISCELLANEOUS MANUFACTURING (2.2%)
Callaway Golf Co. 15,900 457,125
International Game Technology 6,000 109,500
Litton Industries (A) 4,900 233,363
Stryker Corp. 9,500 284,406
Tencor Instruments (A) 9,600 253,800
United States Surgical Corp. 4,700 185,062
VISX, Inc. (A) 9,300 207,506
------------
1,730,762
------------
OIL & GAS (3.3%)
Anadarko Petroleum Corp. 8,500 550,375
Apache Corp. 7,900 279,463
Chesapeake Energy Corp. (A) 3,700 205,812
Ensco International, Inc. (A) 6,900 334,650
Global Marine, Inc. (A) 15,700 323,813
Noble Affiliates, Inc. 4,700 225,012
Noble Drilling Corp. (A) 10,500 208,688
Transocean Offshore, Inc. 4,700 294,337
Weatherford Enterra, Inc. (A) 5,000 150,000
------------
2,572,150
------------
PAPER AND ALLIED PRODUCTS (1.1%)
Boise Cascade Corp. 4,800 152,400
Bowater, Inc. 4,000 150,500
James River Corp. 4,700 155,687
Mead Corp. 3,400 197,625
Willamette Industries, Inc. 2,600 181,025
------------
837,237
------------
PETROLEUM REFINING AND
RELATED INDUSTRIES (1.2%)
Ashland Oil, Inc. 5,600 245,700
Kerr McGee Corp. 2,900 208,800
Lyondell Petrochemical 3,700 81,400
Murphy Oil Corp. 4,200 207,675
Tosco Corp. 2,500 197,813
------------
941,388
------------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (1.4%)
A.H. Belo Corp. 9,200 $ 320,850
Scholastic Corp. (A) 3,000 200,625
Tribune Co. 2,400 189,300
Washington Post Co. 1,200 402,150
------------
1,112,925
------------
RETAIL (6.8%)
Bed Bath & Beyond, Inc. (A) 16,200 393,862
Borders Group, Inc. (A) 4,500 161,438
Boston Chicken, Inc. (A) 5,700 204,487
Claire's Stores, Inc. 26,200 340,600
Dollar General Corp. 12,700 406,400
Federated Department Stores, Inc. (A) 5,100 174,037
General Nutrition Cos. (A) 11,800 200,600
Home Shopping Network, Inc. (A) 11,205 264,718
Kohls Corp. (A) 6,800 266,900
Lands' End, Inc. (A) 11,500 304,750
Mens Wearhouse, Inc. (A) 7,900 192,069
Office Depot, Inc. (A) 8,100 143,775
OfficeMax, Inc. (A) 22,800 242,250
Outback Steakhouse, Inc. (A) 11,100 295,538
Revco D.S., Inc. (A) 6,500 240,500
Safeway, Inc. (A) 4,800 205,200
Staples, Inc. (A) 32,075 579,355
Tiffany & Co. 10,400 380,900
Viking Office Products, Inc. (A) 4,000 106,750
Vons Cos. (A) 4,200 251,475
------------
5,355,604
------------
RUBBER AND PLASTIC PRODUCTS (1.2%)
Armstrong World Industries 2,800 194,600
Cooper Tire & Rubber 8,200 161,950
Sealed Air Corp. (A) 9,200 382,950
Tupperware Corp. 3,200 171,600
------------
911,100
------------
SERVICES (7.6%)
AccuStaff, Inc. (A) 12,300 259,838
Adobe Systems, Inc. 7,300 273,294
America Online, Inc. (A) 4,300 142,975
Apria Healthcare Group, Inc. (A) 4,800 90,000
BMC Software, Inc. (A) 10,000 415,625
Cadence Design System, Inc. (A) 12,525 497,869
Compuware Corporation (A) 3,700 185,462
Corrections Corp. of America (A) 8,100 248,063
Electronic Arts (A) 4,900 146,694
Equifax, Inc. 8,500 260,312
Gartner Group, Inc. (A) 3,600 140,175
HBO & Co. 4,600 273,125
HEALTHSOUTH Rehabilitation (A) 14,000 540,750
Manpower, Inc. 7,600 247,000
McAfee Associates, Inc. (A) 4,100 179,631
Olsten Corp. 6,400 96,800
Omnicom Group, Inc. 5,700 260,775
Parametric Technology Co. (A) 16,500 848,719
Paychex, Inc. 5,350 275,191
Structural Dynamic Resources (A) 10,000 198,125
Transitional Hospital Corp. (A) 450 4,331
Vencor, Inc. (A) 12,500 395,312
------------
5,980,066
------------
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.2%)
Owens Corning Fiberglass 4,300 183,288
------------
</TABLE>

-32-

<PAGE> 35

STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------- --------------
<S> <C> <C>
TEXTILE MILL PRODUCTS (0.7%)
Jones Apparel Group, Inc. (A) 5,700 $ 213,038
Shaw Industries, Inc. 10,800 126,900
Unifi, Inc. 6,000 192,750
-------------
532,688
-------------
TRANSPORTATION (1.9%)
Alexander & Baldwin 10,900 270,456
Continental Air, Inc. (A) 6,900 194,925
Kansas City Southern Industries, Inc. 4,200 189,000
Northwest Airlines Corp. (A) 4,300 168,237
Tidewater, Inc. 9,900 447,975
Wisconsin Central Transportation (A) 4,800 190,200
-------------
1,460,793
-------------
TRANSPORTATION MANUFACTURING (1.3%)
Harley Davidson, Inc. 6,800 319,600
Sundstrand Corp. 10,100 429,250
Trinity Industries 7,700 288,750
-------------
1,037,600
-------------
UTILITIES (11.0%)
AES Corp. (A) 12,600 585,900
Allegheny Power Systems, Inc. 15,200 461,700
Baltimore Gas & Electric Co. 8,000 214,000
Brooklyn Union Gas Co. 11,400 343,425
CalEnergy Co. (A) 14,200 477,475
Columbia Gas Systems, Inc. 2,900 184,512
Consolidated Natural Gas Co. 4,700 259,675
CMS Energy Corp. 16,700 561,538
Delmarva Power & Light 5,500 112,063
El Paso Natural Gas Co. 3,300 166,650
Florida Progress Corp. 9,200 296,700
Illinova Corp. 14,200 390,500
Louisville Gas & Electric Co. 11,500 281,750
National Fuel Gas Co. 8,800 363,000
Northeast Utilities, Inc. 12,300 162,975
NIPSCO Industries, Inc. 10,400 412,100
Pinnacle West Capital Corp. 15,100 479,425
Public Service Co. of Colorado 11,800 458,725
Rochester Gas & Electric Corp. 7,300 139,612
Seagull Energy Corp. (A) 5,600 123,200
Sonat, Inc. 4,000 206,000
SCANA Corp. 16,600 444,050
TECO Energy, Inc. 18,800 453,550
USA Waste Services, Inc. (A) 18,700 596,062
Wisconsin Energy 16,900 454,188
-------------
8,628,775
-------------
WHOLESALE TRADE (2.2%)
Arrow Electronics (A) 4,700 251,450
Avnet, Inc. 3,300 192,225
Cardinal Health, Inc. 12,000 699,000
Crane Co. 6,150 178,350
Grainger (W.W.) 2,600 208,650
Richfood Holdings, Inc. 7,400 179,450
-------------
1,709,125
-------------
TOTAL COMMON STOCKS
(COST $53,701,522) 63,170,603
-------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (19.4%)

COMMERCIAL PAPER (17.8%)
Abbott Laboratories,
5.34% due January 3, 1997 $ 1,500,000 $ 1,499,168
BHP Finance (USA), Inc.,
5.37% due January 15, 1997 1,500,000 1,496,346
Ciesco LP,
5.47% due February 4, 1997 1,000,000 994,672
Ford Motor Credit Co.,
5.36% due February 11, 1997 1,500,000 1,490,452
General Electric Capital Corp.,
5.37% due January 23, 1997 1,500,000 1,494,566
Heinz H. J. Co.,
5.42% due January 23, 1997 1,500,000 1,494,565
Household Finance Corp.,
5.35% due January 8, 1997 1,500,000 1,497,894
Prudential Funding Corp.,
5.36% due January 13, 1997 1,500,000 1,496,760
Raytheon Co.,
5.50% due January 13, 1997 500,000 498,920
Seagram Joseph E. & Sons Inc.,
5.44% due January 8, 1997 1,500,000 1,497,894
Toyota Motor Credit Corp.,
5.35% due February 12, 1997 500,000 496,744
-------------
13,957,981
-------------
U.S. GOVERNMENT SECURITIES (0.9%)
United States of America Treasury,
5.29% due August 21, 1997 (D) 750,000 725,552
-------------
REPURCHASE AGREEMENTS (0.7%)
Merrill Lynch Government Securities, Inc.,
6.00% Repurchase Agreement
dated December 31, 1996 due January 2,
1997, collateralized by: United
States of America Treasury, $515,000,
7.875% due November 15, 2004 553,000 553,000
-------------
TOTAL SHORT-TERM
INVESTMENTS (COST $15,240,783) 15,236,533
-------------
<CAPTION>
NOTIONAL
VALUE
-----------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)

S&P 400 MidCap Index,
Exp. March, 1997 (E) $15,139,400 -
-------------

TOTAL INVESTMENTS (100%)
(COST $68,942,305) (F) $ 78,407,136
=============
</TABLE>

-33-

<PAGE> 36

STATEMENT OF INVESTMENTS - CONTINUED

NOTES

(A) Non-income Producing Security.

(B) Management Priced Security.

(D) Par value of $450,000 pledged to cover margin deposits on futures
contracts.

(E) 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.

(F) At December 31, 1996, net unrealized appreciation for all securities was
$9,464,831. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$11,449,002 and aggregate gross unrealized depreciation for all securities
in which there was an excess of cost over market value of $1,984,171.

See Notes to Financial Statements

-34-

<PAGE> 37

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, 1996, 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.

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, 1996, 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 12, 1997

-35-

<PAGE> 38

THE TRAVELERS
TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES

The investment world began 1996 with an optimistic outlook for the bond market.
Talks of deficit reduction via a balanced budget amendment, coupled with anemic
consumer spending and a tame inflation outlook laid the groundwork for a
further rally. The longest Treasuries were yielding less than 6.00% at the
start of the year for the second time this decade, and expectation of an easier
Federal Reserve Board helped fuel yields on shorter Treasuries to levels less
than 5.00%. As the year progressed, these bullish sentiments were shattered as
balanced budget talks stalled, energy prices began to rise, and economic growth
resumed. Yields on 30-year Treasuries rose to 7.20% by mid-year, posting a
negative return of 9.10% by the end of June. The second half of the year
recouped some of the earlier losses, with yields falling to 6.63% by year end,
but still leaving the performance of the 30-year Treasury at a dismal 3.50%
loss, trailing cash by almost 9%. Mortgage backed securities fared somewhat
better, returning 5.35% as a group, almost in line with cash. The best
performing mortgages were those slight premium securities with coupons in the
7.50% to 8.00% range, which tightened as yields rose as their embedded
refinancing options moved out of the money.

In the government securities market, agency debentures fared well as their
yield spreads tightened versus Treasuries. Among long Treasuries, there were a
few opportunities for investors in 1996. The on-the-run bond became scarce in
the securities lending market in the first quarter, causing dealers who needed
to borrow the issue to bid its price up versus other long Treasuries. The 2015
to 2016 year sector traded in line with market direction, as these were the
cheapest-to-deliver into the bond futures contract. As the market traded off,
futures would lead the way down, causing these maturities to underperform, and
to outperform when the market rallied. The yield curve flattened from the
beginning of the year, but was relatively calm in the second half.

When a "Buy" is in place, this fund invests in liquid government securities and
agency mortgage backed securities. During the course of the year, three "Buy"
signals were in place and the fund was indexed to a 50/50 weighting of long
Treasuries and mortgages. The year began with a "Buy" signal that was
initiated in September of 1995 which ended on April 11. The two other buy
signals occurred in the third quarter: the first from July 3 ending July 10,
and the second beginning August 6 ending September 6. No further "buy" signals
were received during the remainder of 1996; and as a result, The Travelers
Timed Bond Account for Variable Annuities had no securities at December 31,
1996. Among the mortgages that were purchased during the year, GNMA, FNMA and
FHLMC 15- and 30-year passthroughs with net coupons of 6.50% to 8.00% were used
to afford maximum liquidity. Agency debentures from the Resolution Funding
Corporation and the Federal Home Loan Bank were used for additional yield in
conjunction with long Treasuries maturing in years 2019 to 2021 to provide
duration needed to match the index.

PORTFOLIO MANAGER: JOSEPH M. MULLALLY

[TAMIC LOGO]

-36-

<PAGE> 39

THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................ $ 350,785

EXPENSES:
Market timing fees.................................. $ 67,112
Investment management and advisory fees............. 26,799
Insurance charges................................... 67,112
--------------
Total expenses................................... 161,023
--------------
Net investment income......................... 189,762
--------------

REALIZED LOSS AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized loss from investment security transactions:
Proceeds from investment securities sold.......... 34,098,269
Amortized cost of investment securities sold...... 35,148,792
--------------
Net realized loss............................. (1,050,523)

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1995.............. 698,966
Unrealized gain at December 31, 1996.............. -
--------------
Net change in unrealized gain for the year.... (698,966)
--------------
Net realized loss and change in unrealized
gain...................................... (1,749,489)
--------------
Net decrease in net assets resulting from
operations....................................... $ (1,559,727)
==============
</TABLE>

See Notes to Financial Statements

-37-

<PAGE> 40

THE TRAVELERS TIMED BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income................................................... $ 189,762 $ 501,286
Net realized gain (loss) from investment security transactions.......... (1,050,523) 901,740
Net change in unrealized gain on investment securities.................. (698,966) 698,966
---------------- ----------------
Net increase (decrease) in net assets resulting from operations...... (1,559,727) 2,101,992
---------------- ----------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 243,706 and 796,980 units, respectively)............... 324,504 1,033,094
Participant transfers from other Travelers accounts
(applicable to 13,851 and 55,290 units, respectively)................. 19,555 68,142
Market timing transfers from other Travelers timed accounts
(applicable to 18,855,866 and 25,376,865 units, respectively)......... 24,121,224 31,962,202
Administrative charges
(applicable to 72 and 16,869 units, respectively)..................... (94) (22,828)
Contract surrenders
(applicable to 318,514 and 614,080 units, respectively)............... (428,452) (802,989)
Participant transfers to other Travelers accounts
(applicable to 992,326 and 1,869,809 units, respectively)............. (1,324,406) (2,437,532)
Market timing transfers to other Travelers timed accounts
(applicable to 29,259,875 and 12,262,071 units, respectively)......... (37,004,878) (16,038,495)
Other payments to participants
(applicable to 8,942 units)........................................... (11,312) -
---------------- ----------------
Net increase (decrease) in net assets resulting from unit transactions (14,303,859) 13,761,594
---------------- ----------------
Net increase (decrease) in net assets.............................. (15,863,586) 15,863,586

NET ASSETS:
Beginning of year..................................................... 15,863,586 -
---------------- ----------------
End of year........................................................... $ - $ 15,863,586
===============- ================
</TABLE>

See Notes to Financial Statements

-38-

<PAGE> 41

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.

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

It is Account TB's practice to hold cash and cash equivalents 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 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 debt securities associated with the futures contract.

-39-

<PAGE> 42

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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

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

2. INVESTMENTS

The proceeds from sales of bonds (other than short-term securities) was
$326,965; the costs of purchases and proceeds from sales of direct and
indirect U.S. government obligations were $20,876,153 and $33,771,304,
respectively, for the year ended December 31, 1996. Realized gains and
losses from investment transactions are reported on an identified cost
basis.

3. CONTRACT CHARGES

Investment management and advisory fees are calculated daily at annual rates
which start at 0.50% and decrease, as net assets increase, to 0.25% of
Account TB's average net assets. These fees are paid to Travelers Asset
Management International Corporation, an indirect wholly owned subsidiary of
Travelers Group Inc.

A market timing fee equivalent on an annual basis to 1.25% of the average
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 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 include
$9,844 and $21,911 of contingent deferred sales charges for the years ended
December 31, 1996 and 1995, respectively.

-40-

<PAGE> 43

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............................... $ .033 $ .071 $ .007 $ .054 $ .051
Operating expenses.................................... .015 .031 .006 .036 .032
---------- ---------- ---------- ---------- ----------

Net investment income................................. .018 .040 .001 .018 .019

Unit value at beginning of year....................... 1.383 1.215 1.234 1.132 1.087
Net realized and change in unrealized gains (losses).. (.169) .128 (.020) .084 .026
---------- ---------- ---------- ---------- ----------

Unit value at end of year............................. $ 1.232 $ 1.383 $ 1.215 $ 1.234 $ 1.132
========== ========== ========== ========== ==========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value................. $ (.15) $ .17 $ (.02) $ .10 $ .05
Ratio of operating expenses to average net assets*.... 3.00 % 3.00 % 3.00 % 3.00 % 2.99 %
Ratio of net investment income to average net assets*. 3.48 % 3.98 % 1.02 % 1.48 % 1.71 %
Number of units outstanding at end of year (thousands) - 11,466 - 20,207 21,868
Portfolio turnover rate............................... 153 % 117 % - 190 % 505 %
</TABLE>

* Annualized.

-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 operations of The Travelers Timed
Bond Account for Variable Annuities for the year ended December 31, 1996, and
the related 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 results of operations of The
Travelers Timed Bond Account for Variable Annuities for the year ended December
31, 1996, 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 12, 1997

-42-

<PAGE> 45

This page intentionally left blank.

<PAGE> 46

This page intentionally left blank.

<PAGE> 47

Investment Advisers
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 INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut

THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION
Hartford, Connecticut

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

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

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

VG-182 (Annual) (12-96) Printed in U.S.A.