<PAGE> 1
UNIVERSAL ANNUITY
SEMI-ANNUAL REPORTS
JUNE 30, 1999
[UMBRELLA LOGO]
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
[TRAVELERS LIFE & ANNUITY LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
The Travelers Investment Management Company ("TIMCO")
provides equity management and advisory services for the
[TIMCO LOGO] 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.
<PAGE> 3
[TRAVELERS LIFE & ANNUITY LOGO]
THE TRAVELERS VARIABLE PRODUCT SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF JUNE 30, 1999
ECONOMIC REVIEW
The first half of 1999 was a period of economic growth at home and recovery
abroad. Following the events surrounding the Russian debt default in August of
1998--which included a dive in bond yields and a 0.75% decrease in interest
rates--yields have recovered quite well. Investor optimism, however, was
tempered by concerns about inflation, interest rates, and continued economic
growth.
EQUITY COMMENTARY
The year began on a volatile note for global financial markets as a new threat
emerged in Latin America. The devaluation of the Brazilian currency raised
concerns for U.S. companies with exposure to Latin America and took its toll on
the stock market in the middle of January. The Dow Jones Industrial Average
("DJIA") swung from intra-day levels of above 9,700 to below 9,000. Stock prices
did recover, however, to finish higher at the end of January.
Interest rate concerns dominated market psychology during February. Despite low
inflation, interest rates moved higher amid fears of the Federal Reserve Board
("Fed") tightening in response to the strong U.S. economy. In February, the
yield on the 30-year Treasury bond moved from 5.18% to 5.55%. Stock market
valuations became a concern as investors focused on the rise in interest rates,
the lack of a substantial earnings recovery and high price-to-earnings
multiples. Consumer prices rose 0.1% in February and 1.6% from a year ago.
During the month of March, market sentiment reversed and investors focused on
the reality of DJIA 10,000. After repeated assaults, the DJIA did breach 10,000
on March 16, retreated and then went on to close at 10,006 on March 29. Economic
activity remained brisk and it became obvious that first quarter Gross Domestic
Product ("GDP") growth would be above expectations
The Standard & Poor's 500 Stock Index ("S&P 500") gained 5.0% in the first
quarter of 1999. The S&P 400 Mid Cap Index fell by -6.4% while the Russell 2000
Index declined by -5.4%. The S&P 500 Growth Index produced a 6.9% total return,
outpacing the 2.9% total return of the S&P 500 Value Index. All sectors except
consumer staples (-11%) registered respectable gains in the first quarter of
1999. The market rally was led by the energy services (22%) and technology (9%)
sectors. The financial services (7%) and Consumer Discretionary (6%) sectors
also performed well.
Despite a rise in interest rates in the second quarter, the U.S. stock market
finished firmly in positive territory. Evidence of stronger-than-expected
economic growth prompted hopes of a meaningful earnings recovery during the
quarter and, at the same time, triggered concerns about rising interest rates.
Both implications led to a furious rally in small cap and value stocks.
Interest rates began to climb in the month of May as investors worried about
inflation concerns on the heels of recent economic strength. First quarter GDP
growth was revised down to 4.1% from 4.5%, but other indicators provided
evidence of continued strength in the economy. The stock market sagged during
May under the burden of lofty valuations and higher rates.
The Fed took center stage in the month of June as investors anxiously awaited
its next monetary policy move. Even though inflation data released in June was
lower than consensus expectations, the bond and stock markets had clearly
anticipated a 25 basis point rate hike as a result of unexpected economic
strength. The decision to raise the federal-funds rate by 25 basis points on
June 30, 1999 therefore, came as no surprise and markets rallied when the Fed
announced that it had now switched to a neutral bias in monetary policy.
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<PAGE> 4
The rotation into value and small cap stocks began in the middle of April and
continued through May. This trend reversed in June, as investors became
comfortable that a proactive Fed policy would preempt inflation and keep
interest rates in check. The S&P 500 Index advanced by 7.1% in the second
quarter. The S&P 400 Mid Cap Index gained 14.2% while the Russell 2000 Index
rose sharply by 15.6%. The S&P 500 Value Index produced a 10.8% total return,
outpacing the 3.8% total return of the S&P 500 Growth Index.
All sectors within the S&P 500 except health care (-4%) registered respectable
gains in the second quarter. The economically sensitive, value-oriented
materials and processing (19%), energy services (14%) and producer durables
(14%) sectors led the market rally. The utilities (13%) and technology (10%)
sectors also performed well.
The focus in the U.S. stock market has now switched from the earnings front to
the future direction of interest rates. The early second quarter earnings
reports project a healthy growth in corporate profits from the prior year. With
the DJIA now trading well above 10,000 and at unprecedented valuation levels,
any further increase in interest rates could trigger a compression in the
price-to-earnings multiple for the stock market.
FIXED INCOME COMMENTARY
The long anticipated slowdown in U.S. economic activity again failed to happen
during the reporting period. Global stock markets continued to rise led by
better than expected profit growth and continued merger and acquisition
activity. The risks of higher U.S. economic growth were more fairly reflected in
the yield curve in the U.S. at the end of the first quarter of 1999 than they
were at the beginning.
The stronger than expected growth caused interest rates to rise in the first
quarter of 1999. The 30-year U.S. Treasury bond had its third worst quarter of
the 1990s. In fact, only the first quarters of 1994 and 1996 were worse. The
Lehman Government/Corporate Index declined about 1.2% in the first quarter of
1999. U.S. Treasuries underperformed as spreads narrowed in all sectors.
During the first half of 1999, U.S. economic growth continued at a robust pace,
posting a 4.3% annualized GDP growth rate for the first quarter of 1999.
Furthermore, the labor market continued to be extremely tight, as the
unemployment rate fell to a 29-year low of 4.2% in March. Defying the
expectations of many economists, inflation--as measured by the Consumer Price
Index ("CPI")--was virtually absent. Productivity gains and sagging global
demand were credited with keeping inflation under control.
However, in the month of April, the CPI rose by 0.7%, its largest monthly
increase in nine years. This, coupled with signs that many world economies were
in the beginning stages of growth and recovery, deepened fears that inflationary
pressures were reaching a breaking point. These concerns brought about an
increase in the yield of the benchmark 30-year U.S. Treasury Bond, which gained
71 basis points between April 8th and June 24th to close at 6.16%.
To counter these inflationary pressures, the Fed raised short-term interest
rates by 0.25% at the end of June, and subsequently adopted a neutral stance on
monetary policy. Meanwhile, during the months of May and June, the CPI remained
constant, generating considerable optimism that inflation had retreated. Further
reports of rising U.S. jobless claims added to the optimism.
The unwillingness of consumer spending to slow down keeps the Fed's monetary
policy on watch. With the world economic crisis abating, we cannot rule out the
possibility of the Fed raising rates before year-end. However, in our view, the
most likely case is that the Fed's monetary policy will remain neutral through
the third quarter of 1999. By next year we think that nominal growth should slow
below 5% and may allow room for additional short-term rates cuts. However, if
global economic growth accelerates unexpectedly and signs of inflation emerge
during the remainder of 1999, the Fed will not hesitate to raise rates again.
DAVID A. TYSON, CFA, PRESIDENT & CHIEF INVESTMENT OFFICER, TRAVELERS ASSET
MANAGEMENT INTERNATIONAL CORPORATION
SANDIP A. BHAGAT, CFA, PRESIDENT & CHIEF INVESTMENT OFFICER, THE TRAVELERS
INVESTMENT MANAGEMENT COMPANY
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<PAGE> 5
TABLE OF CONTENTS
PAGE
- -------------------------------------------------------------------------------
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES...................................................... 4
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES.......... 17
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES...........25
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<PAGE> 6
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"). TIMCO manages Account TGIS 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 shares 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 six months ending June 30, 1999, Account TGIS achieved a total return of
12.4%, before fees and expenses, in line with the S&P 500 index return of 12.4%.
Net of fees and expenses, Account TGIS's total return of 10.9% for the first
half of 1999 was comparable to the 11.3% average return for variable annuity
stock accounts in the Lipper Growth & Income Category. On a trailing twelve
month basis as of June 30, 1999, Account TGIS had a total return of 20.1%, net
of fees and expenses, well ahead of the Lipper Growth & Income Category average
of 14.9%.
During the first quarter of 1999, stock selection was most favorable in the
Technology, Financial Services and Utilities sectors while relative performance
was disappointing in the Consumer Discretionary and Consumer Staples sectors.
Our holdings in the Technology sector added value relative to the benchmark as
several successful growth stocks rebounded sharply from their early 1999
sell-off. Higher price-to-earnings growth stocks such as America Online, Sun
Microsystems and EMC Corp, which fell in February as interest rates rose by
nearly 50 basis points, posted gains of over 20% in March and helped Account
TGIS's performance.
In the Financial Services sector, our overweight positions in Merrill Lynch,
Morgan Stanley Dean Witter and Lehman Brothers performed better than the rest of
the investment banking and brokerage industry. In the Utilities sector, our
positions in long-distance and cellular telephone companies such as Airtouch
Communications, Sprint PCS, Nextel Communications and MCI Worldcomm performed
better than the regional telephone companies and the electric utilities group.
Account TGIS's performance was hurt in the Consumer Discretionary sector as a
result of our small overweight position in Rite Aid Corp, a discount drug
retailer, which warned of an earnings shortfall in mid-March and still
disappointed relative to lower expectations. We were also hurt by our overweight
position in Suiza Foods, a leading producer of dairy products in the Consumer
Staples sector, where the threat of rising milk prices cast doubts on the near
term earnings outlook.
The market environment changed in the second quarter as successful stocks with
high price-to-earnings ratios declined and out-of-favor, value-oriented stocks
came surging back. As a general rule, we tend to exclude those stocks which lack
earnings visibility and we, therefore, underperformed our benchmark. Stock
selection was least favorable in the Technology, Health Care and Consumer
Discretionary sectors and favorable in the Materials and Processing sector.
In the Technology sector, this philosophy led us to underweight positions in
Computer Associates and Hewlett Packard which rose in the second quarter rally
in value stocks. Our overweight position in high growth stocks such as America
Online lost ground as investors expressed concerns about high valuation levels.
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<PAGE> 7
In the Health Care sector, McKesson HBOC, a medical services company, hurt
performance as investors punished the stock for a negative restatement of
earnings and concerns about prior accounting irregularities. Our positions in
high growth companies like Pfizer, Watson Pharmaceuticals and Guidant Corp lost
ground. In the Consumer Discretionary sector, a similar theme repeated itself as
our position in Costco lost ground and cheap stocks with previous earnings woes
such as Eastman Kodak rose sharply.
The Materials and Processing sector produced the best relative performance. A
number of our overweight positions such as Lyondell Chemicals, Alcoa and W.R.
Grace produced strong gains in anticipation of increased demand and higher
commodity prices from a strong economy.
The focus in the U.S. stock market has now switched from the earnings front to
the future direction of interest rates. The early second quarter earnings
reports project a healthy growth in corporate profits from the prior year. With
the stock market now trading well above the Dow Jones Industrial Average 10,000
and at unprecedented valuation levels, any further increase in interest rates
could trigger a compression in the price-to-earnings multiple for the market.
In our disciplined approach to stock selection, we screen our research universe
of over 1,000 large cap securities for companies that offer improving earnings
fundamentals at discounted stock valuations. A small sample of our current
holdings is presented here to illustrate our investment approach. In the
Technology sector, our recent emphasis in lower price-to-earnings growth stocks
such as Compuware and BMCS has paid off well. We are also positioned to benefit
from a continued rally in value stocks through our positions in materials stocks
such as Alcoa, Georgia Pacific and W.R. Grace.
PORTFOLIO MANAGER: SANDIP A. BHAGAT, CFA
[TIMCO LOGO]
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<PAGE> 8
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $114,454,451) ............ $141,982,276
Cash .................................................................. 77,923
Receivables:
Dividends ............................................................ 122,484
Investment securities sold ........................................... 1,851,454
Purchase payments and transfers from other Travelers accounts ........ 30,616
Variation on futures margin .......................................... 156,250
Other assets .......................................................... 53
------------
Total Assets ....................................................... 144,221,056
------------
LIABILITIES:
Payables:
Investment securities purchased ...................................... 1,342,419
Contract surrenders and transfers to other Travelers accounts ........ 102,823
Investment management and advisory fees .............................. 7,320
Market timing fees ................................................... 28,306
Insurance charges .................................................... 28,306
------------
Total Liabilities .................................................. 1,509,174
------------
NET ASSETS:
(Applicable to 28,806,842 units outstanding at 4.954 per unit).... $142,711,882
============
</TABLE>
See Notes to Financial Statements
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<PAGE> 9
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................ $ 722,971
Interest ............................................ 377,645
-------------------------
Total income ....................................... $ 1,100,616
EXPENSES:
Market timing fees ................................... 824,595
Investment management and advisory fees .............. 213,273
Insurance charges .................................... 824,595
-------------------------
Total expenses ..................................... 1,862,463
----------------------
Net investment loss ................................ (761,847)
----------------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN
ON INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold ........... 37,529,052
Cost of investment securities sold ................. 34,436,308
-------------------------
Net realized gain ................................ 3,092,744
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1998 ............... 17,656,288
Unrealized gain at June 30, 1999 ................... 27,527,825
-------------------------
Net change in unrealized gain for the period ..... 9,871,537
----------------------
Net realized gain and change in unrealized gain .. 12,964,281
----------------------
Net increase in net assets resulting from operations ... $ 12,202,434
======================
</TABLE>
See Notes to Financial Statements
-7-
<PAGE> 10
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment loss.............................................................. $ (761,847) $ (1,658,997)
Net realized gain from investment security transactions.......................... 3,092,744 60,348,770
Net change in unrealized gain on investment securities........................... 9,871,537 (31,625,672)
------------ -------------
Net increase in net assets resulting from operations........................... 12,202,434 27,064,101
------------ -------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 522,616 and 1,393,179 units, respectively)...................... 2,458,406 5,425,118
Participant transfers from other Travelers accounts
(applicable to 473,025 and 1,384,558 units, respectively)...................... 2,233,407 5,367,961
Market timing transfers from other Travelers timed accounts
(applicable to 9,273,623 and 10,452,244 units, respectively)................... 44,512,134 44,617,650
Administrative charges
(applicable to 13,323 and 31,443 units, respectively).......................... (63,233) (133,088)
Contract surrenders
(applicable to 1,280,699 and 3,370,312 units, respectively).................... (6,031,742) (13,144,096)
Participant transfers to other Travelers accounts
(applicable to 663,866 and 2,139,672 units, respectively)...................... (3,116,998) (8,225,358)
Market timing transfers to other Travelers timed accounts
(applicable to 4,676,710 and 42,726,533 units, respectively)................... (21,940,344) (160,776,295)
Other payments to participants
(applicable to 19,756 and 82,003 units, respectively).......................... (94,578) (319,237)
------------ -------------
Net increase (decrease) in net assets resulting from unit transactions......... 17,957,052 (127,187,345)
------------ -------------
Net increase (decrease) in net assets........................................ 30,159,486 (100,123,244)
NET ASSETS:
Beginning of period.............................................................. 112,552,396 212,675,640
------------ -------------
End of period.................................................................... $142,711,882 $ 112,552,396
============ =============
</TABLE>
See Notes to Financial Statements
-8-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Timed Growth and Income Stock Account for Variable Annuities
("Account TGIS") is a separate account of The Travelers Insurance Company
("The Travelers"), an indirect wholly owned subsidiary of Citigroup 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 4:00 p.m. Eastern Standard Time price
of the New York Stock Exchange on the last business day of the period;
securities traded on the over-the-counter market and listed securities with
no reported sales are valued at the mean between the last-reported bid and
asked prices or on the basis of quotations received from a reputable broker
or other recognized source.
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.
SECURITY TRANSACTIONS. 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. Premiums and discounts are
amortized to interest income utilizing the constant yield method.
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 based on the 4:00 p.m. Eastern Standard Time price of the New York Stock
Exchange, or in the absence of such price, the latest bid quotation.
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<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - 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 a "regulated investment company"
under Subchapter M of the Code.
OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities), were $30,399,111 and $15,267,303,
respectively; the cost of purchases and proceeds from sales of direct and
indirect U.S. government securities were $493,951 and $77,306,
respectively, for the six months ended June 30, 1999. Realized gains and
losses from investment security 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 $4,029 and $16,676 for the six months ended June 30,
1999 and the year ended December 31, 1998, respectively.
At June 30, 1999, Account TGIS held 25 open S&P 500 Stock Index futures
contracts expiring in September, 1999. The underlying face value, or
notional value, of these contracts at June 30, 1999 amounted to $8,635,625.
In connection with these contracts, short-term investments with a par value
of $750,000 had been pledged as margin deposits.
Net realized gains resulting from futures contracts were $598 and
$2,707,685 for six months ended June 30, 1999 and the year ended December
31, 1998, respectively. These gains are included in the net realized gain
from investment security transactions on both the Statement of Operations
and the Statement of Changes in Net Assets. The cash settlement for June
30, 1999 is shown on the Statement of Assets and Liabilities as a
receivable for variation on futures margin.
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<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - 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 Citigroup 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 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
period) 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
$28,476 and $57,912 of contingent deferred sales charges for the six months
ended June 30, 1999 and the year ended December 31, 1998, respectively.
4. CHANGE IN ACCOUNTANTS
Account TGIS did not renew its audit relationship with its former principal
accountant, PricewaterhouseCoopers LLP on January 29, 1999. On that same
day, KPMG LLP was engaged as principal accountant for Account TGIS. KPMG
LLP serves as the principal accountant for other affiliated separate
accounts and mutual funds.
The report by PricewaterhouseCoopers LLP on the financial statements for
fiscal years ended December 31, 1998 and 1997, did not contain an adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
The decision to change principal accountants was approved by the Board of
Managers at a meeting held on January 29, 1999, where it decided to engage
KPMG LLP as the principal accountant to audit the fund's financial
statements since it would promote consistency and possible economies of
scale among affiliated separate accounts and mutual funds.
During the past two years and subsequent interim period preceding such
termination there were no disagreements with PricewaterhouseCoopers LLP on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not
resolved to the satisfaction of the former accountant, would have caused it
to make reference to the subject matter of disagreement in connection with
its report.
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<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
5. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each period.)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
----------- --------------------------------------------------
1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income ..................................... $ .038 $ .064 $ .075 $ .061 $ .083 $ .064
Operating expenses ......................................... .066 .110 .090 .069 .057 .041
--------- --------- -------- --------- --------- ---------
Net investment income (loss) ................................ (.028) (.046) (.015) (.008) .026 .023
Unit value at beginning of period ........................... 4.468 3.526 2.717 2.263 1.695 1.776
Net realized and change in unrealized gains (losses) ........ .514 .988 .824 .462 .542 (.104)
--------- --------- --------- --------- --------- ---------
Unit value at end of period ................................. $ 4.954 $ 4.468 $ 3.526 $ 2.717 $ 2.263 $ 1.695
========= ========= ========= ========= ========= =========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value ....................... $ .49 $ .94 $ .81 $ .45 $ .57 $ (.08)
Ratio of operating expenses to average net assets* .......... 2.82% 2.82% 2.82% 2.82% 2.82% 2.82%
Ratio of net investment income (loss) to average net assets*. (1.20)% (1.16)% (0.45)% (0.34)% 1.37% 1.58%
Number of units outstanding at end of period (thousands) .... 28,807 25,192 60,312 68,111 105,044 29,692
Portfolio turnover rate...................................... 15% 81% 63% 81% 79% 19%
</TABLE>
* Annualized
-12-
<PAGE> 15
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -----------------
<S> <C> <C>
COMMON STOCKS (94.3%)
AEROSPACE (0.8%)
Boeing Co. 18,000 $ 795,375
General Dynamics Corp. 4,800 328,800
-------------------
1,124,175
-------------------
AIRLINES (0.3%)
AMR Corp. (A) 1,760 120,120
Delta Airlines, Inc. 5,300 305,413
-------------------
425,533
-------------------
AUTOMOTIVE (1.6%)
Ford Motor Co. 15,100 852,206
General Motors Corp. 11,700 772,200
Lear Corp. (A) 4,600 228,850
Navistar International Corp. (A) 7,600 380,000
-------------------
2,233,256
-------------------
BANKING (7.5%)
AmSouth Bancorp 10,650 246,947
Bank of America Corp. 19,903 1,459,139
Bank of New York 15,000 550,312
Bank One Corp. 6,372 379,532
BankBoston Corp. 7,400 378,325
Capital One Financial Corp. 7,500 417,656
Chase Manhattan Corp. 13,948 1,208,245
Comerica, Inc. 3,900 231,806
Fifth Third Bancorp 3,900 259,716
First Union Corp. 12,300 578,100
Firstar Corp. 16,900 473,200
Fleet Financial Group 9,100 403,813
J.P. Morgan & Company, Inc. 2,300 323,150
Marshall & Ilsley Corp. 3,800 244,506
MBNA Corp. 17,600 539,000
National City Corp. 6,000 393,000
SouthTrust Corp. 9,300 356,597
State Street Corp. 3,900 332,963
Summit Bancorp 6,900 288,506
SunTrust Banks, Inc. 6,000 416,625
Washington Mutual 5,750 203,406
Wells Fargo & Co. 22,600 966,150
-------------------
10,650,694
-------------------
BEVERAGE (2.0%)
Anheuser-Busch Cos. 9,700 688,094
Coca-Cola Co. 23,800 1,487,500
PepsiCo, Inc. 18,700 723,456
-------------------
2,899,050
-------------------
BROKERAGE (2.3%)
Charles Schwab Corp. 5,800 637,275
Lehman Brothers Holding, Inc. 8,600 535,350
Merrill Lynch & Co. 11,600 927,275
Morgan Stanley Dean Witter & Co. 11,840 1,213,600
-------------------
3,313,500
-------------------
BUILDING MATERIALS (0.2%)
Masco Corp. 11,300 326,288
-------------------
CAPITAL GOODS (1.6%)
Applied Materials, Inc. (A) 9,600 708,900
Cordant Technologies, Inc. 5,000 225,937
Crane Co. 8,826 277,467
Deere & Co. 5,200 206,050
Honeywell, Inc. 3,100 359,213
Tellabs, Inc. (A) 3,600 243,338
TRW, Inc. 4,800 263,400
-------------------
2,284,305
-------------------
CHEMICALS (1.3%)
Dow Chemical Co. 3,400 431,375
E.I. Dupont de Nemours & Co. 9,500 648,969
Lyondell Petrochemical Co. 22,100 455,812
Monsanto Co. 8,200 323,388
-------------------
1,859,544
-------------------
CONGLOMERATES (4.7%)
Emerson Electric Co. 3,800 238,925
General Electric Co. 40,300 4,553,900
Minnesota Mining &
Manufacturing Co. 3,500 304,281
Tyco International Ltd. 9,709 919,928
United Technologies Corp. 9,800 702,538
-------------------
6,719,572
-------------------
CONSTRUCTION MACHINERY (0.4%)
Caterpillar, Inc. 3,400 204,000
Ingersoll-Rand Co. 6,200 400,675
-------------------
604,675
-------------------
CONSUMER (2.7%)
Clorox Co. 3,500 373,844
Colgate-Palmolive Co. 2,900 286,375
Gillette Co. 9,078 372,198
Kimberly Clark Corp. 9,420 536,940
Maytag Corp. 4,800 334,500
Procter & Gamble Co. 13,600 1,213,800
Rohm & Haas Co. 6,800 291,550
Unilever N.V. 5,714 398,551
-------------------
3,807,758
-------------------
DEFENSE (0.2%)
Raytheon Co. 3,600 253,350
-------------------
ENTERTAINMENT (1.1%)
Carnival Corp. 7,500 363,750
Seagram Co. Ltd. 8,300 418,113
Viacom, Inc. (A) 6,450 283,800
Walt Disney Co. 13,923 429,002
-------------------
1,494,665
-------------------
FINANCE (1.8%)
American Express Co. 8,100 1,054,012
Countrywide Credit Industries, Inc. 6,500 277,875
Household International 10,400 492,700
Providian Financial Corp. 5,600 523,600
Pulte Corp. 7,100 163,744
-------------------
2,511,931
-------------------
</TABLE>
-13-
<PAGE> 16
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -----------------
<S> <C> <C>
FOOD (1.6%)
Campbell Soup Co. 4,500 $ 208,688
General Mills, Inc. 5,200 417,950
H.J. Heinz Co. 7,200 360,900
Kellogg Co. 3,600 118,800
Sara Lee Corp. 10,400 235,950
Suiza Foods Corp. (A) 8,600 360,125
Sysco Corp. 11,800 351,787
Tricon Global Restaurants (A) 5,000 270,625
-------------------
2,324,825
-------------------
HEALTHCARE (1.1%)
Abbott Laboratories 14,300 650,650
Guidant Corp. (A) 8,200 421,787
Healthsouth Rehabilitation Corp. (A) 15,300 228,544
McKesson HBOC Corp. 3,088 99,202
Wellpoint Health Networks, Inc. (A) 2,300 195,213
-------------------
1,595,396
-------------------
HOME CONSTRUCTION (0.1%)
Kaufman & Broad Home Corp. 6,100 151,738
-------------------
INDEPENDENT ENERGY (0.5%)
Apache Corp. 9,600 374,400
Entergy Corp. 11,100 346,875
-------------------
721,275
-------------------
INDUSTRIAL (0.4%)
Sealed Air Corp. (A) 5,000 324,375
Waste Management, Inc. 5,300 284,875
-------------------
609,250
-------------------
INSURANCE (2.6%)
Aetna, Inc. 4,300 384,581
Allstate Corp. 14,376 515,739
Ambac Financial Group, Inc. 3,100 177,088
American International Group, Inc. 16,215 1,898,168
ChoicePoint Inc. (A) 310 20,809
Everest Reinsurance Holdings 4,900 159,863
Hartford Financial Services Group 5,200 303,225
Mercury General Corp. 2,800 95,200
20th Century Industries 7,100 134,012
-------------------
3,688,685
-------------------
INTEGRATED ENERGY (4.3%)
Atlantic Richfield Co. 5,600 467,950
Chevron Corp. 5,600 533,050
Exxon Corp. 28,700 2,213,487
Mobil Corp. 8,500 841,500
Royal Dutch Petroleum Co. 20,300 1,223,075
Texaco, Inc. 7,900 493,750
Unocal Corp. 9,700 384,363
-------------------
6,157,175
-------------------
MEDIA (2.9%)
CBS Corp. 12,000 521,250
Clear Channel
Communications, Inc. (A) 7,800 537,712
Comcast Corp. 15,000 576,563
Gannett Company, Inc. 6,300 449,663
Meredith Corp. 6,400 221,600
New York Times Co. 9,200 338,675
Time Warner, Inc. 16,400 1,205,400
Times Mirror Co. 5,200 308,100
-------------------
4,158,963
-------------------
METALS (0.9%)
Alcoa Inc. 11,124 688,297
Bethlehem Steel Corp. (A) 13,800 106,088
Phelps Dodge Corp. 2,100 130,069
W.R. Grace & Co. (A) 17,500 321,562
-------------------
1,246,016
-------------------
NATURAL GAS PIPELINE (0.5%)
Enron Corp. 2,800 228,900
Sonat, Inc. 4,100 135,813
Williams Cos. 7,400 314,962
-------------------
679,675
-------------------
OIL FIELD (0.5%)
Halliburton Co. 2,400 108,600
Schlumberger Ltd. 9,700 617,769
-------------------
726,369
-------------------
PAPER (0.9%)
Georgia-Pacific Group 8,200 388,475
International Paper Co. 8,800 444,400
Mead Corp. 8,590 358,633
Weyerhaeuser Co. 1,700 116,875
-------------------
1,308,383
-------------------
PHARMACEUTICALS (8.6%)
Allergan, Inc. 4,900 543,900
American Home Products Corp. 17,300 994,750
Amgen, Inc. (A) 9,700 590,185
Baxter International, Inc. 5,600 339,500
Bristol-Myers Squibb Co. 18,500 1,303,094
CVS Corp. 9,700 495,913
Eli Lilly & Co. 11,900 852,337
Johnson & Johnson 18,200 1,783,600
Merck & Co. 26,900 1,990,600
Pfizer, Inc. 14,760 1,619,910
Pharmacia & Upjohn, Inc. 4,800 272,700
Schering-Plough Corp. 14,300 757,900
Warner-Lambert Co. 10,200 707,625
-------------------
12,252,014
-------------------
RAILROADS (0.2%)
CSX Corp. 4,600 208,437
Union Pacific Corp. 1,800 104,963
-------------------
313,400
-------------------
</TABLE>
-14-
<PAGE> 17
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -----------------
<S> <C> <C>
RETAILERS (5.3%)
Costco Cos. (A) 4,900 $ 392,153
Dayton Hudson Corp. 9,700 630,500
Gap Inc. 8,513 428,817
Home Depot, Inc. 17,400 1,121,212
KMart Corp. (A) 20,200 332,038
JC Penney Company, Inc. 2,400 116,550
May Department Stores Co. 3,450 141,019
McDonalds Corp. 20,900 863,431
Staples, Inc. (A) 12,600 389,419
TJX Companies, Inc. 11,300 376,431
Wal-Mart Stores, Inc. 57,000 2,750,250
-------------------
7,541,820
-------------------
SERVICES (5.5%)
Cendant Corp. (A) 23,900 489,950
Equifax Inc. 1,200 42,825
Medtronic, Inc. 7,400 576,275
Microsoft Corp. (A) 63,100 5,686,888
Oracle Corp. (A) 27,000 1,002,375
-------------------
7,798,313
-------------------
SUPERMARKETS (0.5%)
Kroger Co. (A) 11,200 312,900
Safeway, Inc. (A) 8,143 403,079
-------------------
715,979
-------------------
TECHNOLOGY (13.8%)
America Online, Inc. (A) 17,000 1,878,500
BMC Software, Inc. (A) 9,400 507,307
Ceridian Corp. (A) 7,300 238,619
Cisco Systems, Inc. (A) 40,750 2,624,557
Compaq Computer Corp. 10,678 252,935
Computer Associates International 6,100 335,500
Computer Sciences Corp. (A) 4,600 318,262
Compuware Corp. (A) 17,200 546,638
Dell Computer Corp. (A) 29,780 1,100,931
Eastman Kodak Co. 3,800 257,450
EG&G, Inc. 9,100 324,187
EMC Corp. (A) 11,400 627,000
Gateway 2000 Inc. (A) 1,500 88,500
General Instrument Corp. (A) 8,200 348,500
Hewlett Packard Co. 12,000 1,206,000
International Business
Machines Corp. 23,700 3,063,225
Intel Corp. 39,400 2,343,071
Micron Technology, Inc. (A) 4,500 181,406
Motorola, Inc. 5,600 530,600
Solectron Corp. (A) 7,200 480,150
Sun Microsystems, Inc. (A) 14,200 978,469
Symbol Technologies, Inc. 4,950 182,531
Texas Instruments, Inc. 3,900 565,500
Xerox Corp. 8,000 472,500
-------------------
19,452,338
-------------------
TELECOMMUNICATIONS (10.9%)
Ameritech Corp. 9,600 705,600
AT&T Corp. 42,421 2,367,622
Bell Atlantic Corp. 15,760 1,030,310
BellSouth Corp. 13,500 632,812
Centurytel, Inc. 8,350 331,913
GTE Corp. 7,400 560,550
Lucent Technologies 38,126 2,571,122
MCI Worldcom, Inc. (A) 25,651 2,206,789
MediaOne Group, Inc. (A) 8,600 639,625
Nextel Communications, Inc. (A) 9,900 497,166
Nortel Networks Corp. 5,000 434,063
SBC Communications, Inc. 21,550 1,249,900
Sprint Corp. - Fon Group 14,540 767,894
Sprint Corp. - PCS Group (A) 12,735 727,487
U S West, Inc. 10,386 610,177
-------------------
15,333,030
-------------------
TEXTILE (0.4%)
Fruit of the Loom (A) 8,000 78,000
Nike Inc. 7,100 449,519
-------------------
527,519
-------------------
TOBACCO (1.1%)
Loews Corp. 2,100 166,163
Philip Morris Cos. 35,000 1,406,562
-------------------
1,572,725
-------------------
TRANSPORTATION (0.5%)
FDX Corp. (A) 7,800 423,150
Ryder Systems, Inc. 9,300 241,800
-------------------
664,950
-------------------
U.S. AGENCY (1.2%)
Federal Home Loan Mortgage Corp. 11,600 672,800
Federal National Mortgage
Association 14,700 1,005,113
-------------------
1,677,913
-------------------
UTILITIES (1.5%)
Alltel Corp. 6,100 436,150
Central & South West Corp. 11,600 271,150
Edison International 13,400 358,450
FPL Group, Inc. 6,500 355,063
PP&L Resources, Inc. 8,300 255,225
Southern Co. 6,000 159,000
Texas Utilities Co. 8,200 338,250
-------------------
2,173,288
-------------------
TOTAL COMMON STOCKS
(COST $106,370,200) 133,899,335
-------------------
</TABLE>
-15-
<PAGE> 18
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------- ------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (5.7%)
COMMERCIAL PAPER (4.1%)
J.P. Morgan & Company, Inc.,
4.92% due July 13, 1999 $ 1,075,000 $ 1,072,953
Ford Motor Credit Co.,
5.71% due July 1, 1999 909,000 909,000
GE Capital Corp.,
5.11% due July 7, 1999 1,400,000 1,398,548
Dorada Finance, Inc.,
4.94% due July 15, 1999 2,400,000 2,394,749
---------------------
5,775,250
---------------------
U.S. TREASURY (1.6%)
United States of America Treasury,
4.81% due April 27, 2000 (B) 2,400,000 2,307,691
---------------------
TOTAL SHORT-TERM
INVESTMENTS (COST $8,084,251) 8,082,941
---------------------
NOTIONAL
VALUE
-------------
FUTURES CONTRACTS (0.0%)
S&P 500 Stock Index,
Exp. September, 1999 (C) $ 8,635,625 -
---------------------
TOTAL INVESTMENTS (100%)
(COST $114,454,451) (D) $ 141,982,276
=====================
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) Par value of $750,000 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 June 30, 1999, net unrealized appreciation for all securities was
$27,527,825. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$30,282,558 and aggregate gross unrealized depreciation for all securities
in which there was an excess of cost over market value of $2,754,733.
See Notes to Financial Statements
-16-
<PAGE> 19
THE TRAVELERS
TIMED SHORT-TERM
BOND ACCOUNT
FOR VARIABLE ANNUITIES
The U.S. economic expansion continued in the first six months of 1999, with
leadership on the production side of the economy shifting from the construction
sector to the industrial sector. Unemployment remained low, edging up to 4.3%
at the end of June. It is estimated that real Gross Domestic Product growth for
the second quarter is to remain at 3.9%.
The six months ended with the 30-year Treasury Bond yield at a 5.96% and the
federal funds rate at 5.00%. The 30-year Treasury Bond yield was up 34 basis
points from the first quarter and 87 basis points from year-end. During the
second quarter, the Federal Open Market Committee ("FOMC") raised its target
federal funds rate by 25 basis points, to 5.00%, as was widely expected.
Although the FOMC had moved back to an unbiased inter-meeting policy directive,
the economic environment that provoked the 25 basis points tightening is likely
to persist and may require additional tightening in order to unwind last fall's
monetary policy accommodation of 75 basis points.
The strategy in management of The Travelers Timed Short-Term Bond Account for
Variable Annuities, will be to extend maturities from the current average life
of 31 days to 45 days. At June 30, 1999 the asset size of the portfolio was
$160.4 million with an average yield of 4.93%.
PORTFOLIO MANAGER: EMIL J. MOLINARO JR.
[TIMCO LOGO]
-17-
<PAGE> 20
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $160,522,845) ....................... $160,445,189
Receivables:
Investment securities sold ...................................................... 4,570,000
Purchase payments and transfers from other Travelers accounts ................... 34,108
------------
Total Assets ................................................................... 165,049,297
------------
LIABILITIES:
Cash overdraft .................................................................... 50,136
Payables:
Investment securities purchased .................................................. 4,518,263
Contract surrenders and transfers to other Travelers accounts .................... 133,327
Investment management and advisory fees .......................................... 8,526
Market timing fees ............................................................... 32,967
Insurance charges ................................................................ 32,967
Accrued liabilities ............................................................... 19
------------
Total Liabilities .............................................................. 4,776,205
------------
NET ASSETS:
(Applicable to 110,330,800 units outstanding at 1.453 per unit) .................. $160,273,092
============
</TABLE>
See Notes to Financial Statements
-18-
<PAGE> 21
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ............................................................. $ 4,196,078
EXPENSES:
Market timing fees ................................................... $ 1,055,209
Investment management and advisory fees .............................. 272,919
Insurance charges .................................................... 1,055,209
--------------------------
Total expenses .................................................... 2,383,337
-----------------------
Net investment income ........................................... 1,812,741
-----------------------
REALIZED GAIN AND CHANGE IN UNREALIZED LOSS
ON INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold .......................... 36,922,430
Cost of investment securities sold ................................ 36,922,197
--------------------------
Net realized gain ............................................... 233
Change in unrealized loss on investment securities:
Unrealized loss at December 31, 1998 .............................. (6,304)
Unrealized loss at June 30, 1999 .................................. (77,656)
--------------------------
Net change in unrealized loss for the period .................... (71,352)
-----------------------
Net realized gain and change in unrealized loss ............... (71,119)
-----------------------
Net increase in net assets resulting from operations .................. $ 1,741,622
=======================
</TABLE>
See Notes to Financial Statements
-19-
<PAGE> 22
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income ............................................................... $ 1,812,741 $ 4,262,991
Net realized gain from investment security transactions ............................. 233 4,401
Net change in unrealized gain (loss) on investment securities ....................... (71,352) (7,755)
------------- -------------
Net increase in net assets resulting from operations ............................... 1,741,622 4,259,637
------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 2,294,887 and 4,899,841 units, respectively) ........................ 3,315,692 6,966,870
Participant transfers from other Travelers accounts
(applicable to 1,829,628 and 3,275,494 units, respectively) ........................ 2,645,833 4,642,138
Market timing transfers from other Travelers timed accounts
(applicable to 21,434,352 and 139,179,292 units, respectively) ..................... 31,080,967 197,358,803
Administrative charges
(applicable to 53,637 and 111,227 units, respectively) ............................. (77,893) (158,992)
Contract surrenders
(applicable to 5,303,491 and 9,833,684 units, respectively) ........................ (7,665,235) (13,984,074)
Participant transfers to other Travelers accounts
(applicable to 3,638,704 and 6,135,224 units, respectively) ........................ (5,258,401) (8,720,437)
Market timing transfers to other Travelers timed accounts
(applicable to 43,178,662 and 41,238,874 units, respectively) ...................... (62,408,779) (59,114,111)
Other payments to participants
(applicable to 120,391 and 230,542 units, respectively) ............................ (174,057) (328,066)
------------- -------------
Net increase (decrease) in net assets resulting from unit transactions .............. (38,541,873) 126,662,131
------------- -------------
Net increase (decrease) in net assets .............................................. (36,800,251) 130,921,768
NET ASSETS:
Beginning of period ................................................................. 197,073,343 66,151,575
------------ ------------
End of period ....................................................................... $160,273,092 $197,073,343
============ ============
</TABLE>
See Notes to Financial Statements
-20-
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Timed Short-Term Bond Account for Variable Annuities
("Account TSB") is a separate account of The Travelers Insurance Company
("The Travelers"), an indirect wholly owned subsidiary of Citigroup Inc.,
and is available for funding certain variable annuity contracts issued by
The Travelers. Account TSB is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment
company. Participants in Account TSB have entered into market timing
service agreements with an affiliate of The Travelers, which provide for
the transfer of participants' funds to certain other timed accounts of The
Travelers, at the discretion of the market timers.
The following is a summary of significant accounting policies consistently
followed by Account TSB in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the 4:00 p.m. Eastern Standard Time price
of the New York Stock Exchange on the last business day of the period;
securities traded on the over-the-counter market and listed securities with
no reported sales are valued at the mean between the last-reported bid and
asked prices or on the basis of quotations received from a reputable broker
or other recognized source.
When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated
at fair value on the basis of valuations furnished by a pricing service.
These valuations are determined for normal institutional-size trading units
of such securities, using methods based on market transactions for
comparable securities and various relationships between securities which
are generally recognized by institutional traders. Securities, including
restricted securities, for which pricing services are not readily
available, are valued by management at prices which it deems in good faith
to be fair.
Short-term investments for which a quoted market price is available are
valued at market. Short-term investments for which there is no reliable
quoted market price are valued at amortized cost which approximates market.
SECURITY TRANSACTIONS. Security transactions are accounted for on the
trade date. Interest income is recorded on the accrual basis. Premiums
and discounts are amortized to interest income utilizing the constant yield
method.
REPURCHASE AGREEMENTS. When Account TSB enters into a repurchase agreement
(a purchase of securities whereby the seller agrees to repurchase the
securities at a mutually agreed upon date and price), the repurchase price
of the securities will generally equal the amount paid by Account TSB plus
a negotiated interest amount. The seller under the repurchase agreement
will be required to provide to Account TSB securities (collateral) whose
market value, including accrued interest, will be at least equal to 102% of
the repurchase price. Account TSB monitors the value of collateral on a
daily basis. Repurchase agreements will be limited to transactions with
national banks and reporting broker dealers believed to present minimal
credit risks. Account TSB's custodian will take actual or constructive
receipt of all securities underlying repurchase agreements until such
agreements expire.
FEDERAL INCOME TAXES. The operations of Account TSB form a part of the
total operations of The Travelers and are not taxed separately. The
Travelers is taxed as a life insurance company under the Internal Revenue
Code of 1986, as amended (the "Code"). Under existing federal income tax
law, no taxes are payable on the investment income and capital gains of
Account TSB. Account TSB is not taxed as a "regulated investment company"
under Subchapter M of the Code.
OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
-21-
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
2. INVESTMENTS
Realized gains and losses from investment security transactions are
reported on an identified cost basis.
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 Citigroup 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 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
period) 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
$42,349 and $72,123 of contingent deferred sales charges for the six months
ended June 30, 1999 and the year ended December 31, 1998, respectively.
4. CHANGE IN ACCOUNTANTS
Account TSB did not renew its audit relationship with its former principal
accountant, PricewaterhouseCoopers LLP on January 29, 1999. On that same
day, KPMG LLP was engaged as principal accountant for Account TSB. KPMG LLP
serves as the principal accountant for other affiliated separate accounts
and mutual funds.
The report by PricewaterhouseCoopers LLP on the financial statements for
fiscal years ended December 31, 1998 and 1997, did not contain an adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
The decision to change principal accountants was approved by the Board of
Managers at a meeting held on January 29, 1999, where it decided to engage
KPMG LLP as the principal accountant to audit the fund's financial
statements since it would promote consistency and possible economies of
scale among affiliated separate accounts and mutual funds.
During the past two years and subsequent interim period preceding such
termination there were no disagreements with PricewaterhouseCoopers LLP on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not
resolved to the satisfaction of the former accountant, would have caused it
to make reference to the subject matter of disagreement in connection with
its report.
-22-
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)- CONTINUED
5. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each period.)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
---------- -------------------------------------------------
1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income .................................... $ .036 $ .078 $ .077 $ .057 $ .074 $ .055
Operating expenses ......................................... .020 .040 .039 .030 .035 .036
--------- --------- --------- --------- --------- ---------
Net investment income ...................................... .016 .038 .038 .027 .039 .019
Unit value at beginning of period .......................... 1.437 1.399 1.361 1.333 1.292 1.275
Net realized and change in unrealized gains (losses)** ..... .000 .000 .000 .001 .002 (.002)
--------- --------- --------- --------- --------- ---------
Unit value at end of period ................................ $ 1.453 $ 1.437 $ 1.399 $ 1.361 $ 1.333 $ 1.292
========= ========= ========= ========= ========= =========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value ................................. $ .02 $ .04 $ .04 $ .03 $ .04 $ .02
Ratio of operating expenses to average net assets* ......... 2.82% 2.82% 2.82% 2.82% 2.82% 2.82%
Ratio of net investment income to average net assets* ...... 2.17% 2.71% 2.77% 2.47% 3.17% 1.45%
Number of units outstanding at end of period (thousands) ... 110,331 137,067 47,262 54,565 - 216,713
</TABLE>
* Annualized
** Effective May 2, 1994, Account TSB was authorized to invest in
securities with a maturity of greater than one year. As a result, net
realized and changed in unrealized gains (losses) are no longer
included in total investment income.
-23-
<PAGE> 26
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (100%)
COMMERCIAL PAPER (100%)
American Express Credit Corp.,
4.93% due August 26, 1999 $ 8,100,000 $ 8,032,827
American Home Products Corp.,
4.95% due July 21, 1999 7,500,000 7,477,200
Asset Securitization Corp.,
5.12% due July 20, 1999 3,075,000 3,066,086
Associates Corp. of North America,
4.95% due July 12, 1999 7,500,000 7,486,793
AT&T Corp.,
5.08% due July 7, 1999 6,500,000 6,493,259
Becton Dickinson & Co.,
5.15% due July 29, 1999 4,500,000 4,481,307
Boeing Capital Corp.,
5.08% due July 8, 1999 4,995,000 4,989,091
Cargill, Inc.,
4.93% due July 13, 1999 6,500,000 6,487,624
CIT Group Holdings, Inc.,
4.95% due August 2, 1999 2,000,000 1,990,540
Coca-Cola Co.,
4.96% due July 26, 1999 6,500,000 6,475,696
DE Funding Corp.,
5.12% due July 19, 1999 1,835,000 1,829,941
Eastman Kodak Co.,
4.91% due July 19, 1999 1,550,000 1,545,727
Ford Motor Credit Co.,
4.92% due July 22, 1999 7,175,000 7,152,183
GE Capital Corp.,
5.06% due July 14, 1999 8,000,000 7,983,632
General Mills, Inc.,
4.94% due July 7, 1999 4,800,000 4,795,022
General Mills, Inc.,
4.94% due July 12, 1999 2,900,000 2,894,893
GM Acceptance Corp.,
4.94% due August 31, 1999 5,400,000 5,351,141
Goldman Sachs Group LP,
5.01% due July 2, 1999 3,000,000 2,999,103
H. J. Heinz Co.,
4.96% due July 28, 1999 7,000,000 6,971,888
Household Financial Corp.,
5.96% due July 1, 1999 4,519,000 4,519,000
J. P. Morgan & Company, Inc.,
5.02% due November 17, 1999 6,000,000 5,874,060
Merrill Lynch & Co.,
4.91% due July 28, 1999 6,250,000 6,224,900
Morgan Stanley Group, Inc.,
5.14% due July 8, 1999 1,400,000 1,398,344
Morgan Stanley Group, Inc.,
4.94% due July 19, 1999 6,500,000 6,482,080
Private Export Funding Corp.,
4.97% due July 30, 1999 7,500,000 7,467,810
Providian Master Trust,
4.96% due July 29, 1999 3,600,000 3,585,046
Providian Master Trust,
4.96% due August 3, 1999 2,950,000 2,935,613
Prudential Funding Corp.,
4.93% due August 12, 1999 6,500,000 6,459,687
TECO Financial, Inc.,
4.94% due July 23, 1999 5,600,000 5,581,402
Transamerica Financial Corp.,
5.13% due July 27, 1999 5,795,000 5,772,527
Walt Disney Co.,
4.98% due November 4, 1999 5,750,000 5,640,767
--------------
TOTAL INVESTMENTS (100%)
(COST $160,522,845) $ 160,445,189
==============
</TABLE>
See Notes to Financial Statements
-24-
<PAGE> 27
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").
TIMCO manages Account TAS 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 that favors
companies that achieve earnings growth above consensus expectations and whose
shares 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
Mid Cap Stock Index ("S&P 400"). The S&P 400 is a value-weighted index
comprised of mid- and small-company stocks.
For the six months ending June 30, 1999, Account TAS had a total return of
5.2%, before fees and expenses, lagging the 6.9% total return of the S&P 400.
Net of fees and expenses, Account TAS's total return of 3.8% for the first half
of 1999 trailed the 13.2% average return achieved by variable annuity stock
funds in the Lipper Capital Appreciation Mid Cap Category. On a trailing twelve
month basis as of June 30, 1999, Account TAS's total return of 10.6%, net of
fees and expenses, lagged the Lipper Capital Appreciation Mid Cap average of
17.7%.
During the first quarter of 1999, stock selection in the Consumer
Discretionary, Transportation and Utilities sectors had a positive impact on
relative performance but proved to be adverse in the Consumer Staples and
Energy Services sectors.
In the Consumer Discretionary sector, performance was helped by our emphasis on
both strong earnings fundamentals and low valuation. High growth, higher
price-to-earnings multiple retailers such as Bed Bath & Beyond, TJX Companies
and Abercrombie & Fitch bounced back in March after the February sell-off in
growth stocks. At the other end of the spectrum, companies like Mail-Well Inc.
rebounded from extremely depressed valuations early in the first quarter.
In the Transportation sector, our emphasis on Alaska Air Group, with higher
growth prospects, and Navistar International, which rose on takeover
speculation from Volvo's interest in the company, helped performance. We also
benefited from avoiding earnings disappointments from SPX Corp. and Meritor
Automotive.
In the Utilities sector over the last several months, we have been emphasizing
long-distance and cellular telephone companies such as Winstar Communications,
Qwest Communication and Century Telephone at the expense of the local/regional
telephone companies and the electric utilities group. We continue to be
rewarded in these positions as investors have paid a premium for the higher
growth prospects of these companies within a relatively low growth sector.
In the Consumer Staples sector, we were hurt by our overweight position in
Suiza Foods, a leading producer of dairy products, where the threat of rising
milk prices cast doubts on the near term earnings outlook. Finally, we were
underweight some of the best performing stocks, such as BJ Services and Smith
International, in the spectacular Energy Services rally during March when oil
prices rose from their recent lows.
The market environment changed in the second quarter as successful stocks with
high price-to-earnings ratios declined and out-of-favor, value-oriented stocks
came surging back. As a general rule, we tend to exclude those stocks which
lack earnings visibility and we, therefore, underperformed our benchmark. Stock
selection was least favorable in the Technology, Health Care and Consumer
Discretionary sectors and favorable in the Financial Services sector.
-25-
<PAGE> 28
In the Technology sector, our shortfall in relative performance came largely
from being underweight stocks with poor recent earnings which bounced strongly
in the second quarter. The list of such stocks included companies like SCI
Systems, Arrow Electronics and Integrated Devices. Not owning Fore Systems,
which was acquired in a takeover for a 78% premium, hurt relative performance.
Stable growth stocks such as Legato Systems and Siebel Systems lost ground as
their price-to-earnings valuation declined. Finally, a large negative earnings
surprise from Cadence Systems hurt portfolio performance.
In the Health Care sector, biotech and drug stocks like Biogen, Forest
Laboratories and Genzyme lost ground during the sell-off in growth stocks.
Stocks such as Oxford Health Plans and ICN Pharmaceuticals, which had
experienced large price declines in 1998 due to earnings problems, rebounded
sharply in the second quarter. A similar theme was observed in the Consumer
Discretionary sector where several down-and-out stocks like Callaway Golf and
Fastenal bounced back sharply in April and May.
The focus in the U.S. stock market has now switched from the earnings front to
the future direction of interest rates. The early second quarter earnings
reports project a healthy growth in corporate profits from the prior year. With
the stock market now trading well above the Dow Jones Industrial Average 10,000
and at unprecedented valuation levels, any further increase in interest rates
could trigger a compression in the price-to-earnings multiple for the market.
In our disciplined approach to stock selection, we screen our research universe
of over 800 mid cap securities for companies that offer improving earnings
fundamentals at discounted stock valuations. A small sample of our current
holdings is presented here to illustrate our investment approach. In the
technology sector, our emphasis is on growth stocks such as Comverse Technology
and Lexmark which still trade at reasonable valuations. We are also positioned
to benefit from a continued rally in value stocks through our positions in
materials stocks such as Southdown, Solutia and Consolidated Papers.
PORTFOLIO MANAGER: SANDIP A. BHAGAT, CFA
[TIMCO LOGO]
-26-
<PAGE> 29
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $60,818,858) .............. $68,123,738
Receivables:
Dividends ............................................................. 34,429
Investment securities sold ............................................ 2,378,469
Purchase payments and transfers from other Travelers accounts ......... 9,290
Variation on futures margin ........................................... 10,500
-----------
Total Assets ........................................................ 70,556,426
-----------
LIABILITIES:
Cash overdraft ......................................................... 86,522
Payables:
Investment securities purchased ....................................... 935,925
Contract surrenders and transfers to other Travelers accounts ......... 87,123
Investment management and advisory fees ............................... 3,913
Market timing fees .................................................... 13,977
Insurance charges ..................................................... 13,977
Accrued liabilities ................................................... 411
-----------
Total Liabilities ................................................... 1,141,848
-----------
NET ASSETS:
(Applicable to 17,127,923 units outstanding at 4.053 per unit) ......... $69,414,578
===========
</TABLE>
See Notes to Financial Statements
-27-
<PAGE> 30
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ................................................... $ 323,217
Interest .................................................... 161,317
-----------
Total income ............................................... $ 484,534
EXPENSES:
Market timing fees .......................................... 415,089
Investment management and advisory fees ..................... 116,225
Insurance charges ........................................... 415,089
-----------
Total expenses ........................................... 946,403
----------
Net investment loss .................................... (461,869)
----------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN
ON INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold ................... 34,565,920
Cost of investment securities sold ......................... 30,784,395
-----------
Net realized gain ...................................... 3,781,525
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1998 ....................... 7,733,544
Unrealized gain at June 30, 1999 ........................... 7,304,880
-----------
Net change in unrealized gain for the period ............. (428,664)
----------
Net realized gain and change in unrealized gain ........ 3,352,861
----------
Net increase in net assets resulting from operations ......... $2,890,992
==========
</TABLE>
See Notes to Financial Statements
-28-
<PAGE> 31
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment loss .................................................... $ (461,869) $ (854,695)
Net realized gain from investment security transactions ................ 3,781,525 13,953,509
Net change in unrealized gain on investment securities ................. (428,664) (7,344,883)
----------- ------------
Net increase in net assets resulting from operations ............... 2,890,992 5,753,931
----------- ------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 418,645 and 1,162,073 units, respectively) ............ 1,579,554 4,076,993
Participant transfers from other Travelers accounts
(applicable to 100,757 and 285,187 units, respectively) .............. 380,483 1,020,435
Market timing transfers from other Travelers timed accounts
(applicable to 4,765,426 and 4,085,482 units, respectively) .......... 17,896,645 14,496,461
Administrative charges
(applicable to 10,234 and 25,033 units, respectively) ................ (40,223) (91,340)
Contract surrenders
(applicable to 892,818 and 1,541,603 units, respectively) ............ (3,394,787) (5,452,058)
Participant transfers to other Travelers accounts
(applicable to 1,293,909 and 1,838,385 units, respectively) .......... (4,935,347) (6,504,181)
Market timing transfers to other Travelers timed accounts
(applicable to 2,385,521 and 11,517,409 units, respectively) ......... (9,140,624) (36,582,507)
Other payments to participants
(applicable to 26,647 and 22,628 units, respectively) ................ (99,258) (81,663)
----------- ------------
Net increase (decrease) in net assets resulting from
unit transactions ...................................................... 2,246,443 (29,117,860)
----------- ------------
Net increase (decrease) in net assets ............................. 5,137,435 (23,363,929)
NET ASSETS:
Beginning of period .................................................... 64,277,143 87,641,072
----------- ------------
End of period .......................................................... $69,414,578 $ 64,277,143
=========== ===============
</TABLE>
See Notes to Financial Statements
-29-
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Timed Aggressive Stock Account for Variable Annuities
("Account TAS") is a separate account of The Travelers Insurance Company
("The Travelers"), an indirect wholly owned subsidiary of Citigroup Inc.,
and is available for funding certain variable annuity contracts issued by
The Travelers. Account TAS is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment
company. Participants in Account TAS have entered into market timing
service agreements with an affiliate of The Travelers, which provide for
the transfer of participants' funds to certain other timed accounts of The
Travelers, at the discretion of the market timers.
The following is a summary of significant accounting policies consistently
followed by Account TAS in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the 4:00 p.m. Eastern Standard Time price
of the New York Stock Exchange on the last business day of the period;
securities traded on the over-the-counter market and listed securities with
no reported sales are valued at the mean between the last-reported bid and
asked prices or on the basis of quotations received from a reputable broker
or other recognized source.
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.
SECURITY TRANSACTIONS. 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. Premiums and discounts are
amortized to interest income utilizing the constant yield method.
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 market and are short-term contracts with a
duration of less than nine months. The market value of the options will be
based on the 4:00 p.m. Eastern Standard Time price of the New York Stock
Exchange, or, in the absence of such price, the latest bid quotation.
-30-
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
REPURCHASE AGREEMENTS. When Account TAS enters into a repurchase agreement
(a purchase of securities whereby the seller agrees to repurchase the
securities at a mutually agreed upon date and price), the repurchase price
of the securities will generally equal the amount paid by Account TAS plus
a negotiated interest amount. The seller under the repurchase agreement
will be required to provide to Account TAS securities (collateral) whose
market value, including accrued interest, will be at least equal to 102% of
the repurchase price. Account TAS monitors the value of collateral on a
daily basis. Repurchase agreements will be limited to transactions with
national banks and reporting broker dealers believed to present minimal
credit risks. Account TAS's custodian will take actual or constructive
receipt of all securities underlying repurchase agreements until such
agreements expire.
FEDERAL INCOME TAXES. The operations of Account TAS form a part of the
total operations of The Travelers and are not taxed separately. The
Travelers is taxed as a life insurance company under the Internal Revenue
Code of 1986, as amended (the "Code"). Under existing federal income tax
law, no taxes are payable on the investment income and capital gains of
Account TAS. Account TAS is not taxed as a "regulated investment company"
under Subchapter M of the Code.
OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities), were $26,955,455 and $23,816,381,
respectively; the costs of purchases and proceeds from sales of direct and
indirect U.S. government securities were $1,752,074 and $900,000,
respectively, for the six months ended June 30, 1999. Realized gains and
losses from investment security 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 $11,420 and $9,682 for the six months ended June 30,
1999 and the year ended December 31, 1998, respectively.
At June 30, 1999, Account TAS held 15 open S&P 400 MidCap Index futures
contracts expiring in September, 1999. The underlying face value, or
notional value, of these contracts at June 30, 1999 amounted to $3,145,125.
In connection with these contracts, short-term investments with a par value
of $750,000 had been pledged as margin deposits.
Net realized gains resulting from futures contracts were $564,738 and
$277,383 for the six months ended June 30, 1999 and the year ended December
31, 1998, respectively. These gains are included in the net realized gain
from investment security transactions on both the Statement of Operations
and the Statement of Changes in Net Assets. The cash settlement for June
30, 1999 is shown on the Statement of Assets and Liabilities as a
receivable for variation on futures margin.
-31-
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
3. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at an annual
rate of 0.35% of Account TAS's average net assets. These fees are paid to
The Travelers Investment Management Company, an indirect wholly owned
subsidiary of Citigroup 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 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
period) 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
$28,476 and $58,013 of contingent deferred sales charges for the six months
ended June 30, 1999 and the year ended December 31, 1998, respectively.
4. CHANGE IN ACCOUNTANTS
Account TAS did not renew its audit relationship with its former principal
accountant, PricewaterhouseCoopers LLP on January 29, 1999. On that same
day, KPMG LLP was engaged as principal accountant for Account TAS. KPMG LLP
serves as the principal accountant for other affiliated separate accounts
and mutual funds.
The report by PricewaterhouseCoopers LLP on the financial statements for
fiscal years ended December 31, 1998 and 1997, did not contain an adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
The decision to change principal accountants was approved by the Board of
Managers at a meeting held on January 29, 1999, where it decided to engage
KPMG LLP as the principal accountant to audit the fund's financial
statements since it would promote consistency and possible economies of
scale among affiliated separate accounts and mutual funds.
During the past two years and subsequent interim period preceding such
termination there were no disagreements with PricewaterhouseCoopers LLP on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not
resolved to the satisfaction of the former accountant, would have caused it
to make reference to the subject matter of disagreement in connection with
its report.
-32-
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
5. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each period.)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
--------- -------------------------------------------------
1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income ........................................... $ .027 $ .056 $ .063 $ .041 $ .042 $ .036
Operating expenses ................................................ .053 .098 .085 .069 .057 .049
-------- ------- -------- -------- -------- -------
Net investment loss ............................................... (.026) (.042) (.022) (.028) (.015) (.013)
Unit value at beginning of period ................................. 3.907 3.389 2.623 2.253 1.706 1.838
Net realized and change in unrealized gains (losses) .............. .172 .560 .788 .398 .562 (.119)
-------- ------- -------- -------- -------- -------
Unit value at end of period ....................................... $ 4.053 $ 3.907 $ 3.389 $ 2.623 $ 2.253 $1.706
======== ======== ======== ========= ======== =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value ............................. $ .15 $ .52 $ .77 $ .37 $ .55 $(.13)
Ratio of operating expenses to average net assets* ................ 2.85% 2.85% 2.85% 2.84% 2.83% 2.80%
Ratio of net investment income to average net assets* ............. (1.41)% (1.21)% (0.76)% (1.13)% (0.74)% (0.72)%
Number of units outstanding at end of period (thousands) .......... 17,128 16,452 25,865 30,167 45,575 25,109
Portfolio turnover rate ........................................... 39% 113% 92% 98% 113% 142%
</TABLE>
* Annualized
-33-
<PAGE> 36
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
COMMON STOCKS (95.7%)
AEROSPACE (0.8%)
Gulfstream Aerospace Corp. (A) 4,900 $ 331,056
Precision Castparts Corp. 4,800 204,000
--------------
535,056
--------------
AIRLINES (0.3%)
Alaska Air Group (A) 4,400 183,700
--------------
AUTOMOTIVE (2.4%)
Arvin Inds., Inc. 6,200 234,825
Borg Warner Automotive 4,200 231,000
Federal-Mogul 2,400 124,800
Harley Davidson, Inc. 10,940 594,863
Lear Corp. (A) 9,000 447,750
--------------
1,633,238
--------------
BANKING (6.7%)
AmSouth Bancorp 3,412 79,116
Associated Banc-Corp. 7,475 310,212
Capital One Financial Corp. 4,800 267,300
Charter One Financial, Inc. 13,900 386,160
City National Corp. 7,000 262,062
Dime Savings Bank 7,800 156,975
First Security Corp. 17,550 477,690
First Tennesse National Corp. 9,100 348,929
First Virginia Banks, Inc. 3,200 157,200
Hibernia Corp. 21,100 331,006
Marshall & Ilsley Corp. 9,900 637,004
Mercantile Bankshares Corp. 7,950 280,983
North Fork Bancorp, Inc. 13,400 285,587
Old Kent Financial Corp. 2,940 123,113
Sovereign Bancorp, Inc. 17,400 211,520
Wilmington Trust Corp. 2,000 114,750
Zions Bancorp 2,600 165,425
--------------
4,595,032
--------------
BROKERAGE (1.0%)
A.G. Edwards, Inc. 9,050 291,863
T. Rowe Price & Associates, Inc. 9,300 356,597
--------------
648,460
--------------
BUILDING MATERIALS (0.8%)
Masco Corp. 6,300 181,913
Southdown, Inc. 5,900 379,075
--------------
560,988
--------------
CAPITAL GOODS (3.5%)
Allied Waste Industries, Inc. (A) 10,300 203,425
American Standard Co. (A) 2,700 129,600
Cordant Technologies, Inc. 6,320 285,585
Crane Co. 3,925 123,392
Leggett & Platt, Inc. 19,100 531,219
Modine Manufacturing Co. 5,900 191,935
Premark International, Inc. 7,600 285,000
Tecumseh Products Co. 5,000 302,656
Thomas & Betts 3,500 165,375
York International 4,300 184,094
--------------
2,402,281
--------------
CHEMICALS (2.7%)
Albemarle Corp. 13,200 305,250
Crompton & Knowles Corp. 12,400 242,575
IMC Global 10,700 188,587
Lubrizol Corp. 8,700 237,075
Lyondell Petrochemical Co. 12,800 264,000
Mylan Labortories, Inc. 7,900 209,350
Solutia, Inc. 18,700 398,544
--------------
1,845,381
--------------
CONSUMER (1.1%)
Dial Corp. 7,300 271,469
Furniture Brands International (A) 7,800 217,425
Mohawk Industries (A) 8,000 243,000
--------------
731,894
--------------
CONSUMER SERVICES (0.3%)
Outback Steakhouse (A) 5,250 205,899
--------------
DEFENSE (0.5%)
Litton Industries (A) 4,600 330,050
--------------
FINANCE (2.8%)
American Financial Group 7,200 245,250
Comdisco, Inc. 11,000 281,875
Countrywide Credit Industries, Inc. 2,700 115,425
E Trade Group (A) 16,400 654,463
Finova Group, Inc. 6,000 315,750
Greenpoint Financial Co. 8,900 292,031
--------------
1,904,794
--------------
FOOD (4.6%)
Bob Evans Farms 8,300 164,704
Brinker International, Inc. (A) 10,700 290,906
Flowers Industries, Inc. 10,700 232,056
Hormel Foods 8,200 330,050
IBP, Inc. 12,400 294,500
Interstate Bakeries Corp. 10,300 231,106
Starbucks Corp. (A) 12,900 483,348
Suiza Foods Co. (A) 7,300 305,687
Tyson Foods, Inc. 21,200 477,000
U.S. Foodservice, Inc. (A) 7,000 298,375
--------------
3,107,732
--------------
HEALTHCARE (2.8%)
Beckman Coulter 4,400 213,950
Covance, Inc. (A) 3,500 83,781
Health Management Assoc. Inc. (A) 26,875 302,344
PacifiCare Health Systems (A) 3,200 230,200
Quintiles Transnational Corp. (A) 6,900 289,585
Trigon Healthcare (A) 7,800 283,725
VISX Inc. (A) 6,600 523,256
--------------
1,926,841
--------------
HOME CONSTRUCTION (0.2%)
Clayton Homes, Inc. 9,437 107,936
--------------
</TABLE>
-34-
<PAGE> 37
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
INDUSTRIAL (2.8%)
Cintas Corp. 10,700 $ 718,572
Convegys Corp. (A) 12,000 231,000
Hillenbrand Industries, Inc. 2,200 95,150
Minerals Technologies, Inc. 2,600 145,113
Modis Professional Services,
Inc. (A) 16,400 225,500
Pentair, Inc. 5,500 251,625
Teleflex, Inc. 5,500 238,906
--------------
1,905,866
--------------
INSURANCE (2.0%)
Ambac Financial Group, Inc. 4,200 239,925
Hartford Life Inc. 3,000 157,875
Old Republic International
Corp. 9,250 160,141
Oxford Health Plans, Inc. (A) 6,200 96,294
PMI Group, Inc. 4,800 301,500
Protective Life Corp. 7,000 231,000
ReliaStar Financial 4,000 175,000
--------------
1,361,735
--------------
INTERGRATED ENERGY (0.3%)
Noble Affiliates 7,800 219,863
--------------
LODGING-HOTELS (0.7%)
Mandalay Resort Group (A) 14,400 304,200
Promus Hotel (A) 6,200 192,200
--------------
496,400
--------------
MEDIA-CABLE (1.3%)
Media General, Inc. 4,300 219,300
TCA Cable TV, Inc. 3,700 205,119
Univision Communications, Inc. (A) 7,500 495,000
--------------
919,419
--------------
MEDIA-NONCABLE (2.1%)
Hispanic Broadcasting Corp. (A) 2,300 174,441
Houghton Mifflin 6,400 301,200
Reader's Digest Association, Inc. 7,700 306,075
Snyder Communications (A) 7,600 248,900
Washington Post Co. 710 381,802
--------------
1,412,418
--------------
METALS (0.4%)
Ryerson Tull 12,500 282,031
--------------
NATURAL GAS DISTRIBUTORS (1.3%)
El Paso Energy Corp. 9,800 344,837
KeySpan Energy 7,900 208,363
MCN Energy Group, Inc. 4,200 87,150
National Fuel Gas Co. 5,000 242,500
--------------
882,850
--------------
OIL FIELD (2.9%)
ENSCO International, Inc. 19,600 390,775
Global Marine, Inc. (A) 10,900 168,269
Noble Drilling Corp. (A) 15,600 307,125
Tidewater, Inc. 11,100 338,550
Transocean Offshore, Inc. 13,200 346,500
Varco International, Inc. (A) 11,700 127,969
Weatherford International, Inc. (A) 7,500 274,687
--------------
1,953,875
--------------
PAPER (1.9%)
Consolidated Papers, Inc. 11,200 299,600
Georgia-Pacific Group 9,000 227,250
Reynolds & Reynolds Co. 12,800 298,400
Sonoco Products Co. 6,950 208,066
Wausau Mosinee Paper Co. 15,800 284,400
--------------
1,317,716
--------------
PHARMACEUTICALS (4.6%)
Bergen Brunswig Corp. 12,550 216,488
Biogen Inc. (A) 12,400 797,863
Centocor, Inc. (A) 4,800 223,950
Chiron Corp. (A) 14,700 304,566
Forest Labs (A) 7,900 365,375
Genzyme Corp. (A) 7,600 368,363
Genzyme Molecular Oncology (A) 5 24
Medimmune Inc. (A) 5,900 400,647
Omnicare, Inc. 6,000 75,750
Sepracor Inc. (A) 2,200 178,475
STERIS Corp. (A) 11,800 228,625
--------------
3,160,126
--------------
RAILROADS (0.3%)
Trinity Industries 6,700 224,450
--------------
REFINING (1.3%)
Murphy Oil Corp. 3,000 146,437
Tosco Corp. 10,300 267,156
Ultramar Diamond Shamrock Corp. 10,700 233,394
Valero Energy Corp. 10,100 216,519
--------------
863,506
--------------
RETAILERS (5.4%)
Abercrombie & Fitch Co. (A) 11,200 537,600
Barnes & Noble (A) 4,700 128,663
Bed Bath & Beyond, Inc. (A) 10,000 384,375
BJ's Wholesale Club (A) 9,900 297,619
Callaway Golf 17,400 254,475
Dollar Tree Stores (A) 3,900 171,478
Family Dollar Stores, Inc. 22,800 547,200
Lands' End (A) 5,000 242,500
OfficeMax, Inc. (A) 7,880 94,560
Ross Stores, Inc. 7,300 367,053
Saks, Inc. (A) 14,100 407,138
Tiffany & Co. 2,500 241,250
--------------
3,673,911
--------------
</TABLE>
-35-
<PAGE> 38
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
SERVICES (4.3%)
Apollo Group, Inc. (A) 5,800 $ 153,882
Cadence Design Systems (A) 15,750 200,813
Concord EFS, Inc. (A) 12,200 516,594
Lincare Holdings, Inc. (A) 9,100 227,785
Robert Half International,
Inc. (A) 6,500 169,000
Sotheby's Holdings, Inc. 7,200 274,500
Stryker Corp. 6,900 414,862
SunGard Data Systems, Inc. (A) 10,900 376,050
Xilinx, Inc. (A) 10,600 607,182
--------------
2,940,668
--------------
SUPERMARKETS (0.5%)
Hannaford Brothers Co. 5,800 310,300
--------------
TECHNOLOGY (20.7%)
Altera Corp. (A) 14,200 522,294
American Power Conversion (A) 25,800 518,420
Analog Devices, Inc. (A) 11,900 597,231
Atmel Corp. (A) 7,700 201,404
Cambridge Technology Partners (A) 5,300 92,916
Citrix Systems, Inc. (A) 8,400 473,288
Compuware Corp. (A) 8,400 266,963
Comverse Technology, Inc. (A) 7,950 599,728
Fiserv Inc. (A) 5,725 179,443
General Instrument Corp. (A) 3,600 153,000
Intuit, Inc. (A) 6,100 550,144
Investment Technology Group 5,700 184,537
Jabil Circuit (A) 3,900 175,988
Legato Systems, Inc. (A) 7,200 416,025
Lexmark International Group,
Inc. (A) 13,200 872,025
Linear Technology Corp. 11,000 740,437
Maxim Integrated Products (A) 7,700 512,050
Molex, Inc. 9,000 332,438
NCR Corp. (A) 9,300 453,956
QUALCOMM Inc. (A) 10,200 1,464,019
Quantum Corp. (A) 9,700 233,406
Rational Software Corp. (A) 10,900 359,360
Sanmina Corp. (A) 6,400 485,600
Siebel Systems, Inc. (A) 10,200 676,069
Sterling Commerce, Inc. (A) 8,500 310,250
Symbol Technologies, Inc. 6,300 232,313
Synopsys Inc. (A) 4,000 220,625
Tech Data Corp. (A) 9,700 370,722
Teradyne Inc. (A) 5,600 401,800
VERITAS Software Corp. (A) 4,500 427,360
Vishay Intertechnology, Inc. (A) 19,625 412,125
Vitesse Semiconductor Corp. (A) 9,400 635,969
--------------
14,071,905
--------------
TELECOMMUNICATIONS (2.1%)
ADC Telecommunications, Inc. (A) 8,900 405,228
Aliant Communications, Inc. 9,100 420,875
CenturyTel Inc. 2,625 104,344
Comsat Corp. 5,900 191,750
Qwest Communications (A) 4,400 145,613
Winstar Communications (A) 3,900 190,247
--------------
1,458,057
--------------
TEXTILE (1.1%)
Jones Apparel Group, Inc. (A) 7,000 240,188
Shaw Industries 17,900 295,350
Westpoint Stevens 7,700 229,556
--------------
765,094
--------------
TOBACCO (0.5%)
RJ Reynolds Tobacco Holding,
Inc. (A) 7,900 248,850
Universal Corp. 2,300 65,406
--------------
314,256
--------------
TRANSPORTATION (1.3%)
Airborne Freight Corp. 8,273 229,059
CNF Transportation 6,400 245,600
GATX Corp. 7,800 296,887
J.B. Hunt Transportation
Services, Inc. 7,000 113,969
--------------
885,515
--------------
UTILITIES (7.4%)
Alltel Corp. 3,446 246,389
Constellation Energy Group 4,600 136,275
Dominion Resources, Inc. 3,400 147,262
Energy East 9,100 236,600
FirstEnergy Corp. 7,900 244,900
MidAmerican Energy Holding (A) 9,200 318,550
Minnesota Power, Inc. 12,800 254,400
Montana Power Co. 8,300 585,150
New England Electric System 7,300 365,913
Nisource, Inc. 15,000 387,188
Northeast Utilities (A) 8,500 150,344
OGE Energy Corp. 12,700 301,625
Pinnacle West Capital Corp. 10,100 406,525
Public Service of New Mexico 13,600 270,300
SCANA Corp. 14,300 334,262
TECO Energy, Inc. 17,000 386,750
Wisconsin Energy 10,900 273,181
--------------
5,045,614
--------------
TOTAL COMMON STOCKS
(COST $57,879,644) 65,184,857
--------------
</TABLE>
-36-
<PAGE> 39
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (4.3%)
COMMERCIAL PAPER (3.0%)
Ford Motor Credit Co.,
5.71% due July 1, 1999 $ 625,000 $ 625,000
Providian Master Trust,
4.92% due July 7, 1999 1,450,000 1,448,497
--------------
2,073,497
--------------
U.S. TREASURY (1.3%)
United States of America
Treasury,
4.81% due April 27, 2000 (B) 900,000 865,384
--------------
TOTAL SHORT-TERM
INVESTMENTS (COST $2,939,214) 2,938,881
--------------
<CAPTION>
NOTIONAL
VALUE
------------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 400 MidCap Index,
Exp. September, 1999 (C) $ 3,145,125 -
--------------
TOTAL INVESTMENTS (100%)
(COST $60,818,858) (D) $ 68,123,738
==============
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) Par value of $750,000 pledged to cover margin deposits on futures
contracts.
(C) 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.
(D) At June 30, 1999, net unrealized appreciation for all securities was
$7,304,880. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$10,648,427 and aggregate gross unrealized depreciation for all securities
in which there was an excess of cost over market value of $3,343,547.
See Notes to Financial Statements
-37-
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<PAGE> 43
Investment Advisers
-------------------
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut
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
Independent Accountants
-----------------------
KPMG LLP
Hartford, Connecticut
Custodian
---------
THE CHASE MANHATTAN BANK, N.A.
New York, New York
The financial information included herein has been taken from the records of
The Travelers Timed Growth and Income Stock Account for Variable Annuities, The
Travelers Timed Short-Term Bond Account for Variable Annuities and The
Travelers Timed Aggressive Stock Account for Variable Annuities. This financial
information has not been audited by the Accounts' independent accountants, who
therefore express no opinion concerning its accuracy. However, it is
management's opinion that all proper adjustments have been made.
This report is prepared for the general information of contract owners and is
not an offer of units of The Travelers Timed Growth and Income Stock Account
for Variable Annuities, The Travelers Timed Short-Term Bond Account for
Variable Annuities, or The Travelers Timed Aggressive Stock 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 (Semi-Annual) (6-99) Printed in U.S.A.
