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Registration Nos. 33-13053
811-5091
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 12
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
--------------------------------------------
FOR VARIABLE ANNUITIES
----------------------
(Exact name of Registrant)
THE TRAVELERS INSURANCE COMPANY
-------------------------------
(Name of Insurance Company)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
----------------------------------------------
(Address of Insurance Company's Principal Executive Offices)
Insurance Company's Telephone Number, including Area Code: (203) 277-0111
--------------
ERNEST J. WRIGHT
Secretary to the Board of Managers
The Travelers Timed Aggressive Stock
Account for Variable Annuities
One Tower Square
Hartford, Connecticut 06183
----------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
-------------------
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485
- ----
on ___________ pursuant to paragraph (b) of Rule 485
- ----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
- ----
X on May 1, 1996 pursuant to paragraph (a)(1) of Rule 485
- ----
75 days after filing pursuant to paragraph (a)(2)
- ----
on ___________ pursuant to paragraph (a)(2) of Rule 485
- ----
If appropriate check the following box:
This post-effective amendment designates a new effective date for a
- ---- previously filed post-effective amendment.
An indefinite amount of Variable Annuity Contracts was registered pursuant to
Rule 24f-2 of the Investment Company Act of 1940. A Rule 24f-2 Notice for the
fiscal year ended December 31, 1995 will be filed with the Commission prior to
March 1, 1996.
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THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-3
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
- --- ---------------------
<S> <C> <C>
1. Cover Page The Travelers Timed Aggressive Stock
Account for Variable Annuities
2. Definitions Glossary of Special Terms
3. Synopsis Prospectus Summary
4. Condensed Financial Information Condensed Financial Information
5. General Description of Registrant The Insurance Company and the Separate
and Insurance Company Accounts
6. Management Managed Separate Accounts: Management
and Advisory Services
7. Deductions and Expenses Charges and Deductions; Fee Table
8. General Description of Variable The Variable Annuity Contract; Miscellaneous
Annuity Contracts
9. Annuity Period The Annuity Period
10. Death Benefit Death Benefit; Payout Options
11. Purchases and Contract Value The Variable Annuity Contract
12. Redemptions Surrenders and Redemptions; Right to Return
13. Taxes Premium Tax; Federal Tax Considerations
14. Legal Proceedings Legal Proceedings and Opinions
15. Table of Contents of Statement Appendix A
of Additional Information
<CAPTION>
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
-------------------------------------------------
<S> <C> <C>
16. Cover Page The Travelers Timed Aggressive Stock
Account for Variable Annuities
17. Table of Contents Table of Contents
18. General Information and History Description of The Travelers and the
Separate Accounts
19. Investment Objectives and Investment Restrictions
Policies
20. Management The Board of Managers
21. Investment Advisory and Other Services Investment Management
and Advisory Services; Securities Custodian; Independent Accountants
22. Brokerage Allocation Investment Management and Advisory Services
23. Purchase and Pricing of Securities Valuation of Separate Account Assets
Being Offered
24. Underwriters Distribution and Management Services
25. Calculation of Performance Data Performance Data
26. Annuity Payments Inapplicable
27. Financial Statements Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
UNIVERSAL ANNUITY
PROSPECTUS
This prospectus describes the Individual and Group Variable Annuity
Contracts (the "Contracts") to which Purchase Payments may be made as either a
single payment or on a flexible basis. The Contracts are issued by The
Travelers Insurance Company. Purchase Payments may be allocated to one or more
of the following Investment Alternatives: The Travelers Growth and Income
Stock Account for Variable Annuities (Account GIS) -- common stock; The
Travelers Quality Bond Account for Variable Annuities (Account QB) --
intermediate-term bonds; The Travelers Money Market Account for Variable
Annuities (Account MM) -- money market instruments (an investment in Account MM
is neither insured nor guaranteed by the U.S. Government); The Travelers Timed
Growth and Income Stock Account for Variable Annuities (Account TGIS) --
timed/common stock; The Travelers Timed Short-Term Bond Account for Variable
Annuities (Account TSB) -- timed/short-term bonds; The Travelers Timed
Aggressive Stock Account for Variable Annuities (Account TAS) --
timed/aggressive common stock; The Travelers Timed Bond Account for Variable
Annuities (Account TB) -- timed/U.S. Government securities; or The Travelers
Fund U for Variable Annuities (Fund U) and its underlying funds as follows:
<TABLE>
<S> <C>
Capital Appreciation Fund Dreyfus Stock Index Fund
High Yield Bond Trust American Odyssey International Equity Fund
Managed Assets Trust American Odyssey Emerging Opportunities Fund
U.S. Government Securities Portfolio American Odyssey Core Equity Fund
Social Awareness Stock Portfolio American Odyssey Long-Term Bond Fund
Utilities Portfolio American Odyssey Intermediate-Term Bond Fund
Templeton Bond Fund American Odyssey Short-Term Bond Fund
Templeton Stock Fund Smith Barney Income and Growth Portfolio
Templeton Asset Allocation Fund Alliance Growth Portfolio
Fidelity's High Income Portfolio Smith Barney International Equity Portfolio
Fidelity's Equity-Income Portfolio Putnam Diversified Income Portfolio
Fidelity's Growth Portfolio Smith Barney High Income Portfolio
Fidelity's Asset Manager Portfolio MFS Total Return Portfolio
</TABLE>
This prospectus sets forth the information that you should know before
investing. Please read it and retain it for future reference. Additional
information is contained in a Statement of Additional Information ("SAI") dated
May 1, 1996, which has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this prospectus. A copy may be
obtained, without charge, by writing to The Travelers Insurance Company,
Annuity Services, One Tower Square, Hartford, Connecticut 06183-5030, or by
calling 1-800-842-0125. The Table of Contents of the SAI appears in Appendix A
of this prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
FUND U'S UNDERLYING FUNDS. BOTH THIS PROSPECTUS AND EACH OF THE UNDERLYING
FUND PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996
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TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CONDENSED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE VARIABLE ANNUITY CONTRACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PURCHASE PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Application of Purchase Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of Accumulation Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE VARIABLE INVESTMENT ALTERNATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fund U: Underlying Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dollar-Cost Averaging (Automated Transfers) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset Allocation Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MARKET TIMING SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market Timing Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SURRENDERS AND REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Systematic Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHARGES AND DEDUCTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent Deferred Sales Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administrative Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reduction or Elimination of Contract Charges . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market Timing Services Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE ANNUITY PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation of Annuity Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Unit Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Determination of First Annuity Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Determination of Second and Subsequent Annuity Payments . . . . . . . . . . . . . . . . . . . . . .
PAYOUT OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Election of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefit in the Event of Termination of a Participant, the Plan or the Contract . . . . . . . . . . . . .
Distribution from One Account to Another Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Required Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right to Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
2
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<TABLE>
<S> <C>
Suspension of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fund U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts GIS, QB, MM, TGIS, TSB, TAS, TB . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of Variable Annuity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE INSURANCE COMPANY AND THE SEPARATE ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE INSURANCE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE SEPARATE ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Substitution of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Separate Accounts: Management and Advisory Services . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investor Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 403(b) Plans and Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified Pension and Profit-Sharing Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Individual Retirement Annuities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 457 Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Employee Retirement Income Security Act of 1974. . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Income Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Travelers Growth and Income Stock Account for Variable Annuities (Account GIS) . . . . . . . . . . . . .
The Travelers Quality Bond Account for Variable Annuities (Account QB) . . . . . . . . . . . . . . . . . . .
The Travelers Money Market Account for Variable Annuities (Account MM) . . . . . . . . . . . . . . . . . . .
The Travelers Timed Growth and Income Stock Account for Variable Annuities (Account TGIS) . . . . . . . . .
The Travelers Timed Short-Term Bond Account for Variable Annuities (Account TSB) . . . . . . . . . . . . . .
The Travelers Timed Aggressive Stock Account for Variable Annuities (Account TAS) . . . . . . . . . . . . .
The Travelers Timed Bond Account for Variable Annuities (Account TB) . . . . . . . . . . . . . . . . . . . .
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
3
<PAGE> 7
GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: an accounting unit of measure used to calculate the value
of a contract before Annuity Payments begin.
ANNUITANT: the person on whose life the Variable Annuity contract is issued.
ANNUITY COMMENCEMENT DATE: the date on which Annuity Payments are to begin
under the terms of the Contract and/or the Plan. Also referred to as
"Maturity Date" under an Individual Contract.
ANNUITY PAYMENTS: a series of periodic payments for life; for life with either
a minimum number of payments or a determinable sum assured; or for the
joint lifetime of the Annuitant and another person and thereafter
during the lifetime of the survivor.
ANNUITY UNIT: an accounting unit of measure used to calculate the dollar
amount of Annuity Payments.
BOARD OF MANAGERS: the persons directing the investment and administration of
a Managed Separate Account.
CASH SURRENDER VALUE: the amount payable to the Owner or other payee upon
termination of the contract during the lifetime of the Annuitant.
CASH VALUE: the current value of Accumulation Units credited to the contract
less any administrative charges.
CERTIFICATE: the document issued to a Participant evidencing his or her
participation under the Group Contract.
CERTIFICATE DATE: the effective date of participation under the group annuity
contract as designated in the Certificate.
CERTIFICATE YEARS: annual periods computed from the Certificate Date.
COMPANY: The Travelers Insurance Company.
COMPANY'S HOME OFFICE: the principal executive offices of the Company, located
at One Tower Square, Hartford, Connecticut, 06183.
CONTRACT: the Variable Annuity contract described in this prospectus. A group
contract ("Group Contract" or an individual contract ("Individual
Contract") may be issued.
CONTRACT DATE: the date on which the master Group Contract or Individual
Contract and its benefits and provisions become effective.
CONTRACT YEARS: annual periods computed from the Contract Date.
CONTRACT OWNER (OWNER): for a Group Contract, the entity to which the master
group contract is issued, usually a trustee, Plan administrator or
employer. For an Individual Contract, the person to whom the Contract
is issued.
CONTRACT OWNER'S ACCOUNT (OWNER'S ACCOUNT): the record of accumulation Units
credited to the Contract Owner.
INCOME PAYMENTS: optional forms of periodic payments made by the Company which
are not based on the life of the Annuitant.
INDIVIDUAL ACCOUNT: the record of Accumulation Units credited to a Participant
or beneficiary.
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INVESTMENT ALTERNATIVE: a Managed Separate Account or available Underlying
Fund to which assets under a Variable Annuity contract may be
allocated.
MAJORITY VOTE: a "majority vote of the outstanding voting securities" is
defined in the Investment Company Act of 1940 as the lesser of (i) 67%
or more of the votes present at a meeting, if Contract Owners holding
more than 50% of the total voting power of all Contract Owners in the
Separate Account are present or represented by proxy, or (ii) more
than 50% of the total voting power of all Contract Owners in the
Separate Account.
MANAGED SEPARATE ACCOUNTS: Accounts GIS, QB, MM, TGIS, TSB, TAS and TB, the
diversified open-end management investment companies registered with
the Securities and Exchange Commission under the Investment Company
Act of 1940 ("1940 Act") to which payments under this Contract may be
allocated.
MARKET TIMING SERVICES: third party investment advisory services provided for
an extra fee to Participants in Account TGIS, Account TSB, Account TAS
and Account TB.
MATURITY DATE: the date on which the first Annuity Payment is to begin.
PARTICIPANT: an eligible person who participates in the Plan.
PARTICIPANT'S INTEREST: the Cash Value which is credited for the benefit of a
Participant under the Plan.
PLAN: the Plan under which the Contract is issued.
PURCHASE PAYMENT: a gross amount paid to the Company under the Contract during
the accumulation period.
SEPARATE ACCOUNT: assets set aside by the Company, the investment experience
of which is kept separate from that of other assets of the Company;
for example, The Travelers Fund U for Variable Annuities or The
Travelers Growth and Income Stock Account for Variable Annuities.
UNDERLYING FUND(S): the investment option(s) available under The Travelers
Fund U for Variable Annuities to which payments under the Contract may
be allocated. (The portion of the Contract or Account allocated to the
Underlying Fund is referred to in the Contract as "Sub-Accounts.")
VALUATION DATE: generally, a day on which an account is valued. A valuation
date is any day on which the New York Stock Exchange is open for
trading. The value of Accumulation Units and Annuity Units will be
determined as of the close of trading on the New York Stock Exchange.
VALUATION PERIOD: the period between the close of business on successive
Valuation Dates.
VARIABLE ANNUITY: an annuity contract which provides for accumulation and for
Annuity Payments which vary in amount in accordance with the
investment experience of a Separate Account.
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<PAGE> 9
PROSPECTUS SUMMARY
INTRODUCTION
The Contract described in this prospectus is both an insurance product
and a security. As an insurance product, it is subject to the insurance laws
and regulations of each state in which it is available for distribution. As a
security it is subject to federal securities laws. The Contract is a variable
annuity designed to help Contract Owners and Participants accumulate money for
retirement. It allows Purchase Payments to be allocated to any or all of the
Investment Alternatives. The Contracts described in this prospectus are issued
by The Travelers Insurance Company (the "Company" or "The Travelers"). The
minimum Purchase Payment under tax-qualified contracts is $20, except in the
case of invididual retirement annuities ("IRAs") where the initial minimum
Purchase Payment is $1,000. For nonqualified contracts, the minimum Purchase
Payment is $1,000 initially, and $100 thereafter. (See "The Variable Annuity
Contract -- Purchase Payments," page __.) Purchase Payments are allocated to
the Managed Separate Accounts and to the Underlying Funds of Fund U in
accordance with the selection made by the Contract Owner. A description of the
investment objectives for each Investment Alternative begins on page __.
For Group Contracts issued in the state of New York, and for
Individual Contracts regardless of the state where issued, there is a Right to
Return. (See "The Variable Annuity Contract -- Right to Return," page __.)
TRANSFERS AND SURRENDERS
Transfers may be made among available Investment Alternatives without
fee, penalty or charge at any time before Annuity or Income Payments begin.
(See "Transfers," page __.)
Prior to the Maturity Date, all or part of the Contract value may be
surrendered, subject to certain charges and limitations. Income taxes will be
payable on the taxable portion of the amount surrendered, and a penalty tax may
be incurred if you are under age 59 1/2. (See "Surrenders and Redemptions,"
page __, and "Federal Tax Considerations -- Section 403(b) Plans and
Arrangements," page __.)
MARKET TIMING AND ASSET ALLOCATION
Accounts TGIS, TSB, TAS and TB (the "Market Timed Accounts") are
available to Contract Owners who have entered into third party market timing
services agreements ("market timing agreements") with registered investment
advisers who provide such services for a fee ("registered investment
advisers"). (See "Market Timing Services," page __.)
Some Contract Owners may elect to enter into an asset allocation
investment advisory agreement which is fully described in a separate Disclosure
Statement. (See "The Travelers Fund U for Variable Annuities -- Asset
Allocation Advice," page __.)
CHARGES AND EXPENSES
No sales charge is deducted from Purchase Payments when they are
received. However, a Contingent Deferred Sales Charge of 5% will be deducted
if a Purchase Payment is surrendered within five years of the date it was
received. Under certain circumstances, the Contingent Deferred Sales Charge
may be waived. (See "Charges and Deductions -- Contingent Deferred Sales
Charge," page __.)
Premium taxes may apply to annuities in a few states. The applicable
amount will be deducted in compliance with each state's laws. (See "Charges
and Deductions -- Premium Tax; page ____.)
The Company will deduct $15 semiannually from the Contract to cover
administrative expenses associated with the Contract. (See "Charges and
Deductions -- Administrative Charge," page __.)
The Company deducts an insurance charge from each Separate Account to
compensate for mortality and expense risks assumed by the Company. The
insurance charge is equivalent on an annual basis to 1.25% of the daily net
assets of each Separate Account. (See "Charges and Deductions -- Insurance
Charge," page __.)
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<PAGE> 10
A deduction is made from each Managed Separate Account for investment
management and advisory services. (See "Charges and Deductions -- Investment
Advisory Fees," page __.) For investment options under Fund U, the investment
management and advisory services fee is deducted from the assets of the
underlying funds. (See the prospectuses for the Underlying Funds for a
description of their respective investment management and advisory fees.)
ANNUITY PAYMENTS
At the Maturity Date, the Contract provides lifetime Annuity Payments,
as well as other types of payout plans. (See "Payout Options," page __.) If a
variable payout is selected, the payments will continue to vary with the
investment performance of the selected Investment Alternatives. Variable
payout is not available for Contracts issued in New Jersey and Florida.
DEATH BENEFIT
For Individual Contracts, and Group Contracts for which individual
certificates have been issued to Participants, a death benefit is payable to
the Beneficiary of the Contract if the Participant dies before Annuity or
Income Payments begin. (See "Death Benefit," page __.)
7
<PAGE> 11
FEE TABLE
ACCOUNTS GIS, QB, MM, TGIS, TSB, TAS AND TB
FUND U AND ITS UNDERLYING FUNDS
The purpose of this Fee Table is to help individuals understand the
various costs and expenses that a Contract Owner or a Participant will bear,
directly or indirectly, under the Contract. The information listed reflects
expenses of the Managed Separate Accounts as well as Fund U and its Underlying
Funds. For additional information, including possible waivers or reductions of
these expenses, see "Charges and Deductions," page __. Expenses shown do not
include premium taxes, which may be applicable.
<TABLE>
<S> <C>
CONTRACT CHARGES AND EXPENSES
Contingent Deferred Sales Charge (as a percentage of purchase payments if surrendered within 5 years) . . . . . . . . . . . . 5.00%
Semiannual Contract Administrative Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15
ANNUAL SEPARATE ACCOUNT EXPENSES
MORTALITY AND EXPENSE RISK CHARGE
(as a percentage of average net assets of Managed Separate Accounts and Fund U) . . . . . . . . . . . . . . . . . . . . . . . 1.25%
INVESTMENT ALTERNATIVE EXPENSES:
(as a percentage of average net assets of amounts allocated to the Investment
Alternative)
</TABLE>
<TABLE>
<CAPTION>
MARKET
MANAGEMENT TIMING ANNUAL
MANAGED SEPARATE ACCOUNTS FEE FEE(1) EXPENSES(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Account GIS 0.45% -- 0.45%
Account QB 0.32% -- 0.32%
Account MM 0.32% -- 0.32%
Account TGIS 0.32% 1.25% 1.57%
Account TSB 0.32% 1.25% 1.57%
Account TAS 0.35% 1.25% 1.55%
Account TB 0.50% 1.25% 1.75%
<CAPTION>
OTHER TOTAL
MANAGEMENT EXPENSES UNDERLYING
UNDERLYING FUNDS FEE (AFTER REIMBURSEMENT) FUND EXPENSES
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund 0.75% % (3) %
High Yield Bond Trust 0.50% % (3) %
Managed Assets Trust 0.50% % (3) %
U.S. Government Securities Portfolio 0.32% % (3) %
Social Awareness Stock Portfolio 0.65% % (3) %
Utilities Portfolio 0.65% % (3) %
Templeton Bond Fund 0.50% % (4) %
Templeton Stock Fund 0.48% % (4) %
Templeton Asset Allocation Fund 0.49% % (4) %
Fidelity's High Income Portfolio 0.61% % (5) %
Fidelity's Equity-Income Portfolio 0.52% % (5) %
Fidelity's Growth Portfolio 0.62% % (5) %
Fidelity's Asset Manager Portfolio 0.72% % (5) %
Dreyfus Stock Index Fund 0.07% % (6) %
American Odyssey International Equity Fund 0.70% % (7) %
American Odyssey Emerging Opportunities Fund 0.65% % (7) %
American Odyssey Core Equity Fund 0.60% % (7) %
American Odyssey Long-Term Bond Fund 0.50% % (7) %
American Odyssey Intermediate-Term Bond Fund 0.50% % (7) %
American Odyssey Short-Term Bond Fund 0.50% % (7) %
Smith Barney Income and Growth Portfolio 0.65% % (8) %
Alliance Growth Portfolio 0.80% % (8) %
Smith Barney International Equity Portfolio 0.90% % (8) %
Putnam Diversified Income Portfolio 0.75% % (8) %
Smith Barney High Income Portfolio 0.60% % (8) %
MFS Total Return Portfolio 0.80% % (8) %
G.T. Global Strategic Income Portfolio 0.80% % (8) %
</TABLE>
8
<PAGE> 12
(1) Contract Owners may discontinue market timing services at any time and
thereby avoid any subsequent fees for those services by transferring to a
non-timed account.
(2) This figure does not include the mortality and expense risk fee.
(3) Other Expenses are as of the fiscal year ended December 31, 1995, taking
into account the current expense reimbursement arrangement with the
Company. The Company has agreed to reimburse each Fund for the amount by
which its aggregate expenses (including the management fee, but excluding
brokerage commissions, interest charges and taxes) exceeds 1.25%. Without
such arrangement, Other Expenses would have been _____%, _____% and _____%
for High Yield Bond Trust, Social Awareness Stock Portfolio, and Utilities
Portfolio, respectively.
(4) Other Expenses are based on the actual operating expenses incurred by the
Fund during the year ended December 31, 1995.
(5) Management Fees and Other Expenses are as of the fiscal year ended December
31, 1995. No reimbursement arrangement affected the High Income Portfolio.
A portion of the brokerage commissions the Fund paid was used to reduce its
expenses. Without this reduction, total Other Expenses would have been:
Equity-Income Portfolio, _____%; Growth Portfolio, _____%; and Asset
Manager Portfolio, _____%.
(6) The administrator and investment adviser have agreed to reimburse the Fund
for expenses in excess of 0.40%. For the fiscal year ended December 31,
1995, the Investment Management Fee and Other Expenses before reimbursement
were ____% and _____%, respectively.
(7) Other Expenses are as of the fiscal year ended December 31, 1995 taking
into account the current expense limitations agreed to by the fund's
manager. The fund's manager has agreed to continue, at least until MAY 1,
1996, to waive fees or reimburse expenses to the extent a Fund's total
expense ratio exceeds the following expense limitation: International
Equity Fund, 1.25%; Emerging Opportunities Fund and Core Equity Fund,
1.00%; and Long-Term Bond Fund, Intermediate-Term Bond Fund, Short-Term
Bond Fund, 0.75%. Thereafter, each fund is required to reimburse the
manager for any fees waived or expenses it reimbursed provided that this
reimbursement by the Fund does not cause the total expense ratio to exceed
the expense limitations above. The Long-Term Bond Fund and the
Intermediate-Bond Fund are currently reimbursing the manager while the
Short-Term Bond Fund and the International Equity Fund are still receiving
reimbursements from the manager. Without these expense limitations and/or
Manager reimbursements, Other Expenses of the Funds would have been as
follows: International Equity Fund, ____%; Emerging Opportunities Fund,
_____%; Core Equity Fund, _____%; Long-Term Bond Fund, _____%;
Intermediate-Bond Fund, _____%; and Short-Term Bond, ____%.
(8) Other expenses are as of October 31, 1995, taking into account the current
expense limitations agreed to by the Manager. The Manager waived all of its
fees for the period and reimbursed the Funds for their expenses. If such
fees were not waived and expenses were not reimbursed, Total Underlying
Expenses would have been as follows: Smith Barney Income and Growth, ___%;
Alliance Growth Portfolio, ____%; Smith Barney International Equity
Portfolio, ____%; Putnam Diversified Income Portfolio, Smith Barney High
Income Portfolio, _____%; and MFS Total Return Portfolio, _____%.
9
<PAGE> 13
EXAMPLE *
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Assuming a 5% annual return on assets, a $1,000 investment would be subject to
the following expenses:
<TABLE>
<CAPTION>
If the Contract is NOT
If the Contract is surrendered at the end of
surrendendered at the the period shown
end of the period shown: or if it is annuitized:
- -----------------------------------------------------------------------------------------------------------------------
One Three Five Ten One Three Five Ten
Year Years Years Years Year Years Years Years
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGED SEPARATE ACCOUNTS:
Account GIS $ $ $ $ $ $ $ $
Account QB
Account MM
Account TGIS
Account TSB
Account TAS
Account TB
UNDERLYING FUNDING OPTIONS:
Capital Appreciation Fund $ $ $ $ $ $ $ $
High Yield Bond Trust
Managed Assets Trust
U.S. Government Securities Portfolio
Social Awareness Stock Portfolio
Utilities Portfolio
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Fidelity's High Income Portfolio
Fidelity's Equity-Income Portfolio
Fidelity's Growth Portfolio
Fidelity's Asset Manager Portfolio
Dreyfus Stock Index Fund
American Odyssey Funds (1):
International Equity Fund
Emerging Opportunities Fund
Core Equity Fund
Long-Term Bond Fund
Intermediate-Term Bond Fund
Short-Term Bond Fund
American Odyssey Funds (2):
International Equity Fund
Emerging Opportunities Fund
Core Equity Fund
Long-Term Bond Fund
Intermediate-Term Bond Fund
Short-Term Bond Fund
Smith Barney Income and Growth Portfolio -- --
Alliance Growth Portfolio -- --
Smith Barney International Equity Portfolio -- -- -- --
Putnam Diversified Income Portfolio -- -- -- --
Smith Barney High Income Portfolio -- -- -- --
MFS Total Return Portfolio -- -- -- --
</TABLE>
* The Example reflects the $15 Semiannual Contract Fee as an annual
charge of _______% of assets.
(1) Reflects expenses that would be incurred for those Contract Owners who
DO NOT participate in the CHART Asset Allocation program.
(2) Reflects expenses that would be incurred for those Contract Owners who
DO participate in the CHART Asset Allocation program.
10
<PAGE> 14
11
<PAGE> 15
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
Per Unit Data for an Accumulation and Annuity Unit
outstanding throughout each year
The following information on per unit data has been audited by Coopers &
Lybrand L.L.P., independent accountants. Their report on the per unit data for
each of the five years in the period ended December 31, 1995 is contained in
the 1995 Annual Report to Contract Owners. The Annual Report is incorporated by
reference into the Statement of Additional Information. The following
information should be read in conjunction with the financial statements
contained in the 1995 Annual Report.
CONTRACTS ISSUED ON OR AFTER TO MAY 16,1983.
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1995 1994 1993 1992 1991
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . $ .189 $ .184 $ .188 $ .198
Operating expenses . . . . . . . . . . . . . . . . . . . . . .115 .106 .098 .091
-------- -------- -------- --------
Net investment income . . . . . . . . . . . . . . . . . . . . .074 .078 .090 .107
Unit Value at beginning of year . . . . . . . . . . . . . . . 7.007 6.507 6.447 5.048
Net realized and change in unrealized gains (losses) . . . . (.164) .422 (.030) 1.292
-------- -------- -------- --------
Unit Value at end of year . . . . . . . . . . . . . . . . . . $ 6.917 $ 7.007 $ 6.507 $ 6.447
======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . . . . (.09) .50 .06 1.40
Ratio of operating expenses to average net assets . . . . . . 1.65% 1.57% 1.58% 1.58%
Ratio of net investment income to average net assets . . . . 1.05% 1.15% 1.43% 1.86%
Number of units outstanding at end of year (thousands) 26,692 28,497 29,661 26,235
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . 103% 81% 189% 319%
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . $ .192 $ .191 $ .168 $ .132 $ .126
Operating expenses . . . . . . . . . . . . . . . . . . . . . .079 .095 .071 .066 .060
-------- -------- -------- -------- --------
Net investment income . . . . . . . . . . . . . . . . . . . . .113 .096 .097 .066 .066
Unit Value at beginning of year . . . . . . . . . . . . . . . 5.295 4.191 3.601 3.737 3.275
Net realized and change in unrealized gains (losses) . . . . (.360) 1.008 .493 (.202) .396
-------- -------- -------- -------- --------
Unit Value at end of year . . . . . . . . . . . . . . . . . . $ 5.048 $ 5.295 $ 4.191 $ 3.601 $ 3.737
======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . . . . (.25) 1.10 .59 (.14) .46
Ratio of operating expenses to average net assets . . . . . . 1.57% 1.58% 1.58% 1.58% 1.57%
Ratio of net investment income to average net assets . . . . 2.25% 2.33% 2.60% 1.49% 1.84%
Number of units outstanding at end of year (thousands) 19,634 15,707 12,173 11,367 54,065
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . 54% 27% 38% 51% 95%
</TABLE>
CONTRACTS ISSUED PRIOR TO MAY 16,1983.
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . $ .192 $ .189 $ .192 $ .201
Operating expenses . . . . . . . . . . . . . . . . . . . . . .100 .092 .085 .077
-------- -------- -------- --------
Net investment income . . . . . . . . . . . . . . . . . . . . .092 .097 .107 .124
Unit Value at beginning of year . . . . . . . . . . . . . . . 7.194 6.664 6.587 5.145
Net realized and change in unrealized gains (losses) . (.166) .433 (.030) 1.318
-------- -------- -------- --------
Unit Value at end of year . . . . . . . . . . . . . . . . . . $ 7.120 $ 7.194 $ 6.664 $ 6.587
======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . . . . (.07) .53 .08 1.44
Ratio of operating expenses to average net assets . . . . . . 1.41% 1.33% 1.33% 1.33%
Ratio of net investment income to average net assets . . . . 1.30% 1.40% 1.67% 2.11%
Number of units outstanding at end of year (thousands) . . . 19,557 21,841 22,516 24,868
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . 103% 81% 189% 319%
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . $ .199 $ .191 $ .168 $ .132 $ .126
Operating expenses . . . . . . . . . . . . . . . . . . . . . .069 .066 .053 .059 .047
-------- -------- -------- -------- --------
Net investment income . . . . . . . . . . . . . . . . . . . . .130 .125 .115 .073 .079
Unit Value at beginning of year . . . . . . . . . . . . . . . 5.383 4.250 3.642 3.771 3.296
Net realized and change in unrealized gains (losses) . (.368) 1.008 .493 (.202) .396
-------- -------- -------- -------- --------
Unit Value at end of year . . . . . . . . . . . . . . . . . . $ 5.145 $ 5.383 $ 4.250 $ 3.642 $ 3.771
======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . . . . (.24) 1.13 .61 (.13) .48
Ratio of operating expenses to average net assets . . . . . . 1.33% 1.33% 1.33% 1.33% 1.32%
Ratio of net investment income to average net assets . . . . 2.50% 2.56% 2.85% 1.72% 2.09%
Number of units outstanding at end of year (thousands) . . . 28,053 31,326 35,633 41,859 48,008
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . 54% 27% 38% 51% 95%
</TABLE>
The consolidated financialstatements of The Travelers Insurance Company
and Subsidiaries are contained inthe Statement of Additional Information.
12
<PAGE> 16
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES
Per Unit Data for an Accumulation and Annuity Unit
outstanding throughout each year
The following information on per unit data has been audited by Coopers &
Lybrand L.L.P., independent accountants. Their report on the per unit data for
each of the five years in the period ended December 31, 1995 is contained in
the l995 Annual Report to Contract Owners. The Annual Report is incorporated
by reference into the Statement of Additional information. The following
information should be read in conjunction with the financial statements
contained in the 1995 Annual Report.
CONTRACTS ISSUED ON OR AFTER TO MAY 16, 1983.
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . $ .310 $ .299 $ .311 $ .299
Operating expenses . . . . . . . . . . . . . . . . . . .069 .067 .061 .056
-------- -------- -------- --------
Net investment income . . . . . . . . . . . . . . . . .241 .232 .250 .243
Unit Value at beginning of year . . . . . . . . . . . 4.381 4.052 3.799 3.357
Net realized and change in unrealized gains (losses) . (.348) .097 .003 .199
-------- -------- -------- --------
Unit Value at end of year . . . . . . . . . . . . . . $ 4.274 $ 4.381 $ 4.052 $ 3.799
======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . (.11) .33 .25 .44
Ratio of operating expenses to average net assets . . 1.57% 1.57% 1.58% 1.57%
Ratio of net investment income to average net assets . 5.62% 5.41% 6.38% 6.84%
Number of units outstanding at end of year (thousands) 27,033 28,472 20,250 17,211
Portfolio turnover rate . . . . . . . . . . . . . . . 27% 24% 23% 21%
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA * 1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . $ .277 $ .270 $ .259 $ .245 $ .240
Operating expenses . . . . . . . . . . . . . . . . . . .048 .047 .046 .042 .040
-------- -------- -------- -------- --------
Net investment income . . . . . . . . . . . . . . . . .229 .223 .213 .203 .200
Unit Value at beginning of year . . . . . . . . . . . 3.129 2.852 2.697 2.629 2.369
Net realized and change in unrealized gains (losses) . (.001) .054 (.058) (.135) .060
-------- -------- -------- -------- --------
Unit Value at end of year . . . . . . . . . . . . . . $ 3.357 $ 3.129 $ 2.852 $ 2.697 $ 2.629
======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . .23 .28 .16 .07 .26
Ratio of operating expenses to average net assets . . 1.57% 1.57% 1.58% 1.57% 1.57%
Ratio of net investment income to average net assets . 7.06% 7.44% 7.67% 7.72% 7.94%
Number of units outstanding at end of year (thousands) 14,245 13,135 9,457 7,560 8,321
Portfolio turnover rate . . . . . . . . . . . . . . . 41% 33% 17% 17% 28%
</TABLE>
CONTRACTS ISSUED PRIOR TO MAY 16,1983.
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1995 1994 1993 1992 1991
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total investment income .................................. $ .318 $ .306 $ .317 $ .304
Operating expenses ....................................... .059 .058 .050 .048
--------- --------- --------- ---------
Net investment income .................................... .259 .248 .267 .256
Unit Value at beginning of year .......................... 4.498 4.150 3.880 3.421
Net realized and change in unrealized gains (losses) ..... (.357) .100 .003 .203
--------- --------- --------- ---------
Unit Value at end of year ............ $ 4.400 $ 4.498 $ 4.150 $ 3.880
========= ========= ========= =========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . . (.10) .35 .27 .46
Ratio of operating expenses to average net assets . . . . 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net assets . . . 5.87% 5.66% 6.61% 7.09%
Number of units outstanding at end of year (thousands) . . 10,694 12,489 13,416 14,629
Portfolio turnover rate . . . . . . . . . . . . . . . . . 27% 24% 23% 21%
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA * 1990 1989 1988 1987 1986
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total investment income .................................. $ .281 $ .270 $ .259 $ .245 $ .240
Operating expenses ....................................... .040 .035 .037 .034 .032
-------- -------- -------- -------- --------
Net investment income .................................... .241 .235 .222 .211 .208
Unit Value at beginning of year .......................... 3.181 2.892 2.728 2.652 2.384
Net realized and change in unrealized gains (losses) ..... (.001) .054 (.058) (.135) .060
-------- -------- -------- -------- --------
Unit Value at end of year ............ $ 3.421 $ 3.181 $ 2.892 $ 2.728 $ 2.652
======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . . .24 29 .16 .08 .27
Ratio of operating expenses to average net assets . . . . 1.33% 1.33% 1.33% 1.32% 1.32%
Ratio of net investment income to average net assets . . . 7.31% 7.60% 7.82% 7.87% 8.19%
Number of units outstanding at end of year (thousands) . . 16,341 18,248 21,124 24,703 27,776
Portfolio turnover rate . . . . . . . . . . . . . . . . . 41% 33% 17% 17% 28%
</TABLE>
+ On May 1. 1990, TAMIC replaced TIMCO as the investment adviser for Account
QB.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
13
<PAGE> 17
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES
Per Unit Data for an Accumulation Unit outstanding throughout each year
The following information on per unit data has been audited by Coopers &
Lybrand L.L.P., independent accountants. Their report on the per unit data for
each of the five years in the period ended December 31, 1995 is contained in
the 1995 Annual Report to Contract Owners. The Annual Report is incorporated by
reference into the Statement of Additional Information. The following
information should be read in conjunction with the financial statements
contained in the 1995 Annual Report.
CONTRACTS ISSUED ON OR AFTER MAY 16, 1983.
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . . $ .087 $ .065 $ .077 $ .118
Operating expenses . . . . . . . . . . . . . . . . . . . . . . .032 .031 .031 .030
------- ------- ------- -------
Net investment income . . . . . . . . . . . . . . . . . . . . . .055 .034 .046 .088
Unit Value at beginning of year . . . . . . . . . . . . . . . . 2.029 1.995 1.949 1.861
------- ------- ------- -------
Unit Value at end of year . . . . . . . . . . . . . . . . . . . $ 2.084 $ 2.029 $ 1.995 $ 1.949
======= ======= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value . . . . . . . . . . . . . . . . . . .06 .03 .05 .09
Ratio of operating expenses to average net assets . . . . . . . 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average net assets . . . . . 2.72% 1.68% 2.33% 4.66%
Number of units outstanding at end of year (thousands) . . . . 39,675 34,227 42,115 55,013
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1990* 1989 1988 1987 1986
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . . $ .149 $ .156 $ .118 $ .101 $ .091
Operating expenses . . . . . . . . . . . . . . . . . . . . . . .029 .027 .023 .023 .020
------- ------- ------- -------
Net investment income . . . . . . . . . . . . . . . . . . . . . .120 .129 .095 .078 .071
Unit Value at beginning of year . . . . . . . . . . . . . . . . 1.741 1.612 1.517 1.439 1.368
------- ------- ------- ------- -------
Unit Value at end of year . . . . . . . . . . . . . . . . . . . $ 1.861 $ 1.741 $ 1.612 $ 1.517 $ 1.439
======= ======= ======= ====== =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value . . . . . . . . . . . . . . . . . . .12 .13 .10 .08 .07
Ratio of operating expenses to average net assets . . . . . . . 1.57% 1.57% 1.56% 1.57% 1.57%
Ratio of net investment income to average net assets . . . . . 6.68% 7.65% 6.02% 5.27% 4.87%
Number of units outstanding at end of year (thousands) . . . . 67,343 57,916 41,449 49,918 31,831
</TABLE>
CONTRACTS ISSUED PRIOR TO MAY 16, 1983.
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . . $ .091 $ .067 $ .079 $ .120
Operating expenses . . . . . . . . . . . . . . . . . . . . . . .028 .027 .027 .026
------- ------- ------- -------
Net investment income . . . . . . . . . . . . . . . . . . . . . .063 .040 .052 .094
Unit Value at beginning of year . . . . . . . . . . . . . . . . 2.083 2.043 1.991 1.897
------- ------- ------- -------
Unit Value at end of year . . . . . . . . . . . . . . . . . . . $ 2.146 $ 2.083 $ 2.043 $ 1.991
======= ======= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value . . . . . . . . . . . . . . . . . . .06 .04 .05 .09
Ratio of operating expenses to average net assets . . . . . . . 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net assets 2.98% 1.93% 2.58% 4.90%
Number of units outstanding at end of year (thousands) 206 218 227 262
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER UNIT DATA 1990* 1989 1988 1987 1986
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total investment income . . . . . . . . . . . . . . . . . . . . $ .151 $ .156 $ .118 $ .101 $ .091
Operating expenses . . . . . . . . . . . . . . . . . . . . . . .024 .021 .018 .018 .015
------- ------- ------- ------- -------
Net investment income . . . . . . . . . . . . . . . . . . . . . .127 .135 .100 .083 .076
Unit Value at beginning of year . . . . . . . . . . . . . . . . 1.770 1.635 1.535 1.452 1.376
------- ------- ------- ------- -------
Unit Value at end of year . . . . . . . . . . . . . . . . . . . $ 1.897 $ 1.770 $ 1.635 $ 1.535 $ 1.452
======= ======= ======= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value . . . . . . . . . . . . . . . . . . .13 .14 .10 .08 .08
Ratio of operating expenses to average net assets . . . . . . . 1.33% 1.33% 1.31% 1.32% 1.32%
Ratio of net investment income to average net assets 6.93% 7.81% 6.19% 5.49% 5.09%
Number of units outstanding at end of year (thousands) 326 367 497 592 593
</TABLE>
* On May 1, 1990, TAMIC replaced TIMCO as the investment adviser for Account
MM.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
14
<PAGE> 18
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
(Unaudited)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
Q NQ Q NQ Q NQ
- -- - -- --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year . . . . . . . . . . . . . . $ 1.892 $ 1.962 $ 1.665 $ 1.727
Unit Value at end of year . . . . . . . . . . . . . . . . . 1.779 1.845 1.892 1.962
Number of units outstanding at end of year (thousands)....... 40,160 3,605 30,003 2,825
HIGH YIELD BOND TRUST
Unit Value at beginning of year . . . . . . . . . . . . . . $ 2.222 $ 2.245 $ 1.974 $ 1.994
Unit Value at end of year . . . . . . . . . . . . . . . . . 2.167 2.189 2.222 2.245
Number of units outstanding at end of year (thousands) . . 4,708 585 5,066 603
MANAGED ASSETS TRUST
Unit Value at beginning of year . . . . . . . . . . . . . . $ 2.281 $ 2.455 $ 2.111 $ 2.273
Unit Value at end of year . . . . . . . . . . . . . . . . . 2.201 2.369 2.281 2.455
Number of units outstanding at end of year (thousands) 58,355 4,813 63,538 4,490
</TABLE>
<TABLE>
<CAPTION>
1992 1991
---- ----
Q NQ Q NQ
- -- - --
<S> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year . . . . . . . . . . . . . . $ 1.433 $ 1.487 $ 1.075 $ 1.114
Unit Value at end of year . . . . . . . . . . . . . . . . . 1.665 1.727 1.433 1.487
Number of units outstanding at end of year (thousands)....... 16,453 1,020 12,703 887
HIGH YIELD BOND TRUST
Unit Value at beginning of year . . . . . . . . . . . . . . $ 1.767 $ 1.785 $ 1.418 $ 1.433
Unit Value at end of year . . . . . . . . . . . . . . . . . 1.976 1.994 1.767 1.785
Number of units outstanding at end of year (thousands) . . 4,730 428 4,018 344
MANAGED ASSETS TRUST
Unit Value at beginning of year . . . . . . . . . . . . . . $ 2.034 $ 2.189 $ 1.691 $ 1.821
Unit Value at end of year . . . . . . . . . . . . . . . . . 2.111 2.273 2.034 2.189
Number of units outstanding at end of year (thousands) 65,926 4,120 58,106 3,359
</TABLE>
<TABLE>
<CAPTION>
1990 1989 1988
---- ---- ----
Q NQ Q NQ Q NQ
- -- - -- - --
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year . . . . . . . . . . . . $ 1.157 $ 1.200 .$ 1.015 $ 1.052 $ 0.934 $ 0.968
Unit Value at end of year . . . . . . . . . . . . . . . 1.075 1.114 1.157 1.200 1.015 1.052
Number of units outstanding at end of year (thousands) 11,356 553 12,038 495 13,040 423
HIGH YIELD BOND TRUST
Unit Value at beginning of year . . . . . . . . . . . . $ 1.573 $ 1.590 .$ 1.571 $ 1.588 $ 1.388 $ 1.403
Unit Value at end of year . . . . . . . . . . . . . . 1.418 1.433 1.573 1.590 1.571 1.588
Number of units outstanding at end of year (thousands) 4,045 341 6,074 573 5,783 676
MANAGED ASSETS TRUST
Unit Value at beginning of year . . . . . . . . . . . . $ 1.671 $ 1.799 $ 1.331 $ 1.433 $ 1.234 $ 1.328
Unit Value at end of year . . . . . . . . . . . . . . 1.691 1.821 1.671 1.799 1.331 1.433
Number of units outstanding at end of year (thousands) 51,489 2.744 47,104 2,836 46,809 3,316
</TABLE>
<TABLE>
<CAPTION>
1987 1986
---- ----
Q NQ Q NQ
- -- - --
<S> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND*
Unit Value at beginning of year . . . . . . . . . . . . $ 1.027 $ 1.066 $ 0.946 $ 0.976
Unit Value at end of year . . . . . . . . . . . . . . . 0.934 0.968 1.027 1.066
Number of units outstanding at end of year (thousands) 12,957 486 12,658 263
HIGH YIELD BOND TRUST
Unit Value at beginning of year . . . . . . . . . . . . $ 1.412 $ 1.427 $ 1.324 $ 1.339
Unit Value at end of year . . . . . . . . . . . . . . 1.388 1.403 1.412 1.427
Number of units outstanding at end of year (thousands) 4,645 523 4,866 591
MANAGED ASSETS TRUST
Unit Value at beginning of year . . . . . . . . . . . . $ 1.223 $ 1.317 $ 1.040 $ 1.119
Unit Value at end of year . . . . . . . . . . . . . . 1.234 1.328 1.223 1.317
Number of units outstanding at end of year (thousands) 46,733 3,875 33,600 1,876
</TABLE>
Q = Qualified
NQ = NonQualified
The financial statements of Fund U are contained in the 1995 Annual Report to
Contract Owners.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
* Prior to May 1, 1994, the Capital Appreciation Fund was known as the
Aggressive Stock Trust.
15
<PAGE> 19
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
(Unaudited)
<TABLE>
<CAPTION>
1995 1994 1993 1992**
---- ---- ---- ----
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES PORTFOLIO (1/92)*
Unit Value at beginning of period.......................... $ 1.153 $ 1.066 $ 1.000
Unit Value at end of period................................ 1.074 1.153 1.066
Number of units outstanding at end of period (thousands) .. 22,709 22,142 8,566
SOCIAL AWARENESS STOCK PORTFOLIO (5/92)*
Unit Value at beginning of period.......................... $ 1.153 $ 1.086 $ 1.000
Unit Value at end of period................................ 1.109 1.153 1.086
Number of units outstanding at end of year (thousands) .... 3,499 2,920 1,332
UTILITIES PORTFOLIO (2/94)*
Unit Value at beginning of period.......................... $ 1.000 -- --
Unit Value at end of period................................ 1.005 -- --
Number of units outstanding at end of period (thousands) .. 5,740 -- --
TEMPLETON BOND FUND (8/88)*
Unit Value at beginning of year ........................... $ 1.172 $ 1.065 $ 1.000
Unit Value at end of year ................................. 1.101 1.172 1.065
Number of units outstanding at end of year (thousands) .... 10,186 8,014 3,477
TEMPLETON STOCK FUND (8/88)*
Unit Value at beginning of year ........................... $ 1.385 $ 1.047 $ 1.000
Unit Value at end of year ................................. 1.338 1.385 1.047
Number of units outstanding at end of year (thousands) .... 101,462 43,847 10,433
TEMPLETON ASSET ALLOCATION FUND (8/88)*
Unit Value at beginning of year ........................... $ 1.333 $ 1.070 $ 1.000
Unit Value at end of year ................................. 1.277 1.333 1.070
Number of units outstanding at end of year (thousands) .... 103,407 51,893 13,888
FIDELITY'S HIGH INCOME PORTFOLIO (9/85)*
Unit Value at beginning of year ........................... $ 1.138 $ 1.138 $ 1.000
Unit Value at end of year ................................. 1.316 1.354 1.138
Number of units outstanding at end of year (thousands) .... 25,813 17,381 4,875
FIDELITY'S GROWTH PORTFOLIO (10/86)*
Unit Value at beginning of year ........................... $ 1.024 $ 1.024 $ 1.000
Unit Value at end of year ................................. 1.192 1.207 1.024
Number of units outstanding at end of year (thousands) .... 176,304 101,260 30,240
FIDELITY'S EQUITY-INCOME PORTFOLIO (10/86)*
Unit Value at beginning of period ......................... $ 1.052 $ 1.000 --
Unit Value at end of period ............................... 1.112 1.052 --
Number of units outstanding at end of period (thousands) .. 78,856 13,414 --
FIDELITY'S ASSET MANAGER PORTFOLIO (9/89)*
Unit Value at beginning of year ........................... $ 1.301 $ 1.088 $ 1.000
Unit Value at end of year ................................. 1.207 1.301 1.088
Number of units outstanding at end of year (thousands) .... 282,474 162,413 30,207
DREYFUS STOCK INDEX FUND (9/89)*
Unit Value at beginning of year ........................... $ 1.148 $ 1.064 $ 1.000
Unit Value at end of year ................................. 1.144 1.148 1.064
Number of units outstanding at end of year (thousands) .... 31,600 26,789 12,089
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND (5/93)*
Unit Value at beginning of period ......................... $ 1.180 $ 1.000 --
Unit Value at end of period ............................... 1.084 1.180 --
Number of units outstanding at end of period (thousands) .. 47,096 16,944 --
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND (5/93)*
Unit Value at beginning of period .......................... $ 1.079 $ 1.000 --
Unit Value at end of period ................................ 1.168 1.079 --
Number of units outstanding at end of period (thousands) .. 73,838 27,011 --
AMERICAN ODYSSEY CORE EQUITY FUND (5/93)*
</TABLE>
16
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
Unit Value at beginning of period ......................... $ 1.012 $ 1.000 --
Unit Value at end of period ............................... .990 1.012 --
Number of units outstanding at end of period (thousands) .. 100,082 37,136 --
AMERICAN ODYSSEY LONG-TERM BOND FUND (5/93)*
Unit Value at beginning of period ......................... $ 1.085 $ 1.000 --
Unit Value at end of period ............................... 1.010 1.085 --
Number of units outstanding at end of period (thousands) .. 70,928 25,467 --
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND FUND (5/93)*
Unit Value at beginning of period ......................... $ 1.035 $ 1.000 --
Unit Value at end of period ............................... .993 1.035 --
Number of units outstanding at end of period (thousands) .. 50,403 19,564 --
AMERICAN ODYSSEY SHORT-TERM BOND FUND (5/93)*
Unit Value at beginning of period ......................... $ 1.020 $ 1.000 --
Unit Value at end of period ............................... 1.006 1.020 --
Number of units outstanding at end of period (thousands) .. 17,611 8,201 --
SMITH BARNEY INCOME AND GROWTH PORTFOLIO (6/94)
Unit Value at beginning of period ......................... $ 1.020 $ 1.000 --
Unit Value at end of period ............................... 1.006 1.020 --
Number of units outstanding at end of period (thousands) .. 17,611 8,201 --
ALLIANCE GROWTH PORTFOLIO (6/94)
Unit Value at beginning of period .......................... $ 1.020 $ 1.000 --
Unit Value at end of period ................................ 1.006 1.020 --
Number of units outstanding at end of period (thousands) ... 17,611 8,201 --
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO (6/94)
Unit Value at beginning of period ........................... $ 1.020 $ 1.000 --
Unit Value at end of period ................................. 1.006 1.020 --
Number of units outstanding at end of period (thousands) .... 17,611 8,201 --
PUTNAM DIVERSIFIED INCOME PORTFOLIO (6/94)
Unit Value at beginning of period ........................... $ 1.020 $ 1.000 --
Unit Value at end of period ................................. 1.006 1.020 --
Number of units outstanding at end of period (thousands) .... 17,611 8,201 --
SMITH BARNEY HIGH INCOME PORTFOLIO (6/94)
Unit Value at beginning of period ........................... $ 1.020 $ 1.000 --
Unit Value at end of period ................................. 1.006 1.020 --
Number of units outstanding at end of period (thousands) .... 17,611 8,201 --
MFS TOTAL RETURN PORTFOLIO (6/94)
Unit Value at beginning of period ........................... $ 1.020 $ 1.000 --
Unit Value at end of period ................................. 1.006 1.020 --
Number of units outstanding at end of period (thousands) .... 17,611 8,201 --
</TABLE>
* Inception date.
** Period covers January 24, 1992 (date portfolio became available under Fund
U) to December 31, 1992, except Social Awareness Stock Portfolio, which
became available under Fund U on May 1, 1992.
The financial statements of Fund U are contained in the 1995 Annual Report
to Contract Owners.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
17
<PAGE> 21
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
Per Unit Data for an Accumulation Unit outstanding throughout each period
The following information on per unit data has been audited by Coopers &
Lybrand L.L.P., independent accountants. Their report on the per unit data for
each of the five years in the period ended December 31, 1995 is contained in
the 1995 Annual Report to Contract Owners. The Annual Report is incorporated by
reference into the Statement of Additional Information. The following
information should be read in conjunction with the financial statements
contained in the 1995 Annual Report.
<TABLE>
<CAPTION>
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . $ .064 $ .043 $ .046
Operating expenses . . . . . . . . . . . . . . . ** (.041) ** .042 ** .045
---------- ---------- ----------
Net investment income . . . . . . . . . . . . . . .023 .001 .001
Unit Value at beginning of year . . . . . . . . . $ 1.776 $ 1.689 $ 1.643
Net realized and change in unrealized gains (losses) (.104) 0.086 0.045
---------- ---------- ----------
Unit Value at end of year . . . . . . . . . . . . $ 1.695 $ 1.776 $ 1.689
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . (.08) .09 .05
Ratio of operating expenses to average net assets * . . ** 2.82% ** 2.82% ** 2.82%
Ratio of net investment income to average net assets * 1.58% 0.08% 0.78%
Number of units outstanding at end of year (thousands) 29,692 -- 217,428
Portfolio turnover rate . . . . . . . . . . . . . . . . 19% 70% 119%
<CAPTION>
1991 1990 1989 1988
---- ---- ---- ----
<S> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . $ .045 $ .099 $ .161 $ .044
Operating expenses . . . . . . . . . . . . . . . ** .045 ** .034 .023 .017
---------- ---------- ---------- ---------
Net investment income . . . . . . . . . . . . . . -- .065 .138 .027
Unit Value at beginning of year . . . . . . . . . $ 1.391 $ 1.447 $ 1.108 $ 1.000
Net realized and change in unrealized gains (losses) 0.252 (.121) .201 .081
---------- ---------- ---------- ---------
Unit Value at end of year . . . . . . . . . . . . $ 1.643 $ 1.391 $ 1.447 $ 1.108
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . .25 (.06) .34 .11
Ratio of operating expenses to average net assets * . . ** 2.82% ** 2.41% 1.57% 1.57%
Ratio of net investment income to average net assets * 1.33% 1.86% 2.81% 2.55%
Number of units outstanding at end of year (thousands) -- 5,708 -- 3,829
Portfolio turnover rate . . . . . . . . . . . . . . . . 489% 653% 149% 268%
</TABLE>
* Annualized
** Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner, and were not recorded in the financial
statements of Account TGIS, or by contractual surrender to the extent allowed
under federal tax law.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
18
<PAGE> 22
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES*
Per Unit Data for an Accumulation Unit outstanding throughout each period
The following information on per unit data has been audited by Coopers & Lybrand
L.L.P., independent accountants. Their report on the per unit data for each of
the five years in the period ended December 31, 1995 is contained in the 1995
Annual Report to Contract Owners. The Annual Report is incorporated by
reference into the Statement of Additional Information. The following
information should be read in conjunction with the financial statements
contained in the 1995 Annual Report.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . . $ .055 $ .041 $ .054 $ .076
Operating expenses . . . . . . . . . . . . . . . . . ** .036 ** .037 ** .041 ** .036
---------- --------- --------- ----------
Net investment income . . . . . . . . . . . . . . . .019 .004 .013 .040
Unit value at beginning of year . . . . . . . . . . 1.275 1.271 1.258 1.218
Net realized and change in unrealized gains (losses) **** (.002) -- -- --
---------- ---------- --------- ----------
Unit value at end of year . . . . . . . . . . . . . $ 1.292 $ 1.275 $ 1.271 $ 1.258
---------- ---------- --------- ----------
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value . . . . . . . . . . . . .02 -- .01 .04
Ratio of operating expenses to average net assets *** **2.82% ** 2.82% ** 2.82% ** 2.82%
Ratio of net investment income to average net assets *** 1.45% .39% 1.12% 3.07%
Number of units outstanding at end of year (thousands) . 216,713 353,374 173,359 439,527
<CAPTION>
1990 1989 1988 1987
---- ---- ---- ----
<S> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . . $ .099 $ .102 $ .078 $ .003
Operating expenses . . . . . . . . . . . . . . . . . ** .030 .017 .016 .001
---------- ---------- --------- --------
Net investment income . . . . . . . . . . . . . . . .069 .085 .062 .002
Unit value at beginning of year . . . . . . . . . . 1.149 1.064 1.002 1.000
Net realized and change in unrealized gains (losses) **** -- -- -- --
---------- ---------- --------- ---------
Unit value at end of year . . . . . . . . . . . . . $ 1.218 $ 1.149 $ 1.064 $ 1.002
---------- ---------- --------- ---------
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase in unit value . . . . . . . . . . . . .07 .09 .06 --
Ratio of operating expenses to average net assets *** ** 2.41% 1.57% 1.57% 1.57%
Ratio of net investment income to average net assets *** 5.89% 7.63% 6.51% 2.69%
Number of units outstanding at end of year (thousands) . 369,769 360,074 356,969 288,757
</TABLE>
* Prior to May 1,1994, the Account was known as The Travelers Timed Money
Market Account for Variable Annuities.
** Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner, and were not recorded in the financial
statements of Account TSB, or by contractual surrender to the extent allowed
under federal tax law.
*** Annualized
**** Effective May 2, 1994, Account TSB was authorized to invest in securities
with a maturity of greater than one year. As a result, net realized and change
in unrealized gains (losses) are no longer included in total investment income.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
19
<PAGE> 23
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
Per Unit Data for an Accumulation Unit outstanding throughout each period
The following information on per unit data has been audited by Coopers &
Lybrand L.L.P., independent accountants. Their report on the per unit data for
each of the five years in the period ended December 31, 1995 is contained in
the 1995 Annual Report to Contract Owners. The Annual Report is incorporated by
reference into the Statement of Additional Information. The following
information should be read in conjunction with the financial statements
contained in the 1995 Annual Report.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . . . $ .036 $ .037 $ .041 $ .044
Operating expenses . . . . . . . . . . . . . . . . . ** .049 ** .048 ** .043 ** .039
---------- --------- --------- ----------
Net investment income (loss) . . . . . . . . . . . . . (.013) (.011) (.002) .005
Unit Value at beginning of year . . . . . . . . . . . 1.838 1.624 1.495 1.136
Net realized and unrealized gains (losses) . . . . . (.119) .225 .131 .354
---------- --------- --------- ----------
Unit Value at end of year . . . . . . . . . . . . . . $ 1.706 $ 1.838 $ 1.624 $ 1.495
---------- --------- --------- ----------
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . (.13) .21 (.13) .36
Ratio of operating expenses to average net assets * . ** 2.80% ** 2.82% ** 2.93% ** 2.99%
Ratio of net investment income to average net assets. * (.72)% (.80)% (.12)% .37%
Number of units outstanding at end of year (thousands) 25,109 43,059 20,225 19,565
Portfolio turnover rate . . . . . . . . . . . . . . . 142% 71% 269% 261%
<CAPTION>
+1990 1989 1988 1987
---- ---- ---- ----
<S> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . . . $ .045 $ .052 $ .008 $ .001
Operating expenses . . . . . . . . . . . . . . . . . . ** .073 .051 .015 .000
Net investment income (loss) . . . . . . . . . . . . . (.028) .001 (.007) .001
Unit Value at beginning of year . . . . . . . . . . . 1.189 1.059 1.001 1.000
Net realized and unrealized gains (losses) . . . . . . (.025) .129 .065 .000
---------- --------- --------- ---------
Unit Value at end of year . . . . . . . . . . . . . . $ 1.136 $ 1.189 $ 1.059 $ 1.001
---------- --------- --------- ---------
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . (.05) .13 .06 .00
Ratio of operating expenses to average net assets * . ** 2.64% 1.95% 1.95% 1.95%
Ratio of net investment income to average net assets . (3.73)% .91% (.88)% 4.90%
Number of units outstanding at end of year (thousands) 5,585 0 0 841
Portfolio turnover rate . . . . . . . . . . . . . . . 0% 77% 127% 0
</TABLE>
* Annualized
** Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner and were not recorded in the financial
statements of Account TAS, or by contractual surrender to the extent allowed
under federal tax law.
+ On May 1, 1990, TIMCO replaced Keystone Custodian Funds, Inc. as the
investment adviser for Account TAS.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
20
<PAGE> 24
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES
Per Unit Data for an Accumulation Unit outstanding throughout each period
The following information on per unit data has been audited by Coopers &
Lybrand L.L.P., independent accountants. Their report on the per unit data for
each of the five years in the period ended December 31, 1995 is contained in
the 1995 Annual Report to Contract Owners. The Annual Report is incorporated
by reference into the Statement of Additional Information. The following
information should be read in conjunction with the financial statements
contained in the 1995 Annual Report.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . . . . $ .007 $ .054 $ .051 $ .052
Operating expenses . . . . . . . . . . . . . . . . . . ** .006 ** .036 ** .032 ** .031
Net investment income . . . . . . . . . . . . . . . . . .001 .018 .019 .021
Unit Value at beginning of year . . . . . . . . . . . . 1.234 1.132 1.087 .994
Net realized and change in unrealized gains (losses). . (.020) .084 .026 .072
Unit Value at end of year . . . . . . . . . . . . . . . $ 1.215 $ 1.234 $ 1.132 $ 1.087
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . (.02) .10 .05 .09
Ratio of operating expenses to average net assets * . . ** 3.00% ** 3.00% ** 2.99% ** 3.00%
Ratio of net investment income to average net assets * 1.02% 1.48% 1.71% 3.07%
Number of units outstanding at end of year (thousands) -- 20,207 21,868 19,521
Portfolio turnover rate . . . . . . . . . . . . . . . . -- 190% 505% 627%
<CAPTION>
+1990 1989 1988 1987
---- ---- ---- ----
<S> <C> <C> <C> <C>
SELECTED PER UNIT DATA
Total investment income . . . . . . . . . . . . . . . . $ .072 $ .147 $ .141 $ .001
Operating expenses . . . . . . . . . . . . . . . . . . ** .018 .023 .022 .001
Net investment income . . . . . . . . . . . . . . . . . .054 .124 .119 .000
Unit Value at beginning of year . . . . . . . . . . . . 1.036 1.114 1.000 1.000
Net realized and change in unrealized gains (losses). . (.096) (.202) (.005) --
Unit Value at end of year . . . . . . . . . . . . . . . $ .994 $ 1.036 $ 1.114 $ 1.000
SIGNIFICANT RATIOS AND ADDITIONAL DATA
Net increase (decrease) in unit value . . . . . . . . . (.04) (.08) .11 .00
Ratio of operating expenses to average net assets * . . ** 2.58% 2.02% 2.04% 1.78%
Ratio of net investment income to average net assets * 3.88% 11.15% 11.12% (.95)
Number of units outstanding at end of year (thousands) 14,115 660 830 625
Portfolio turnover rate . . . . . . . . . . . . . . . 370% 10% 26% 0%
</TABLE>
* Annualized
** Effective May 1, 1990, market timing fees are included in operating
expenses. Prior to May 1, 1990, market timing fee payments were made by
separate check from a contract owner, and were not recorded in the financial
statements of Account TB, or by contractual surrender to the extent allowed
under federal tax law.
+ On May 1, 1990, TAMIC replaced Keystone Custodian Funds, Inc. as the
investment adviser for Account TB.
The consolidated financial statements of The Travelers Insurance Company and
Subsidiaries are contained in the Statement of Additional Information.
21
<PAGE> 25
THE VARIABLE ANNUITY CONTRACT
The Contract is a variable annuity designed to help Contract Owners
and Participants accumulate money for retirement. The following brief
description of the key features of the Contract is subject to the specific
terms of the Contract itself. Reference should also be made to the Glossary of
Special Terms.
PURCHASE PAYMENTS
Purchase Payments under tax-qualified retirement plans (except IRAs),
that is, tax-sheltered annuities (i.e., 403(b)), corporate pension and
profit-sharing, governmental and deferred compensation plans for governmental
and tax-exempt organization employees, may be made under the Contract in
amounts of $20 or more per Participant, subject to the terms of the Plan. The
initial minimum Purchase Payment for IRAs is $1,000; for nonqualified
Contracts, the initial minimum Purchase Payment is $1,000 and $100 thereafter.
The initial Purchase Payment is due and payable before the Contract becomes
effective.
Purchase Payments accumulate under the Contract until the Annuity
Commencement Date. The Company will automatically begin paying Annuity Payments
to the Owner or Participant, as provided in the Plan, on the Participant's
Annuity Commencement Date, if the Participant is then living. (See "Annuity
Option--Automatic Option," page __.) The Owner or the Participant, as provided
in the Plan, may choose instead a number of alternative arrangements for
benefit payments. Under a Group Contract, if the Participant dies before a
payout begins, the Company will pay to the Owner or beneficiary, as provided in
the Plan, the Participant's Interest. The Participant's Interest will be
considered the Cash Value of that Participant's Individual Account unless the
Company is otherwise instructed by the Owner. Under an Individual Contract, if
the Owner dies before a payout begins, the amount due will be be paid to the
beneficiary.
APPLICATION OF PURCHASE PAYMENTS
Each Purchase Payment will be applied to the Contract to provide
Accumulation Units of the Investment Alternatives, as selected by the Contract
Owner. Such Accumulation Units will be credited to an Owner's Account or
Individual Account, as directed or as provided in the Plan. If the Contract
application is in good order, the Company will apply the initial Purchase
Payment within two business days of receipt of the Purchase Payment at the
Company's Home Office. If the application is not in good order, the Company
will attempt to secure the missing information within five business days. If
the application is not complete at the end of this period, the Company will
inform the applicant of the reason for the delay. The Purchase Payment will be
returned immediately unless the applicant specifically consents to the Company
keeping the Purchase Payment until the application is complete. Once it is
complete, the Purchase Payment will be applied within two business days.
NUMBER OF ACCUMULATION UNITS
The number of Accumulation Units to be credited will be determined by
dividing the Purchase Payment applied to the designated Investment Alternative
by the current Accumulation Unit Value of that Investment Alternative.
The Accumulation Unit Value for each Investment Alternative was
established at $1.00 at inception. The value of an Accumulation Unit on any
Valuation Date is determined by multiplying the value on the immediately
preceding Valuation Date by the net investment factor for the Valuation Period
just ended. The net investment factor is described in the SAI. The value of
an Accumulation Unit on any date other than a Valuation Date will be equal to
its value as of the next succeeding Valuation Date. The value of an
Accumulation Unit may increase or decrease.
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<PAGE> 26
THE VARIABLE INVESTMENT ALTERNATIVES
FUND U
Fund U currently invests in the following Underlying Funds. Each
Underlying Fund has risks associated with it. Please read the accompanying
prospectus for each carefully. Underlying Funds may be added or withdrawn as
permitted by applicable law. Additionally, some of the Underlying Funds may
not be available in every state due to various insurance regulations.
UNDERLYING FUNDS:
CAPITAL APPRECIATION FUND. The objective of the Capital Appreciation Fund is
growth of capital through the use of common stocks. Income is not an
objective. The Fund invests principally in common stocks of small to large
companies which are expected to experience wide fluctuations in price in both
rising and declining markets.
HIGH YIELD BOND TRUST. The objective of the High Yield Bond Trust is generous
income. The assets of the High Yield Bond Trust will be invested in bonds
which, as a class, sell at discounts from par value and are typically high risk
securities.
MANAGED ASSETS TRUST. The objective of the Managed Assets Trust is high total
investment return through a fully managed investment policy. Assets of the
Managed Assets Trust will be invested in a portfolio of equity, debt and
convertible securities.
DREYFUS STOCK INDEX FUND. The objective of the Dreyfus Stock Index Fund is to
provide investment results that correspond to the price and yield performance
of publicly traded common stocks in the aggregate, as represented by the
Standard & Poor's 500 Composite Stock Price Index.
THE TRAVELERS SERIES TRUST PORTFOLIOS
U.S. GOVERNMENT SECURITIES PORTFOLIO. The objective of the U.S. Government
Securities Portfolio is the selection of investments from the point of view of
an investor concerned primarily with highest credit quality, current income and
total return. The assets of the U.S. Government Securities Portfolio will be
invested in direct obligations of the United States, its agencies and
instrumentalities.
SOCIAL AWARENESS STOCK PORTFOLIO. The objective of the Social Awareness Stock
Portfolio is long-term capital appreciation and retention of net investment
income. The Portfolio seeks to fulfill this objective by selecting
investments, primarily common stocks, which meet the social criteria
established for the Portfolio. Social criteria currently excludes companies
that derive a significant portion of their revenues from the production of
tobacco, tobacco products, alcohol, or military defense systems, or in the
provision of military defense related services or gambling services.
UTILITIES PORTFOLIO. The objective of the Utilities Portfolio is to provide
current income by investing in equity and debt securities of companies in the
utility industries.
TEMPLETON VARIABLE PRODUCTS SERIES
TEMPLETON BOND FUND. The objective of the Templeton Bond Fund is high current
income through a flexible policy of investing primarily in debt securities of
companies, governments and government agencies of various nations throughout
the world.
TEMPLETON STOCK FUND. The objective of the Templeton Stock Fund is capital
growth through a policy of investing primarily in common stocks issued by
companies, large and small, in various nations throughout the world.
TEMPLETON ASSET ALLOCATION FUND. The objective of the Templeton Asset
Allocation Fund is a high level of total return with reduced risk over the long
term through a flexible policy of investing in stocks of companies in any
nation and debt obligations of companies and governments of any nation.
Changes in the asset mix will be adjusted in an attempt to capitalize on total
return potential produced by changing economic conditions throughout the world.
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<PAGE> 27
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND
FIDELITY'S HIGH INCOME PORTFOLIO. The objective of the High Income Portfolio
is to seek to obtain a high level of current income by investing primarily in
high yielding, lower-rated, fixed-income securities, while also considering
growth of capital.
FIDELITY'S EQUITY-INCOME PORTFOLIO. The objective of the Equity-Income
Portfolio is to seek reasonable income by investing primarily in
income-producing equity securities; in choosing these securities, the portfolio
manager will also consider the potential for capital appreciation.
FIDELITY'S GROWTH PORTFOLIO. The objective of the Growth Portfolio is to seek
capital appreciation. The Portfolio normally purchases common stocks of
well-known, established companies, and small emerging growth companies,
although its investments are not restricted to any one type of security.
Capital appreciation may also be found in other types of securities, including
bonds and preferred stocks.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II
FIDELITY'S ASSET MANAGER PORTFOLIO. The objective of the Asset Manager
Portfolio is to seek high total return with reduced risk over the long-term by
allocating its assets among stocks, bonds and short-term fixed-income
instruments.
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND. * The objective of the
International Equity Fund is to seek maximum long-term total return by
investing primarily in common stocks of established non-U.S. companies.
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND. * The objective of the Emerging
Opportunities Fund is to seek maximum long-term total return by investing
primarily in common stocks of small, rapidly growing companies.
AMERICAN ODYSSEY CORE EQUITY FUND. * The objective of the Core Equity Fund is
to seek maximum long-term total return by investing primarily in common stocks
of well-established companies.
AMERICAN ODYSSEY LONG-TERM BOND FUND. * The objective of the Long-Term Bond
Fund is to seek maximum long-term total return by investing primarily in
long-term corporate debt securities, U.S. government securities,
mortgage-related securities, and asset-backed securities, as well as money
market instruments.
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND FUND. * The objective of the
Intermediate-Term Bond Fund is to seek maximum long-term total return by
investing primarily in intermediate-term corporate debt securities, U.S.
government securities, mortgage-related securities and asset-backed securities,
as well as money market instruments.
AMERICAN ODYSSEY SHORT-TERM BOND FUND. * The objective of the Short-Term Bond
Fund is to seek maximum long-term total return by investing primarily in
investment-grade, short-term debt securities.
SMITH BARNEY/TRAVELERS SERIES FUND, INC.
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of the Income and
Growth Portfolio is current income and long-term growth of income and capital
by investing primarily, but not exclusively, in common stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth Portfolio is long-term
growth of capital by investing predominantly in equity securities of companies
with a favorable outlook for earnings and whose rate of growth is expected to
exceed that of the U.S. economy over time. Current income is only an
incidental consideration.
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective of the
International Equity Portfolio is total return on assets from growth of capital
and income by investing at least 65% of its assets in a diversified portfolio
of equity securities of established non-U.S. issuers.
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the Diversified Income
Portfolio is to seek high current income consistent with preservation of
capital. The Portfolio will allocate its investments among the U.S. Government
Sector, the High Yield Sector, and the International Sector of the fixed income
securities markets.
24
<PAGE> 28
SMITH BARNEY HIGH INCOME PORTFOLIO. The investment objective of the High
Income Portfolio is high current income. Capital appreciation is a secondary
objective. The Portfolio will invest at least 65% of its assets in
high-yielding corporate debt obligations and preferred stock.
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's objective is to
obtain above-average income (compared to a portfolio entirely invested in
equity securities) consistent with the prudent employment of capital.
Generally, at least 40% of the Portfolio's assets will be invested in equity
securities.
GT GLOBAL STRATEGIC INCOME PORTFOLIO. (NOTE: AVAILABLE ONLY TO EXISTING
CUSTOMERS AS OF APRIL 30, 1996. THE COMPANY EXPECTS TO ELIMINATE THIS OPTION BY
EARLY 1997.) This fund's objective is to seek high current income and
secondarily to seek capital appreciation. The Portfolio allocates its
investments among debt securities of issuers of the U.S. Government Sector, the
High Yield Sector and the International Sector of the fixed income securities
markets.
* Funds available for use with an asset allocation program, for which there is
a fee. See "Asset Allocation Advice" on page ___ for more information.
MANAGED SEPARATE ACCOUNTS:
For each Managed Separate Account, neither the investment objective
nor the fundamental investment restrictions, as described in the SAI, can be
changed without a vote of the majority of the outstanding voting securities of
the Accounts, as defined by the 1940 Act. See page __ for more information
regarding the investment objectives and policies and risk factors of these
options.
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES (ACCOUNT
GIS): The basic investment objective is long-term accumulation of principal
through capital appreciation and retention of net investment income.
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES (ACCOUNT QB): The
basic objective is current income, moderate capital volatility and total
return.
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES (ACCOUNT MM): The
basic investment objective is preservation of capital, a high degree of
liquidity and the highest possible current income available from certain
short-term money market securities.
#THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
(ACCOUNT TGIS): The basic investment objective is long-term accumulation of
principal through capital appreciation and retention of net investment income
#THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES (ACCOUNT
TSB): The investment objective is to generate high current income with limited
price volatility while maintaining a high degree of liquidity.
#THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES (ACCOUNT
TAS): The investment objective is growth of capital by investing primarily in
a broadly diversified portfolio of common stocks.
#THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES (ACCOUNT TB): The
investment objective is current income and total return by investing debt
securities of the highest credit quality.
# These investment options are available through a market timing program, for
which there is a fee. Certain risks may apply to those who allocate funds to
these options outside of the market timing program. See "Market Timing
Services" on page ___ for more information.
TRANSFERS
Before Annuity or Income Payments begin, the Owner or Participant, if
permitted, may transfer all or part of the Contract Value among available
Investment Alternatives without fee, penalty or charge. There are currently no
restrictions on frequency of transfers, but the Company reserves the right to
limit transfers to one in any six-month period. Such restrictions do not apply
to transfers by third party market timing services among timed Investment
Alternatives.
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<PAGE> 29
Since the available Investment Alternatives have different investment
advisory fees, a transfer from one Investment Alternative to another could
result in higher or lower investment advisory fees. (See "Investment Advisory
Fees," page __.)
DOLLAR COST AVERAGING (AUTOMATED TRANSFERS)
By written request, the Owner or Participant, if permitted, may elect
automated transfers of Contract Values on a monthly or quarterly basis from
specific Investment Alternatives to other Investment Alternatives. Certain
minimums may apply to enroll in the program. He or she may stop or change
participation in the Dollar Cost Averaging program at any time, provided the
Company receives at least 30 days' written notice.
Automated transfers are subject to all Contract provisions, including
those relating to the transfer of money between Investment Alternatives.
Certain minimums may apply to amounts transferred.
Dollar cost averaging requires regular investment regardless of
fluctuating prices and does not guarantee profits nor prevent losses in a
declining market. Before electing this option, individuals should consider
their financial ability to continue purchases through periods of low price
levels.
ASSET ALLOCATION ADVICE
Some Contract Owners or Participants, if permitted, may elect to enter
into a separate advisory agreement with Copeland Financial Services, Inc.
("Copeland"), an affiliate of the Company. Copeland provides asset allocation
advice under its CHART (SM) Program, which is fully described in a separate
Disclosure Statement. Under the CHART Program, Purchase Payments and Cash
Values are allocated among the six American Odyssey Funds. Copeland's charge
for this advisory service is equal to a maximum of 1.50% of the assets subject
to the CHART Program. This fee is currently reduced by 0.25%, the amount of
the fee paid to the investment manager of American Odyssey Funds, and it is
further reduced for assets over $25,000. Another reduction is made for
Participants in Plans subject to ERISA with respect to amounts allocated to the
American Odyssey Intermediate-Term Bond Fund because that Fund has as its
sub-adviser an affiliate of Copeland. A $30 initial fee is also charged. The
CHART Program fee will be paid by quarterly withdrawals from the Cash Values
allocated to the American Odyssey Funds. The Company will not treat these
withdrawals as taxable distributions. The CHART Program may not be available
in all marketing programs through which the Universal Annuity Contract is sold.
MARKET TIMING SERVICES
Accounts TGIS, TSB, TAS and TB ("Market Timed Accounts") are
Investment Alternatives available to individuals who have entered into market
timing services agreements ("market timing agreements") with registered
investment advisers who provide market timing services ("registered investment
advisers"). Such agreements permit the registered investment advisers to act
on behalf of the Contract Owner or Participant by transferring all or a portion
of the Contract Owner's units from one Market Timed Account to another. The
registered investment advisers can transfer funds only from one Market Timed
Account to another Market Timed Account.
A Contract Owner or Participant, if permitted, may transfer account
values from any of the Market Timed Accounts to any of the other Investment
Alternatives available under the Contract. However, if an individual in a
Market Timed Account transfers all current account values and directs all
future allocations to a non-timed investment alternative, the market timing
agreements with the registered investment advisers automatically terminate. If
this occurs, the registered investment advisers no longer have the right to
transfer funds on behalf of that individual. Partial withdrawals from the
Market Timed Accounts do not affect the market timing agreements.
Copeland, a registered investment adviser and an affiliate of the
Company, provides market timing services for a fee equivalent to 1.25% of the
current value of the assets subject to timing. Copeland also charges a $30
market timing application fee. If a person who has terminated his or her market
timing agreement wishes to reenter a market timing agreement, the market timing
fees will be reassessed, and a new $30 application fee will be charged by
Copeland.
The market timing fee is deducted from the assets of the Market Timed
Accounts pursuant to a payment method for which the Company, Accounts TGIS,
TSB, TAS and TB, Tower Square Securities, Inc., the principal underwriter of
the Contracts, and Copeland obtained an exemptive order from the Securities and
Exchange
26
<PAGE> 30
Commission on February 7, 1990 ("asset charge payment method"). Pursuant to
the asset charge payment method, the market timing agreements are between the
Contract Owner or Participant, as applicable and Copeland; however, the Company
is a signatory to the agreements and is solely responsible for payment of the
fee to Copeland. On each Valuation Date, the Company deducts the amount
necessary to pay the fee from each of the Market Timed Accounts and, in turn,
pays that amount to Copeland. This is the sole payment method available to
those who enter into market timing agreements. Individuals in the Market Timed
Accounts may use the services of unaffiliated market timing investment advisers
if such advisers are acceptable to the Company, and if such advisers agree to
an arrangement substantially identical to the asset charge payment method.
Distribution and Management Agreements between each of the Market
Timed Accounts and the Company authorize the Company to deduct the market
timing fees in accordance with the asset charge payment method. Contract Owners
are asked to approve annually the terms of the Distribution and Management
Agreement in order to continue the asset charge payment method. Because the
market timing services are provided pursuant to individual agreements between
Contract Owners or Participants and the registered investment advisers, the
Boards of Managers of the Market Timed Accounts do not exercise any supervisory
or oversight role with respect to these services or the fees charged therefor.
Under the asset charge payment method, the daily deductions for market
timing fees are not treated by the Company as taxable distributions. (See
"Federal Tax Considerations," page __.)
MARKET TIMING RISKS
Those who allocate amounts to the Market Timed Accounts without a
market timing agreement do so at their own risk and may bear a disproportionate
amount of the expenses associated with Separate Account portfolio turnover. In
addition, since the market timing fee is deducted by the Company as an asset
charge from the Market Timed Accounts, those who allocate amounts to these
Accounts without a market timing agreement will nevertheless have the fees
deducted on a daily basis. Although the Company intends to identify such
non-timed Contract Owners or Participants and to restore to the non-timed
Contract Owner's account, no less frequently than monthly, an amount equal to
the deductions for the market timing fees, this restored amount will not
reflect any investment experience that would have been attributable to such
deductions.
Those who elect to participate in a market timing agreement may be
subject to the following additional risks: (1) higher transaction costs; (2)
higher portfolio turnover rate; (3) investment return goals not being achieved
by the registered investment advisers which provide market timing services; and
(4) higher account expenses for depleting and, then, starting up the account.
Actions by the registered investment advisers which provide market timing
services may also increase risks generally found in any investment, i.e., the
failure to achieve an investment objective, and possible lower yield. In
addition, if there is more than one market timing strategy utilizing a Market
Timed Account, those who invest in the Market Timed Account when others are
transferred into or out of that Account by the registered investment advisers
may bear part of the direct costs incurred by those individuals who were
transferred. For example, if 90% of a Market Timed Account is under one market
timing strategy, and those funds are transferred either into or out of that
Account, those constituting the other 10% of the Market Timed Account may bear
a disproportionate amount of the expense for the transfer.
SURRENDERS AND REDEMPTIONS
Under a Group Contract, before a Participant's Annuity Commencement
Date, the Company will pay all or any portion of that Participant's Interest to
the Owner or Participant, as provided in the Plan. Under an Individual
Contract, the Contract Owner may redeem all or any portion of the Cash
Surrender Value at any time prior to the Annuity Commencement Date. The Owner
or Participant must submit a written surrender request. Surrenders will be made
pro rata from all the investment options unless he or she specifies the
Investment Alternative(s) from which surrender is to be made. The Cash
Surrender Value will be determined as of the Valuation Date next following
receipt of the Owner's surrender request at the Company's Home Office. A Group
Contract Owners' Account may be surrendered for cash as provided in the Plan
without the consent of any Participant.
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<PAGE> 31
The Company may defer payment of any Cash Surrender Value for a period
of not more than seven days after the request is received in good order. The
Cash Surrender Value of an Owner's Account or Individual Account on any date
will be equal to the Cash Value of the applicable Contract or Account less any
applicable Contingent Deferred Sales Charge, outstanding cash loans, and any
premium tax not previously deducted. The Cash Surrender Value may be more or
less than the Purchase Payments made depending on the value of the Contract or
Account at the time of surrender.
For those participating in the Texas Optional Retirement Program, a
withdrawal is available only upon termination of employment, retirement or
death as provided in the Texas Optional Retirement Program.
For Participants in Section 403(b) tax deferred annuity plans, a
withdrawal may not be made from certain salary reduction amounts taken prior to
reaching age 59 1/2, or due to separation from service, death, disability or
hardship. (See "Section 403(b) Plans and Arrangements," page __.)
SYSTEMATIC WITHDRAWALS
Each Contract Year, Contract Owners or Participants, as applicable,
may elect to take monthly, quarterly, semiannual or annual systematic
withdrawals of a specified dollar amount. Any applicable premium taxes will be
deducted. To elect this option, an election form provided by the Company must
be completed. Systematic withdrawals may be stopped at any time, provided the
Company receives at least 30 days' written notice.
DEATH BENEFIT
The following Death Benefit applies to all Contracts, except for
unallocated Group Contracts for which there is no death benefit:
If the Participant or, for an Individual Contract, the Annuitant dies
on or after age 75 and before Annuity or Income Payments begin, the Company
will pay to the beneficiary the Participant's Interest or Cash Value, for
individual Contracts, as of the date it receives at its Home Office proof of
death, less any premium tax incurred. If the Participant or Annuitant dies
before age 75 and before Annuity or Income Payments begin, after receipt of due
proof of death, the Company will pay the greatest of (1), (2) or (3) below:
1. the Participant's Interest or, for an Individual Contract, the
Cash Value, less any premium tax incurred or outstanding cash loans;
2. the total Purchase Payments allocated for that Participant or
Contract Owner, less any prior surrenders or cash loans; or
3. the Participant's Interest or, for an Individual Contract, the
Cash Value, on the fifth Certificate or Contract Year immediately preceding the
date of receipt of due proof of death by the Company, less any applicable
premium tax, outstanding cash loans or surrenders made since such fifth year
anniversary.
In some jurisdictions, until state approval is received, the
applicable age at which the death benefit formula will reduce will be age 65
rather than age 75.
CHARGES AND DEDUCTIONS
CONTINGENT DEFERRED SALES CHARGE
No sales charges are deducted at the time a Purchase Payment is
applied under the Contract. A Contingent Deferred Sales Charge of 5% will be
assessed if an amount is surrendered (withdrawn) within five years of its
payment date. (For this calculation, the five years will be measured from the
first day of the calendar month of the payment date.)
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<PAGE> 32
In the case of a partial surrender, payments made first will be
considered to be surrendered first ("first in, first out"). In no event may
the Contingent Deferred Sales Charge exceed 5% of premiums paid in the five
years immediately preceding the surrender date, nor may the charge exceed 5% of
the amount withdrawn. Unless the Company receives instructions to the contrary,
the Contingent Deferred Sales Charge will be deducted from the amount
requested.
The Contingent Deferred Sales Charge will be waived if:
- --- an annuity payout is begun;
- --- an income option of at least three years' duration (without right of
withdrawal) is begun after the first Contract Year;
- --- the Participant under a Group Contract or Annuitant under an
Individual Contract dies;
- --- the Participant under a Group Contract or Annuitant under an
Individual Contract becomes disabled (as defined by the Internal
Revenue Service) subsequent to purchase of the Contract;
- --- the Participant under a Group Contract, or Annuitant under an
Individual Contract, under a tax-deferred annuity plan (403(b) plan)
retires after age 55, provided the Contract has been in effect five
years or more and provided the payment is made to the Contract Owner
or PARTICIPANT;
- --- the Participant under a Group Contract, or Annuitant under an
Individual Contract, under an IRA plan reaches age 70 1/2, provided
the Certificate has been in effect five years or more;
- --- the Participant under a Group Contract, or Annuitant under an
Individual Contract, under a qualified pension or profit-sharing plan
(including a 401(k) plan) retires at or after age 59 1/2, provided the
Certificate or Contract, as applicable has been in effect five years
or more; or if refunds are made to satisfy the anti-discrimination
test. (For those under Certificates issued before May 1, 1992, the
Contingent Deferred Sales Charge will also be waived if the
Participant or Annuitant retires at normal retirement age (as defined
by the Plan), provided the Certificate or Contract, as applicable has
been in effect one year or more);
- --- the Participant under a Section 457 deferred compensation plan retires
and the Certificate has been in effect five years or more, or if a
financial hardship or disability withdrawal has been allowed by the
Plan administrator under applicable Internal Revenue Service ("IRS")
rules;
- --- for Group Contracts, the Participant under a Section 457 deferred
compensation plan established by the Deferred Compensation Board of
the state of New York or a "public employer" in that state (as defined
in Section 5 of the New York State Finance Laws) terminates
employment. The Contingent Deferred Sales Charge will also be waived
for such a Plan at the termination date specified in the Contract; or
- --- for Group Contracts, the Participant under a pension or profit-sharing
plan, including a 401(k) plan, Section 457 deferred compensation plan,
or a tax deferred annuity plan (403(b) plan) that is subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") retires at
normal retirement age (as defined by the Plan) or terminates
employment, provided that the Contract Owner purchases this Contract
in conjunction with a group unallocated flexible annuity contract
issued by the Company.
There is a 10% free withdrawal allowance available for partial
withdrawals taken during any Certificate Year or Contract Year, as applicable
after the first. Such withdrawals will be free of charge until the free
withdrawal amount is exceeded. Participants under IRA plans with Certificates
or Contracts, as applicable, issued prior to May 1, 1994, are entitled to a 20%
free withdrawal allowance after the first Certificate or Contract Year. Free
withdrawals from IRA plans are only available after the Participant has
attained age 59 1/2. The free withdrawal amount that is available will be
calculated as of the Contract Anniversary Date immediately preceding the
surrender date. The free withdrawal allowance does not apply to full
surrenders. For 403(b) plan Participants, partial and full withdrawals
(surrenders) may be subject to restrictions. (See "Section 403(b) Plans and
Arrangements," page __.)
The Company expects the Contingent Deferred Sales Charge under the
Contracts will be insufficient to cover distribution expenses. The difference
will be covered by the general assets of the Company which are attributable, in
part, to the mortality and expense risk charges assessed under the Contract.
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<PAGE> 33
PREMIUM TAX
Certain state and local governments impose premium taxes. These taxes
currently range from 0.5% to 5.0% depending upon jurisdiction. The Company, in
its sole discretion and in compliance with any applicable state law, will
determine the method used to recover premium tax expenses incurred. The
Company will deduct any applicable premium taxes from the Contract Value either
upon death, surrender, annuitization, or at the time Purchase Payments are made
to the Contract, but no earlier than when the Company has a tax liability under
state law.
ADMINISTRATIVE CHARGE
On all Contracts there will be a semiannual administrative charge of
$15 for each Participant or Owner for which an account is maintained. The
administrative charge will be deducted from the account in June and December of
each year. This charge will be prorated from the date of purchase to the next
date of assessment of charge. A prorated charge will also be assessed upon
voluntary or involuntary surrender of the Contract. This charge will not be
assessed after an annuity payout has begun. The administrative charge will be
deducted from the Contract Value by canceling Accumulation Units in each
investment alternative on a pro rata basis. The administrative charge will
offset the actual expenses of the Company in administering the Contract. The
charge is set at a level which does not exceed the average expected cost of the
administrative services to be provided while the Contract is in force.
MORTALITY AND EXPENSE RISK CHARGE
There is an insurance charge against the assets of each Separate
Account to cover the mortality and expense risks associated with guarantees
which the Company provides under these Variable Annuity Contracts. This
charge, on an annual basis, is 1.25% of the Separate Account value and is
deducted on each Valuation Date at the rate of 0.003425% for each day in the
Valuation Period.
The Company estimates that approximately 50% of the charge is for the
assumption of mortality risk, while the remainder is for the assumption of
expense risk. The mortality risk charge compensates the Company for
guaranteeing to provide Annuity Payments according to the terms of the Contract
regardless of how long the Annuitant lives and for the guaranteeing to provide
the death benefit if the Annuitant dies prior to the Maturity Date. The
expense risk charge compensates the Company for the risk that the charges under
the Contract, which cannot be increased during the duration of the Contract,
will be insufficient to cover actual costs.
If the amount deducted for these mortality and expense risks is not
sufficient to cover the mortality costs and expense shortfalls, the loss is
borne by the Company. If the deduction is more than sufficient, the excess
will be a profit to the Company. The Company expects to make a profit from the
insurance charge.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The amount of the Contingent Deferred Sales Charge, mortality and
expense risk charge, and the administrative charge assessed under the Contract
may be reduced or eliminated when sales of the Contract are made to individuals
or a group of individuals in such a manner that results in savings or reduction
of sales expenses. The entitlement to such a reduction in the Contingent
Deferred Sales Charges, mortality and expense risk charge or the administrative
charge will be based on the following: (1) the size and type of group to which
sales are to be made (the sales expenses for a larger group are generally less
than for a smaller group because of the ability to implement large numbers of
contracts with fewer sales contacts); (2) the total amount of Purchase Payments
to be received (per Contract sales expenses are likely to be less on larger
Purchase Payments than on smaller ones); and (3) any prior or existing
relationship with the Company (per contract sales expenses are likely to be
less when there is a prior or existing relationship because of the likelihood
of implementing the Contract with fewer sales contacts).
There may be other circumstances, of which the Company is not
presently aware, which could result in fewer sales expenses. In no event will
reduction or elimination of the Contingent Deferred Sales Charge, mortality and
expense risk charge or the administrative charge be permitted where such
reduction or elimination will be unfairly discriminatory to any person.
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<PAGE> 34
INVESTMENT ADVISORY FEES
The Travelers Investment Management Company ("TIMCO") furnishes
investment management and advisory services to Accounts GIS, TGIS, TSB and TAS
according to the terms of written agreements between TIMCO and each Managed
Separate Account. The fees are as follows:
<TABLE>
<CAPTION>
Account Annual Management Fee
------- ---------------------
<S> <C>
Account TAS 0.35% of average daily net assets
Account GIS 0.45% of average daily net assets
Account TGIS 0.3233% of average daily net assets
Account TSB 0.3233% of average daily net assets
</TABLE>
Travelers Asset Management International Corporation ("TAMIC")
furnishes investment management and advisory services to Accounts QB, MM and TB
according to the terms of written agreements between TAMIC and each Account.
The fees are as follows:
<TABLE>
<CAPTION>
Account Annual Management Fee
------- ---------------------
<S> <C>
Account TB 0.50% of the first $ 50,000,000, plus
0.40% of the next $100,000,000, plus
0.30% of the next $100,000,000, plus
0.25% of amounts over $250,000,000 (Aggregate Net Asset Value)
Accounts QB 0.3233% of average daily net assets
Account MM 0.3233% of average daily net assets
</TABLE>
For information on the Investment Advisory Fees of Fund U's underlying funds
refer to the Fee Table and to the prospectuses for those funds.
MARKET TIMING SERVICES FEES
In connection with the market timing services provided to Participants
in Accounts TGIS, TSB, TAS and TB, Copeland receives a fee equivalent on an
annual basis to 1.25% of the current value of the assets subject to timing.
The Company deducts this fee daily from the assets of the Market Timed
Accounts. Copeland also charges a $30 market timing application fee.
Participants may discontinue market timing services at any time and thereby
avoid any subsequent fees for those services by transferring to a non-timed
account. (See "Market Timing Services," page __.)
THE ANNUITY PERIOD
MATURITY DATE
Under a Group Contract, Annuity Payments for a particular Participant
will ordinarily begin on that Participant's Annuity Commencement Date as stated
in that Participant's Certificate. For Individual Contracts, it is the date
stated in the Contract. However, a later Annuity Commencement Date may be
elected. The Annuity Commencement Date must be before the individual's 70th
birthday, unless the Company consents to a later date. Federal income tax law
requires that certain minimum distribution payments be taken from pension,
profit-sharing, Section 403(b), Section 457 and IRA plans after the individual
reaches the age of 70 1/2. A number of payout options are available (see
"Payout Options," page __). No Contingent Deferred Sales Charge will be
assessed if an Annuity Option is elected, or an Income Option of at least three
years' duration (without right of withdrawal) is elected after the first
Certificate or Contract Year. Federal income tax law also requires that certain
minimum distribution payments be taken upon the death of the Contract Owner of
a nonqualified annuity contract and upon the death of the Annuitant of a
pension, profit-sharing, Section 403(b), Section 457, or IRA plan.
ALLOCATION OF ANNUITY PAYMENTS
When Annuity Payments begin, the accumulated value in each Investment
Alternative will be applied to provide an Annuity with the amount of Annuity
Payments varying with the investment experience of that same
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<PAGE> 35
Investment Alternative. If the Owner or Participant, as provided in the Plan,
wishes to have Annuity Payments which vary with the investment experience of a
different Investment Alternative, transfers among accounts must be made at
least 30 days before the date Annuity Payments begin. If the Owner or
Participant wishes to have a fixed dollar annuity whose payments do not vary,
the Company will exchange that Participant's Interest for a different contract
or provide such other settlement agreements as are appropriate to effect the
payment of such an Annuity.
Variable payout is not available for Contracts issued in the states of
New Jersey and Florida. Once Annuity Payments begin, these Contract Owners or
Participants, as provided in the Plan will automatically receive a fixed dollar
annuity whose payments do not vary with the investment experience of an
Investment Alternative.
ANNUITY UNIT VALUE
The dollar value of an Annuity Unit for each Investment Alternative
was established at $1.00 at inception. The value of an Annuity Unit as of any
Valuation Date is determined 14 days in advance in order to allow adequate time
for the required calculations and the mailing of annuity checks in advance of
their due dates. (If the date 14 days in advance is not a Valuation Date, the
calculation is made on the next following Valuation Date, which would generally
be 13 or 12 days in advance.)
Specifically, the Annuity Unit Value for an Investment Alternative as
of a Valuation Date is equal to (a) the value of the Annuity Unit on the
immediately preceding Valuation Date multiplied by (b) the net investment
factor for the Valuation Period ending on or next following 14 days prior to
the current Valuation Date, divided by (c) the assumed net investment factor
for the Valuation Period. (For example, the assumed net investment factor
based on an annual assumed net investment rate of 3.5% for a Valuation Period
of one day is 1.0000942 and, for a period of two days, is 1.0000942 x
1.0000942.)
The value of an Annuity Unit as of any date other than a Valuation
Date is equal to its value on the next succeeding Valuation Date.
The number of Annuity Units credited to the Contract is determined by
dividing the first monthly Annuity Payment attributable to each Investment
Alternative by the Investment Alternative's Annuity Unit Value as of the due
date of the first Annuity Payment. The number of Annuity Units remains fixed
during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT
The Contract contains tables used to determine the first monthly
Annuity Payment. The amount applied to effect an Annuity will be the Cash
Value of the Contract as of 14 days before the date Annuity Payments commence
less any applicable premium taxes not previously deducted.
The amount of the first monthly payment depends on the Annuity Option
elected (see "Automatic Option," page __) and the adjusted age of the
Participant. A formula for determining the adjusted age is contained in the
Contract. The tables are determined from the Progressive Annuity Table
assuming births in the year 1900 and an assumed annual net investment rate of
3.5%. The total first monthly Annuity Payment is determined by multiplying the
benefit per $1,000 of value shown in the tables of the Contract by the number
of thousands of dollars of value of the Contract applied to that Annuity
Option. The Company reserves the right to require proof of age before Annuity
Payments begin.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS
The dollar amount of the second and subsequent Annuity Payments is not
predetermined and may change from month to month based on the investment
experience of the applicable Investment Alternatives. The actual amounts of
these payments are determined by multiplying the number of Annuity Units
credited to the Contract in each Investment Alternative by the corresponding
Annuity Unit Value as of the date on which payment is due. The interest rate
assumed in the annuity tables would produce a level Annuity Unit Value and,
therefore, level Annuity Payments if the net investment rate remained constant
at the assumed rate. In fact, payments will vary up or down as the net
investment rate varies up or down from the assumed rate, and there can be no
assurance that a net investment rate will be as high as the assumed rate.
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<PAGE> 36
PAYOUT OPTIONS
ELECTION OF OPTIONS
On the Annuity Commencement Date, or other agreed-upon date, the
Company will pay an amount payable under the Contract in one lump sum, or in
accordance with the payment option selected by the Contract Owner. Election of
an Annuity Option or an Income Option must be made in writing in a form
satisfactory to the Company. Any election made during the lifetime of the Group
Contract Participant, or the Annuitant under an Individual Contract, must be
made by the Participant, as provided in the Plan or the Contract Owner, as
applicable. The terms of options elected may be restricted to meet the contract
qualification requirements of Section 401(a)(9) of the Internal Revenue Code.
If, at the death of a Participant, or Annuitant under an Individual Contract,
there is no election in effect for that Participant or Annuitant, the
beneficiary may elect an Annuity Option or Income Option in lieu of the Death
Benefit. The minimum amount that can be placed under an Annuity Option or
Income Option, as described below, is $2,000 unless the Company consents to a
lesser amount. If any monthly periodic payment due any payee is less than $20,
the Company reserves the right to make payments at less frequent intervals.
Annuity Options and Income Options may be elected on a monthly, quarterly,
semiannual or annual basis.
ANNUITY OPTIONS
AUTOMATIC OPTION--Unless the Company is directed otherwise by the
Owner, if the Participant is living and has a spouse and no election has been
made, the Company will, on that Participant's Annuity Commencement Date, pay to
the Participant the first of a series of Annuity Payments based on the life of
the Participant as the primary payee and the Participant's spouse in accordance
with Option 5 below.
Unless the Plan provides otherwise, if the Participant is living and
no election has been made and the Participant has no spouse, the Company will,
on the Annuity Commencement Date, pay to the Participant the first of a series
of Annuity Payments based on the life of the Participant, in accordance with
Option 2 with 120 monthly payments assured.
OPTION 1--LIFE ANNUITY--NO REFUND: The Company will make Annuity
Payments during the lifetime of the person on whose life the payments are
based, terminating with the last payment preceding death. While this option
offers the maximum periodic payment, THERE IS NO ASSURANCE OF A MINIMUM NUMBER
OF PAYMENTS NOR A PROVISION FOR A DEATH BENEFIT FOR BENEFICIARIES.
OPTION 2--LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED:
The Company will make monthly Annuity Payments during the lifetime of the
person on whose life payments are based, with the agreement that if, at the
death of that person, payments have been made for less than 120, 180 or 240
months, as elected, payments will be continued during the remainder of the
period to the beneficiary designated. The beneficiary may instead receive a
single sum settlement equal to the discounted value of the future payments with
the interest rate equivalent to the assumption originally used when the Annuity
began.
OPTION 3--UNIT REFUND LIFE ANNUITY: The Company will make Annuity
Payments during the lifetime of the person on whose life payments are based,
terminating with the last payment due before the death of that person, provided
that, at death, the beneficiary will receive in one sum the current dollar
value of the number of Annuity Units equal to (a) minus (b) (if that difference
is positive) where: (a) is the total amount applied under the option divided by
the Annuity Unit Value on the due date of the first Annuity Payment, and (b) is
the product of the number of the Annuity Units represented by each payment and
the number of payments made.
OPTION 4--JOINT AND LAST SURVIVOR LIFE ANNUITY--NO REFUND: The
Company will make Annuity Payments during the joint lifetime of the two persons
on whose lives payments are based, and during the lifetime of the survivor. No
further payments will be made following the death of the survivor. THERE IS NO
ASSURANCE OF A MINIMUM NUMBER OF PAYMENTS OR NOR A PROVISION FOR A DEATH
BENEFIT UPON THE SURVIVOR'S DEATH.
OPTION 5--JOINT AND LAST SURVIVOR LIFE ANNUITY--ANNUITY REDUCES ON
DEATH OF PRIMARY PAYEE: The Company will make Annuity Payments during the
lifetime of the two persons on whose lives payments are based. One of the two
persons will be designated as the primary payee. The other will be designated
as the secondary payee. On the death of the secondary payee, if survived by
the primary payee, the Company will continue to make monthly Annuity Payments
to the primary payee in the same amount that would have been payable during the
joint lifetime of
33
<PAGE> 37
the two persons. On the death of the primary payee, if survived by the
secondary payee, the Company will continue to make Annuity Payments to the
secondary payee in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee. No further payments will be
made following the death of the survivor.
OPTION 6--OTHER ANNUITY OPTIONS: The Company will make any other
arrangements for Annuity Payments as may be mutually agreed upon.
INCOME OPTIONS
OPTION 1--PAYMENTS OF A FIXED AMOUNT: The Company will make equal
payments of the amount elected until the Cash Value applied under this option
has been exhausted. The final payment will include any amount insufficient to
make another full payment.
OPTION 2--PAYMENTS FOR A FIXED PERIOD: The Company will make payments
for the number of years selected. The amount of each payment will be equal to
the remaining Cash Value applied under this option divided by the number of
remaining payments.
OPTION 3--INVESTMENT INCOME: The Company will make payments for the
period agreed on. The amount payable will be equal to the excess, if any, of
the Cash Value under this option over the amount applied under this option. No
payment will be made if the Cash Value is less than the amount applied, and it
is possible that no payments would be made for a period of time. Payments
under this option are not considered to be Annuity Payments and are taxable in
full as ordinary income. (See "Federal Tax Considerations," page __.) This
option will generally be inappropriate under federal tax law for periods that
exceed the Participant's attainment of age 70 1/2.
The Cash Value used to determine the amount of any Income Payment will
be calculated as of 14 days before the date an Income Payment is due and will
be determined on the same basis as the Cash Value of the Contract, including
the deduction for mortality and expense risks.
Income Options differ from Annuity Options in that the amount of the
payments made under Income Options are unrelated to the length of life of any
person. Although the Company continues to deduct the charge for mortality and
expense risks, it assumes no mortality risks for amounts applied under any
Income Option. Moreover, except with respect to lifetime payments of
investment income under Income Option 3, payments are unrelated to the actual
life span of any person. Thus, the Participant may outlive the payment period.
While Income Options do not directly involve mortality risks for the
Company, an individual may elect to apply the remaining Cash Value to provide
an Annuity at the guaranteed rates even though Income Payments have been
received under an Income Option. Before an Owner or Participant makes any
Income Option election, he or she should consult a tax adviser as to any
adverse tax consequences the election might have.
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<PAGE> 38
MISCELLANEOUS
TERMINATION
No Purchase Payments after the first are required to keep the Contract
in effect. However, under Group Contract, if the Cash Value in a Participant's
Individual Account is less than $500 and no premium has been applied to the
Participant's Individual Account for at least three years, the Company reserves
the right to terminate the Participant's Individual Account and move the Cash
Value of that Participant's Individual Account to the Owner's Account. If the
Plan does not allow for transfer to the Owner's Account, the Company will pay
the Cash Value, adjusted for any applicable premium tax, to the Owner, or to
that Participant at the direction of the Owner.
Additionally, the Company reserves the right to terminate the Contract
on any Valuation Date if there is no Cash Value in any Participant's Individual
Account and the Cash Value of the Owner's Account, if any, is less than $500
and no premium has been paid for at least three years. If the Group Contract
is terminated, the Company will pay to the Owner the Cash Value of the Owner's
Account, if any (without deduction of any Contingent Deferred Sales Charge, but
after deduction of any applicable administrative charge or premium tax).
Under an Individual Contract, the Company reserves the right to
terminate the Contract on any Valuation Date if the Cash Value as of that date
is less than $500 and no payments have been made for three years. If the
Contract is terminated, the Company will pay to the Contract Owner the Cash
Surrender Value, if any, (except in those jurisdictions which mandate the Cash
Value), less any applicable administrative charge or premium tax.
Termination will not occur until 31 days after the Company has mailed
notice of termination to the Owner or the Participant, as provided in the Plan,
at the last known address and to any assignee of record.
BENEFIT IN THE EVENT OF TERMINATION OF A PARTICIPANT, THE PLAN OR THE CONTRACT
Under a Group Contract in the event that, prior to the Annuity
Commencement Date, the Participant terminates participation in the Plan, the
Plan is terminated, or the Contract is terminated, the Owner or the
Participant, as provided in the Plan with respect to that Participant's
Interest, may elect:
(a) if the Participant is at least 50 years of age, to have that
Participant's Interest applied to provide an Annuity or Income
Payment;
(b) if the Contract is continued, to have that Participant's Interest
applied to continue as a paid-up deferred annuity for that
Participant;
(c) to have the Owner or the Participant, as provided in the Plan,
receive that Participant's Interest in cash; or
(d) if the Participant becomes a Participant under another group
contract of the same type which is in force with the Company, to
transfer that Participant's Interest to that group contract.
If the Contract is continued, any Cash Value to which a terminating
Participant is not entitled under the Plan will be moved to the Owner's
Account. If the Contract is terminated, the Owner will receive the Cash Value
of the Owner's Account.
AUTOMATIC BENEFIT -- In the event of termination, unless otherwise
provided in the Plan, a Participant's Interest will (1) if the Contract is
continued, be applied to continue as a paid-up deferred annuity in accordance
with option (b), or (2) if the Contract is terminated, be paid in cash to the
Owner or that Participant as provided in the Plan, in accordance with option
(c).
ANNUITY PAYMENTS -- Termination of this Contract or the Plan will not
affect payments being made under any Annuity Option which has commenced prior
to the date of termination.
DISTRIBUTION FROM ONE ACCOUNT TO ANOTHER ACCOUNT
Under a Group Contract, the Owner may, as provided for in the Plan,
distribute the Cash Value from the Owner's Account to one or more Individual
Accounts. No distribution will be allowed between Individual Accounts.
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<PAGE> 39
The Owner may, as required by and provided for in the Plan, move the
Cash Value from any or all Individual Accounts to the Owner's Account without a
charge.
REQUIRED REPORTS
As often as required by law, but at least once in each Contract Year
before the due date of the first Annuity Payment, the Company will furnish a
report which will show the number of Accumulation Units credited to the
Contract in each Investment Alternative and the corresponding Accumulation Unit
Value as of the date of the report. The Company will keep all records required
under federal or state laws.
RIGHT TO RETURN
For Group Contracts issued in the state of New York, during the 20
days following the Participant's receipt of a Certificate, the Participant may
return the Certificate to the Company, by mail or in person, if for any reason
the Participant has changed his or her mind. Upon return of the Certificate,
the Company will refund to the Owner the sum of all Purchase Payments made
under the Contract, and will make the Separate Accounts whole if the
accumulation value has declined.
For all Individual Contracts, the Contract may be returned for a full
refund of the Contract's Cash Value (including charges) within ten days after
the delivery of the Contract to the Contract Owner, unless state law requires a
longer period. The Contract Owner bears the investment risk during the
free-look period; therefore, the Cash Value returned may be greater or less
than the Purchase Payment made under the Contract. However, if applicable state
law so requires, or if the Contract was purchased in an Individual Retirement
Annuity, the Purchase Payment will be returned in full. All Cash Values will be
determined as of the Valuation Date next following the Company's receipt of the
Contract Owner's written request for refund.
The right to return is not available to participants of the Texas
Optional Retirement Program.
CHANGE OF CONTRACT
For Group Contracts, the Company may, at any time, make any changes,
including retroactive changes, in the Contract to the extent that the change is
required to meet the requirements of any federal law or regulation to which the
Company is subject.
Except as provided in the paragraph immediately above, no change may
be made in the Contract before the fifth anniversary of the Contract Date, and
in no event will changes be made with respect to payments being made by the
Company under any Annuity Option which has commenced prior to the date of
change. On and after the fifth anniversary of the Contract Date, the Company
reserves the right to change the Termination Amount (see "Termination," page
__), the calculation of the net investment rate and the Unit Values, and the
Annuity Tables. Any change in the Annuity Tables will be applicable only to
premiums received under the Contract after the change. The ability to make
such change lessens the value of mortality and expense guarantees. Other
changes (including changes to the administrative charge) may be applicable to
all Owners' Accounts and Individual Accounts under the Contract, to only the
Owners' Accounts and Individual Accounts established after the change, or to
only premiums received under the Contract after the date of change as the
Company declares at the time of change. The Company will give notice to the
Owner at least 90 days before the date the change is to take effect.
ASSIGNMENT
The Participant may not assign his or her rights under a Group
Contract. The Owner may assign his or her rights under an Individual or a Group
Contract if allowed by the Plan.
SUSPENSION OF PAYMENTS
If a national stock exchange is closed (except for holidays or
weekends), or trading is restricted due to an existing emergency as defined by
the Securities and Exchange Commission so that disposal of the Separate
Account's investments or determination of its net asset value is not reasonably
practicable, or the Commission has ordered that the right of redemption
(surrender) be suspended for the protection of Contract Owners, the Company may
postpone all procedures (including making Annuity Payments) which require
valuation of Separate Accounts until the stock exchange is reopened and trading
is no longer restricted.
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<PAGE> 40
VOTING RIGHTS
The Contract Owner or Participant, as applicable, has certain voting rights in
the Investment Alternatives. The number of votes which an Owner or
Participant, as provided in the Plan, may cast in the accumulation period is
equal to the number of Accumulation Units credited to the account under the
Contract. During the annuity period, the group Participant or the Individual
Contract Owner may cast the number of votes equal to (i) the reserve related to
the Contract divided by (ii) the value of an Accumulation Unit. During the
annuity period, the voting rights of a Participant or, under an Individual
Contract, an Annuitant, will decline as the reserve for the Contract declines.
During the accumulation period, Participants covered by a Contract
issued in connection with an H.R. 10 Plan will have the right to instruct the
Contract Owner with respect to all votes attributable to the Contract, and
Participants covered by a Contract issued in connection with a governmental,
tax exempt or corporate pension plan will have the right to instruct the Owner
with respect to votes attributable to payments made by the Participant, or,
under an Individual Contract, the Annuitant, and with respect to any additional
votes which are authorized by the terms of the Plan, if any. All other votes
entitled to be cast during the accumulation period may be cast by the Contract
Owner in its sole discretion. During the annuity period, every Participant
will have the right to instruct the Contract Owner with respect to all votes
attributable to the amount of assets established in the account to meet the
annuity obligations related to such Participant. Each Participant having the
right to instruct a Contract Owner with respect to any votes will receive a
statement of the number of votes, including fractional votes, attributable to
his or her account, and stating his or her right to instruct the Contract Owner
how such votes are to be cast.
Each Group Contract Owner will cast the votes with respect to which
instructions from Participants have been received in accordance with such
instructions. Votes for which Participants were entitled to instruct the
Contract Owner, but for which the Owner has received no instructions, will be
cast by the Owner for or against each proposal to be voted on only in the same
proportion as votes for which instructions have been received.
Upon the death of the person authorized to vote under the Contract,
all voting rights will vest in the beneficiary of the Contract, except in the
case of nonqualified Individual Contracts, where the surviving spouse may
succeed to the ownership.
FUND U. In accordance with its view of present applicable law, the Company will
vote shares of the Underlying Funds at regular and special meetings of the
shareholders of the funds in accordance with instructions received from persons
having a voting interest in Fund U. The Company will vote shares for which it
has not received instructions in the same proportion as it votes shares for
which it has received instructions. However, if the 1940 Act or any regulation
thereunder should be amended, or if the present interpretation thereof should
change, and as a result the Company determines that it is permitted to vote
shares of the mutual funds in its own right, it may elect to do so.
The number of shares which a person has a right to vote will be
determined as of the date concurrent with the date established by the
respective mutual fund for determining shareholders eligible to vote at the
meeting of the fund, and voting instructions will be solicited by written
communication before the meeting in accordance with the procedures established
by the mutual fund.
Each person having a voting interest in Fund U will receive periodic
reports relating to the fund(s) in which he or she has an interest, proxy
material and a form with which to give such instructions with respect to the
proportion of the fund shares held in Fund U corresponding to his or her
interest in Fund U.
ACCOUNTS GIS, QB, MM, TGIS, TSB, TAS AND TB. Contract Owners participating in
Accounts GIS, QB, MM, TGIS, TSB, TAS or TB will be entitled to vote at their
meetings on (i) any change in the fundamental investment policies of or other
policies related to the accounts requiring the Owners' approval; (ii) amendment
of the investment advisory agreements; (iii) election of the members of the
Board of Managers of the accounts; (iv) ratification of the selection of an
independent public accountant for the accounts; (v) any other matters which, in
the future, under the 1940 Act require the Owners' approval; and (vi) any other
business which may properly come before the meeting.
The number of votes which each Contract Owner or a Participant may
cast, including fractional votes, shall be determined as of the date to be
chosen by the Board of Managers within 75 days of the date of the meeting, and
at least 20 days' written notice of the meeting will be given.
37
<PAGE> 41
Votes for which Participants under a Group Contract were entitled to
instruct the Owner, but for which the Owner has received no instructions, will
be cast by the Owner for or against each proposal to be voted on only in the
same proportion as votes for which instructions have been received.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contract in all jurisdictions where
the Company is licensed to do business, except the Bahamas. The Contract may
be purchased from agents who are licensed by state insurance authorities to
sell variable annuity contracts issued by the Company, and who are also
registered representatives of broker-dealers which have Selling Agreements with
Tower Square Securities, Inc. ("Tower Square"). Tower Square, whose principal
business address is One Tower Square, Hartford, Connecticut, serves as the
principal underwriter for the variable annuity contracts described herein. It
is anticipated, however, that an affiliated broker-dealer may become the
principal underwriter for the Contracts during 1996. The offering is
continuous. Tower Square is a registered broker-dealer with the Securities
and Exchange Commission under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. ("NASD"). Tower
Square is an affiliate of the Company and an indirect wholly owned subsidiary
of Travelers Group Inc., and serves as principal underwriter pursuant to a
Distribution and Management Agreement to which the Separate Accounts, the
Company and Tower Square are parties. No amounts have been or will be retained
by Tower Square for acting as principal underwriter for the Contracts.
Agents will be compensated for sales of the Contracts on a commission
and service fee basis. The compensation paid to sales agents will not exceed
7.0% of the payments made under the Contract. In addition, certain production,
persistency and managerial bonuses may be paid.
From time to time the Company may pay or permit other promotional
incentives, in cash, credit or other compensation.
STATE REGULATION
The Company is subject to the laws of the state of Connecticut
governing insurance companies and to regulation by the Insurance Commissioner
of the state of Connecticut. An annual statement in a prescribed form must be
filed with that Commissioner on or before March 1 in each year covering the
operations of the Company for the preceding year and its financial condition on
December 31 of such year. Its books and assets are subject to review or
examination by the Commissioner or his agents at all times, and a full
examination of its operations is conducted by the National Association of
Insurance Commissioners ("NAIC") at least once in every four years.
In addition, the Company is subject to the insurance laws and
regulations of the other states in which it is licensed to operate. Generally,
the insurance departments of the states apply the laws of the jurisdiction of
domicile in determining the field of permissible investments.
LEGAL PROCEEDINGS AND OPINIONS
There are no pending material legal proceedings affecting the Separate
Accounts.
Legal matters in connection with federal laws and regulations
affecting the issue and sale of the variable annuity Contract described in this
Prospectus and the organization of the Company, its authority to issue variable
annuity contracts under Connecticut law and the validity of the forms of the
variable annuity contracts under Connecticut law have been passed on by the
General Counsel of the Life and Annuities Division of the Company.
38
<PAGE> 42
THE INSURANCE COMPANY AND SEPARATE ACCOUNTS
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company") is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. It is licensed to conduct a life insurance
business in all states of the United States, the District of Columbia, Puerto
Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company
is an indirect wholly owned subsidiary of Travelers Group Inc., a financial
services holding company. The Company's Home Office is located at One Tower
Square, Hartford, Connecticut 06183.
THE SEPARATE ACCOUNTS
Two different types of Separate Accounts serve as the funding vehicles
for the Contracts described in this prospectus. The first type, Fund U, is a
unit investment trust registered with the SEC under the Investment Company Act
of 1940 ("1940 Act"), which means that Fund U's assets are invested exclusively
in the shares of the Underlying Funds. The second type of Separate Account
available under the Contract (the "Managed Separate Accounts" - Accounts GIS,
QB, MM, TGIS, TSB, TAS and TB) are diversified, open-end management investment
companies registered with the SEC under the 1940 Act. The assets of the
Managed Separate Accounts are invested directly in securities such as stocks,
bonds or money market instruments which are compatible with the stated
investment policies of each Separate Account. Each of the Separate Accounts
available in connection with the Contract has different investment objectives
and fundamental investment policies, as described beginning on page ___.
The Separate Accounts were established on the following dates: Fund U
- -- May 16, 1983; Account GIS -- September 22, 1967; Account QB --July 29, 1974;
Account MM -- December 29, 1981; Accounts TGIS and TSB -- October 30, 1986; and
Accounts TAS and TB -- January 2, 1987.
Under Connecticut law, the assets of the Separate Accounts will be
held for the exclusive benefit of its owners. Income, gains and losses,
whether or not realized, for assets allocated to the Separate Accounts, are in
accordance with the applicable annuity contracts, credited to or charged
against the Separate Accounts without regard to other income, gains or losses
of the Company. The assets in the Separate Accounts are not chargeable with
liabilities arising out of any other business which the Company may conduct.
The obligations arising under the Variable Annuity contracts are obligations of
the Company.
SUBSTITUTION OF INVESTMENTS
If any of the Separate Accounts or Underlying Funds become
unavailable, or in the judgment of the Company become inappropriate for the
purposes of the Contract, the Company may substitute another investment
alternative without consent of Contract Owners. Substitution may be made with
respect to both existing investments and the investment of future Purchase
Payments. However, no such substitution will be made without notice to
Contract Owners and without prior approval of the SEC, to the extent required
by the 1940 Act, or other applicable law.
39
<PAGE> 43
INVESTMENT ADVISERS
The Investment Alternatives receive investment management and advisory
services from the following investment professionals:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT ALTERNATIVE INVESTMENT ADVISER SUB-ADVISER
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund The Travelers Investment Management Janus Capital Corporation
Company (TIMCO)
- ---------------------------------------------------------------------------------------------------------------------
High Yield Bond Trust Travelers Asset Management International
Corporation (TAMIC)
- ---------------------------------------------------------------------------------------------------------------------
Managed Assets Trust TAMIC TIMCO
- ---------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Portfolio TAMIC
- ---------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio Smith Barney Mutual Funds Management Inc.
- ---------------------------------------------------------------------------------------------------------------------
Utilities Portfolio Smith Barney Mutual Funds Management Inc.
- ---------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund Templeton Investment Counsel, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund Templeton Investment Counsel, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Templeton Bond Fund Templeton Global Bond Managers
- ---------------------------------------------------------------------------------------------------------------------
Fidelity's High Income Portfolio Fidelity Management & Research Company
- ---------------------------------------------------------------------------------------------------------------------
Fidelity's Equity-Income Portfolio Fidelity Management & Research Company
- ---------------------------------------------------------------------------------------------------------------------
Fidelity's Growth Portfolio Fidelity Management & Research Company
- ---------------------------------------------------------------------------------------------------------------------
Fidelity's Asset Manager Portfolio Fidelity Management & Research Company
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund Wells Fargo Nikko Investment Advisors
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey International American Odyssey Funds Management, Inc. Bank of Ireland Asset
Equity Fund Management (U.S.) Limited
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging American Odyssey Funds Management, Inc. Wilke/Thompson Capital
Opportunities Fund Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund American Odyssey Funds Management, Inc. Equinox Capital Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term American Odyssey Funds Management, Inc. Western Asset Management Company
Bond Fund and WLO Global Management
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate- American Odyssey Funds Management, Inc. TAMIC
Term Bond Fund
- ---------------------------------------------------------------------------------------------------------------------
American Odyssey Short-Term American Odyssey Funds Management, Inc. Smith Graham & Co. Asset Managers,
Bond Fund L.P.
- ---------------------------------------------------------------------------------------------------------------------
Smith Barney Income and Growth Smith Barney Mutual Funds Management Inc.
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Alliance Growth Portfolio Smith Barney Mutual Funds Management Inc. Alliance Capital Management L.P.
- ---------------------------------------------------------------------------------------------------------------------
Smith Barney International Smith Barney Mutual Funds Management Inc.
Equity Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio Smith Barney Mutual Funds Management Inc. Putnam Investment Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio Smith Barney Mutual Funds Management Inc.
- ---------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio Smith Barney Mutual Funds Management Inc. Massachusetts Financial Services
Company
- ---------------------------------------------------------------------------------------------------------------------
G.T. Global Strategic Income Portfolio Smith Barney Mutual Funds Management Inc. G.T. Capital Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 44
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT ALTERNATIVE INVESTMENT ADVISER SUB-ADVISER
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth and Income Account TIMCO
- ---------------------------------------------------------------------------------------------------------------------
Quality Bond Account TAMIC
- ---------------------------------------------------------------------------------------------------------------------
Money Market Account TAMIC
- ---------------------------------------------------------------------------------------------------------------------
Timed Growth and Income Stock Account TIMCO
- ---------------------------------------------------------------------------------------------------------------------
Timed Short-Term Bond Account TIMCO
- ---------------------------------------------------------------------------------------------------------------------
Timed Aggressive Stock Account TIMCO
- ---------------------------------------------------------------------------------------------------------------------
Timed Bond Account TAMIC
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
MANAGED SEPARATE ACCOUNTS: MANAGEMENT AND INVESTMENT ADVISORY SERVICES
The investments and administration of each Managed Separate Account
are under the direction of a Board of Managers. Subject to the authority of
each Board of Managers, TIMCO and TAMIC furnish investment management and
advisory services as indicated in the Investment Adviser Chart. Additionally,
the Board of Managers for each Managed Separate Account annually selects an
independent public accountant, reviews the terms of the management and
investment advisory agreements, recommends any changes in the fundamental
investment policies (and submits any such changes to Contract Owners at the
annual meeting), and takes any other actions necessary in connection with the
operation and management of the Managed Separate Accounts.
The Travelers Investment Management Company ("TIMCO") is a registered
investment adviser that has provided investment advisory services since its
incorporation in 1967. Its principal offices are located at One Tower Square,
Hartford, Connecticut, and it is a wholly owned subsidiary of Smith Barney
Holdings Inc., which is a wholly owned subsidiary of Travelers Group Inc., a
financial services holding company. TIMCO also acts as investment adviser or
sub-adviser for other investment companies used to fund variable products, as
well as for individual and pooled pension and profit-sharing accounts, and for
affiliated companies of The Travelers Insurance Company.
Travelers Asset Management International Corporation ("TAMIC") is a
registered investment adviser that has provided investment advisory services
since its incorporation in 1978. Its principal offices are located at One
Tower Square, Hartford, Connecticut, and it is an indirect wholly owned
subsidiary of Travelers Group Inc., a financial services holding company.
TAMIC also acts as investment adviser or sub-adviser for other investment
companies used to fund variable products, as well as for individual and pooled
pension and profit-sharing accounts, and for domestic and offshore insurance
companies affiliated with The Travelers Insurance Company.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for the Managed Separate Accounts and the Underlying
Funds of Fund U. The yield and effective yield may be advertised for Account
MM, a money market fund. Yield is a measure of the net dividend and interest
income earned over a specific seven-day period, expressed as a percentage of
the offering price of Account MM's Accumulation Units. Yield is an annualized
figure, which means that it is assumed that Account MM generates the same level
of net income over a 52-week period. Effective yield is calculated similarly
but includes the effect of assumed compounding calculated under rules
prescribed by the Securities and Exchange Commission. The effective yield will
be slightly higher than yield due to this compounding effect. Neither yield
quotation reflects a deduction for the Contingent Deferred Sales Charge, which
if included, would reduce yield and effective yield.
The Company may also advertise the standardized average annual total
returns of Accounts GIS, QB, MM, TGIS, TSB, TAS, TB and Fund U, calculated in a
manner prescribed by the Securities and Exchange Commission, as well as the
non-standardized total return, as described below. Standardized average annual
total return will show the percentage rate of return of a hypothetical initial
investment of $1,000 for the most recent one-, five- and ten-year
41
<PAGE> 45
periods, or since an Underlying Fund's inception date. This standardized
calculation reflects the deduction of all applicable charges made to the
Contract, except for premium taxes which may be imposed by certain states. The
Non-standardized total returns differ from the standardized average annual
total returns, in that they do not reflect the deduction of any applicable
Contingent Deferred Sales Charge or the $15 semiannual contract administrative
charge, which would decrease the level of performance shown.
For Underlying Funds that were in existence prior to the date they
became available under the Contract, the standardized average annual total
return and non-standardized total return quotations will show the investment
performance that such Underlying Funds would have achieved (reduced by the
applicable charges) had they been available under the Contract for the period
quoted.
Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. Advertisements may include data
comparing performance to well-known indices of market performance as discussed
in the Statement of Additional Information. Advertisements may also include
published editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of
separate accounts and mutual funds.
The yield and total return quotations are based upon historical
earnings and are not necessarily representative of future performance. The
Contract Value at redemption may be more or less than original cost. The
Statement of Additional Information contains more detailed information about
these performance calculations, including actual examples of each type of
performance advertised.
FEDERAL TAX CONSIDERATIONS
GENERAL
The Company is taxed as a life insurance company under Subchapter L of
the Internal Revenue Code (the "Code"). The Separate Accounts that form the
Investment Alternatives described herein are treated as part of the total
operations of the Company and are not taxed separately. Investment income and
gains of a Separate Account that are credited to a variable annuity contract
incur no current federal income tax. Generally, amounts credited to a contract
are not taxable until received by the Contract Owner, participant or
beneficiary, either in the form of Annuity Payments or other distributions.
Tax consequences and limits are described further below for each annuity
program.
INVESTOR CONTROL
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contract. In those circumstances,
income and gains from the separate account assets would be includable in the
variable contract owner's gross income.
The IRS has stated in published rulings that a variable contract owner
will be considered the owner of separate account assets if the contract owner
possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. The U.S. Treasury Department has
also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated
asset account may cause the investor (i.e., the Contract Owner), rather than
the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets." As of the date of this prospectus, no such guidance has
been issued.
The ownership rights under the Contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it
determined that the owners were not owners of separate account assets. For
example, a Contract Owner or Participant of this Contract has additional
flexibility in allocating payments and cash values. These differences could
result in the Contract Owner being treated as the owner of the assets of Fund
U. In addition, the Company does not know what standard will be set forth in
the regulations or rulings which the Treasury is expected to issue, nor does
the Company know if such guidance will be issued. The Company therefore
reserves the
42
<PAGE> 46
right to modify the Contract as necessary to attempt to prevent the Contract
Owner from being considered the owner of a pro rata share of the assets of Fund
U.
The remaining tax discussion assumes that the Contract qualifies as an
annuity contract for federal income tax purposes.
SECTION 403(b) PLANS AND ARRANGEMENTS
Purchase Payments for tax-deferred annuity contracts may be made by an
employer for employees under annuity plans adopted by public educational
organizations and certain organizations which are tax exempt under Section
501(c)(3) of the Code. Within statutory limits, these payments are not
currently includable in the gross income of the participants. Increases in the
value of the Contract attributable to these Purchase Payments are similarly not
subject to current taxation. The income in the Contract is taxable as ordinary
income whenever distributed.
An additional tax of 10% will apply to any taxable distribution
received by the participant before the age of 59 1/2, except when due to death,
disability, or as part of a series of payments for life or life expectancy, or
made after the age of 55 with separation from service. There are other
statutory exceptions.
Amounts attributable to salary reductions and income thereon may not
be withdrawn prior to attaining the age of 59 1/2, separation from service,
death, total and permanent disability, or in the case of hardship as defined by
federal tax law and regulations. Hardship withdrawals are available only to the
extent of the salary reduction contributions and not from the income
attributable to such contributions. These restrictions do not apply to assets
held generally as of December 31, 1988.
Distribution must begin by April 1st of the calendar year following
the calendar year in which the participant attains the age of 70 1/2. Certain
other mandatory distribution rules apply at the death of the participant.
Eligible rollover distributions, including most partial or full
redemptions or "term-for-years" distributions of less than 10 years, are
eligible for direct rollover to another 403(b) contract or to an Individual
Retirement Arrangement (IRA) without federal income tax withholding.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing trust described in Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code,
Purchase Payments made by an employer are not currently taxable to the
participant and increases in the value of a contract are not subject to
taxation until received by a participant or beneficiary.
Distribution must begin by April 1st of the calendar year following
the calendar year in which the participant attains the age of 70 1/2. Certain
other mandatory distribution rules apply at the death of the participant.
Distributions in the form of Annuity or Income Payments are taxable to
the participant or beneficiary as ordinary income in the year of receipt. Any
distribution that is considered the participant's "investment in the contract"
is treated as a return of capital and is not taxable. Payments under Income
Option 3 are taxable in full. Certain lump-sum distributions described in
Section 402 of the Code may be eligible for special ten-year forward averaging
treatment for individuals born before January 1, 1936. All individuals may be
eligible for favorable five-year forward averaging of lump-sum distributions.
Certain eligible rollover distributions including most partial and full
surrenders or term-for-years distributions of less than 10 years are eligible
for direct rollover to an eligible retirement plan or to an IRA without federal
income tax withholding.
An additional tax of 10% will apply to any taxable distribution
received by the participant before the age of 59 1/2, except by reason of
death, disability or as part of a series of payments for life or life
expectancy, or at early retirement at or after the age of 55. There are other
statutory exceptions.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year (and not exceeding $2,000
per individual), an individual may make deductible contributions to an
individual retirement annuity (IRA). There are certain limits on the
deductible amount based on the adjusted gross income of the individual and
spouse and based on their participation in a retirement plan. If an individual
is married and the spouse is not employed, the individual may establish IRAs
for the individual and spouse. Purchase Payments may then be made annually
into IRAs for both spouses in the maximum amount of 100% of earned income up to
a combined limit of $2,250.
43
<PAGE> 47
Partial or full distributions made prior to the age of 59 1/2, except
in the case of death, disability or distribution for life or life expectancy,
will incur a penalty tax of 10% plus ordinary income tax treatment of the
taxable amount received. Distributions after the age of 59 1/2 are treated as
ordinary income. Amounts contributed after 1986 on a non-deductible basis are
not includable in income when distributed. Distributions must begin by April
1st of the calendar year following the calendar year in which the individual
attains the age of 70 1/2. The individual must maintain personal and tax
return records of any non-deductible contributions and distributions.
Section 408(k) of the Code provides for the purchase of a Simplified
Employee Pension ("SEP") plan. A SEP is funded through an IRA with an annual
employer contribution limit of 15% of compensation up to $30,000 for each
participant.
SECTION 457 PLANS
Section 457 of the Code allows employees and independent contractors
of state and local governments and tax-exempt organizations to defer a portion
of their salaries or compensation to retirement years without paying current
income tax on either the deferrals or the earnings on the deferrals.
The Owner of contracts issued under Section 457 plans is the employer
or a contractor of the participant and amounts may not be made available to
participants (or beneficiaries) until separation from service, retirement or
death or an unforeseeable emergency as determined by Treasury Regulations. The
proceeds of annuity contracts purchased by Section 457 plans are subject to the
claims of general creditors of the employer or contractor.
Distributions must begin generally by April 1st of the calendar year
following the calendar year in which the participant attains the age of 70 1/2.
Certain other mandatory distribution rules apply upon the death of the
Participant.
All distributions from plans that meet the requirements of Section 457
of the Code are taxable as ordinary income in the year paid or made available
to the Participant or beneficiary.
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
Under the Employee Retirement Income Security Act of 1974 ("ERISA"),
as amended, certain special provisions may apply to certain tax-qualified
Contracts if the Owner requests that the Contract be issued to conform to ERISA
or if the Company has notice that the Contract was issued pursuant to a plan
that is subject to ERISA.
ERISA requires that certain Annuity Options, withdrawals or other
payments and any application for a loan secured by the Contract may not be made
until the Participant has filed a Qualified Election with the Plan
administrator. Under certain Plans, ERISA also requires that a designation of
a beneficiary other than the Participant's spouse be invalid unless the
Participant has filed a Qualified Election.
A Qualified Election must include either the written consent of the
Participant's spouse, notarized or witnessed by an authorized Plan
representative, or the Participant's certification that there is no spouse or
that the spouse cannot be located.
The Company intends to administer all contracts to which ERISA applies
in a manner consistent with the direction of the Plan administrator regarding
the provisions of the Plan, in accordance with applicable law. Because these
requirements differ according to the Plan, a person contemplating the purchase
of an annuity contract should consider the provisions of the Plan.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient
will be subject to federal income tax withholding, generally pursuant to
Section 3405 of the Code. The application of this provision is summarized
below.
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR
ARRANGEMENTS OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions
that are eligible for rollover to an IRA or to another retirement
plan but that are not directly rolled over. A distribution made
directly to a participant or beneficiary may avoid this result if:
44
<PAGE> 48
(a) a periodic settlement distribution is elected based upon a
life or life expectancy calculation, or
(b) a complete term-for-years settlement distribution is elected
for a period of ten years or more, payable at least annually,
or
(c) a minimum required distribution as defined under the tax law
is taken after the attainment of the age of 70 1/2 or as
otherwise required by law.
A distribution including a rollover that is not a direct rollover
will require the 20% withholding, and a 10% additional tax penalty
may apply to any amount not added back in the rollover. The 20%
withholding may be recovered when the participant or beneficiary
files a personal income tax return for the year if a rollover was
completed within 60 days of receipt of the funds, except to the
extent that the participant or spousal beneficiary is otherwise
underwithheld or short on estimated taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1
above, the portion of a non-periodic distribution which
constitutes taxable income will be subject to federal income tax
withholding, to the extent such aggregate distributions exceed
$200 for the year, unless the recipient elects not to have taxes
withheld. If an election out is not provided, 10% of the taxable
distribution will be withheld as federal income tax. Election
forms will be provided at the time distributions are requested.
This form of withholding applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD
GREATER THAN ONE YEAR)
The portion of a periodic distribution which constitutes taxable
income will be subject to federal income tax withholding under the
wage withholding tables as if the recipient were married claiming
three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by
providing a completed election form. Election forms will be
provided at the time distributions are requested. This form of
withholding applies to all annuity programs. As of January 1,
1994, a recipient receiving periodic payments (e.g., monthly or
annual payments under an Annuity Option) which total $13,700 or
less per year, will generally be exempt from the withholding
requirements.
Recipients who elect not to have withholding made are liable for
payment of federal income tax on the taxable portion of the distribution. All
recipients may also be subject to penalties under the estimated tax payment
rules if withholding and estimated tax payments are not sufficient.
Recipients who do not provide a social security number or other
taxpayer identification number will not be permitted to elect out of
withholding. Additionally, United States citizens residing outside of the
country, or U.S. legal residents temporarily residing outside the country, are
not permitted to elect out of withholding.
TAX ADVICE
Because of the complexity of the law and the fact that the tax results
will vary according to the factual status of the individual involved, tax
advice may be needed by a person contemplating purchase of an annuity contract
and by an Owner, participant or beneficiary who may make elections under a
Contract. It should be understood that the foregoing description of the federal
income tax consequences under these Contracts is not exhaustive and that
special rules are provided with respect to situations not discussed here. It
should be understood that if a tax-qualified plan loses its exempt status,
employees could lose some of the tax benefits described. For further
information regarding federal income taxes and any applicable state income
taxes, a qualified tax adviser should be consulted.
45
<PAGE> 49
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT GIS)
INVESTMENT OBJECTIVE
The basic investment objective of Account GIS is to seek long-term
accumulation of principal through capital appreciation and retention of net
investment income. In seeking its objective, short-term gains may also be
realized. The assets of Account GIS generally will be fully invested in a
portfolio of equity securities, mainly common stocks, spread over industries
and companies. However, investments may be made in bonds, notes or other
evidence of indebtedness, issued publicly or placed privately, of a type
customarily purchased for investment by institutional investors, including
United States government securities. These investments in other than equity
securities generally would not have a prospect of long-term appreciation, and
are temporary for defensive purposes and are chosen on the basis of combined
considerations of risk, income and appreciation. Such investments may or may
not be convertible into stock or be accompanied by stock purchase options or
warrants for the purchase of stock.
Account GIS will use exchange-traded stock index futures contracts as
a hedge to protect against changes in stock prices. A stock index futures
contract is a contractual obligation to buy or sell a specified index of stocks
at a future date for a fixed price. Stock index futures may also be used to
hedge cash inflows to gain market exposure until the cash is invested in
specific common stocks. Account GIS will not purchase or sell futures
contracts for which the aggregate initial margin exceeds 5% of the fair market
value of its assets, after taking into account unrealized profits and losses on
any such contracts which it has entered into. When a futures contract is
purchased, Account GIS will set aside, an amount of cash and cash equivalents
equal to the total market value of the futures contract, less the amount of the
initial margin.
All stock index futures will be traded on exchanges that are licensed
and regulated by the Commodity Futures Trading Commission ("CFTC"). To ensure
that its futures transactions meet CFTC standards, Account GIS will enter into
futures contracts for hedging purposes only (i.e., for the purposes or with the
intent specified in CFTC regulations and interpretations, subject to the
requirements of the SEC). Account GIS expects that risk management
transactions involving futures contracts will not impact more than 30% of its
assets at any one time. For a more detailed discussion of financial futures
contracts and associated risks, please see the Statement of Additional
Information.
Account GIS may write covered call options on portfolio securities for
which call options are available and which are listed on a national securities
exchange. It may also purchase index or individual equity call options as an
alternative to holding stocks or stock index futures, or purchase index or
individual equity put options as a defensive measure. For a detailed
discussion of options contracts and associated risks, please see the Statement
of Additional Information.
Changes in investments may be made from time to time to take into
account changes in the outlook for particular industries or companies. The
investments of Account GIS will not, however, be concentrated in any one
industry; that is, no more than 25% of the value of Account GIS's assets will
be invested in any one industry. While Account GIS may occasionally invest in
foreign securities, it is not anticipated that such foreign securities will, at
any time, account for more than 10% of the investment portfolio.
The assets of Account GIS will be kept fully invested, except that (a)
sufficient cash may be kept on hand reasonably to provide for variable annuity
contract obligations, and (b) reasonable amounts of cash, United States
government or other liquid securities, such as short-term bills and notes, may
be held for limited periods, pending investment in accordance with Account
GIS's investment policies.
RISK FACTORS
It must be recognized that there are risks inherent in the ownership
of any security. The investment experience on equity investments over time
will tend to reflect levels of stock market prices and dividend payouts. Both
are affected by diverse factors, including not only business conditions and
investor confidence in the economy, but current conditions in a particular
industry or company. The yield on a common stock is not contractually
determined. Equity securities are subject to financial risks relating to the
earning stability and overall financial soundness of an issue. They are also
subject to market risks relating to the effect of general changes in the
securities market on the price of a security.
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FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account GIS permit it to:
1. invest up to 5% of its assets in the securities of any one issuer
(exclusive of securities issued or guaranteed by the United States
government, its agencies or instrumentalities);
2. borrow from banks in amounts of up to 5% of its assets, but only
for emergency purposes;
3. purchase interests in real estate represented by securities for
which there is an established market;
4. make loans through the acquisition of a portion of a privately
placed issue of bonds, debentures or other evidences of
indebtedness of a type customarily purchased by institutional
investors;
5. acquire up to 10% of the voting securities of any one issuer (it
is the present practice of Account GIS not to exceed 5% of the
voting securities of any one issuer);
6. make purchases on margin in the form of short-term credits which
are necessary for the clearance of transactions; and place up to
5% of its net asset value in total margin deposits for positions
in futures contracts; and
7. invest up to 5% of its assets in restricted securities (securities
which may not be publicly offered without registration under the
Securities Act of 1933).
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE
ANNUITIES (ACCOUNT QB)
INVESTMENT OBJECTIVE
The basic investment objective of Account QB is to seek current
income, moderate capital volatility and total return.
The assets of Account QB will be primarily invested in money market
obligations, including, but not limited to, Treasury bills, repurchase
agreements, commercial paper, bank certificates of deposit and bankers'
acceptances, and in publicly traded debt securities, including bonds, notes,
debentures, equipment trust certificates and short-term instruments. These
securities may carry certain equity features such as conversion or exchange
rights or warrants for the acquisition of stocks of the same or different
issuer, or participation based on revenues, sales or profits. It is currently
anticipated that the market value-weighted average maturity of the portfolio
will not exceed five years. (In the case of mortgage-backed securities, the
estimated average life of cash flows will be used instead of average maturity.)
Investment in longer term obligations may be made if the Board of Managers
concludes that the investment yields justify a longer term commitment. No more
than 25% of the value of Account QB's assets will be invested in any one
industry.
The portfolio will be actively managed and investments may be sold
prior to maturity if deemed advantageous in light of factors such as market
conditions or brokerage costs. While the investments of Account QB are
generally not listed securities, there are firms which make markets in the type
of debt instruments that Account QB holds. No problems of liquidity are
anticipated with regard to the investments of Account QB.
From time to time, Account QB may commit to purchase new-issue
government or agency securities on a "when-issued" or "to be announced" ("TBA")
basis ("when-issued securities"). The prices of such securities will be fixed
at the time the commitment to purchase is made, and may be expressed in either
dollar price or yield maintenance terms. Such commitment to purchase be viewed
as a senior security, and will be marked to market and reflected in Account
QB's Accumulation Unit Value daily from the commitment date. Delivery and
payment may be at a future date beyond customary settlement time. It is the
customary practice of Account QB to make when-issued or TBA purchases for
settlement no more than 90 days beyond the commitment date.
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While it is TAMIC's intention to take physical delivery of these
securities, offsetting transactions may be made prior to settlement, if it is
advantageous to do so. Account QB does not make payment or begin to accrue
interest on these securities until settlement date. In order to invest its
assets pending settlement, Account QB will normally invest in short-term money
market instruments and other securities maturing no later than the scheduled
settlement date.
Account QB does not intend to purchase when-issued securities for
speculative or "leverage" purposes. Consistent with Section 18 of the
Investment Company Act of 1940 and the General Policy Statement of the SEC
thereunder, when Account QB commits to purchase a when-issued security, it will
identify and place in a segregated account high-grade money market instruments
and other liquid securities equal in value to the purchase cost of the
when-issued securities.
TAMIC believes that purchasing securities in this manner will be
advantageous to Account QB. However, this practice does entail certain risks,
namely the default of the counterparty on its obligation to deliver the
security as scheduled. In this event, Account QB would endure a loss (or gain)
equal to the price appreciation (or depreciation) in value from the commitment
date. TAMIC employs a rigorous credit quality procedure in determining the
counterparties with which it will deal in when-issued securities and, in some
circumstances, will require the counterparty to post cash or some other form of
security as margin to protect the value of its delivery obligation pending
settlement.
Account QB may also purchase and sell interest rate futures contracts
to hedge against changes in interest rates that might otherwise have an adverse
effect upon the value of Account QB's securities. Hedging by use of interest
rate futures seeks to establish, with more certainty than would otherwise be
possible, the effective rate of return on portfolio securities. When hedging
is successful, any depreciation in the value of portfolio securities will
substantially be offset by appreciation in the value of the futures position.
Conversely, any appreciation in the value of the portfolio securities will
substantially be offset by depreciation in the value of the futures position.
Account QB will not purchase or sell futures contracts for which the
aggregate initial margin exceeds 5% of the fair market value of its assets,
after taking into account unrealized profits and losses on any such contracts
which it has entered into. At no time will Account QB's transactions in
futures contracts be employed for speculative purposes. When a futures
contract is purchased, Account QB will set aside, in an identifiable manner, an
amount of cash and cash equivalents equal to the total market value of the
futures contract, less the amount of the initial margin.
All interest rate futures contracts will be traded on exchanges that
are licensed and regulated by the Commodity Futures Trading Commission
("CFTC"). To ensure that its futures transactions meet FTC standards, Account
QB will enter into futures contracts for edging purposes only (i.e., for the
purposes or with the intent specified in CFTC regulations and interpretations,
subject to the requirements of the SEC). For a more detailed discussion of
financial futures contracts and associated risks, please see the Statement of
Additional Information.
RISK FACTORS
The Board of Managers will weigh considerations of risks, yield and
ratings in implementing Account QB's fundamental investment policies. There
are no specific criteria with regard to quality or ratings of the investments
of Account QB, but it is anticipated that they will be of investment grade or
its equivalent. There may or may not be more risk in investing in debt
instruments where there are no specific criteria with regard to quality or
ratings of the investments.
The yield on debt instruments over a period of time should reflect
prevailing interest rates, which depend on a number of factors, including
government action in the capital markets, government fiscal and monetary
policy, needs of businesses for capital goods for expansion, and investor
expectations as to future inflation. The yield on a particular debt instrument
is also affected by the risk that the issuer will be unable to pay principal
and interest.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account QB permit it to:
1. invest up to 15% of the value of its assets in the securities of
any one issuer (exclusive of obligations of the United States
government and its instrumentalities, for which there is no
limit);
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2. borrow from banks in amounts of up to 5% of its assets, but only
for emergency purposes;
3. purchase interests in real estate represented by securities for
which there is an established market;
4. make loans through the acquisition of a portion of a privately
placed issue of bonds, debentures or other evidences of
indebtedness of a type customarily purchased by institutional
investors;
5. acquire up to 10% of the voting securities of any one issuer (it
is the present practice of Account QB not to exceed 5% of the
voting securities of any one issuer);
6. make purchases on margin in the form of short-term credits which
are necessary for the clearance of transactions; and place up to
5% of its net asset value in total margin deposits for positions
in futures contracts; and
7. invest up to 5% of its assets in restricted securities (securities
which may not be publicly offered without registration under the
Securities Act of 1933).
THE TRAVELERS MONEY MARKET ACCOUNT FOR
VARIABLE ANNUITIES (ACCOUNT MM)
INVESTMENT OBJECTIVE
The basic investment objective of Account MM is preservation of
capital, a high degree of liquidity and the highest possible current income
available from certain short-term money market securities. Account MM restricts
its investment portfolio to only the securities listed below. As is true with
all investment companies, there can be no assurance that Account MM's
objectives will be achieved. An investment in Account MM is neither insured
nor guaranteed by the U.S. Government. Account MM's assets will be invested in
the following types of securities.
1. Marketable obligations issued or guaranteed by the United States
government, its agencies, authorities or instrumentalities. These include
issues of the United States Treasury, such as bills, certificates of
indebtedness, notes and bonds, and issues of agencies, authorities and
instrumentalities established under the authority of an act of Congress. The
latter issues include, but are not limited to, obligations of the Tennessee
Valley Authority, the Bank for Cooperatives, the Federal Intermediate Credit
Banks, Federal Land Banks and the Federal National Mortgage Association.
Obligations issued or guaranteed by the United States government, its agencies,
authorities or instrumentalities may be supported by the full faith and credit
of the United States Treasury; by the right of the issuer to borrow from the
United States Treasury; by discretionary authority of the United States
government to purchase an agency's, authority's or instrumentalities'
obligations and in some instances, solely by the credit of the United States
government agency, authority or instrumentality. No assurance can be given
that the United States government will provide financial support to such United
States government sponsored agencies, authorities or instrumentalities in the
future, since it is not obligated to do so by law. Account MM will invest in
such securities only when satisfied that the credit risk with respect to the
issuer (or guarantor) is minimal. Interest or discount rates on agency
securities are closely related to rates on Treasury bills.
2. Certificates of Deposit and Banker's Acceptances of banks having
total assets of more than $1 billion which are members of the Federal Deposit
Insurance Corporation. Certificates of Deposit are receipts issued by a bank
in exchange for the deposit of funds. The issuer agrees to pay the amount
deposited plus interest to the bearer of the receipt on the date specified on
the certificate. The certificate usually can be traded in the secondary market
before maturity. The Federal Deposit Insurance Corporation does not insure
Certificates of Deposit to the extent they are in excess of $100,000 per
customer. Banker's Acceptances usually arise from short-term credit
arrangements drawn on a bank by an exporter or importer to obtain a stated
amount of funds to pay for specific merchandise. The draft is then "accepted"
by a bank which, in effect, unconditionally guarantees to pay the face value of
the instrument on its maturity date. The acceptance may then be held by the
accepting bank as an earning asset or it may be sold in the secondary market at
the going rate of discount for a specific maturity. Although maturity for
acceptances can be as long as 270 days, most acceptances have maturities of six
months or less.
Account MM may invest in securities of foreign branches of United
States banks, payable in United States dollars, which meet the foregoing
requirements. Obligations of foreign branches of United States banks are
subject to
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additional risks beyond those of domestic branches of United States banks.
These additional risks include foreign economic and political developments,
foreign governmental restrictions which may adversely affect payment of
principal and interest on obligations, foreign withholding and other taxes on
interest income, and difficulties in obtaining and enforcing a judgment against
a foreign branch of a domestic bank. In addition, different risks may result
from the fact that foreign branches of United States banks are not necessarily
subject to the types of requirements that apply to domestic branches of United
States banks with respect to mandatory reserves, loan limitations,
examinations, accounting, auditing, recordkeeping and the public availability
of information.
3. Commercial Paper rated A-1 by Standard and Poor's Corporation or
Prime-1 by Moody's Investor Services, Inc. For a more detailed discussion of
the characteristics of commercial paper ratings, please see the Statement of
Additional Information.
4. Repurchase agreements with national banks or reporting broker
dealers involving marketable obligations of or guaranteed by the United States
government, its agencies, authorities or instrumentalities. A repurchase
agreement is an agreement in which the seller of a security agrees to
repurchase the security sold at a mutually agreed upon time and price. It may
also be viewed as the loan of money by Account MM to the seller. The resale
price is in excess of the purchase price, reflecting an agreed upon interest
rate. The rate is effective for the period of time Account MM is invested in
the agreement and is not related to the coupon rate on the underlying security.
The period of these repurchase agreements will usually be short, from overnight
to one week, and at no time will Account MM invest in repurchase agreements for
more than one year. The securities which are subject to repurchase agreements
may, however, have maturity dates in excess of one year from the effective date
of the repurchase agreement. Account MM will always receive, as collateral,
securities whose market value, including accrued interest, will be at least
equal to 102% of the dollar amount invested by Account MM in each agreement and
will make payment for such securities only upon physical delivery or evidence
of book entry transfer to the account of the Custodian. If the seller
defaults, Account MM might incur a loss if the value of the collateral securing
the repurchase agreement declines, and Account MM might incur disposition costs
in connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization upon the collateral by Account MM may be delayed or limited.
Account MM's Board of Managers will evaluate the creditworthiness of any banks
or broker dealers with which Account MM engages in repurchase agreements by
setting guidelines and standards of review for Account MM's investment adviser
and monitoring the adviser's actions with regard to repurchase agreements for
Account MM.
RISK FACTORS
The market value of Account MM's investments tends to decrease during
periods of rising interest rates and to increase during intervals of falling
interest rates, with corresponding fluctuations in Account MM's net income. In
order to minimize the fluctuations in market values to which interest-paying
obligations are subject, Account MM concentrates its investments in relatively
short-term securities, and in no event does the maturity date of an obligation
exceed one year from the date of Account MM's purchase.
Return is aided both by Account MM's ability to make investments in
large denominations and by its efficiencies of scale. Also, Account MM may
seek to improve portfolio income by selling certain portfolio securities before
maturity date in order to take advantage of yield disparities that occur in
money markets. Account MM may purchase and sell marketable obligations of or
guaranteed by the United States government, its agencies, authorities or
instrumentalities on a when-issued or delayed delivery basis, with such
purchases possibly occurring as much as a month before actual delivery and
payment.
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account MM permit it to:
1. invest up to 25% of its assets in the securities of issuers in any
single industry (exclusive of securities issued by domestic banks
and savings and loan associations, or securities issued or
guaranteed by the United States government, its agencies,
authorities or instrumentalities); neither all finance companies,
as a group, nor all utility companies, as a group, are considered
a single industry for the purpose of this restriction;
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2. invest up to 10% of its assets in the securities of any one
issuer, including repurchase agreements with any one bank or
dealer (exclusive of securities issued or guaranteed by the United
States government, its agencies or instrumentalities); however, in
accordance with Rule 2a-7 of the Investment Company Act of 1940,
to which Account MM is subject, Account MM will not invest more
than 5% of its assets in the securities of any one issuer (other
than securities issued or guaranteed by the United States
government or its instrumentalities);
3. acquire up to 10% of the outstanding securities of any one issuer
(exclusive of securities issued or guaranteed by the United States
government, its agencies or instrumentalities);
4. borrow money from banks on a temporary basis in an aggregate
amount not to exceed one third of Account MM's assets (including
the amount borrowed); and
5. pledge, hypothecate or transfer, as security for indebtedness, any
securities owned or held by Account MM as may be necessary in
connection with any borrowing mentioned above and in an aggregate
amount of up to 5% of Account MM's assets.
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
(ACCOUNT TGIS)
INVESTMENT OBJECTIVE
The basic investment objective of Account TGIS is to seek long-term
accumulation of principal through capital appreciation and retention of net
investment income. In selecting its objective, short-term gains may also be
realized. The assets of Account TGIS generally will be fully invested in a
portfolio of equity securities, mainly common stocks, spread over industries
and companies. However, when it is determined that investments of other types
may be advantageous on the basis of combined considerations of risk, income and
appreciation, investments may be made in bonds, notes or other evidence of
indebtedness, issued publicly or placed privately, of a type customarily
purchased for investment by institutional investors, including United States
government securities. These investments in other than equity securities
generally would not have a prospect of long-term appreciation, and are
temporary for defensive purposes. Such investments may or may not be
convertible into stock or be accompanied by stock purchase options or warrants
for the purchase of stock.
Account TGIS will use exchange-traded financial futures contracts
consisting of stock index futures contracts and futures contracts on debt
securities ("interest rate futures") to facilitate market timed moves, and as a
hedge to protect against changes in stock prices or interest rates. A stock
index futures contract is a contractual obligation to buy or sell a specified
index of stocks at a future date for a fixed price. An interest rate futures
contract is a contract to buy or sell specified debt securities at a future
time for a fixed price. These contracts would obligate Account TGIS, at
maturity of the contracts, to purchase or sell certain securities at specified
prices or to make cash settlements. In general, moves in a market-timed
investment strategy may require the purchase or sale of large amounts of
securities in a short period of time. This purchase or sale could result in
substantial transaction costs and perhaps higher borrowing in Account TGIS to
provide funds needed for transfer to the other timed accounts prior to the
five-day settlement period for stock sales. Alternatively, common stock
exposure can be increased or decreased in a more timely, cost-effective fashion
by buying or selling stock index futures. By transacting in such futures when
a market timing move is called, the investment adviser can create the ability
to buy or sell actual common stocks with less haste and at lower transaction
costs. As the actual stocks are bought or sold, the futures positions would
simply be eliminated.
Account TGIS may also purchase and sell interest rate futures to hedge
against changes in interest rates that might otherwise have an adverse effect
upon the value of Account TGIS's securities. Hedging by use of interest rate
futures seeks to establish, with more certainty than would otherwise be
possible, the effective rate of return on portfolio securities. When hedging
is successful, any depreciation in the value of portfolio securities will
substantially be offset by appreciation in the value of the futures position.
Conversely, any appreciation in the value of portfolio securities will
substantially be offset by depreciation in the value of the futures position.
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Account TGIS will not purchase or sell futures contracts for which the
aggregate initial margin exceeds 5% of the fair market value of its assets,
after taking into account unrealized profits and losses on any such contracts
it has entered into. At no time will Account TGIS's transactions in such
financial futures be used for speculative purposes. When a futures contract is
purchased, Account TGIS will set aside, an amount of cash and cash equivalents
equal to the total market value of the futures contract, less the amount of the
initial margin.
All financial futures contracts will be traded on exchanges that are
licensed and regulated by the Commodity Futures Trading Commission ("CFTC").
To ensure that its futures transactions meet CFTC standards, Account TGIS will
enter into futures contracts for hedging purposes only (i.e., for the purposes
or with the intent specified in CFTC regulations and interpretations, subject
to the requirements of the SEC). For a more detailed discussion of financial
futures contracts and associated risks, please see the Statement of Additional
Information.
Account TGIS may write covered call options on portfolio securities
for which call options are available and which are listed on a national
securities exchange. It may also purchase index or individual equity call
options as an alternative to holding stocks or stock index futures, or purchase
index or individual equity put options as a defensive measure. For a detailed
discussion of options contracts and associated risks, please see the Statement
of Additional Information.
RISK FACTORS
It must be recognized that there are risks inherent in the ownership
of any security. The investment experience on equity investments over time
will tend to reflect levels of stock market prices and dividend payouts. Both
are affected by diverse factors including not only business conditions and
investor confidence in the economy, but current conditions in a particular
industry or company. Equity securities are subject to financial risks relating
to the earning stability and overall financial soundness of an issue. They are
also subject to market risks relating to the effect of general changes in the
securities market on the price of a security. In addition, there are risks
inherent in Account TGIS as an investment alternative used by Market Timing
Services. (See "Market Timing Risks," page __.)
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TGIS are the same as
Account GIS. (See "Account GIS -- Fundamental Investment Policies," page __.)
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT TSB)
INVESTMENT OBJECTIVE
The investment objective of Account TSB is to generate high current
income with limited price volatility while maintaining a high degree of
liquidity. As is true with all investment companies, there can be no assurance
that Account TSB's objectives will be achieved. Account TSB's assets will be
invested in the following types of securities. The final maturity of any asset
will not exceed three years and the average maturity of the total portfolio is
expected to be nine months.
1. Marketable obligations issued or guaranteed by the United States
government, its agencies, authorities or instrumentalities. These include
issues of the United States Treasury, such as bills, certificates of
indebtedness, notes and bonds, and issues of agencies, authorities and
instrumentalities established under the authority of an act of Congress. The
latter issues include, but are not limited to, obligations of the Tennessee
Valley Authority, the Bank for Cooperatives, the Federal Intermediate Credit
Banks, Federal Land Banks and the Federal National Mortgage Association.
Obligations issued or guaranteed by the United States government, its agencies,
authorities or instrumentalities may be supported by the full faith and credit
of the United States Treasury; by the right of the issuer to borrow from the
United States Treasury; by discretionary authority of the United States
government to purchase an agency's, authority's or instrumentalities'
obligations and in some instances, solely by the credit of the United States
government agency, authority or instrumentality. No assurance can be given
that the United States government will provide financial support to such United
States government sponsored agencies, authorities or instrumentalities in the
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future, since it is not obligated to do so by law. Account TSB will invest in
such securities only when satisfied that the credit risk with respect to the
issuer (or guarantor) is minimal. Interest or discount rates on agency
securities are closely related to rates on Treasury bills.
2. Certificates of Deposit and Banker's Acceptances of banks having
total assets of more than $1 billion which are members of the Federal Deposit
Insurance Corporation. Certificates of Deposit are receipts issued by a bank
in exchange for the deposit of funds. The issuer agrees to pay the amount
deposited plus interest to the bearer of the receipt on the date specified on
the certificate. The certificate usually can be traded in the secondary market
before maturity. The Federal Deposit Insurance Corporation does not insure
Certificates of Deposit to the extent they are in excess of $100,000 per
customer. Banker's Acceptances usually arise from short-term credit
arrangements drawn on a bank by an exporter or importer to obtain a stated
amount of funds to pay for specific merchandise. The draft is then "accepted"
by a bank which, in effect, unconditionally guarantees to pay the face value of
the instrument on its maturity date. The acceptance may then be held by the
accepting bank as an earning asset or it may be sold in the secondary market at
the going rate of discount for a specific maturity. Although maturity for
acceptances can be as long as 270 days, most acceptances have maturities of six
months or less.
Account TSB may invest in securities payable in United States dollars
of foreign branches of United States banks which meet the foregoing
requirements and in Euro Certificates of Deposit, which are certificates of
deposit issued by banks outside of the United States, with interest and
principal paid in U.S. dollars. Obligations of foreign banks and foreign
branches of United States banks are subject to additional risks than those of
domestic branches of United States banks. These additional risks include
foreign economic and political developments, foreign governmental restrictions
which may adversely affect payment of principal and interest on obligations,
foreign withholding and other taxes on interest income, and difficulties in
obtaining and enforcing a judgment against a foreign bank or a foreign branch
of a domestic bank. In addition, different risks may result from the fact that
foreign banks or foreign branches of United States banks are not necessarily
subject to the types of requirements that apply to domestic branches of United
States banks with respect to mandatory reserves, loan limitations,
examinations, accounting, auditing, recordkeeping and the public availability
of information.
3. Commercial Paper rated A-1 by Standard and Poor's Corporation or
Prime-1 by Moody's Investor Services, Inc. For a more detailed discussion of
the characteristics of commercial paper ratings, please see the Statement of
Additional Information.
4. Repurchase agreements with national banks and reporting broker
dealers involving marketable obligations of or guaranteed by the United States
government, its agencies, authorities or instrumentalities. A repurchase
agreement is an agreement in which the seller of a security agrees to
repurchase the security sold at a mutually agreed upon time and price. It may
also be viewed as the loan of money by Account TSB to the seller. The resale
price is in excess of the purchase price, reflecting an agreed upon interest
rate. The rate is effective for the period of time Account TSB is invested in
the agreement and is not related to the coupon rate on the underlying security.
The period of these repurchase agreements will usually be short, from overnight
to one week, and at no time will Account TSB invest in repurchase agreements
for more than one year. The securities which are subject to repurchase
agreements may, however, have maturity dates in excess of one year from the
effective date of the repurchase agreement. Account TSB will always receive,
as collateral, securities whose market value, including accrued interest, will
be at least equal to 102% of the dollar amount invested by Account TSB in each
agreement and will make payment for such securities only upon physical delivery
or evidence of book entry transfer to the account of the Custodian. If the
seller defaults, Account TSB might incur a loss if the value of the collateral
securing the repurchase agreement declines, and Account TSB might incur
disposition costs in connection with liquidating the collateral.
In addition, if bankruptcy proceedings are commenced with respect to
the seller of the security, realization upon the collateral by Account TSB may
be delayed or limited. Account TSB's Board of Managers will evaluate the
creditworthiness of any banks or broker dealers with which Account TSB engages
in repurchase agreements by setting guidelines and standards of review for
Account TSB's investment adviser and monitoring the adviser's actions with
regard to repurchase agreements for Account TSB.
5. Short-term notes, bonds, debentures and other debt instruments
issued or guaranteed by an entity with a bond rating of at least AA by S&P or
Aa by Moody's, and with final maturities of such short-term instruments
normally limited to eighteen months at the time of purchase.
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RISK FACTORS
The market value of Account TSB's investments tends to decrease during
periods of rising interest rates and to increase during intervals of falling
interest rates, with corresponding fluctuations in Account TSB's net income.
In order to minimize the fluctuations in market values to which interest-paying
obligations are subject, Account TSB concentrates its investments in relatively
short-term securities, and in no event does the maturity date of an obligation
exceed three years from the date of Account TSB's purchase. There can be no
assurance that, upon redemption, Account TSB's net asset value will be equal to
or greater than the net asset value at the time of purchase.
Return is aided both by Account TSB's ability to make investments in
large denominations and by its efficiencies of scale. Also, Account TSB may
seek to improve portfolio income by selling certain portfolio securities before
the maturity date in order to take advantage of yield disparities that occur in
money markets. Account TSB may purchase and sell marketable obligations of or
guaranteed by the United States government, its agencies, authorities or
instrumentalities on a when-issued or delayed delivery basis, with such
purchases possibly occurring as much as a month before actual delivery and
payment. In addition, there are risks inherent in Account TSB as an investment
alternative used by market timing services. (See "Market Timing Services,"
page __.)
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TSB permit it to:
1. invest up to 25% of its assets in the securities of issuers in any
single industry (exclusive of securities issued by domestic banks
and savings and loan associations, or securities issued or
guaranteed by the United States government, its agencies,
authorities or instrumentalities); neither all finance companies,
as a group, nor all utility companies, as a group, are considered
a single industry for the purpose of this restriction;
2. invest up to 10% of its assets in the securities of any one
issuer, including repurchase agreements with any one bank or
dealer (exclusive of securities issued or guaranteed by the United
States government, its agencies or instrumentalities);
3. acquire up to 10% of the outstanding securities of any one issuer
(exclusive of securities issued or guaranteed by the United States
government, its agencies or instrumentalities);
4. borrow money from banks on a temporary basis in an aggregate
amount not to exceed one third of Account TSB's assets (including
the amount borrowed); and
5. pledge, hypothecate or transfer, as security for indebtedness, any
securities owned or held by Account TSB as may be necessary in
connection with any borrowing mentioned above and in an aggregate
amount of up to 5% of Account TSB's assets.
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES (ACCOUNT TAS)
INVESTMENT OBJECTIVE
The investment objective of Account TAS is to seek growth of capital
by investing primarily in a broadly diversified portfolio of common stocks.
In selecting investments for the portfolio, TIMCO identifies stocks
which appear to be undervalued. A proprietary computer model reviews over
one-thousand stocks using fundamental and technical criteria such as price
relative to book value, earnings growth and momentum, and the change in price
relative to a broad composite stock index.
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Computer-aided analysis may also be utilized to match certain
characteristics of the portfolio, such as industry sector representation, to
the characteristics of a market index, or to impose a tilt toward certain
attributes. Although Account TAS currently focuses on mid-sized domestic
companies with market capitalizations that fall between $500 million and $10
billion, Account TAS may invest in smaller or larger companies without
limitation. The prices of mid-sized company stocks and smaller company stocks
may fluctuate more than those of larger company stocks.
It is the policy of Account TAS to invest its assets as fully as
practicable in common stocks, securities convertible into common stocks and
securities having common stock characteristics, including rights and warrants
selected primarily for prospective capital growth. Account TAS may invest in
domestic, foreign and restricted securities.
When market conditions warrant, Account TAS may adopt a defensive
position to preserve shareholders' capital by investing in money market
instruments. Such instruments, which must mature within one year of their
purchase, consist of U.S. government securities; instruments of banks which are
members of the Federal Deposit Insurance Corporation and have assets of at
least $1 billion, such as certificates of deposit, demand and time deposits and
bankers' acceptances; prime commercial paper, including master demand notes;
and repurchase agreements secured by U.S. government securities.
Account TAS will use exchange-traded financial futures contracts
consisting of stock index futures contracts and futures contracts on debt
securities ("interest rate futures") to facilitate market timed moves, and as a
hedge to protect against changes in stock prices or interest rates. A stock
index futures contract is a contractual obligation to buy or sell a specified
index of stocks at a future date for a fixed price. An interest rate futures
contract is a contract to buy or sell specified debt securities at a future
time for a fixed price.
In general, moves in a market-timed investment strategy may require
the purchase or sale of large amounts of securities in a short period of time.
This purchase or sale could result in substantial transaction costs and perhaps
higher borrowing in Account TAS to provide funds needed for transfer to other
timed accounts prior to the five-day settlement period for stock sales.
Alternatively, common stock exposure can be increased or decreased in a more
timely, cost-effective fashion by buying or selling stock index futures. By
transacting in such futures when a market timing move is called, TIMCO can
create the ability to buy or sell actual common stocks with less haste and at
lower transaction costs. As the actual stocks are bought or sold, the futures
positions would simply be eliminated.
Account TAS may also purchase and sell interest rate futures to hedge
against changes in interest rates that might otherwise have an adverse effect
upon the value of Account TAS's securities. Hedging by use of interest rate
futures seeks to establish, with more certainty than would otherwise be
possible, the effective rate of return on portfolio securities. When hedging
is successful, any depreciation in the value of portfolio securities will
substantially be offset by appreciation in the value of the futures position.
Conversely, any appreciation in the value of portfolio securities will
substantially be offset by depreciation in the value of the futures position.
Account TAS will not purchase or sell futures contracts for which the
aggregate initial margin exceeds 5% of the fair market value of its assets,
after taking into account unrealized profits and losses on any such contracts
which it has entered into. When a futures contract is purchased, Account TAS
will set aside an amount of cash and cash equivalents equal to the total market
value of the futures contract, less the amount of the initial margin. At no
time will Account TAS's transactions in such futures be used for speculative
purposes.
All financial futures contracts will be traded on exchanges that are
licensed and regulated by the Commodity Futures Trading Commission ("CFTC").
To ensure that its futures transactions meet CFTC standards, Account TAS will
enter into futures contracts for hedging purposes only (i.e., for the purposes
or with the intent specified in CFTC regulations and interpretations, subject
to the requirements of the SEC). For a more detailed discussion of financial
futures contracts and associated risks, please see the Statement of Additional
Information.
Account TAS may write covered call options on portfolio securities for
which call options are available and which are listed on a national securities
exchange. It may also purchase index or individual equity call options as an
alternative to holding stocks or stock index futures, or purchase index or
individual equity put options as a defensive measure. For a detailed
discussion of options contracts and associated risks, please see the Statement
of Additional Information.
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RISK FACTORS
There can, of course, be no assurance that Account TAS will achieve
its investment objective since there is uncertainty in every investment.
Equity securities are subject to financial risks relating to the earning
stability and overall financial soundness of an issue. They are also subject
to market risks relating to the effect of general changes in the securities
market on the price of a security. In addition, there may be more risk
associated with Account TAS to the extent that it invests in small or mid-sized
companies. More risk is associated with investment in small or mid-sized
companies than with larger companies because such companies may be dependent on
only one or two products and may be more vulnerable to competition from larger
companies with greater resources and to economic conditions affecting their
market sector. Small or mid-sized companies may be new, without long business
or management histories, and perceived by the market as unproven. Their
securities may be held primarily by insiders or institutional investors, which
may affect marketability. The prices of these stocks often fluctuate more than
the overall stock market. In addition, there are risks inherent in Account TAS
as an investment alternative used by Market Timing Services. (See "Market
Timing Risks," page __.)
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TAS permit it to:
1. invest up to 5% of its assets in the securities of any one issuer;
2. borrow money from banks in amounts of up to 10% of its assets, but
only as a temporary measure for emergency or extraordinary
purposes;
3. pledge up to 10% of its assets to secure borrowings;
4. invest up to 25% of its assets in the securities of issuers in the
same industry; and
5. invest up to 10% of its assets in repurchase agreements maturing
in more than seven days and securities for which market quotations
are not readily available.
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES
(ACCOUNT TB)
INVESTMENT OBJECTIVE
The investment objective of Account TB is to seek current income and
total return. To achieve this objective, Account TB invests primarily in
direct obligations of highest credit quality: obligations of the United
States, and its instrumentalities, and in obligations issued or guaranteed by
Federal Agencies which are independent corporations sponsored by the United
States and which are subject to its general supervision, but which do not carry
the full faith and credit obligations of the United States.
Direct obligations of the United States include Treasury bills which
are issued on a discount basis with a maturity of one year or less, Treasury
Notes which have maturities at issuance between one and ten years, and Treasury
Bonds which have maturities at issuance greater than ten years.
Instrumentalities of the United States whose debt obligations are backed by its
full faith and credit, include: Government National Mortgage Association,
Federal Housing Administration, Farmers Homes Administration, Export-Import
Bank of the United States, Small Business Administration, General Services
Administration, Maritime Administration, District of Columbia Armory Board,
Farm Credit System Financial Assistance Corporation, Federal Financing Bank and
Washington Metropolitan Area Transit Authority Bonds. Federal Agencies
include: Farm Credit System, Federal Home Loan Banks, Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association and Student Loan
Marketing Association.
Account TB intends to be fully invested at all times; however, when
market conditions warrant, Account TB may invest temporarily in money market
instruments. Such instruments, which must mature within one year of their
purchase, consist of U.S. government securities; instruments of banks which
are members of the Federal Deposit
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Insurance Corporation and have assets of at least $1 billion, such as
certificates of deposit, demand and time deposits and bankers' acceptances;
prime commercial paper, including master demand notes; and repurchase
agreements secured by U.S. government securities.
Account TB may from time to time commit to purchase new-issue
government or agency securities on a "when-issued" or "to be announced" ("TBA")
basis ("when-issued securities"). The prices of such securities will be fixed
at the time the commitment to purchase is made, and may be expressed in either
dollar price or yield maintenance terms. Such commitment may be viewed as a
senior security, and will be marked to market and reflected in Account TB's
Accumulation Unit Value daily from the commitment date. Delivery and payment
may be at a future date beyond customary settlement time. It is the customary
practice of Account TB to make when-issued or TBA purchases for settlement no
more than 90 days beyond the commitment date.
While it is TAMIC's intention to take physical delivery of these
securities, offsetting transactions may be made prior to settlement, if it is
advantageous to do so. Account TB does not make payment or begin to accrue
interest on these securities until settlement date. In order to invest its
assets pending settlement, Account TB will normally invest in short-term money
market instruments and other securities maturing no later than the scheduled
settlement date.
Account TB does not intend to purchase when-issued securities for
speculative or "leverage" purposes. Consistent with Section 18 of the
Investment Company Act of 1940 and the General Policy Statement of the SEC
thereunder, when Account TB commits to purchase a when-issued security, it will
identify and place in a segregated account high-grade money market instruments
and other liquid securities equal in value to the purchase cost of the
when-issued securities.
TAMIC believes that purchasing securities in this manner will be
advantageous to Account TB. However, this practice does entail certain risks,
namely the default of the counterparty on its obligation to deliver the
security as scheduled. In this event, Account TB would endure a loss (gain)
equal to the price appreciation (depreciation) in value from the commitment
date. TAMIC employs a rigorous credit quality procedure in determining the
counterparties with which it will deal in when-issued securities and, in some
circumstances, will require the counterparty to post cash or some other form of
security as margin to protect the value of its delivery obligation pending
settlement.
Account TB may seek to preserve capital by writing covered call
options on securities which it owns. Such an option on an underlying security
would obligate Account TB to sell, and give the purchaser of the option the
right to buy, that security at a stated exercise price at any time until the
stated expiration date of the option.
Account TB will use exchange-traded financial futures contracts
consisting of futures contracts on debt securities ("interest rate futures") to
facilitate market timed moves, and as a hedge to protect against changes in
interest rates. An interest rate futures contract is a contract to buy or sell
specified debt securities at a future time for a fixed price. These contracts
would obligate Account TB, at maturity of the contracts, to purchase or sell
certain securities at specified prices or to make cash settlements.
In general, moves in a market timed investment strategy may require
the purchase or sale of large amounts of securities in a short period of time.
This purchase or sale could result in substantial transaction costs and perhaps
higher borrowing in Account TB to provide funds needed for transfer to Account
TSB. Alternatively, debt security exposure can be increased or decreased in a
more timely, cost-effective fashion by buying or selling interest rate futures.
By transacting in such futures when a market timing move is called, TAMIC can
create the ability to buy or sell actual debt securities with less haste and at
lower transaction costs. As the actual debt securities are bought or sold, the
futures positions would simply be eliminated.
Account TB may also purchase and sell interest rate futures to hedge
against changes in interest rates that might otherwise have an adverse effect
upon the value of Account TB's securities. Hedging by use of interest rate
futures seeks to establish, with more certainty than would otherwise be
possible, the effective rate of return on portfolio securities. When hedging
is successful, any depreciation in the value of portfolio securities will
substantially be offset by appreciation in the value of the futures position.
Conversely, any appreciation in the value of the portfolio securities will
substantially be offset by depreciation in the value of the futures position.
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Account TB will not purchase or sell futures contracts for which the
aggregate initial margin exceeds 5% of the fair market value of its assets,
after taking into account unrealized profits and losses on any such contracts
which it has entered into. At no time will Account TB's transactions in
futures contracts be employed for speculative purposes. When a futures
contract is purchased, Account TB will set aside, in an identifiable manner, an
amount of cash and cash equivalents equal to the total market value of the
futures contract, less the amount of the initial margin.
All interest rate futures contracts will be traded on exchanges that
are licensed and regulated by the Commodity Futures Trading Commission
("CFTC"). To ensure that its futures transactions meet CFTC standards, Account
TB will enter into futures contracts for hedging purposes only (i.e., for the
purposes or with the intent specified in CFTC regulations and interpretations,
subject to the requirements of the SEC). For a more detailed discussion of
financial futures contracts and associated risks, please see the Statement of
Additional Information.
RISK FACTORS
There can, of course, be no assurance that Account TB will achieve its
investment objective since there is uncertainty in every investment. U.S.
Government securities are considered among the safest of fixed-income
investments. As a result, however, their yields are generally lower than the
yields available from corporate debt securities. The value of the portfolio
securities of Account TB will fluctuate based on market conditions and interest
rates. Interest rates depend on a number of factors, including government
action in the capital markets, government fiscal and monetary policy, needs of
businesses for capital goods for expansion, and investor expectations as to
future inflation. An increase in interest rates will generally reduce the
value of debt securities, and conversely a decline in interest rates will
generally increase the value of debt securities. In addition, there are risks
inherent in Account TB as an investment alternative used by Market Timing
Services. (See "Market Timing Risks" page __.)
FUNDAMENTAL INVESTMENT POLICIES
The fundamental investment policies of Account TB permit it to:
1. invest up to 5% of its assets in the securities of any one issuer
(exclusive of securities of the United States government, its
agencies or instrumentalities, for which there is no limit);
2. borrow money from banks in amounts of up to 10% of its assets, but
only as a temporary measure for emergency or extraordinary
purposes;
3. pledge up to 10% of its assets to secure borrowings;
4. invest up to 25% of its assets in the securities of issuers in the
same industry (exclusive of securities of the U.S. government,
its agencies or instrumentalities, for which there is no limit);
and
5. invest up to 10% of its assets in repurchase agreements maturing
in more than seven days and securities for which market quotations
are not readily available including restricted securities.
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APPENDIX A
- --------------------------------------------------------------------------------
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific
information and financial statements relating to the Separate Accounts and The
Travelers Insurance Company. A list of the contents of the Statement of
Additional Information is set forth below:
Description of The Travelers and The Separate Accounts
The Insurance Company
The Separate Accounts
Investment Restrictions
The Travelers Growth and Income Stock Account For Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable
Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
Description of Certain Types of Investments and Investment Techniques
Available to the Separate Accounts
Writing Covered Call Options
Buying Put and Call Options
Futures Contracts
Money Market Instruments
Investment Management and Advisory Services
Advisory Fees
TIMCO
TAMIC
Valuation of Separate Account Assets
Net Investment Factor
Performance Data
Yield Quotations of Account MM
Average Annual Total Return Quotations of Accounts GIS, QB, MM,
TGIS, TSB, TAS, TB and Fund U
The Board of Managers
Distribution and Management Services
Securities Custodian
Independent Accountants
Financial Statements
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COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996 (FORM NO.
L-11165S WHICH IS INCORPORATED BY REFERENCE THEREIN (INCLUDED IN FORM NO.
VG-137), ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, LEASE CLIP THIS
COUPON ON THE DOTTED LINE ABOVE, ENTER YOUR NAME AND ADDRESS IN THE SPACES
PROVIDED BELOW, AND MAIL TO: THE TRAVELERS INSURANCE COMPANY, ANNUITY
SERVICES, ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183-5030.
Name:
--------------------------------------------------------------
Address:
-----------------------------------------------------------
-------------------------------------------------------------------
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THE TRAVELERS UNIVERSAL ANNUITY
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
L-11165 TIC Ed. 5-96
Printed in U.S.A.
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PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 66
UNIVERSAL ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
- -------------------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
MAY 1, 1996
This Statement of Additional Information is not a prospectus but
relates to, and should be read in conjunction with, the Prospectus dated May 1,
1996. A copy of the Prospectus may be obtained by writing to The Travelers
Insurance Company (the "Company"), Annuity Services, One Tower Square,
Hartford, Connecticut 06183-5030, or by calling 1-800-842-9368.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
DESCRIPTION OF THE TRAVELERS INSURANCE COMPANY AND
THE SEPARATE ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Insurance Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Separate Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Travelers Growth and Income Stock Account for Variable Annuities . . . . . . . . . . . . . . . . . . . .
The Travelers Timed Growth and Income Stock Account for Variable Annuities . . . . . . . . . . . . . . . . .
The Travelers Timed Aggressive Stock Account for Variable Annuities . . . . . . . . . . . . . . . . . . . .
The Travelers Quality Bond Account for Variable Annuities. . . . . . . . . . . . . . . . . . . . . . . . . .
The Travelers Timed Bond Account for Variable Annuities. . . . . . . . . . . . . . . . . . . . . . . . . . .
The Travelers Money Market Account for Variable Annuities. . . . . . . . . . . . . . . . . . . . . . . . . .
The Travelers Timed Short-Term Bond Account for Variable Annuities . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS AND INVESTMENT TECHNIQUES
AVAILABLE TO THE SEPARATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WRITING COVERED CALL OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUYING PUT AND CALL OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FUTURES CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MONEY MARKET INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT MANAGEMENT AND ADVISORY SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advisory Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TIMCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TAMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VALUATION OF SEPARATE ACCOUNT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INVESTMENT FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
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<TABLE>
<S> <C>
Yield Quotations of Account MM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Annual Total Return Quotations of Accounts GIS, QB, MM, TGIS, TSB, TAS, TB
and Fund U. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE BOARD OF MANAGERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION AND MANAGEMENT SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECURITIES CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS - THE TRAVELERS INSURANCE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
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DESCRIPTION OF THE TRAVELERS INSURANCE COMPANY
AND THE SEPARATE ACCOUNTS
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company") is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. The Company is a wholly owned subsidiary
of The Travelers Insurance Group, Inc., a holding company which is an indirect
wholly owned subsidiary of Travelers Group Inc., a financial services holding
company. The Company's Home Office is located at One Tower Square, Hartford,
Connecticut 06183.
THE SEPARATE ACCOUNTS
Each of the Separate Accounts available under the variable annuity
contracts described in this Statement of Additional Information meets the
definition of a separate account under federal securities laws, and will comply
with the provisions of the Investment Company Act of 1940, as amended (the
"1940 Act"). Additionally, the operations of each of the Separate Accounts are
subject to the provisions of Section 38a-433 of the Connecticut General
Statutes which authorize the Connecticut Insurance Commissioner to adopt
regulations under it. The Section contains no restrictions on investments of
the Separate Accounts, and the Commissioner has adopted no regulations under
the Section that affect the Separate Accounts.
INVESTMENT RESTRICTIONS
The Separate Accounts described below each have different investment
objectives and policies, as discussed in the Prospectus under "The Managed
Separate Accounts" on page __. Each Managed Separate Account has certain
fundamental investment restrictions which are set forth below. Neither the
investment objective nor the fundamental investment restrictions can be changed
without a vote of a majority of the outstanding voting securities of the
Accounts, as defined in the 1940 Act. Additionally, in accomplishing their
respective investment objectives, each Account uses certain types of
investments and investment techniques which are discussed under "Investments
and Investment Techniques" on page __.
The percentage restrictions (for either fundamental investment
policies or investment restrictions) are interpreted such that if they are
adhered to at the time of investment, a later increase in a percentage beyond
the specified limit resulting from a change in the values of portfolio
securities or in the amount of net assets shall not be considered a violation.
It must be recognized that there are risks inherent in the ownership of any
investment and that there can be no assurance that the investment objectives of
the Separate Accounts will be achieved.
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
INVESTMENT RESTRICTIONS
The investment restrictions for Accounts GIS and TGIS, as set forth
below, are identical, except where indicated. The investment restrictions set
forth in items 1 through 9 are fundamental and may not be changed without a
vote of a majority of the outstanding voting securities of Account GIS or
Account TGIS, as defined in the 1940 Act. Items 10 through 13 may be changed
by a vote of the Board of Managers of Account GIS or Account TGIS.
1. Not more than 5% of the assets of the Account will be invested in
the securities of any one issuer, except obligations of the United
States Government and its instrumentalities.
2. Borrowings will not be made, except that the right is reserved to
borrow from banks for emergency purposes, provided that such
borrowings will not exceed 5% of the value of the assets of
Account GIS, or
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10% of the value of the assets of Account TGIS, and that
immediately after the borrowing, and at all times thereafter, and
while any such borrowing is unrepaid, there will be asset coverage
of at least 300% for all borrowings of the Account.
3. Securities of other issuers will not be underwritten, except that
the Account could be deemed an underwriter when engaged in the
sale of restricted securities. (See item 13.)
4. Interests in real estate will not be purchased, except as may be
represented by securities for which there is an established
market.
5. No purchase of commodities or commodity contracts will be made,
except transactions involving financial futures in order to limit
transaction and borrowing costs and for hedging purposes, as
discussed above.
6. Loans will be made only through the acquisition of a portion of
privately placed issue of bonds, debentures or other evidences of
indebtedness of a type customarily purchased by institutional
investors. (See item 13.)
7. Investments will not be made in the securities of a company for
the purpose of exercising management or control.
8. Not more than 10% of the voting securities of any one issuer will
be acquired. (It is the present practice of the Account not to
exceed 5% of the voting securities of any one issuer.)
9. Senior securities will not be issued.
10. Short sales of securities will not be made.
11. Purchases will not be made on margin, except for short-term
credits which are necessary for the clearance of transactions, and
for the placement of not more than 5% of its net asset value in
total margin deposits for positions in futures contracts.
12. The Account will not invest in the securities of other investment
companies, except as part of a plan of merger, consolidation or
acquisition of assets.
13. Not more than 5% of the value of the assets of the Account may be
invested in restricted securities (securities which may not be
publicly offered without registration under the Securities Act of
1933).
Changes in the investments of Accounts GIS and TGIS may be made from
time to time to take into account changes in the outlook for particular
industries or companies. The Accounts' investments will not, however, be
concentrated in any one industry; that is, no more than 25% of the value of
their assets will be invested in any one industry. While Accounts GIS and TGIS
may occasionally invest in foreign securities, it is not anticipated that such
investments will, at any time, account for more than 10% of their investment
portfolios.
The assets of Accounts GIS and TGIS will be kept fully invested,
except that (a) sufficient cash may be kept on hand to provide for variable
annuity contract obligations, and (b) reasonable amounts of cash, United States
Government or other liquid securities, such as short-term bills and notes, may
be held for limited periods, pending investment in accordance with their
respective investment policies.
PORTFOLIO TURNOVER
Although Accounts GIS and TGIS intend to purchase securities for
long-term appreciation of capital and income, and do not intend to place
emphasis on obtaining short-term trading profits, such short-term trading may
occur. A higher turnover rate should not be interpreted as indicating a
variation from the stated investment policy of seeking long-term accumulation
of capital, and will normally increase the brokerage costs of Accounts GIS and
TGIS.
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However, negotiated fees and the use of futures contracts will help to reduce
brokerage costs. While there is no restriction on portfolio turnover, Account
GIS expects to have a moderate to high level of portfolio turnover in the range
of 150% to 300%, and Account TGIS expects that its portfolio turnover will be
higher than normal since the Account is being timed by third party investment
advisory services. The portfolio turnover rate for Account GIS for the years
ended December 31, 1993, 1994 and 1995 was 81%, 103% and 96%, respectively.
The portfolio turnover rate for Account TGIS for the years ended December 31,
1993, 1994 and 1995 was 70%, 19% and 79%, respectively.
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may
not be changed without a vote of a majority of the outstanding voting
securities of Account TAS, as defined in the 1940 Act. Account TAS may not:
1. invest more than 5% of its total assets, computed at market value,
in the securities of any one issuer;
2. invest in more than 10% of any class of securities of any one
issuer;
3. invest more than 5% of the value of its total assets in companies
which have been in operation for less than three years;
4. borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of
up to 10% of its gross assets computed at cost; while outstanding,
a borrowing may not exceed one-third of the value of its net
assets, including the amount borrowed; Account TAS has no
intention of attempting to increase its net income by means of
borrowing and all borrowings will be repaid before additional
investments are made; assets pledged to secure borrowings shall be
no more than the lesser of the amount borrowed or 10% of the gross
assets of Account TAS computed at cost;
5. underwrite securities, except that Account TAS may purchase
securities from issuers thereof or others and dispose of such
securities in a manner consistent with its other investment
policies; in the disposition of restricted securities the Account
may be deemed to be an underwriter, as defined in the Securities
Act of 1933 (the "1933 Act");
6. purchase real estate or interests in real estate, except through
the purchase of securities of a type commonly purchased by
financial institutions which do not include direct interest in
real estate or mortgages, or commodities or commodity contracts,
except transactions involving financial futures in order to limit
transaction and borrowing costs and for hedging purposes as
described above;
7. invest for the primary purpose of control or management;
8. make margin purchases or short sales of securities, except for
short-term credits which are necessary for the clearance of
transactions, and to place not more than 5% of its net asset value
in total margin deposits for positions in futures contracts;
9. make loans, except that Account TAS may purchase money market
securities, enter into repurchase agreements, buy publicly and
privately distributed debt securities and lend limited amounts of
its portfolio securities to broker- dealers; all such investments
must be consistent with the Account's investment objective and
policies;
10. invest more than 25% of its total assets in the securities of
issuers in any single industry;
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11. purchase the securities of any other investment company, except in
the open market and at customary brokerage rates and in no event
more than 3% of the voting securities of any investment company;
12. invest in interests in oil, gas or other mineral exploration or
development programs; or
13. invest more than 5% of its net assets in warrants, valued at the
lower of cost or market; warrants acquired by the Account in units
or attached to securities will be deemed to be without value with
regard to this restriction. Account TAS is subject to
restrictions in the sale of portfolio securities to, and in its
purchase or retention of securities of, companies in which the
management personnel of The Travelers Investment Management
Company ("TIMCO") have a substantial interest.
Account TAS may make investments in an amount of up to 10% of the
value of its net assets in restricted securities which may not be publicly sold
without registration under the 1933 Act. In most instances such securities are
traded at a discount from the market value of unrestricted securities of the
same issuer until the restriction is eliminated. If and when Account TAS sells
such portfolio securities, it may be deemed an underwriter, as such term is
defined in the 1933 Act, with respect thereto, and registration of such
securities under the 1933 Act may be required. Account TAS will not bear the
expense of such registration. Account TAS intends to reach agreements with all
such issuers whereby they will pay all expenses of registration. In
determining securities subject to the 10% limitation, Account TAS will include,
in addition to restricted securities, repurchase agreements maturing in more
than seven days and other securities not having readily available market
quotations.
PORTFOLIO TURNOVER
Although Account TAS intends to invest in securities selected
primarily for prospective capital growth and does not intend to place emphasis
on obtaining short-term trading profits, such short-term trading may occur. A
high turnover rate should not be interpreted as indicating a variation from the
stated investment policy, and will normally increase Account TAS's brokerage
costs. While there is no restriction on portfolio turnover, Account TAS's
portfolio turnover rate may be high since the Account is being timed by third
party investment advisory services. The portfolio turnover rate for the years
ended December 31, 1993, 1994 and 1995 was 71%, 142% and 113%, respectively.
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES
INVESTMENT RESTRICTIONS
The investment restrictions set forth in items 1 through 9 below are
fundamental and may not be changed without a vote of a majority of the
outstanding voting securities of Account QB, as defined in the 1940 Act. Items
10 through 14 may be changed by a vote of the Board of Managers of Account QB.
1. Not more than 15% of the value of the assets of Account QB will be
invested in the securities of any one issuer, except obligations
of the United States Government and its instrumentalities, for
which there is no limit.
2. Borrowings will not be made, except that the right is reserved to
borrow from banks for emergency purposes, provided that these
borrowings will not exceed 5% of the value of the assets of
Account QB and that immediately after the borrowing, and at all
times thereafter, and while any borrowing is unrepaid, there will
be asset coverage of at least 300% for all borrowings of Account
QB.
3. Securities of other issuers will not be underwritten, except that
Account QB could be deemed to be an underwriter when engaged in
the sale of restricted securities. (See item 13.)
4. Interests in real estate will not be purchased, except as may be
represented by securities for which there is an established
market.
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5. No purchase of commodities or commodity contracts will be made,
except transactions involving financial futures used as a hedge
against unanticipated changes in prevailing levels of interest
rates.
6. Loans will be made only through the acquisition of a portion of
privately placed issue of bonds, debentures and other evidences of
indebtedness of a type customarily purchased by institutional
investors. (See item 13.)
7. Investments will not be made in the securities of a company for
the purpose of exercising management or control.
8. Not more than 10% of the voting securities of any one issuer will
be acquired.
9. Senior securities will not be issued.
10. Short sales of securities will not be made.
11. Purchases will not be made on margin, except for any short-term
credits that are necessary for the clearance of transactions and
to place up to 5% of the value of its net assets in total margin
deposits for positions in futures contracts.
12. Account QB will not invest in the securities of other investment
companies, except as part of a plan of merger, consolidation or
acquisition of assets.
13. Not more than 5% of the value of the assets of Account QB may be
invested in restricted securities (securities which may not be
publicly offered without registration under the Securities Act of
1933 (the "1933 Act").
14. The average period of maturity (or in the case of mortgage-backed
securities, the estimated average life of cash flows) of all fixed
interest debt instruments held by Account QB will not exceed five
years.
The investments of Account QB will not be concentrated in any one
industry; that is, no more than 25% of the value of its assets will be invested
in any one industry. There is no investment policy as to Account QB's
investment in foreign securities.
PORTFOLIO TURNOVER
Brokerage costs associated with short-term debt instruments are
significantly lower than those incurred on equity investments, and thus, a high
portfolio turnover rate would not adversely affect the brokerage costs of
Account QB to the same extent as high turnover in a separate account which
invests primarily in common stock. The portfolio turnover rate for Account QB
for the years ended December 31, 1993, 1994 and 1995 was 24%, 27% and 138%,
respectively.
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental and may
not be changed without a vote of a majority of the outstanding voting
securities of Account TB, as defined in the 1940 Act. Account TB may not:
1. invest more than 5% of its total assets, computed at market value,
in the securities of any one issuer (exclusive of securities of
the United States Government, its agencies or instrumentalities,
for which there is no limit);
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2. invest in more than 10% of any class of securities of any one
issuer;
3. invest more than 5% of the value of its total assets in companies
which have been in operation for less than three years;
4. borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of
up to 10% of its gross assets computed at cost; while outstanding
according to the 1940 Act, a borrowing may not exceed one-third of
the value of the net assets, including the amount borrowed;
Account TB has no intention of attempting to increase its net
income by borrowing and all borrowings will be repaid before
additional investments are made; assets pledged to secure
borrowings shall be no more than the lesser of the amount borrowed
or 10% of the gross assets computed at cost;
5. underwrite securities, except that Account TB may purchase
securities from issuers thereof or others and dispose of such
securities in a manner consistent with its other investment
policies; in the disposition of restricted securities Account TB
may be deemed to be an underwriter, as defined in the 1933 Act;
6. purchase real estate or interests in real estate, except through
the purchase of securities of a type commonly purchased by
financial institutions which do not include direct interest in
real estate or mortgages, or commodities or commodity contracts,
except transactions involving financial futures in order to limit
transactions and borrowing costs and for hedging purposes as
discussed above;
7. invest for the primary purpose of control or management;
8. make margin purchases or short sales of securities, except for
short-term credits which are necessary for the clearance of
transactions, and to place not more than 5% of its net asset value
in total margin deposits for positions in futures contracts;
9. make loans, except that Account TB may purchase money market
securities, enter into repurchase agreements, buy publicly and
privately distributed debt securities and lend limited amounts of
its portfolio securities to brokers-dealers; all such investments
must be consistent with the investment objective and policies;
10. invest more than 25% of its total assets in the securities of
issuers in any single industry (exclusive of securities of the
United States government, its agencies or instrumentalities, for
which there is no limit); or
11. purchase the securities of any other investment company, except in
the open market and at customary brokerage rates and in no event
more than 3% of the voting securities of any investment company.
When consistent with its investment objectives, Account TB may
purchase securities of brokers, dealers, underwriters or
investment advisers. Account TB is subject to restrictions in the
sale of portfolio securities to, and in its purchase or retention
of securities of, companies in which the management personnel of
Travelers Asset Management International Corporation ("TAMIC")
have a substantial interest.
PORTFOLIO TURNOVER
Brokerage costs associated with debt instruments are significantly
lower than those incurred on equity investments, and thus, a high portfolio
turnover rate would not adversely affect the brokerage costs of Account TB to
the same extent as high turnover in a separate account which invests primarily
in common stock. While there is no restriction on portfolio turnover, Account
TB's turnover rate may be high since the Account is being timed by third party
investment advisory services. The portfolio turnover rate for Account TB for
the years ended December 31, 1993, 1994 and 1995 was 190%, 0% and 117%,
respectively.
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THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES
INVESTMENT RESTRICTIONS
In keeping with the objective of obtaining the highest possible
current income consistent with a high degree of liquidity and preservation of
capital, Account MM operates under the following restrictions, which
restrictions are fundamental and may not be changed without a vote of a
majority of the outstanding voting securities of Account MM, as defined in the
1940 Act. Account MM may not:
1. purchase any security which has a maturity date more than one year
from the date of the Account's purchase;
2. invest more than 25% of its assets in the securities of issuers in
any single industry (exclusive of securities issued by domestic
banks and savings and loan associations, or securities issued or
guaranteed by the United States Government, its agencies,
authorities or instrumentalities). Neither all finance companies,
as a group, nor all utility companies, as a group, are considered
a single industry for the purpose of restriction;
3. invest more than 10% of its assets in the securities of any one
issuer, including repurchase agreements with any one bank or
dealer (exclusive of securities issued or guaranteed by the United
States Government, its agencies or instrumentalities);
4. acquire more than 10% of the outstanding securities of any one
issuer (exclusive of securities issued or guaranteed by the United
States Government, its agencies or instrumentalities); however, in
accordance with Rule 2a-7 of the 1940 Act, to which the Account is
subject, the Account will not invest more than 5% of its assets in
the securities of any one issuer (other than securities issued or
guaranteed by the United States Government or its
instrumentalities);
5. borrow money, except from banks on a temporary basis in an
aggregate amount not to exceed one-third of the Account's assets
(including the amount borrowed); the borrowings may be used
exclusively to facilitate the orderly maturation and sale of
portfolio securities during any periods of abnormally heavy
redemption requests, if they should occur; such borrowings may not
be used to purchase investments and the Account will not purchase
any investment while any such borrowing exists; immediately after
the borrowing, and at all times thereafter while any borrowing is
unrepaid, there will be asset coverage of at least 300% for all
borrowings of the Account;
6. pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Account, except
as may be necessary in connection with any borrowing mentioned
above and in an aggregate amount not to exceed 5% of the Account's
assets;
7. make loans, provided that the Account may purchase money market
securities and enter into repurchase agreements;
8. (a) make investments for the purpose of exercising control; (b)
purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization; (c) invest in real estate (other than money market
securities secured by real estate or interests therein, or money
market securities issued by companies which invest in real estate
or interests therein), commodities or commodity contracts,
interests in oil, gas or other mineral exploration or other
development programs; (d) purchase any securities on margin; (e)
make short sales of securities or maintain a short position or
write, purchase or sell puts, calls, straddles, spreads or
combinations thereof; (f) invest in securities of issuers (other
than agencies, authorities or instrumentalities of the United
States Government) having a record, together with predecessors, of
less than three years of continuous operation if more than 5% of
the Account's assets would be invested in such securities; (g)
purchase or retain securities of any issuer if the officers and
directors of the investment adviser who individually own more than
0.5% of the outstanding securities of such issuer together own
more than 5% of the securities of such issuer; or (h) act as an
underwriter of securities;
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9. invest in securities which under the 1933 Act or other securities
laws cannot be readily disposed of with registration or which are
otherwise not readily marketable at the time of purchase,
including repurchase agreements that mature in more than seven
days, if as a result more than 10% of the value of the Account's
assets is invested in these securities. At present, the Account
has no investments in these securities and has no present
expectation of purchasing any, although it may in the future; and
10. issue senior securities.
PORTFOLIO TURNOVER
A portfolio turnover rate is not applicable to Account MM which
invests only in money market instruments.
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE ANNUITIES
INVESTMENT RESTRICTIONS
In keeping with the objective of obtaining the highest possible
current income consistent with a high degree of liquidity and preservation of
capital, Account TSB operates under the following restrictions, which
restrictions are fundamental and may not be changed without a vote of a
majority of the outstanding voting securities of Account TSB, as defined in the
1940 Act. Account TSB may not:
1. purchase any security which has a maturity date more than three
years from the date such security was purchased;
2. invest more than 25% of its assets in the securities of issuers in
any single industry (exclusive of securities issued by domestic
banks and savings and loan associations, or securities issued or
guaranteed by the United States Government, its agencies,
authorities or instrumentalities); neither all finance companies,
as a group, nor all utility companies, as a group, are considered
a single industry for the purpose of restriction;
3. invest more than 10% of its assets in the securities of any one
issuer, including repurchase agreements with any one bank or
dealer (exclusive of securities issued or guaranteed by the United
States Government, its agencies or instrumentalities);
4. acquire more than 10% of the outstanding securities of any one
issuer (exclusive of securities issued or guaranteed by the United
States Government, its agencies or instrumentalities);
5. borrow money, except from banks on a temporary basis in an
aggregate amount not to exceed one-third of the Account's assets
(including the amount borrowed); the borrowings may be used
exclusively to facilitate the orderly maturation and sale of
portfolio securities during any periods of abnormally heavy
redemption requests, if they should occur; such borrowings may not
be used to purchase investments and the Account will not purchase
any investment while any such borrowing exists; immediately after
the borrowing, and at all times thereafter while any borrowing is
unrepaid, there will be asset coverage of at least 300% for all
borrowings of the Account;
6. pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Account, except
as may be necessary in connection with any borrowing mentioned
above and in an aggregate amount not to exceed 5% of the Account's
assets;
7. make loans, provided that the Account may purchase money market
securities and enter into repurchase agreements;
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8. (a) make investments for the purpose of exercising control; (b)
purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization; (c) invest in real estate (other than money market
securities secured by real estate or interests therein, or money
market securities issued by companies which invest in real estate
or interests therein), commodities or commodity contracts,
interests in oil, gas or other mineral exploration or other
development programs; (d) purchase any securities on margin; (e)
make short sales of securities or maintain a short position or
write, purchase or sell puts, calls, straddles, spreads or
combinations thereof; (f) invest in securities of issuers (other
than agencies, authorities or instrumentalities of the United
States Government) having a record, together with predecessors, of
less than three years of continuous operation if more than 5% of
the Account's assets would be invested in such securities; (g)
purchase or retain securities of any issuer if the officers and
directors of the investment adviser who individually own more than
0.5% of the outstanding securities of such issuer together own
more than 5% of the securities of such issuer; or (h) act as an
underwriter of securities;
9. invest in securities which under the 1933 Act or other securities
laws cannot be readily disposed of with registration or which are
otherwise not readily marketable at the time of purchase,
including repurchase agreements that mature in more than seven
days, if as a result more than 10% of the value of the Account's
assets is invested in these securities. At present, the Account
has no investments in these securities and has no present
expectation of purchasing any, although it may in the future; and
10. issue senior securities.
PORTFOLIO TURNOVER
Brokerage costs associated with short-term debt instruments are
significantly lower than those incurred on equity investments, and thus, a high
portfolio turnover rate would not adversely affect the brokerage costs of
Account TSB to the same extent as high turnover in a separate account which
invests primarily in common stock. While there is no restriction on portfolio
turnover, Account TSB's turnover rate may be high since the Account is being
timed by third party investment advisory services.
DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS AND INVESTMENT
TECHNIQUES AVAILABLE TO THE SEPARATE ACCOUNTS
WRITING COVERED CALL OPTIONS
Accounts GIS, TGIS, TAS and TB may write covered call options on
portfolio securities for which call options are available and which are listed
on a national securities exchange. These call options generally will be
short-term contracts with a duration of nine months or less.
The Accounts will write only "covered" call options, that is, they
will own the underlying securities which are acceptable for escrow when they
write the call option and until the obligation to sell the underlying security
is extinguished by exercise or expiration of the call option, or until a call
option covering the same underlying security and having the same exercise price
and expiration date is purchased. The Accounts will receive a premium for
writing a call option, but give up, until the expiration date, the opportunity
to profit from an increase in the underlying security's price above the
exercise price. The Accounts will retain the risk of loss from a decrease in
the price of the underlying security. Writing covered call options is a
conservative investment technique which is believed to involve relatively
little risk, but which is capable of enhancing an Account's total returns.
The premium received for writing a covered call option will be
recorded as a liability in each Account's Statement of Assets and Liabilities.
This liability will be adjusted daily to the option's current market value,
which will be the latest sale price at the close of the New York Stock
Exchange, or, in the absence of such sale, at the latest
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bid quotation. The liability will be extinguished upon expiration of the
option, the purchase of an identical option in a closing transaction, or
delivery of the underlying security upon exercise of the option.
The Options Clearing Corporation is the issuer of, and the obligor on,
the covered call options written by the Accounts. In order to secure an
obligation to deliver to the Options Clearing Corporation the underlying
security of a covered call option, the Accounts will be required to make escrow
arrangements.
In instances where the Accounts believe it is appropriate to close a
covered call option, they can close out the previously written call option by
purchasing a call option on the same underlying security with the same exercise
price and expiration date. The Accounts may also, under certain circumstances,
be able to transfer a previously written call option.
A previously written call option can be closed out by purchasing an
identical call option only on a national securities exchange which provides a
secondary market in the call option. There is no assurance that a liquid
secondary market will exist for a particular call option at such time. If the
Accounts cannot effect a closing transaction, they will not be able to sell the
underlying security while the previously written option remains outstanding,
even though it might otherwise be advantageous to do so.
If a substantial number of the call options are exercised, the
Accounts' rates of portfolio turnover may exceed historical levels. This would
result in higher brokerage commissions in connection with the writing of
covered call options and the purchase of call options to close out previously
written options. Such brokerage commissions are normally higher than those
applicable to purchases and sales of portfolio securities.
BUYING PUT AND CALL OPTIONS
Accounts GIS, TGIS and TAS may purchase put options on securities
held, or on futures contracts whose price volatility is expected to closely
match that of securities held, as a defensive measure to preserve contract
owners' capital when market conditions warrant. The Accounts may purchase call
options on specific securities, or on futures contracts whose price volatility
is expected to closely match that of securities, eligible for purchase by the
Accounts, in anticipation of or as a substitute for the purchase of the
securities themselves. These options may be listed on a national exchange or
executed "over-the-counter" with a broker-dealer as the counterparty. While
the investment advisers anticipate that the majority of option purchases and
sales will be executed on a national exchange, put or call options on specific
securities or for non-standard terms are likely to be executed directly with a
broker-dealer when it is advantageous to do so. Option contracts will be
short-term in nature, generally less than nine months.
The Accounts will pay a premium in exchange for the right to purchase
(call) or sell (put) a specific number of shares of an equity security or
futures contract at a specified price (the strike price) on or before the
expiration date of the options contract. In either case, each Account's risk
is limited to the option premium paid.
The Accounts may sell the put and call options prior to their
expiration and realize a gain or loss thereby. A call option will expire
worthless if the price of the related security is below the contract strike
price at the time of expiration; a put option will expire worthless if the
price of the related security is above the contract strike price at the time of
expiration.
Put and call options will be employed for bona fide hedging purposes
only. Liquid securities sufficient to fulfill the call option delivery
obligation will be identified and segregated in an account; deliverable
securities sufficient to fulfill the put option obligation will be similarly
identified and segregated. In the case of put options on futures contracts,
portfolio securities whose price volatility is expected to match that of the
underlying futures contract will be identified and segregated.
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FUTURES CONTRACTS
STOCK INDEX FUTURES
Accounts GIS, TGIS and TAS will invest in stock index futures. A
stock index futures contract provides for one party to take and the other to
make delivery of an amount of cash over the hedging period equal to a specified
amount times the difference between a stock index value at the close of the
last trading day of the contract or the selling price and the price at which
the futures contract is originally struck. The stock index assigns relative
values to the common stocks included in the index and reflects overall price
trends in the designated market for equity securities. Therefore, price
changes in a stock index futures contract reflect changes in the specified
index of equity securities on which the futures contract is based. Stock index
futures may also be used, to a limited extent, to hedge specific common stocks
with respect to market (systematic) risk (involving the market's assessment of
overall economic prospects) as distinguished from stock-specific risk
(involving the market's evaluation of the merits of the issuer of a particular
security). By establishing an appropriate "short" position in stock index
futures, the Accounts may seek to protect the value of their equity securities
against an overall decline in the market for equity securities. Alternatively,
in anticipation of a generally rising market, the Accounts can seek to avoid
losing the benefit of apparently low current prices by establishing a "long"
position in stock index futures and later liquidating that position as
particular equity securities are in fact acquired. None of the Accounts will
be a hedging fund; however, to the extent that any hedging strategies actually
employed are successful, the Accounts will be affected to a lesser degree by
adverse overall market price movements unrelated to the merits of specific
portfolio equity securities than would otherwise be the case. Gains and losses
on futures contracts employed as hedges for specific securities will normally
be offset by losses or gains, respectively, on the hedged security.
INTEREST RATE FUTURES
Accounts TGIS, TAS, QB and TB may purchase and sell futures contracts
on debt securities ("interest rate futures") to hedge against anticipated
changes in interest rates that might otherwise have an adverse effect upon the
value of an Account's debt securities. An interest rate futures contract is a
binding contractual commitment which, if held to maturity, will result in an
obligation to make or accept delivery, during a particular future month, of
debt securities having a standardized face value and rate of return.
By purchasing interest rate futures (assuming a "long" position) the
Accounts will be legally obligated to accept the future delivery of the
underlying security and pay the agreed price. This would be done, for example,
when the Account intends to purchase particular debt securities when it has the
necessary cash, but expects the rate of return available in the securities
markets at that time to be less favorable than rates currently available in the
futures markets. If the anticipated rise in the price of the debt securities
should occur (with its concurrent reduction in yield), the increased cost of
purchasing the securities will be offset, at least to some extent, by the rise
in the value of the futures position taken in anticipation of the securities
purchase.
By selling interest rate futures held by it, or interest rate futures
having characteristics similar to those held by it (assuming a "short"
position), the Account will be legally obligated to make the future delivery of
the security against payment of the agreed price. Such a position seeks to
hedge against an anticipated rise in interest rates that would adversely affect
the value of the Account's portfolio debt securities.
Open futures positions on debt securities will be valued at the most
recent settlement price, unless such price does not appear to the Board of
Managers to reflect the fair value of the contract, in which case the positions
will be valued at fair value determined in good faith by or under the direction
of the Board of Managers.
Hedging by use of interest rate futures seeks to establish, with more
certainty than would otherwise be possible, the effective rate of return on
portfolio securities. When hedging is successful, any depreciation in the
value of portfolio securities will substantially be offset by appreciation in
the value of the futures position.
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<PAGE> 79
FUTURES MARKETS AND REGULATIONS
When a futures contract is purchased, the Accounts will set aside, in
an identifiable manner, an amount of cash and cash equivalents equal to the
total market value of the futures contract, less the amount of the initial
margin. The Accounts will incur brokerage fees in connection with their
futures transactions, and will be required to deposit and maintain funds with
brokers as margin to guarantee performance of future obligations.
Positions taken in the futures markets are not normally held to
maturity, but instead are liquidated through offsetting transactions which may
result in a profit or a loss. Closing out an open futures contract sale or
purchase is effected by entering into an offsetting futures contract purchase
or sale, respectively, for the same aggregate amount of the stock index or
interest rate futures contract and the same delivery date. If the offsetting
purchase price is less than the original sale price, the Accounts realize a
gain; if it is more, the Accounts realize a loss. Conversely, if the offsetting
sale price is more than the original purchase price, the Accounts realize a
gain; if less, a loss. While futures positions taken by the Accounts will
usually be liquidated in this manner, the Accounts may instead make or take
delivery of the underlying securities whenever it appears economically
advantageous for them to do so. In determining gain or loss, transaction costs
must also be taken into account. There can be no assurance that the Accounts
will be able to enter into an offsetting transaction with respect to a
particular contract at a particular time.
A clearing corporation associated with the exchange on which futures
are traded guarantees that the sale and purchase obligations will be performed
with regard to all positions that remain open at the termination of the
contract.
All stock index and interest rate futures will be traded on exchanges
that are licensed and regulated by the Commodity Futures Trading Commission
("CFTC"). Stock index futures are currently traded on the New York Futures
Exchange and the Chicago Mercantile Exchange. Interest rate futures are
actively traded on the Chicago Board of Trade and the International Monetary
Market at the Chicago Mercantile Exchange.
The investment advisers do not believe any of the Accounts to be a
"commodity pool" as defined under the Commodity Exchange Act. The Accounts
will only enter into futures contracts for bona fide hedging or other
appropriate risk management purposes as permitted by CFTC regulations and
interpretations, and subject to the requirements of the Securities and Exchange
Commission. The Accounts will not purchase or sell futures contracts for which
the aggregate initial margin exceeds five percent (5%) of the fair market value
of their individual assets, after taking into account unrealized profits and
unrealized losses on any such contracts which they have entered into. The
Accounts will further seek to assure that fluctuations in the price of any
futures contracts that they use for hedging purposes will be substantially
related to fluctuations in the price of the securities which they hold or which
they expect to purchase, although there can be no assurance that the expected
result will be achieved.
As evidence of their hedging intent, the Accounts expect that on
seventy-five percent (75%) or more of the occasions on which they purchase a
long futures contract, they will effect the purchase of securities in the cash
market or take delivery at the close of a futures position. In particular
cases, however, when it is economically advantageous, a long futures position
may be terminated without the corresponding purchase of securities.
SPECIAL RISKS
While certain futures contracts may be purchased and sold to reduce
certain risks, these transactions may entail other risks. Thus, while the
Accounts may benefit from the use of such futures, unanticipated changes in
stock price movements or interest rates may result in a poorer overall
performance for the Account than if it had not entered into such futures
contracts. Moreover, in the event of an imperfect correlation between the
futures position and the portfolio position which is intended to be protected,
the desired protection may not be obtained and the Accounts may be exposed to
risk of loss. The investment advisers will attempt to reduce this risk by
engaging in futures transactions, to the extent possible, where, in their
judgment, there is a significant correlation between changes in the prices of
the futures contracts and the prices of any portfolio securities sought to be
hedged.
In addition to the possibility that there may be a less than perfect
correlation between movements in the futures contracts and securities in the
portfolio being hedged, the prices of futures contracts may not correlate
perfectly with movements in the underlying security due to certain market
distortions. First, rather than meeting variation
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<PAGE> 80
margin deposit requirements should a futures contract value move adversely,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and futures markets.
Second, since margin requirements in the futures market are less onerous than
in the securities market, the futures market may attract more speculators than
the securities market. Increased participation by speculators may cause
temporary price distortions. Due to the possibility of such price distortion,
and also because of the imperfect correlation discussed above, even a correct
forecast of general market trends by the investment advisers may not result in
a successful hedging transaction in the futures market over a short time
period. However, as is noted above, the use of financial futures by the
Accounts is intended primarily to limit transaction and borrowing costs. At no
time will the Accounts use financial futures for speculative purposes.
Successful use of futures contracts for hedging purposes is also
subject to the investment advisers' ability to predict correctly movements in
the direction of the market. However, the investment advisers believe that
over time the value of the Accounts' portfolios will tend to move in the same
direction as the market indices which are intended to correlate to the price
movements of the portfolio securities sought to be hedged.
MONEY MARKET INSTRUMENTS
Money market securities are instruments with remaining maturities of
one year or less, such as bank certificates of deposit, bankers' acceptances,
commercial paper (including master demand notes), and obligations issued or
guaranteed by the United States Government, its agencies or instrumentalities,
some of which may be subject to repurchase agreements.
CERTIFICATES OF DEPOSIT
Certificates of deposit are receipts issued by a bank in exchange for
the deposit of funds. The issuer agrees to pay the amount deposited plus
interest to the bearer of the receipt on the date specified on the certificate.
The certificate usually can be traded in the secondary market prior to
maturity.
Certificates of deposit will be limited to U.S. dollar-denominated
certificates of United States banks which have at least $1 billion in deposits
as of the date of their most recently published financial statements (including
foreign branches of U.S. banks, U.S. branches of foreign banks which are
members of the Federal Reserve System or the Federal Deposit Insurance
Corporation).
The Accounts will not acquire time deposits or obligations issued by
the International Bank for Reconstruction and Development, the Asian
Development Bank or the Inter-American Development Bank. Additionally, the
Accounts do not currently intend to purchase such foreign securities (except to
the extent that certificates of deposit of foreign branches of U.S. banks may
be deemed foreign securities) or purchase certificates of deposit, bankers'
acceptances or other similar obligations issued by foreign banks.
Additionally, Account TSB invests in Euro Certificates of Deposit issued by
banks outside of the United States, with interest and principal paid in U.S.
dollars.
BANKERS' ACCEPTANCES
Bankers' acceptances typically arise from short-term credit
arrangements designed to enable businesses to obtain funds to finance
commercial transactions. Generally, an acceptance is a time draft drawn on a
bank by an exporter or an importer to obtain a stated amount of funds to pay
for specific merchandise. The draft is then "accepted" by the bank which, in
effect, unconditionally guarantees to pay the face value of the instrument on
its maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be
as long as 270 days, most acceptances have maturities of six months or less.
Bankers' acceptances acquired by Accounts MM or TSB must have been accepted by
U.S. commercial banks, including foreign branches of U.S. commercial banks,
having total deposits at the time of purchase in excess of $1 billion, and must
be payable in U.S. dollars.
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<PAGE> 81
COMMERCIAL PAPER RATINGS
Investments in commercial paper are limited to those rated A-1 by
Standard & Poor's Corporation and Prime-1 by Moody's Investors Service, Inc.
Commercial paper rated A-1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) the issuer's
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; (3) the issuer has access to at least two additional
channels of borrowing; (4) basic earnings and cash flow have an upward trend
with allowances made for unusual circumstances; and (5) the issuer's industry
is typically well established and the issuer has a strong position within the
industry.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluating the management of the issuer; (2) economic evaluation
of the issuer's industry or industries and an appraisal of speculative-type
risks which may be inherent in certain areas; (3) evaluation of the issuer's
products in relation to competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings over a period of
ten years; (7) financial strength of a parent company and the relationship
which exists with the issuer; and (8) recognition by the management of
obligations which may be present or may arise as a result of public
preparations to meet such obligations. The relative strength or weakness of
the above factors determines how the issuer's commercial paper is rated within
various categories.
MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangements between the lender (issuer) and the borrower. Master
demand notes may permit daily fluctuations in the interest rate and daily
changes in the amounts borrowed. An Account has the right to increase the
amount under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower may repay up to the full
amount of the note without penalty. Notes purchased by a separate account must
permit it to demand payment of principal and accrued interest at any time (on
not more than seven days notice) or to resell the note at any time to a third
party. Master demand notes may have maturities of more than one year, provided
they specify that (i) the account be entitled to payment of principal and
accrued interest upon not more than seven days notice, and (ii) the rate of
interest on such notes be adjusted automatically at periodic intervals which
normally will not exceed 31 days, but which may extend up to one year. Because
these types of notes are direct lending arrangements between the lender and the
borrower, such instruments are not normally traded, and there is no secondary
market for these notes, although they are redeemable and thus repayable by the
borrower at face value plus accrued interest at any time. Accordingly, the
right to redeem is dependent upon the ability of the borrower to pay principal
and interest on demand. In connection with master demand note arrangements,
the investment adviser considers earning power, cash flow, and other liquidity
ratios of the borrower to pay principal and interest on demand. These notes,
as such, are not typically rated by credit rating agencies. Unless they are so
rated, a separate account may invest in them only if at the time of an
investment the issuer meets the criteria set forth above for commercial paper.
The notes will be deemed to have a maturity equal to the longer of the period
remaining to the next interest rate adjustment or the demand notice period.
UNITED STATES GOVERNMENT SECURITIES
Securities issued or guaranteed by the United States Government
include a variety of Treasury securities that differ only in their interest
rates, maturities and dates of issuance. Treasury Bills have maturities of one
year or less, Treasury Notes have maturities of one to ten years, and Treasury
Bonds generally have maturities of greater than ten years at the date of
issuance.
Securities issued or guaranteed by the United States Government or its
agencies or instrumentalities include direct obligations of the United States
Treasury and securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage
Association, General Services Administration, Central Bank for Cooperatives,
Federal Home Loan Banks, Federal Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Maritime Administration, The
Tennessee Valley Authority, District of Columbia Armory Board and Federal
National Mortgage Association.
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Some obligations of United States Government agencies and
instrumentalities, such as Treasury Bills and Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the United States; others, such as securities of Federal Home Loan
Banks, are supported by the right of the issuer to borrow from the Treasury;
still others, such as bonds issued by the Federal National Mortgage
Association, a private corporation, are supported only by the credit of the
instrumentality. Because the United States Government is not obligated by law
to provide support to an instrumentality it sponsors, the Accounts will invest
in the securities issued by such an instrumentality only when the investment
advisers determine that the credit risk with respect to the instrumentality
does not make the securities unsuitable investments. United States Government
securities will not include international agencies or instrumentalities in
which the United States Government, its agencies or instrumentalities
participate, such as the World Bank, the Asian Development Bank or the
Inter-American Development Bank, or issues insured by the Federal Deposit
Insurance Corporation.
REPURCHASE AGREEMENTS
Interim cash balances may be invested from time to time in repurchase
agreements with approved counterparties. Approved counterparties are limited
to national banks or reporting broker-dealers meeting the Advisor's credit
quality standards as presenting minimal risk of default. All repurchase
transactions must be collateralized by U.S. Government securities with market
value no less than 102% of the amount of the transaction, including accrued
interest. Repurchase transactions generally mature the next business day but,
in the event of a transaction of longer maturity, collateral will be marked to
market daily and, when required, additional cash or qualifying collateral will
be required from the counterparty.
In executing a repurchase agreement, a portfolio purchases eligible
securities subject to the seller's simultaneous agreement to repurchase them on
a mutually agreed upon date and at a mutually agreed upon price. The purchase
and resale prices are negotiated with the counterparty on the basis of current
short-term interest rates, which may be more or less than the rate on the
securities collateralizing the transaction. Physical delivery or, in the case
of "book-entry" securities, segregation in the counterparty's account at the
Federal Reserve for the benefit of the Portfolio is required to establish a
perfected claim to the collateral for the term of the agreement in the event
the counterparty fails to fulfill its obligation.
As the securities collateralizing a repurchase transaction are
generally of longer maturity than the term of the transaction, in the event of
default by the counterparty on its obligation, the Portfolio would bear the
risks of delay, adverse market fluctuation and transaction costs in disposing
of the collateral.
FOREIGN BANK OBLIGATIONS
Accounts MM and TSB may invest in obligations of foreign branches of
U.S. banks or U.S. branches of foreign banks. The obligations of foreign
branches of United States banks may be general obligations of the parent bank
in addition to the issuing branch, or may be limited by the terms of a specific
obligation and by government regulation. Payment of interest and principal
upon these obligations may also be affected by governmental action in the
country of domicile of the branch (generally referred to as "sovereign risk").
In addition, evidences of ownership of such securities may be held outside the
United States and Accounts MM and TSB may be subject to the risks associated
with the holding of such property overseas. Various provisions of federal law
governing domestic branches do not apply to foreign branches of domestic banks.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation as well as by governmental action in the country in which the
foreign bank has its head office. In addition, there may be less publicly
available information about a United States branch of a foreign bank than about
a domestic bank.
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<PAGE> 83
INVESTMENT MANAGEMENT AND ADVISORY SERVICES
The investments and administration of the separate accounts are under
the direction of the Board of Managers. The Travelers Investment Management
Company (TIMCO) furnishes investment management and advisory services to
Accounts GIS, TGIS, TSB and TAS according to the terms of written Investment
Advisory Agreements. The Investment Advisory Agreements between Account TGIS
and TIMCO and Account TSB and TIMCO, were each approved by a vote of the
variable annuity contract owners at their meeting held on April 23, 1993. The
Investment Advisory Agreement between Account GIS and TIMCO was approved by a
vote of the variable annuity contract owners at their meeting held on April 23,
1993, and amended effective May 1, 1994 by virtue of contract owner approval at
a meeting held on April 22, 1994. The Investment Advisory Agreement between
Account TAS and TIMCO was approved by a vote of the variable annuity contract
owners at their meeting held on April 23, 1993, and amended effective May 1,
1996 by virtue of contract owner approval at a meeting held on April 19, 1996.
Travelers Asset Management International Corporation (TAMIC) furnishes
investment management and advisory services to Accounts QB, MM and TB according
to the terms of written Investment Advisory Agreements. The Investment
Advisory Agreements between Account QB and TAMIC, Account MM and TAMIC, and
Account TB and TAMIC, were each approved by a vote of variable annuity contract
owners at their meeting held on April 23, 1993.
The agreements between Accounts GIS, TGIS, TSB and TAS and TIMCO, and
the agreements between Accounts QB, MM and TB and TAMIC, will all continue in
effect as described below in (3), as required by the 1940 Act. Each of the
agreements:
1. provides that for investment management and advisory services, the
Company will pay to TIMCO and TAMIC, on an annual basis, an
advisory fee based on the current value of the assets of the
accounts for which TIMCO and TAMIC act as investment advisers (see
"Advisory Fees" on page ___ of the prospectus);
2. may not be terminated by TIMCO or TAMIC without the prior approval
of a new investment advisory agreement by those casting a majority
of the votes entitled to be cast and will be subject to
termination without the payment of any penalty, upon sixty days
written notice, by the Board of Managers or by a vote of those
casting a majority of the votes entitled to be cast;
3. will continue in effect for a period more than two years from the
date of its execution, only so long as its continuance is
specifically approved at least annually by a vote of a majority of
the Board of Managers, or by a vote of a majority of the
outstanding voting securities of the Accounts. In addition, and
in either event, the terms of the agreements must be approved
annually by a vote of a majority of the Board of Managers who are
not parties to, or interested persons of any party to, the
agreements, cast in person at a meeting called for the purpose of
voting on the approval and at which the Board of Managers has been
furnished the information that is reasonably necessary to evaluate
the terms of the agreements; and
4. will automatically terminate upon assignment.
ADVISORY FEES
The advisory fee for each Separate Account is described in the
prospectus.
The advisory fees paid to TIMCO by each of the Accounts during the
last three fiscal years were:
<TABLE>
<CAPTION>
ACCOUNT GIS ACCOUNT TSB ACCOUNT TGIS ACCOUNT TAS
------------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
1993 $ 1,136,509 $ 1,021,879 $ 681,566 $ 213,623
1994 $ 1,368,700 $ 821,532 $ 322,065 $ 279,503
1995 $ 1,700,124 $ 444,029 $ 479,029 $ 215,616
</TABLE>
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The advisory fees paid to TAMIC by each of the Accounts during the last
three fiscal years were:
<TABLE>
<CAPTION>
ACCOUNT QB ACCOUNT MM ACCOUNT TB
<S> <C> <C> <C>
1993 $ 508,762 $ 245,238 $ 126,188
1994 $ 572,484 $ 262,326 $ 18,297
1995 $ 547,715 $ 254,985 $ 62,947
</TABLE>
TIMCO
Investment decisions for Accounts GIS, TGIS, TSB and TAS will be made
independently from each other and from any other accounts that may be or become
managed by TIMCO. If, however, accounts managed by TIMCO are simultaneously
engaged in the purchase of the same security, then available securities may be
allocated to each account and may be averaged as to price in whatever manner
TIMCO deems to be fair. In some cases, this system might adversely affect the
price or volume of securities being bought or sold by an account, while in
other cases it may produce better executions or lower brokerage rates.
BROKERAGE
Subject to approval of the Board of Managers, and in accordance with
the Investment Advisory Agreements, TIMCO will place purchase and sale orders
for portfolio securities of the Accounts through brokerage firms which it may
select from time to time with the objective of seeking the best execution by
responsible brokerage firms at reasonably competitive rates. To the extent
consistent with this policy, certain brokerage transactions may be placed with
firms which provide brokerage and research services to TIMCO, and such
transactions may be paid for at higher rates than other firms would charge.
The term "brokerage and research services" includes advice as to the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities for purchasers or sellers of securities;
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). These brokerage and research
services may be utilized in providing investment advice to Accounts GIS, TGIS,
TSB and TAS, and may also be utilized in providing investment advice and
management to all accounts over which TIMCO exercises investment discretion,
but not all of such services will necessarily be utilized in providing
investment advice to all accounts. This practice may be expected to result in
greater cost to the Accounts than might otherwise be the case if brokers whose
charges were based on execution alone were used for such transactions. TIMCO
believes that brokers' research services are very important in providing
investment advice to the Accounts, but is unable to give the services a dollar
value. While research services are not expected to reduce the expenses of
TIMCO, TIMCO will, through the use of these services, avoid the additional
expenses which would be incurred if it should attempt to develop comparable
information through its own staff.
Transactions in the over-the-counter market are placed with the
principal market makers unless better price and execution may be obtained
otherwise. Brokerage fees will be incurred in connection with futures
transactions, and Accounts GIS, TGIS and TAS will be required to deposit and
maintain funds with brokers as margin to guarantee performance of future
obligations.
The overall reasonableness of brokerage commissions paid is evaluated
by personnel of TIMCO responsible for trading and managing the portfolios of
Accounts GIS, TGIS, TSB and TAS by comparing brokerage firms utilized by TIMCO
to other firms with respect to the following factors: the prices paid or
received in securities transactions, speed of execution and settlement, size
and difficulty of the brokerage transactions, the financial soundness of the
firms, and the quality, timeliness and quantity of research information and
reports.
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The total brokerage commissions paid by Account GIS for the fiscal
years ended December 31, 1993, 1994 and 1995 were $801,002, $991,682 and
$________, respectively. For the fiscal year ended December 31, 1995,
portfolio transactions in the amount of $___________ were directed to certain
brokers because of research services, of which $_______ was paid in commissions
with respect to these transactions.
The total brokerage commissions paid by Account TGIS for the fiscal
years ended December 31, 1993, 1994 and 1995 were $328,616, $40,276 and
$___________, respectively. For the fiscal year ended December 31, 1995,
portfolio transactions in the amount of $__________ were directed to certain
brokers because of research services, of which $______ was paid in commissions
with respect to these transactions.
The total brokerage commissions paid by Account TAS for the fiscal
years ended December 31, 1993, 1994 and 1995 were $181,952, $458,081 and
$__________, respectively. For the fiscal year ended December 31, 1995,
portfolio transactions in the amount of $___________ were directed to certain
brokers because of research services, of which $_______ was paid in commissions
with respect to these transactions.
No formulas were used in placing portfolio transactions with brokers
which provided research services, and no specific amount of transactions was
allocated for research services. No brokerage business was placed with any
brokers affiliated with TIMCO or its predecessors during the last three fiscal
years.
TAMIC
Investment advice and management for TAMIC's clients (Accounts QB, MM
and TB) are furnished in accordance with their respective investment objectives
and policies and investment decisions for the Accounts will be made
independently from those of any other accounts managed by TAMIC. However,
securities owned by Accounts QB, MM or TB may also be owned by other clients
and it may occasionally develop that the same investment advice and decision
for more than one client is made at the same time. Furthermore, it may develop
that a particular security is bought or sold for only some clients even though
it might be held or bought or sold for other clients, or that a particular
security is bought for some clients when other clients are selling the
security. When two or more accounts are engaged in the purchase or sale of the
same security, the transactions are allocated as to amount in accordance with a
formula which is equitable to each account. It is recognized that in some
cases this system could have a detrimental effect on the price or volume of the
security as far as Accounts QB, MM or TB are concerned. In other cases,
however, it is believed that the ability of the accounts to participate in
volume transactions will produce better executions for the accounts.
BROKERAGE
Subject to approval of the Board of Managers, it is the policy of
TAMIC, in executing transactions in portfolio securities, to seek best
execution of orders at the most favorable prices. The determination of what
may constitute best execution and price in the execution of a securities
transaction by a broker involves a number of considerations, including, without
limitation, the overall direct net economic result to Accounts QB and TB,
involving both price paid or received and any commissions and other cost paid,
the efficiency with which the transaction is effected, the ability to effect
the transaction at all where a large block is involved, the availability of the
broker to stand ready to execute possible difficult transactions in the future,
and the financial strength and stability of the broker. Such considerations are
judgmental and are weighed by management in determining the overall
reasonableness of brokerage commissions paid. Subject to the foregoing, a
factor in the selection of brokers is the receipt of research services,
analyses and reports concerning issuers, industries, securities, economic
factors and trends, and other statistical and factual information. Any such
research and other statistical and factual information provided by brokers is
considered to be in addition to and not in lieu of services required to be
performed by TAMIC under its Investment Advisory Agreements. The cost, value
and specific application of such information are indeterminable and hence are
not practicably allocable among Accounts QB and TB and other clients of TAMIC
who may indirectly benefit from the
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<PAGE> 86
availability of such information. Similarly, Accounts QB and TB may indirectly
benefit from information made available as a result of transactions for such
clients.
Purchases and sales of bonds and money market instruments will usually
be principal transactions and will normally be purchased directly from the
issuer or from the underwriter or market maker for the securities. There
usually will be no brokerage commissions paid for such purchases. Purchases
from the underwriters will include the underwriting commission or concession,
and purchases from dealers serving as market makers will include the spread
between the bid and asked prices. Where transactions are made in the
over-the-counter market, Accounts QB and TB will deal with primary market
makers unless more favorable prices are otherwise obtainable. Brokerage fees
will be incurred in connection with futures transactions, and Accounts QB and
TB will be required to deposit and maintain funds with brokers as margin to
guarantee performance of future obligations.
TAMIC may follow a policy of considering the sale of units of Account
QB and TB a factor in the selection of broker-dealers to execute portfolio
transactions, subject to the requirements of best execution described above.
The policy of TAMIC with respect to brokerage is and will be reviewed
by the Board of Managers periodically. Because of the possibility of further
regulatory developments affecting the securities exchanges and brokerage
practices generally, the foregoing practices may be changed, modified or
eliminated.
The total brokerage commissions paid by Account QB for the fiscal
years ended December 31, 1993, 1994 and 1995 were $87,444, $82,390 $__________,
respectively. For the fiscal year ended December 31, 1995, no portfolio
transactions were directed to certain brokers because of research services.
The total brokerage commissions paid by Account TB for the fiscal
years ended December 31, 1993, 1994 and 1995 were $128,480, $46,680 and
$__________, respectively. For the fiscal year ended December 31, 1995, no
portfolio transactions were directed to certain brokers because of research
services.
No brokerage business was placed with any brokers affiliated with
TAMIC or its predecessors during the last three fiscal years.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Managers, TAMIC is
responsible for the investment decisions and the placement of orders for
portfolio transactions of Account MM. Portfolio transactions occur primarily
with issuers, underwriters or major dealers in money market instruments acting
as principals. Such transactions are normally on a net basis and do not
involve payment of brokerage commissions. The cost of securities purchased
from an underwriter usually includes a commission paid by the issuer to the
underwriter, and transactions with dealers normally reflect the spread between
the bid and asked prices. TAMIC seeks to obtain the best net price and most
favorable execution of orders for the purchase and sale of portfolio
securities.
VALUATION OF SEPARATE ACCOUNT ASSETS
The value of the assets of each Separate Account is determined on each
Valuation Date as of the close of the New York Stock Exchange. If the New York
Stock Exchange is not open for trading on any such day, then such computation
shall be made as of the normal close of the New York Stock Exchange. Each
security traded on a national securities exchange is valued at the last
reported sale price on the Valuation Date. If there has been no sale on that
day, then the value of the security is taken to be the mean between the
reported bid and asked prices on the Valuation Date or on the basis of
quotations received from a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter market and for which market quotations are readily available
is valued at the mean between the quoted bid and asked prices on the Valuation
Date or on the basis of quotations received from a reputable broker or any
other recognized source.
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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 maturing in more than sixty days
for which there is no reliable quoted market price are valued by "marking to
market" (computing a market value based upon quotations from dealers or
issuers for securities of a similar type, quality and maturity). "Marking to
market" takes into account unrealized appreciation or depreciation due to
changes in interest rates or other factors which would influence the current
fair values of such securities. Short-term investments maturing in sixty days
or less for which there is no reliable quoted market price are valued at
amortized cost which approximates market.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment
performance of an investment alternative from one Valuation Period to the next.
The net investment factor is determined by dividing (a) by (b) and adding (c)
to the result where:
(a) is the net result of the Valuation Period's investment income
(including, in the case of assets invested in an underlying mutual
fund, distributions whose ex-dividend date occurs during the
Valuation Period), PLUS capital gains and losses (whether realized
or unrealized), LESS any deduction for applicable taxes (presently
zero);
(b) is the value of the assets at the beginning of the Valuation
Period (or, in the case of assets invested in an underlying mutual
fund, value is based on the net asset value of the mutual fund);
(c) is the net result of 1.000, LESS the Valuation Period deduction
for the insurance charge, LESS the applicable deduction for the
investment advisory fee, and in the case of Accounts TGIS, TSB,
TAS and TB, LESS the applicable deduction for market timing fees
(the deduction for the investment advisory fee is not applicable
in the case of assets invested in an Underlying Fund, since the
fee is reflected in the net asset value of the fund).
The net investment factor may be more or less than one.
PERFORMANCE DATA
YIELD QUOTATIONS OF ACCOUNT MM
Yield quotations of Account MM are calculated using the base period
return for a seven-day period. The base period return is calculated using a
hypothetical pre-existing account having a balance of one accumulation unit at
the beginning of the period; base period return per accumulation unit is equal
to accrued interest on portfolio securities plus or minus amortized purchase
discount or premium less all accrued expenses for investment advisory fees and
mortality and expense guarantees, and less a pro rata portion of the contract
administrative charge (calculated in the manner described under "Average Annual
Total Return" below), divided by the accumulation unit value at the beginning
of the period. Realized capital gains or losses and unrealized appreciation or
depreciation of the portfolio are not included in the base period return, but
are included in accumulation unit values.
Current yield is equal to the base period return multiplied by 365,
and the result divided by 7. The current yield for Account MM for the
seven-day period ended December 31, 1995 was ____%.
Effective yield, which includes the effects of compounding, is equal
to the sum of 1 plus the base period return, raised to a power equal to 365
divided by 7, minus 1. The effective yield for Account MM for the seven-day
period ended December 31, 1995 was ____%.
These quotations do not reflect a deduction for any applicable
surrender charge. If the surrender charge was included, yield and effective
yield would be reduced.
22
<PAGE> 88
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS OF ACCOUNTS GIS, QB, MM, TGIS, TSB, TAS,
TB AND FUND U
STANDARDIZED METHOD. Quotations of average annual total return are
computed according to a formula in which a hypothetical initial investment of
$1,000 is applied to an Investment Alternative, and then related to ending
redeemable values over one, five and ten year periods (or fractional portions
thereof). The quotations reflect the deduction of all recurring charges during
each period (on a pro rata basis in the case of fractional periods). The
deduction for the semi-annual administrative charge ($15) is converted to a
percentage of assets based on the actual fee collected, divided by the average
net assets per contract sold under the Prospectus to which this Statement of
Additional Information relates. Each quotation assumes a total redemption at
the end of each period with the assessment of any applicable surrender charge
at that time. For sub-accounts of Fund U that invest in underlying funds that
were in existence prior to the date the underlying fund became available under
Fund U, average annual total return calculations may include periods prior to
the inception of the Fund U sub-account. Such returns will be calculated by
adjusting the actual returns of the underlying funds to reflect the charges
that would have been assessed under the Fund U sub-account had the underlying
fund been available under Fund U during that period. For Accounts TGIS, TSB,
TAS and TB, market timing fees are included in expenses in the calculation of
performance for periods on or after May 1, 1990, the date on which the market
timing fee became a charge against the daily assets of the timed accounts. The
performance for periods prior to May 1, 1990 does not reflect the deduction of
the market timing fee.
NON-STANDARDIZED METHOD. Accounts GIS, QB, MM, TGIS, TSB, TAS, TB and
Fund U may also show the percentage change in the value of an Accumulation Unit
based on the performance of the Account over a period of time, usually for the
calendar year-to-date, and for the past one-year, three-year, five-year and
seven-year periods, determined by dividing the increase (decrease) in value for
that unit by the Accumulation Unit Value at the beginning of the period. This
percentage figure will reflect the deduction of any asset based charges under
the contracts, but will not reflect the deduction of the semi-annual
administrative charge or surrender charge. The deduction of the semi-annual
administrative charge or surrender charge would reduce any percentage increase
or make greater any percentage decrease. For sub-accounts of Fund U that
invest in underlying funds that were in existence prior to the date the
underlying funds became available under Fund U, the percentage change in the
value of an accumulation unit based on the performance of Fund U over a period
of time may include periods prior to the inception of the Fund U sub-account.
Such returns will be calculated by adjusting the actual returns of the
underlying funds to reflect the charges that would have been assessed under the
Fund U sub-account had the underlying fund been available under Fund U during
that period.
TOTAL RETURN QUOTATIONS FOR TIMED ACCOUNTS. Because Accounts TGIS,
TSB, TAS and TB are primarily available to Contract Owners who have entered
into third party market timing services agreements, the Accounts may experience
wide fluctuations in assets over a given time period. Consequently,
performance data computed according to both the standardized and
non-standardized methods for Accounts TGIS, TSB, TAS and TB may not always be
useful in evaluating the performance of these Accounts. In addition,
performance data for Accounts TGIS, TSB, TAS and TB alone will not generally be
useful to the purchase of evaluating the performance of a market timing
strategy that uses these Accounts.
GENERAL. Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. Advertisements may include data
comparing performance to well-known indices of market performance (including,
but not limited to, the Dow Jones Industrial Average, the Standard & Poor's
(S&P) 500 Index, and the S&P 400 Index, the Lehman Brothers Long T-Bond Index,
the Russell 1000, 2000 and 3000 Indices, the Value Line Index, and the Morgan
Stanley Capital International's EAFE Index). Advertisements may also include
published editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of
separate accounts and mutual funds.
Average annual total returns of each Separate Account computed
according to the standardized and non-standardized methods for the periods
ended December 31, 1995 are set forth in the following table.
23
<PAGE> 89
(FIGURES TO BE UPDATED FOR 1996)
24
<PAGE> 90
<TABLE>
<CAPTION>
STANDARDIZED NON-STANDARDIZED INCEPTION
DATE
1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Account GIS (6.48)% 4.32% 9.40% (1.27)% 2.37% 5.48% 9.74% 5/83
Account QB (7.57)% 5.31% 7.26% (2.42)% 4.01% 6.44% 7.50% 5/83
Account MM (2.55)% 2.46% 4.67% 2.75% 2.26% 3.67% 5.00% 5/83
Account TGIS (9.64)% 1.98% 7.50%* (4.61)% 1.02% 3.21%* -- 1/88
Account TSB(1) (3.96)% 1.13% 3.38%* 1.33% 0.91% 2.38%* -- 11/87
Account TAS (12.07)% 6.39% 7.40%* (7.16)% 4.50% 7.50%* -- 11/87
Account TB (6.69)% 2.02% 2.42%* (1.49)% 3.77% 3.24%* -- 11/87
Fund U **--
Managed Assets Trust (8.57)% 4.52% 9.89% (3.47)% 2.67% 5.67 5/83
High Yield Bond Trust (7.64)% 5.49% 6.36% (2.49)% 7.04% 6.61% 6.69% 5/83
Capital Appreciation Fund(2)(10.93)% 7.93% 8.88% (5.96)% 7.47% 8.99% 9.23% 5/83
U.S. Government Securities Portfolio (11.74)% 0.48%* -- (6.82)% 2.48%* -- -- 1/92
Social Awareness Stock Portfolio (8.90)% 1.83% -- (3.83)% 3.95%* -- -- 5/92
Utilities Portfolio (4.71)%* -- -- 0.55%* -- -- -- 2/94
Templeton Bond Fund (11.02)% 4.13% 5.09%* (6.06)% 2.50% 5.29% 5.41%* 8/88
Templeton Stock Fund (8.52)% 7.30% 8.72%* (3.42)% 10.56% 8.38% 9.05%* 8/88
Templeton Asset Allocation Fund (9.32)% 6.76% 8.12%* (4.17)% 8.39% 7.85% 8.44%* 8/88
Fidelity's High Income Portfolio (7.90)% 11.69% 9.21%* (2.77)% 12.11% 12.66% 9.55%* 9/85
Fidelity's Equity-Income Portfolio 0.44% 8.08% 9.23%* 5.74% 12.55% 9.14% 9.57%* 10/86
Fidelity's Growth Portfolio (6.47)% 8.46% 10.83%* (1.26)% 7.93% 9.51% 11.17%* 10/86
Fidelity's Asset Manager Portfolio (12.15)% 8.28% 8.51% (7.26)% 6.99% 9.33% 8.84% 9/89
Dreyfus Stock Index Fund (5.63)% 5.70% 6.52% (0.37)% 4.40% 6.82% 6.85% 9/89
American Odyssey Core Equity Fund (7.40)% (3.98)% -- (2.24)% 0.62%* -- -- 5/93
American Odyssey
Emerging Opportunities Fund 3.00% 6.61%* -- 8.31% 9.80%* -- -- 5/93
American Odyssey
International Equity Fund (12.99)% 1.72%* -- (8.13)% 4.98%* -- -- 5/93
American Odyssey
Long-Term Bond Fund (11.84)% (2.76)%* -- (6.93)% 0.58%* -- -- 5/93
American Odyssey
Intermediate-Term Bond Fund (9.12)% (3.79)%* -- (4.05)% 0.43%* -- -- 5/93
American Odyssey
Short-Term Bond Fund (6.58)% (2.98)%* -- (1.38)% 0.36%* -- -- 5/93
Smith Barney Income
and Growth Portfolio (6.94)%* -- -- (1.89)%* -- -- -- 6/94
Alliance Growth Portfolio (0.48)% -- -- 4.68%* -- -- -- 6/94
Smith Barney
International Equity Portfolio (6.36)%* -- -- (4.55)%* -- -- -- 6/94
Putnam Diversified
Income Portfolio (4.34)%* -- -- 0.81%* -- -- -- 6/94
G.T. Global Strategic
Income Portfolio (10.41)%* -- -- (5.54)%* -- -- -- 6/94
Smith Barney
High Income Portfolio (6.36)%* -- -- (1.28)%* -- -- -- 6/94
MFS Total Return
Portfolio (7.20)%* -- -- (2.16)%* -- -- -- 6/94
</TABLE>
* Since inception date.
** For those Fund U sub-accounts that invest in underlying funds that were in
existence prior to the date on which the underlying fund became available under
the Contract, performance figures represent actual returns of the underlying
funds, adjusted to reflect the charges that would have been assessed had those
underlying funds been offered under Fund U during the entire period shown.
(1) Formerly The Travelers Timed Money Market Account for Variable Annuities
(Account TMM).
(2) Formerly Aggressive Stock Trust.
25
<PAGE> 91
THE BOARD OF MANAGERS
The investments and administration of each of the Separate Accounts
are under the direction of the Board of Managers, listed below. Members of the
Board of Managers of Accounts GIS, QB, MM, TGIS, TSB, TAS and TB are elected
annually by those Contract Owners participating in the Separate Accounts. A
majority of the members of the Board of Managers are persons who are not
affiliated with The Travelers Insurance Company, TIMCO, TAMIC or their
affiliates.
<TABLE>
<CAPTION>
Name Present Position and Principal Occupation During Last Five Years
---- ----------------------------------------------------------------
<S> <C>
* Heath B. McLendon Managing Director (1993-present), Smith Barney Inc. ("Smith Barney");
Chairman and Member Chairman (1993-present), Smith Barney Strategy Advisors, Inc.;
388 Greenwich Street President (1994-present), Smith Barney Mutual Funds Management Inc.;
New York, New York Chairman and Director of forty-one investment companies associated with
Age 62 Smith Barney; Chairman, Board of Trustees, Drew University; Trustee,
The East New York Savings Bank; Advisory Director, First Empire State
Corporation; Chairman, Board of Managers, seven Variable Annuity
Separate Accounts of The Travelers Insurance Company+; Chairman, Board
of Trustees, five Mutual Funds sponsored by The Travelers Insurance
Company++; prior to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers Inc.
Knight Edwards Of Counsel (1988-present), Partner (1956-1988), Edwards & Angell,
Member Attorneys; Member, Advisory Board (1973-1994), thirty-one mutual funds
2700 Hospital Trust Tower sponsored by Keystone Group, Inc.; Member, Board of Managers, seven
Providence, Rhode Island Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Age 72 Trustee, five Mutual Funds sponsored by The Travelers Insurance
Company++.
Robert E. McGill, III Retired manufacturing executive. Director (1983-1995), Executive Vice
Member President (1989-1994) and Senior Vice President, Finance and
295 Hancock Street Administration (1983-1989), The Dexter Corporation (manufacturer of
Williamstown, Massachusetts specialty chemicals and materials); Vice Chairman (1990-1992), Director
Age 64 (1983-1995), Life Technologies, Inc. (life science/biotechnology
products); Director, (1994-present), The Connecticut Surety Corporation
(insurance); Director (1995-present), Calbiochem Novachem International
(life science/biotechnology products); Director (1995-present), Chemfab
Corporation (specialty materials manufacturer); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company++.
Lewis Mandell Dean, College of Business Administration (1995-present), Marquette
Member University; Professor of Finance (1980-1995) and Associate Dean
606 N. 13th Street (1993-1995), School of Business Administration, and Director, Center
Milwaukee, WI 53233 for Research and Development in Financial Services (1980-1995),
Age 53 University of Connecticut; Director (1992-present), GZA
Geoenvironmental Tech, Inc. (engineering services); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company++.
</TABLE>
26
<PAGE> 92
<TABLE>
<S> <C>
Frances M. Hawk Portfolio Manager (1992-present), HLM Management Company, Inc.
Member (investment management); Assistant Treasurer, Pensions and Benefits.
222 Berkeley Street Management (1989-1992), United Technologies Corporation (broad- based
Boston, Massachusetts designer and manufacturer of high technology products); Member, Board
Age 48 of Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company++.
Ernest J. Wright Assistant Secretary (1994-present), Counsel (1987-present), The
Secretary to the Board Travelers Insurance Company; Secretary, Board of Managers, seven
One Tower Square Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 55 Travelers Insurance Company++.
Kathleen A. McGah Assistant Secretary and Counsel (1995-present), The Travelers Insurance
Assistant Secretary to the Board Company; Assistant Secretary, Board of Managers, seven Variable Annuity
One Tower Square Separate Accounts of The Travelers Insurance Company+; Assistant
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 45 Travelers Insurance Company++. Prior to January 1995, Counsel, ITT
Hartford Life Insurance Company.
</TABLE>
+ These seven Variable Annuity Separate Accounts are: The Travelers Growth
and Income Stock Account for Variable Annuities, The Travelers Quality
Bond Account for Variable Annuities, The Travelers Money Market Account
for Variable Annuities, The Travelers Timed Growth and Income Stock
Account for Variable Annuities, The Travelers Timed Short-Term Bond
Account for Variable Annuities, The Travelers Timed Aggressive Stock
Account for Variable Annuities and The Travelers Timed Bond Account for
Variable Annuities.
++ These five Mutual Funds are: Capital Appreciation Fund, Cash Income
Trust, High Yield Bond Trust, Managed Assets Trust and The Travelers
Series Trust.
* Mr. McLendon is an "interested person" within the meaning of
the 1940 Act by virtue of his position as Managing Director of Smith Barney
Inc., an indirect wholly owned subsidiary of Travelers Group Inc. and also owns
shares and options to purchase shares of Travelers Group Inc., the indirect
parent of The Travelers Insurance Company.
The Company is responsible for payment of the fees and expenses of the
Board of Managers, and the expenses of audit of the Separate Accounts, as well
as other expenses for services related to the operations of the accounts, for
which it deducts certain amounts from purchase payments and from the accounts.
Members of the Board of Managers who are also officers or employees of
Travelers Group Inc. or its subsidiaries are not entitled to any fee. Members
of the Board of Managers who are not affiliated as employees of Travelers Group
Inc. or its subsidiaries receive an aggregate retainer of $17,000 for service
on the Boards of the seven Variable Annuity Separate Accounts established by
The Travelers Insurance Company and the five Mutual Funds sponsored by The
Travelers Insurance Company. They also receive an aggregate fee of $2,000 for
each meeting of such Boards attended.
27
<PAGE> 93
DISTRIBUTION AND MANAGEMENT SERVICES
Under the terms of a Distribution and Management Agreement between
each Separate Account, the Company and Tower Square Securities, Inc., the
Company provides all sales and administrative services and mortality and
expense risk guarantees related to variable annuity contracts issued by the
Company in connection with the Separate Accounts and assumes the risk of
minimum death benefits, as applicable. The Company also pays all sales costs
(including costs associated with the preparation of sales literature); all
costs of qualifying the Separate Accounts and the variable annuity contracts
with regulatory authorities; the costs of proxy solicitation; all custodian,
accountants' and legal fees; and all compensation paid to the unaffiliated
members of the Board of Managers. In addition, under the terms of the
Distribution and Management Agreements between the Company and Accounts TGIS,
TSB, TAS and TB, the Company deducts amounts necessary to pay fees to
third-party registered investment advisers which provide market timing
investment advisory services to Contract Owners in those accounts and, in turn,
pays such fees to the registered investment advisers. The Company also
provides without cost to the Separate Accounts all necessary office space,
facilities, and personnel to manage its affairs.
The Company received the following amounts from the Separate Accounts
in each of the last three fiscal years for services provided under the
Distribution and Management Agreements:
<TABLE>
<CAPTION>
SEPARATE ACCOUNT 1995 1994 1993
---------------- ---- ---- ----
<S> <C> <C> <C>
GIS $ $ 4,025,788 $ 4,239,811
QB $ $ 2,156,643 $ 1,903,669
MM $ $ 1,107,288 $ 1,050,585
U $ $ 17,248,780 $ 7,219,329
TGIS $ $ 1,409,471 $ 2,872,771
TSB $ $ 3,525,570 $ 4,308,973
TAS $ $ 1,238,375 $ 874,790
TB $ $ 47,835 $ 332,985
</TABLE>
SECURITIES CUSTODIAN
Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New
York, is the custodian of the portfolio securities and similar investments of
Accounts GIS, QB, MM, TGIS, TSB, TAS and TB.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., Independent Accountants, 100 Pearl Street,
Hartford, Connecticut, are the independent auditors for Accounts GIS, QB, MM,
TGIS, TSB, TAS, TB and Fund U. The services provided to these Separate
Accounts include primarily the examination of the Accounts' financial
statements. The financial statements of Account GIS, QB, MM, TGIS, TSB, TAS,
TB and Fund U included or incorporated by reference in the Prospectus,
Statement of Additional Information and their respective Registration
Statements have been audited by Coopers & Lybrand L.L.P., as indicated in their
reports thereon, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
The financial statements for Accounts GIS, QB, MM, TGIS, TSB, TAS, TB
and Fund U contained in the December 31, 1995 Annual Reports to Contract Owners
are incorporated herein by reference. A copy may be obtained
28
<PAGE> 94
by writing to The Travelers Insurance Company, Annuity Services, One Tower
Square, Hartford, Connecticut 06183, or by calling 1-800-842-9368.
The financial statements of the Company, should be considered only as
bearing upon the Company's ability to meet its obligations under the Contract,
not as bearing on the investment performance of the Separate Accounts.
29
<PAGE> 95
THIS PAGE INTENTIONALLY LEFT BLANK.
30
<PAGE> 96
THE TRAVELERS (logo umbrella)
THE TRAVELERS
VARIABLE ANNUITIES
INDIVIDUAL AND GROUP VARIABLE ANNUITY CONTRACTS
Issued By
THE TRAVELERS INSURANCE COMPANY
PENSION AND PROFIT-SHARING,
SECTION 403(b) AND SECTION 408, AND
DEFERRED COMPENSATION PROGRAMS
L-11165S TIC Ed. 5-96
Printed in U.S.A.
31
<PAGE> 97
PART C
OTHER INFORMATION
Item 28. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of
Independent Accountants thereto will be provided in a subsequent
Post-Effective Amendment.
The consolidated financial statements of The Travelers Insurance
Company and Subsidiaries and the Report of Independent Accountants
will be provided in a subsequent Post-Effective Amendment.
(b) Exhibits
1. Resolution of The Travelers Insurance Company's Board of
Directors authorizing the establishment of the Registrant.
2. Rules and Regulations of the Registrant.
3. Custody Agreement between the Registrant and Chase Manhattan
Bank, N. A., Brooklyn, New York. (Incorporated herein by
reference to Exhibit 3 to the Registration Statement on Form N-3
filed on April 26, 1995.)
4. Investment Advisory Agreement between the Registrant and The
Travelers Investment Management Company and Amendment to the
Investment Advisory Agreement.
5(a). Distribution and Management Agreement among the Registrant, The
Travelers Insurance Company and Tower Square Securities, Inc.
(Incorporated herein by reference to Exhibit 5 to the
Registration Statement on Form N-3 filed April 26, 1995.)
5(b). Selling Agreement
6. Form of Variable Annuity Contracts.
7. Form of Application(s). (To be filed by amendment.)
8(a). Charter of The Travelers Insurance Company, as amended on October
19, 1994. (Incorporated herein by reference to Exhibit 3(a)(i)
to the Registration Statement Form S-2-, File No. 33-58677, filed
via Edgar on April 18, 1995.)
8(b). By-Laws of The Travelers Insurance Company, as amended on October
20, 1994. (Incorporated herein by reference to Exhibit 3(b)(i) to
the Registration Statement Form S-2-, File No. 33-58677, filed
via Edgar on April 18, 1995.)
12. Opinion of Counsel as to the legality of the securities being
registered. (Incorporated herein by reference to the
Registrant's most recent 24f-2 Notice filed on February 27,
1996.)
13(a). Consent of Coopers & Lybrand L.L.P., Independent Accountants, to
the use of their name and their opinion in Part A and Part B of
this Form N-3 - to be filed in a subsequent Post-Effective
Amendment.
<PAGE> 98
13(b). Consent of KPMG Peat Marwick LLP Independent Auditors, to the
inclusion in this Form N-3 of their report on the financial
statements of The Travelers Insurance Company contained in Part B
of this Registration Statement - to be filed in a subsequent
Post-Effective Amendment.
16. Schedule for Computation of Total Return Calculations -
Standardized and Non-Standardized - to be filed in a subsequent
Post-Effective Amendment.
17. Representation concerning reliance upon No-Action Letter IP-6-88.
18(a) Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Heath B. McLendon, Knight Edwards, Robert
E. McGill, III, Lewis Mandell and Frances M. Hawk.
18(b). Power of Attorney authorizing Ernest J. Wright as signatory for
Jay S. Fishman.
18(c). Powers of Attorney authorizing Jay S. Fishman or Ernest J. Wright
as signatory for Robert I. Lipp, Charles O. Prince, III, Marc P.
Weill, Irwin R. Ettinger, Michael A. Carpenter and Donald T.
DeCarlo. (Incorporated herein by reference to Exhibits 18(b)and
18(c) to the Registration Statement on Form N-3 filed on April
26, 1995.)
18(d) Power of Attorney authorizing Jay S. Fishman or Ernest J. Wright
as signatory for Michael A. Carpenter and Christine B. Mead.
27. Financial Data Schedule - to be filed in a subsequent
Post-Effective Amendment.
<PAGE> 99
Item 29. Directors and Officers of The Travelers Insurance Company
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Insurance Company with Registrant
- -------------------------- ---------------------- -----------------
<S> <C>
Robert I. Lipp* Director, Chairman of the Board
----
Michael A. Carpenter* Director, President and
Chief Executive Officer ----
Jay S. Fishman* Director and Vice Chairman
and Chief Financial Officer ----
Charles O. Prince, III** Director
----
Marc P. Weill** Director and Senior Vice President
----
Irwin R. Ettinger** Director
----
Donald T. DeCarlo* Director, General Counsel
and Secretary ----
Stuart Baritz** Senior Vice President
----
Jay S. Benet* Senior Vice President
----
George C. Kokulis* Senior Vice President
----
Warren H. May* Senior Vice President
----
Christine B. Mead* Vice President and Controller
----
William H. White* Vice President and Treasurer
----
Ian R. Stuart* Vice President and Financial Officer
----
Kathleen M. D'Auria* Vice President
----
Elizabeth Charron* Vice President
----
Robert C. Hamilton* Vice President
----
Charles N. Vest* Vice President and Actuary
----
Bethann C. Maas Second Vice President
----
Ernest J. Wright* Assistant Secretary and Counsel Secretary to the
Board of Managers
Kathleen A. McGah Assistant Secretary and Counsel Assistant Secretary
* Principal Business Address: **
The Travelers Insurance Company Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013
</TABLE>
<PAGE> 100
Item 30. Persons Controlled by or Under Common Control with the Depositor or
Registrant.
To be filed by amendment.
<PAGE> 101
Item 31. Number of Contract Owners
As of March 31, 1996, _____ qualified and non-qualified contract owners held
contracts offered by the Registrant.
Item 32. Indemnification
Pursuant to the provisions of Article VI of the Rules and Regulations of the
Registrant, indemnification is provided to members of the Board of Managers,
and the officers and employees of the Registrant in accordance with the
standards established by Section 33-320a of the Connecticut General Statutes
("C.G.S.") relating to indemnification under the Connecticut Stock Corporation
Act.
Section 33-320a of the Connecticut General Statutes regarding indemnification
of directors and officers of Connecticut corporations provides in general that
Connecticut corporations shall indemnify their officers, directors and certain
other defined individuals against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses actually incurred in connection with
proceedings against the corporation. The corporation's obligation to provide
such indemnification generally does not apply unless (1) the individual is
successful on the merits in the defense of any such proceeding; or (2) a
determination is made (by persons specified in the statute) that the individual
acted in good faith and in the best interests of the corporation; or (3) the
court, upon application by the individual, determines in view of all of the
circumstances that such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine. With
respect to proceedings brought by or in the right of the corporation, the
statute provides that the corporation shall indemnify its officers, directors
and certain other defined individuals, against reasonable expenses actually
incurred by them in connection with such proceedings, subject to certain
limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Registrant. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 102
Item 33. Business and Other Connections of Investment Adviser
Officers and Directors of The Travelers Investment Management Company (TIMCO),
the Registrant's Investment Adviser, are set forth in the following table:
<TABLE>
<CAPTION>
Name Position with TIMCO Other Business
- ---- ------------------- --------------
<S> <C> <C>
Jeffrey B. Lane Director and Chairman Vice Chairman
Smith Barney Inc.*
Kent A. Kelley Director and Chief**
Executive Officer -----
Sandip A. Bhagat Director and President** -----
Heath B. McLendon Director Managing Director
Smith Barney Inc.*
Jacob E. Hurwitz Senior Vice President** -----
Emil Molinaro Vice President Vice President
Travelers Group Inc.*
Daniel B. Willey Vice President ** -----
Gloria G. Williams Assistant Vice President** -----
James W. Churm Corporate Secretary Senior Vice President
Smith Barney Inc.*
Michael Day Treasurer Managing Director
Smith Barney Inc.**
</TABLE>
* Address: Smith Barney Inc., 388 Greenwich Street, New York, New York,
10013
** Address: One Tower Square, Hartford, Connecticut 06183
<PAGE> 103
Item 34. Principal Underwriter
(a) Tower Square Securities, Inc.
One Tower Square
Hartford, Connecticut 06183
Tower Square Securities, Inc. also serves as principal underwriter for the
following :
The Travelers Growth and Income Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund UL II for Variable Life Insurance
The Travelers Fund BD for Variable Annuities
The Travelers Fund BD II for Variable Annuities
The Travelers Fund VA for Variable Annuities
The Travelers Variable Life Insurance Separate Account One
The Travelers Variable Life Insurance Separate Account Three
The Travelers Fund ABD for Variable Annuities
The Travelers Fund ABD II for Variable Annuities
The Travelers Separate Account QP for Variable Annuities
The Travelers Separate Account QP II for Variable Annuities
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ --------------------- ---------------------
<S> <C> <C> <C>
Russell H. Johnson Chairman and Chief -----
Executive Officer
Donald R. Munson, Jr. Director, President and Chief -----
Operating Officer
Gregory C. Macdonald Director -----
George C. Kokulis Director -----
Robert C. Hamilton Director and Senior -----
Vice President
Thomas P. Tooley Vice President, Life Marketing -----
George A. Ryan Vice President -----
Jeffrey A. Barker Regional Vice President -----
Walter Melnik, Jr. Regional Vice President -----
Raymond W. Sheridan Regional Vice President -----
William F. Scully, III Treasurer and -----
Vice President of Operations
William H. White Assistant Treasurer -----
Charles B. Chamberlain Assistant Treasurer -----
George M. Quaggin Assistant Treasurer -----
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Cynthia P. Macdonald Chief Compliance Officer -----
John J. Williams, Jr. Assistant Compliance Officer -----
Susan M. Curcio Operations Manager -----
</TABLE>
* Principal business address: One Tower Square, Hartford, Connecticut 06183
<PAGE> 104
(c) Tower Square Securities, Inc. serves as the principal underwriter.
The compensation listed below is for the year ending December 31, 1995.
<TABLE>
<CAPTION>
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation
- ----------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Tower Square $ 0 $ 0 $ 0 $ 0
Securities, Inc.
</TABLE>
Item 35. Location of Accounts and Records
(1) The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(2) Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, New York 11245
Item 36. Management Services
Inapplicable.
Item 37. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may
be accepted;
(b) To include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a post
card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of
Additional Information;
(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-3 promptly
upon written or oral request.
(d) To include in any registration statement filed in connection with a
contract used as a funding vehicle for retirement plans meeting the
requirements of Section 403(b) of the Internal Revenue Code a
representation that the Registrant is relying upon No-Action Letter
IP-6-88 issued to the American Council of Life Insurance. (See
Exhibit 17.)
<PAGE> 105
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this amendment to this Registration Statement
to be signed on its behalf, in the City of Hartford, State of Connecticut, on
February 29, 1996.
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
(Registrant)
By: *HEATH B. McLENDON
---------------------------------
Heath B. McLendon
Chairman of the Board of Managers
Pursuant to the requirements of the Securities Act of 1933, this amendment to
this Registration Statement has been signed below by the following persons in
the capacities indicated on February 29, 1996.
<TABLE>
<S> <C>
*HEATH B. McLENDON Chairman, Board of Managers
- -------------------------------------------
(Heath B. McLendon)
*KNIGHT EDWARDS Member, Board of Managers
- -------------------------------------------
(Knight Edwards)
*ROBERT E. McGILL, III Member, Board of Managers
- ------------------------------------------
(Robert E. McGill, III)
*LEWIS MANDELL Member, Board of Managers
- -------------------------------------------
(Lewis Mandell)
*FRANCES M. HAWK Member, Board of Managers
- -------------------------------------------
(Frances M. Hawk)
</TABLE>
*By: /s/Ernest J. Wright
----------------------------------
Ernest J. Wright, Attorney-in-Fact
Secretary, Board of Managers
<PAGE> 106
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this amendment to this Registration Statement
to be signed on its behalf, in the City of Hartford, State of Connecticut, on
February 29, 1996.
THE TRAVELERS INSURANCE COMPANY
(Registrant)
By: /s/ Jay S. Fishman
-----------------------
Jay S. Fishman
Vice Chairman and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment to
this Registration Statement has been signed below by the following persons in
the capacities indicated on February 29, 1996.
<TABLE>
<S> <C>
*ROBERT I. LIPP Director, Chairman of the Board
- -------------------------------------------
(Robert I. Lipp)
*MICHAEL A. CARPENTER Director, President and
- ------------------------------------------- Chief Executive Officer
(Michael A. Carpenter)
/s/JAY S. FISHMAN Director, Vice Chairman and
- ------------------------------------------- Chief Financial Officer
(Jay S. Fishman)
*CHARLES O. PRINCE, III Director
- -------------------------------------------
(Charles O. Prince, III)
*MARC P. WEILL Director
- -------------------------------------------
(Marc P. Weill)
*IRWIN R. ETTINGER Director
- -------------------------------------------
(Irwin R. Ettinger)
*DONALD T. DeCARLO Director
- -------------------------------------------
(Donald T. DeCarlo)
/s/CHRISTINE B. MEAD Vice President and Controller
- ------------------------------------------
(Christine B. Mead)
</TABLE>
*By: /s/Jay S. Fishman
--------------------------------------
Jay S. Fishman, Attorney-in-Fact
<PAGE> 107
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------------------ ----------------
<S> <C> <C>
1. Board of Directors authorizing the establishment of Electronically
Resolution of The Travelers Insurance Company's
the Registrant.
2. Rules and Regulations of the Registrant. Electronically
3. Form of Custody Agreement between the Registrant
and Chase Manhattan Bank, N. A., Brooklyn,
New York. (Incorporated herein by reference to
Exhibit 3 to the Registration Statement on Form N-3
filed on April 26, 1995.)
4. Investment Advisory Agreement between the Registrant Electronically
and The Travelers Investment Management Company
and Amendment to the Investment Advisory Agreement.
5(a). Distribution and Management Agreement among the
Registrant, The Travelers Insurance Company and
Tower Square Securities, Inc. (Incorporated herein by
reference to Exhibit 5 to the Registration Statement on
Form N-3 filed on April 26, 1995.)
5(b). Selling Agreement Electronically
6. Form of Variable Annuity Contract. Electronically
7. Form of Applications To be filed by
amendment.
8(a). Charter of The Travelers Insurance Company, as amended
on October 19, 1994. (Incorporated herein by reference to
Exhibit 3(a)(i) to the Registration Statement filed on Form S-2,
File No. 33-58677, filed via Edgar on April 18, 1995.)
8(b). By-Laws of The Travelers Insurance Company, as amended
on October 20, 1994. (Incorporated herein by reference to
Exhibit 3(b)(i) to the Registration Statement filed on Form S-2,
File No. 33-58677, filed via Edgar on April 18, 1995.)
12. Opinion of Counsel as to the legality of the securities
being registered. (Incorporated herein by reference to
the Registrant's most recent 24f-2 Notice filed on
February __, 1996.)
</TABLE>
<PAGE> 108
<TABLE>
<S> <C> <C>
13(a). Consent of Coopers & Lybrand L.L.P., Independent To be filed by
Accountants, to the incorporation by reference in this amendment
Form N-3 of their report on the audited financial
statements of the Registrant, to the inclusion of their
13(b). Consent of KPMG Peat Marwick LLP, Independent To be filed by
Auditors, to the inclusion in this Form N-3 of their amendment
report on the financial statements of The Travelers
Insurance Company contained in Part B of this
Registration Statement.
16. Schedule for Computation of Total Return Calculations - To be filed by
Standardized and Non-Standardized. amendment
17. Representation concerning reliance upon No-Action Electronically
Letter IP-6-88.
18(a). Powers of Attorney authorizing Ernest J. Wright or Electronically
Kathleen A. McGah as signatory for Heath B. McLendon,
Knight Edwards, Robert E. McGill, III, Lewis Mandell
and Frances M. Hawk
18(b). Power of Attorney authorizing Ernest J. Wright as
signatory for Jay S. Fishman.
18(c). Powers of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Robert I. Lipp,
Charles O. Prince, III, Marc P. Weill, Irwin R. Ettinger,
Michael A. Carpenter and Donald T. DeCarlo.
(Incorporated herein by reference to Exhibits18(b)
and18(c) to the Registration Statement on Form N-3
filed April 26, 1995.)
18(d). Power of attorney authorizing Jay S. Fishman or Ernest J. Electronically
Wright as signatory for Michael A. Carpenter and Christine B. Mead.
27. Financial Data Schedule. To be filed by
amendment
</TABLE>
<PAGE> 1
Exhibit 1
RESOLUTION
I, ERNEST J. WRIGHT, Assistant Secretary of THE TRAVELERS INSURANCE
COMPANY, DO HEREBY CERTIFY that by unanimous consent action of the Board of
Directors of The Travelers Insurance Company effective the 7th day of May,
1982, the following resolutions were adopted:
VOTED: That pursuant to authority granted by Section 38a-154a of the
Connecticut General Statutes, the Chairman of the Board, the President,
or Chairman of the Finance Committee, or any one of them acting alone,
is authorized to establish a separate account or accounts to invest in
shares of investment companies advised by affiliates of the Company
pursuant to plans and contracts issued and sold by the Company in
connection therewith.
VOTED: That the proper officers are authorized to take such action as may be
necessary to register the separate account or accounts to be
established to hold shares of investment companies advised by
affiliates of the Company as a unit investment trust investment company
under the Investment Company Act of 1940; to file any necessary or
appropriate exemptive requests, and any amendments thereto, for such
separate account or accounts under the Investment Company Act of 1940;
to file a registration statement, and any amendments, exhibits and
other documents thereto, in order to register plans and contracts of
the Company and interests in such separate account or accounts in
connection therewith under the Securities Act of 1933; and to take any
and all action as may in their judgment be necessary or appropriate in
connection therewith.
VOTED: That each officer and director who may be required, on his own behalf
and in the name and on behalf of the Company, to execute a registration
statements and any amendments thereto, under the Securities Act of 1933
and the Investment Company Act of 1940 relating to the separate account
or accounts to be established to invest in shares of investment
companies advised by affiliates of the Company is authorized to execute
a power of attorney appointing representatives to act as his attorney
and agent to execute said registration statement, and any amendments
thereto, in his name, place and stead; and that the Secretary is
designated and appointed the agent for service of process of the
Company under the Securities Act of 1933 and the Investment Company Act
of 1940 in connection with such registration statement, and any
amendments thereto, with all the powers incident to such appointment.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of THE
TRAVELERS INSURANCE COMPANY at Hartford, Connecticut, this 29th day of
February, 1996.
/s/Ernest J. Wright
Ernest J. Wright
Assistant Secretary
<PAGE> 1
EXHIBIT 2
THE TRAVELERS INSURANCE COMPANY
HARTFORD, CONNECTICUT
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
RULES AND REGULATIONS
ARTICLE I
GENERAL
Section 1. Name. The name of this separate account will be The Travelers
Timed Aggressive Stock Account for Variable Annuities (referred to as "Separate
Account"). The name of the Separate Account has been selected by and belongs
to The Travelers Insurance Company (the "Company"). The use of its name by the
Separate Account will in no way prevent the Company or any company affiliated
with the Company from using the name "Travelers" with any other word or words
in connection with any other entity or business, whether competitive with the
Separate Account or not. The Company's red umbrella service mark may be used
by the Separate Account only with the consent of the Company, which reserves
the right to withdraw such consent.
Section 2. Office. The office of the Separate Account will be in the City of
Hartford, Connecticut.
Section 3. Purposes. The purposes of the Separate Account are to provide an
account for assets to be set aside, separate and apart from the other assets of
the Company, for the credit and sole benefit of variable contracts issued by
the Company and entitled to participate in the Separate Account. The assets of
the Separate Account will be held and applied exclusively to meet obligations
(including expenses) to provide variable benefits under variable contracts
participating in the Separate Account, as provided in such contracts, all in
accordance with applicable state law and as may be required to comply with the
requirements of the Investment Company Act of 1940, as amended, and the rules
and regulations of the Securities and Exchange Commission under the Act.
ARTICLE II
BOARD OF MANAGERS
Section 1. Election. An initial Board of Managers of five members will be
elected to serve until the first meeting of the owners of variable contracts
(referred to as "Contract Owners"), at which time a Board of Managers will be
elected by the Contract Owners. Thereafter a Board of Managers will be elected
annually by the Contract Owners. There shall be a minimum of five and a
maximum of ten members, and the number of members at any time within such
minimum and maximum will be the number fixed by
<PAGE> 2
resolution of the Contract Owners or Board of Managers, or in the absence
thereof, will be the number of members elected at the preceding annual meeting
of the Contract Owners. Each member will serve, subject to applicable law,
until the next annual meeting of the Contract Owners and until his successor is
duly elected and qualified. Members of the Board of Managers need not be
Contract Owners.
Section 2. Meetings. Regular meetings of the Board of Managers will be held
in the City of Hartford, Connecticut, at the time the Board of Managers by vote
may determine from time to time, and if so determined no call or notice need be
given. Special meetings of the Board of Managers may be held in Hartford,
Connecticut, at any time whenever called by the Chairman of the Board of
Managers, or any two or more members of the Board of Managers, notice being
given to each member by the Secretary or Assistant Secretary or the person or
persons calling the meeting, or at any time without formal notice provided all
the members are present or those not present waive notice in writing which is
filed with the records of the meeting. Notice of special meetings, stating the
time and place will be given by mailing the same to each member at his
residence or business address at least two days before the meeting or by
delivering the same to him personally or telephoning or telegraphing the same
to him at his residence or business address at least one day before the meeting
unless, in case of urgency, the Chairman of the Board of Managers prescribes a
shorter notice to be given personally or by telephoning or telegraphing each
member at the member's residence or business address. The Chairman of the
Board of Managers will preside at all meetings of the Board at which he is
present. Whenever any notice is required to be given to any member of the
Board of Managers under this Section, a waiver in writing signed by the member
entitled to such notice, whether before or after the time stated in the notice,
will be deemed equivalent to giving notice. Any waiver will be filed with the
records of the meeting.
Section 3. Quorum. A majority of the members of the Board of Managers in
office will constitute a quorum for the transaction of business at any meeting
of the Board, and at every meeting the presiding officer for the time being
will have the right to vote. When a quorum is present at any meeting, a
majority of the members present will decide any question brought before the
meeting except as otherwise provided by applicable law, or by these Rules and
Regulations.
Section 4 Officers. At the first meeting of the Board of Managers and at the
first meeting following each annual meeting of the Contract Owners, the Board
of Managers will elect one of its members to act as Chairman of the Board of
Managers to hold office until a successor is elected and qualified. The Board
of Managers may also elect a Secretary and an Assistant Secretary of the Board
of Managers who may or may not be a member of the Board of Managers. The
Secretary or Assistant Secretary will have the
2
<PAGE> 3
power to certify the minutes of the proceedings of the Contract Owners and
Board of Managers and any portions of the minutes and will perform any other
duties and have any other powers as the Board of Managers designates from time
to time. In the absence of the Secretary or Assistant Secretary, a temporary
Secretary will perform these duties and have these powers.
Section 5. Resignations and Removal. Any member of the Board of Managers or
the Secretary or Assistant Secretary may resign at any time by mailing or
delivering his resignation in writing to the Chairman of the Board of Managers.
Contract Owners may, at any meeting called for the purpose, by vote of a
majority of all votes entitled to be cast, remove any member of the Board of
Managers or the Secretary or Assistant Secretary.
Section 6. Vacancies. After the first meeting of Contract Owners, no person
will serve as a member of the Board of Managers unless duly elected to the
office by ballot of the Contract Owners called for that purpose except that
whenever any vacancy occurs in the Board of Managers by death, resignation or
otherwise, the vacancy may be filled by the Board for the remainder of the term
for which the member was elected, if, immediately after filling any vacancy
occurring after the first meeting of Contract Owners, at least two-thirds of
the members then holding offices have been elected by the Contract Owners. In
the event that at any time after the first meeting of Contract Owners at least
two-thirds of the Board have not been so elected, the Board of Managers will
cause to be held as promptly as possible, and in any event within sixty days, a
meeting of the Contract Owners for the purpose of electing a member or members
to fill the existing vacancy or vacancies in the Board of Managers.
ARTICLE III
CONTRACT OWNERS
Section 1. Annual Meeting. The first annual meeting of the Contract Owners
will be held at the hour and place the Board of Managers may appoint, on the
first Monday of March or on some other day within two months thereafter as
fixed by the Board of Managers which first occurs after the effective date of
the Registration Statement with the Securities and Exchange Commission.
Thereafter annual meetings of the Contract Owners will be held at the hour and
place the Board of Managers may appoint, on the first Monday of March or on
some other day within two months thereafter as fixed by the Board of Managers.
Section 2. Special Meetings. Special meetings of the Contract Owners may be
called by a majority of the Board of Managers at the times and places they may
determine. The notice of a special meeting will state the purposes of the
meeting and no business will be transacted at the meeting except matters coming
within the stated purposes.
3
<PAGE> 4
Section 3. Notice of Meeting. A notice stating the place, day, and hour of
the meeting and, in case of a special meeting, the purposes for which the
meeting is called, will be given to each Contract Owner of a record date
within seventy-five days prior to the date of the meeting selected by the Board
of Managers, by mailing to his address as it appears on the records of the
Company not less than twenty days prior to the day of the meeting. Only
persons owning a contract on the date used to determine the Contract Owners
entitled to notice will be entitled to vote at the meeting. Notice of any
adjourned meeting will not be required. Whenever any notice of time, place or
any other matter is required to be given to Contract Owners, a waiver thereof
in writing signed by the Contract Owner entitled to the notice, whether before
or after the time stated in the notice, will be deemed equivalent to the giving
of notice. Any waivers will be filed with the records of the meeting.
Section 4. Quorum. Contract Owners entitled to vote, represented either in
person or by proxy, will constitute a quorum for the transaction of business at
any annual or special meeting of the Contract Owners, provided that there is
represented, either in person or by proxy, at any meeting, twenty percent (20%)
of the votes entitled to be cast. If a quorum is not present, a majority of
votes represented may adjourn the meeting to some later time. When a quorum is
present, a majority of the votes represented in person or by proxy will
determine any questions, except as may be otherwise provided by these Rules and
Regulations or by applicable law.
Section 5. Proxies. A Contract Owner may vote either in person or by proxy
duly executed in writing by the Contract Owner. A proxy for any meeting will
be valid for any adjournment of such meeting.
Section 6. Voting. The records of the Company will be conclusive in
determining Contract Owners entitled to vote. The number of votes which the
Contract Owner may cast will be determined as of the record date chosen by the
Board of Managers not more than seventy-five nor less than twenty days prior to
the date of the annual or any special meeting of the Contract Owners, provided
that the record date may be less than twenty days prior to the initial meeting
of Contract Owners. Prior to the commencement of payments under a variable
annuity contract, the number of votes will equal the number of Accumulation
Units credited to the contract. After variable payments have commenced, the
number of votes will equal the amount of the assets in the Separate Account
established to meet variable obligations related to the variable contract,
divided by the value of an Accumulation Unit.
The Company will furnish to the Contract Owner (or mail in accordance with his
instructions) proxy materials. In no case will the Company be under any duty
to inquire as to the
4
<PAGE> 5
instructions received by, or the authority of, the Owner, with respect to votes
cast by a Contract Owner in person or by proxy, which will be valid and
effective insofar as the Company, the Separate Account and other Contract
Owners are concerned.
Section 7. Tellers. Every meeting of the Contract Owners will be organized
by the election viva voce of a chairman and clerk. The Chairman will appoint
two tellers to receive, count and report all ballots cast at the meeting and he
may also appoint a committee on qualifications and proxies to inquire and
report to the meeting what Contract Owners are present, duly qualified or
properly represented. If the right of any person to vote be questioned, the
Chairman of the meeting will, on receiving the report of the committee on
qualifications and proxies, determine the person's said rights, subject to an
appeal from such decision to the meeting.
ARTICLE IV
POWERS AND DUTIES OF BOARD OF MANAGERS
The Board of Managers will have the following powers, responsibilities and
duties:
1. To select and approve annually an independent public accountant,
whose employment will be approved by the Contract Owners;
2. To execute a management agreement or agreements and an
investment advisory agreement or agreements providing for sales
and administrative services, mortality guarantees, expense
guarantees, investment advisory services and other related
matters, which agreements will be submitted for approval or
rejection by Contract Owners at their first meeting;
3. To consider annually the terms of any management and investment
advisory agreements approved by Contract Owners and approve
their continuance or submit for action by Contract Owners
recommendations for amendment or termination;
4. To recommend any changes in the fundamental investment policies
of the Separate Account and to submit the same to the Contract
Owners at any annual or special meeting;
5. To supervise the investment of the assets of the Separate
Account in accordance with the fundamental investment policies
of the Separate Account;
6. To enter into agreements and to take any and all actions
necessary or proper in connection with the operation and
management of the Separate Account and the assets of it.
5
<PAGE> 6
ARTICLE V
FEES OF MEMBERS OF BOARD AND OTHERS
The Board of Managers will have power to fix and determine the fee or fees to
be paid members of the Board of Managers or any person elected by the Board of
Managers or by the Contract Owners on account of services to the Separate
Account, except that members of the Board of Managers who are also officers,
directors or employees of the Company or The Travelers Corporation or any
company affiliated with The Travelers Corporation will not be entitled to any
fee. Any fees so fixed and determined by the Board of Managers shall be
subject to revision or amendment by the Contract Owners and may be paid by the
Company in accordance with the terms of any management agreement entered into
with the Separate Account.
ARTICLE VI
INDEMNIFICATION
Indemnification will be provided members of the Board of Managers, officers and
employees of the fund in accordance with the standards established by Section
33-32a of the Connecticut General Statutes relating to indemnification under
the Connecticut Stock Corporation Act as it may now exist or may exist in the
future.
ARTICLE VII
VALUATION OF THE FUND
Section 1. Valuation of Assets. In determining the total value of the assets
of the Separate Account on any valuation date, securities will be taken at
their market value at the close of the New York Stock Exchange and all other
assets at fair value, determined as follows:
(1) In the case of securities actively traded in the
over-the-counter market, the mean between the bid and asked
prices on the valuation date will be used, provided that in
the case of short term discount securities, amortized cost
(which approximates market value) will be used.
(2) In the case of securities not actively traded in the
over-the-counter market, the following guidelines will be used
consistent with generally accepted accounting principles:
(a) Consideration will be given to recent bid prices for
securities of the same issuer closely comparable with
respect to ranking, yield and other features to those
being valued;
6
<PAGE> 7
(b) Consideration will be given to recent bid prices for
other securities with the same or comparable ranking,
yield or other features as those being valued;
(c) Adjustments are to be made where preconditions or
restrictions generally recognized to have a
significant impact on market valuation exist as to
the free sale of the securities being valued, such as
a requirement that a registration statement under the
Securities Act of 1933 be filed or brought up to
date, or that a prospectus be delivered to the
purchaser; and
(d) Any of the criteria commonly used in investment
analysis to value securities for which there is not a
readily available or reliable market price.
(3) In all instances where the guidelines of (2) are applicable,
the officers of the Separate Account will report to the Board
at the next regular meeting their action for specific approval
or rejection.
Section 2. Determination Binding. Any determination made in good faith and,
so far as accounting matters are involved, in accordance with generally
accepted accounting principles, by or in accordance with the direction of the
Board of Managers, as to the amount of the assets, debts, obligations, or
liabilities of the Separate Account, as to the amount of any liabilities or
creating such liabilities or expenses, as to the use, alteration or
cancellation or any liabilities or expenses (whether or not any debt,
obligation or liability for which such liabilities or expenses have been
created, have been paid or discharged or are then or after required to be paid
or discharged), as to the price or closing bid or asked price of any security
owned or held by the Separate Account, as to the market value of any security
or fair value of any other asset of the Separate Account, as to the number or
units of the Separate Account outstanding, as to the estimated expense to the
Separate Account in connection with purchases of assets or units, as to the
ability to liquidate securities in orderly fashion, or as to any other matters
relating to the issue, sale, purchase and/or acquisition or disposition of
securities or units of the Separate Account, will be final, conclusive and
binding.
ARTICLE VIII
AMENDMENTS
These Rules and Regulations, subject to applicable law, may be altered, amended
or repealed by vote of a majority of the Board of Managers as is necessary and
appropriate to carry out the purposes of the Separate Account.
7
<PAGE> 8
***
As adopted on April 24, 1987, by a vote of the Board of Managers of The
Travelers Timed Aggressive Stock Account for Variable Annuities.
8
<PAGE> 1
EXHIBIT 4
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of this 30th day of December,
1992, between The Travelers Investment Management Company, a Connecticut
general business corporation (hereinafter "TIMCO") and The Travelers Timed
Aggressive Stock Account for Variable Annuities (hereinafter "Account TAS"), a
separate account of The Travelers Insurance Company established by its
President and Chief Executive Officer on January 2, 1987, pursuant to a
resolution of The Travelers Insurance Company's Board of Directors on August 4,
1967, pursuant to Section 38-154a of the Connecticut General Statutes.
WITNESSETH:
WHEREAS, Account TAS and TIMCO wish to enter into an agreement setting
forth the terms upon which TIMCO will perform certain services for Account TAS.
NOW, THEREFORE, in consideration of the promise and the mutual
agreements herein contained, the parties hereto agree as follows:
1. Account TAS hereby employs TIMCO to manage the investment and
reinvestment of the assets of Account TAS and to perform the other
services herein set forth, subject to the supervision of the Board of
Managers of Account TAS (hereinafter the "Board") for the period and on
the terms herein set forth. TIMCO hereby accepts such employment and
agrees during such period, at its own expense, to render the services
and to assume the obligations herein set forth for the compensation
herein provided.
2. In carrying out these obligations to manage the investment and
reinvestment of the assets of Account TAS, TIMCO shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
Account TAS, affecting the economy generally and individual
companies or industries, the securities of which are included in
Account TAS's portfolio or are under consideration for inclusion
therein;
b. be authorized to purchase supplemental research and other
services from brokers at additional cost to Account TAS;
c. regularly furnish to the Board recommendations with respect to
any investment program for approval, modification or rejection by
the Board;
d. take such steps as are necessary to implement the investment
program approved by the Board; and
e. regularly report to the Board with respect to implementation of
the approved investment program and any other activities in
connection with the administration of the assets of Account TAS.
3. Any investment program undertaken by TIMCO pursuant to this Agreement
and any other activities undertaken by TIMCO on behalf of Account TAS
shall at all times be subject to any directives of the Board or any duly
constituted committee thereof acting pursuant to like authority.
4. For the services rendered hereunder, TIMCO will receive an amount
equivalent on an annual basis to the following:
<PAGE> 2
<TABLE>
<CAPTION>
Aggregate
Annual Net Asset Value
Management Fee of the Account
-------------- --------------
<S> <C> <C>
0.50% of the first $ 20,000,000, plus
0.25% of the next $ 80,000,000, plus
0.20% of the next $200,000,000, plus
0.15% of amounts over $300,000,000.
</TABLE>
The advisory fees will be deducted on each valuation date.
5. The services of TIMCO to Account TAS hereunder are not to be deemed
exclusive and TIMCO shall be free to render similar services to others
so long as its services hereunder are not impaired or interfered with
thereby.
6. If approved by a vote of a majority of the outstanding voting securities
of Account TAS (as defined in the Investment Company Act of 1940), this
Investment Advisory Agreement:
a. may not be terminated by TIMCO, without the prior approval of a
new Investment Advisory Agreement by a vote of a majority of the
outstanding voting securities of Account TAS, and shall be
subject to termination, without the payment of any penalty, upon
sixty days' written notice to the investment adviser, by the
Board or by a vote of a majority of the outstanding voting
securities of Account TAS;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of Account TAS;
c. shall automatically terminate upon assignment by either party;
and
d. shall continue in effect for a period of more than two years from
the date of its execution, only so long as such continuance is
specifically approved (i) at least annually by a vote of a
majority of the Board who are not parties to, or interested
persons of any party to, such agreement, cast in person at a
meeting called for the purpose of voting on such approval and at
which the Board has been furnished such information as may be
reasonably necessary to evaluate the terms of said agreement, or
(ii) by a vote of a majority of the outstanding voting securities
of Account TAS.
7. This Investment Advisory Agreement is subject to the provisions of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Advisory Agreement to be signed by their respective officials thereunto duly
authorized and seals to be affixed, in the case of TIMCO, as of the day and
year first above written.
THE TRAVELERS TIMED AGGRESSIVE STOCK
ACCOUNT FOR VARIABLE ANNUITIES
By:
---------------------------
Chairman, Board of Managers
WITNESS:
<PAGE> 3
- ------------------------------
Secretary, Board of Managers
THE TRAVELERS INVESTMENT
MANAGEMENT COMPANY
By:
---------------------------
President
ATTEST: (Seal)
- ------------------------------
Corporate Secretary
<PAGE> 4
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
AMENDMENT made as of May 1, 1996 to the Investment Advisory Agreement
made as of the 30th day of December, 1992, between The Travelers Investment
Management Company, a Connecticut general business corporation (hereinafter
"TIMCO") and The Travelers Timed Aggressive Stock Account for Variable
Annuities (hereinafter "Account TAS"), a separate account of The Travelers
Insurance Company established by its President and Chief Executive Officer on
January 2, 1987, pursuant to a resolution of The Travelers Insurance Company's
Board of Directors on August 4, 1967, pursuant to Section 38-154a of the
Connecticut General Statutes (the "Advisory Agreement").
WITNESSETH:
WHEREAS, Account TAS and TIMCO have entered into an Advisory Agreement
setting forth the terms upon which TIMCO will perform certain services for
Account TAS; and
WHEREAS, Account TAS and TIMCO wish to amend the Advisory Agreement to
change the investment advisory fee.
NOW THEREFORE, in consideration of the promises and the mutual
agreements herein contained, the parties hereto agree to amend paragraph 4 of
the Advisory Agreement to read as follows:
4. For the services rendered hereunder, TIMCO will receive an amount
equivalent on an annual basis to 0.35% of the average daily net assets
of Account TAS, such fees to be deducted on each valuation date.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to the
Advisory Agreement to be signed by their respective officials thereunto
duly authorized and seals to be affixed, in the case of TIMCO, as of the
day and year first above written.
THE TRAVELERS TIMED AGGRESSIVE STOCK
ACCOUNT FOR VARIABLE ANNUITIES
By:
---------------------------
Chairman, Board of Managers
WITNESS:
- ------------------------------
Secretary, Board of Managers
THE TRAVELERS INVESTMENT
MANAGEMENT COMPANY
By:
---------------------------
President
ATTEST: (Seal)
<PAGE> 1
EXHIBIT 5.b
SELLING AGREEMENT
FOR VARIABLE CONTRACTS
THIS AGREEMENT, effective ____________________, is made by TOWER SQUARE
SECURITIES, INC., (hereafter referred to as Tower Square) as the Distributor,
and __________________________________________
__________________________________________________, (hereafter referred to as
Broker/Dealer).
Tower Square and the Broker/Dealer enter into this agreement for the purpose of
authorizing the Broker/Dealer, through its licensed individual agents as
described in paragraph 3, to solicit applications for such variable life
insurance, variable annuity and modified guaranteed annuity contracts (the
"Contract(s)") as may be issued by The Travelers Insurance Company, the
Travelers Life and Annuity Company and any affiliated companies (hereafter
referred to as the Insurance Companies), and identified by policy form in the
Compensation Schedules relating to this agreement as such schedules may be
amended from time to time. The parties represent and agree as follows:
1. The Insurance Companies are engaged in the issuance of the
Contracts in accordance with federal securities laws and the
applicable insurance laws of those states in which the
Contracts have been qualified for sale. The Contracts may be
considered securities under the Securities Act of 1933;
therefore, distribution of the Contracts is made through Tower
Square as a registered Broker/Dealer under the Securities
Exchange Act of 1934 and as a member of the National
Association of Securities Dealers, Inc. ("NASD"). The terms
of the offering of the Contracts are more particularly
described in the Prospectus(es) for the Contracts.
2. The Broker/Dealer certifies that it is a registered
Broker/Dealer under the Securities Exchange Act of 1934 and a
member of the NASD. The Broker/Dealer agrees to abide by all
rules and regulations of the NASD and to comply with all
applicable state and federal laws and the rules and
regulations of the authorized regulatory agencies affecting
the sale of the Contracts.
3. The Broker/Dealer will select persons whom it will employ and
supervise and who will be trained and qualified to solicit
applications for the Contracts in conformance with applicable
state and federal laws and regulations. Persons so trained
and qualified will be registered representatives of the
Broker/Dealer in accordance with the rules of the NASD and
they will be properly licensed in accordance with the state
insurance laws of those jurisdictions in which the Contracts
may lawfully be distributed and in which they solicit
applications for such Contracts. The Insurance Companies
shall have ultimate authority to determine whether they shall
appoint or terminate a particular registered representative as
an agent of the Insurance Companies with the various state
insurance departments.
4. The Broker/Dealer will review all contract proposals and
applications for suitability and for completeness and
correctness as to form. The Broker/Dealer will promptly, but
in no case later than the end of the next business day
following receipt by the Broker/Dealer, forward to the
applicable Insurance Company, at addresses provided, all
applications found suitable and in good form, together with
any payments received with such applications without deduction
or reduction. The Broker/Dealer will immediately return to
the applicant all applications together with any payments
received therewith deemed by the Broker/Dealer to be
unsuitable or not complete and correct as to form. The
Insurance Companies reserve the right to reject any Contract
application and return any payment made in connection with an
application which is rejected. Contracts issued on
applications accepted by the Insurance Companies will be
forwarded to the Broker/Dealer or at the direction of the
Broker/Dealer to the registered representative for delivery to
the Contract Owner. The Broker/Dealer shall obtain and retain
a receipt for each Contract which the Broker/Dealer delivers.
<PAGE> 2
2
5. The Broker/Dealer will perform the selling functions required
by this Agreement only in accordance with the terms and
conditions of the then current prospectus(es) applicable to
the Contract and will make no representations not included in
the prospectus or in any authorized supplemental material. No
sales solicitation, including the delivery of supplemental
sales literature or other such materials, shall occur, be
delivered to, or used with a prospective purchaser unless
accompanied or preceded by appropriate and then-current
prospectus(es). Any material prepared or used by the
Broker/Dealer or its registered representative, which
describes in whole or in part or refers by name or form to any
of the Insurance Companies' Contracts or underlying funds or
uses the name of the Insurance Companies, Tower Square, or The
Travelers Group, Inc., or the logos or service marks of any of
them, or the name, logos or service marks of any "Affiliated
Company" of any of them, as that term is defined in Section
2(a)(2) of the Investment Company Act of 1940, must be
approved by Tower Square in writing prior to any such use.
6. Compensation payable to the Broker/Dealer on sales of the
Contracts solicited by the Broker/Dealer will be paid to the
Broker/Dealer, or as necessary to meet any and all legal
requirements, to a licensed insurance affiliate, in accordance
with the Compensation Schedule(s) relating to this agreement
as they may be amended from time to time and are in effect at
the time the Contract payments are received by the applicable
Insurance Company (in the case of annuities) or at the time
the applications are received (in the case of life insurance).
In the event compensation is paid to the licensed insurance
agency affiliate as described in the preceding sentence, such
payment will be reflected in the Broker/Dealer's "Focus"
reports, and in its fee assessment reports filed with the
NASD. The Insurance Companies and Tower Square reserve the
privilege of revising the Compensation Schedules at any time.
7. If the Insurance Companies return all or a portion of a
premium paid with respect to a Contract, Broker/Dealer shall
be obligated to refund to Tower Square applicable commissions
on the amount of such premium only where:
(a) the Contract solicited is returned not taken under
the policy "free look" provisions;
(b) premiums are refunded due to overpayments, errors in
billing or in the timing of automatic premium
collection deductions, or errors resulting in policy
reissue;
(c) the check delivered in payment of any contract
premium does not clear and the premium collection
deductions, or errors resulting in policy reissue;
(d) the Contract is terminated or there is a refund of
premium and an act, error or omission of the
Broker/Dealer or its registered representative
materially contributed to the termination of the
Contract or the need to return premium;
(e) the application is rejected by the Insurance Company;
(f) the Insurance Company is directed by a judicial or
regulatory authority to return premium without
assessment of a surrender charge;
(g) the applicant's initial premium on a 1035 exchange is
returned because the expected rollover amount from
another Contract is not transferred due to the
exchange not meeting the legal requirements to
qualify for a tax-free exchange;
(h) the Insurance Company returns unearned premium on a
life insurance contract as required by the provisions
of the contract;
(i) the Insurance Company determines that it has a legal
liability to return premiums on a life insurance
contract within the first year after the Contract is
issued; or
<PAGE> 3
3
(j) the Insurance Company and Broker/Dealer mutually
agree to return all or a portion of a premium paid
with respect to a Contract.
8. If any Contract is repurchased at any time or if within
forty-five (45) days after confirmation by the Insurance
Companies of any premium payments credited to a Contract, that
Contract is tendered for full or partial surrender, or the
life at risk thereunder dies, then, at the option of the
Insurance Companies or Tower Square no commission will be
payable with respect to said premium payments and any
commission previously paid for said premium payments must be
refunded to the applicable Insurance Company or Tower Square
as directed by Tower Square. Tower Square agrees to notify
the Broker/Dealer within ten (10) business days after the
request for repurchase or redemption, or notification or death
of the life at risk is received by the applicable Insurance
Company.
9. This Agreement may not be assigned except by mutual consent
and will continue, subject to the termination by any party on
written notice to the other party, except that in the event
the Broker/Dealer ceases to be a registered Broker/Dealer or a
member of the NASD, this Agreement will immediately terminate.
Tower Square reserves the right to designate, at its sole
discretion, an alternative Principal Underwriter for the
distribution of the Contracts covered by this Agreement. The
designation will constitute substitution of parties to this
Agreement with assumption of the rights and obligations
created by this Agreement as applicable.
10. Failure of any party to terminate this Agreement for any of
the causes set forth in this agreement will not constitute a
waiver of the right to terminate this Agreement at a later
time for any of these causes.
11. For the purpose of compliance with any applicable federal or
state securities laws or regulations promulgated under them,
the Broker/Dealer acknowledges and agrees that in performing
the Broker/Dealer services covered by this Agreement, it is
acting in the capacity of an independent broker and dealer as
defined by the By-Laws of the NASD and not as an agent or
employee of either Tower Square or any registered investment
company.
The Broker/Dealer represents and warrants that it is
authorized and licensed as an agent under applicable state
insurance laws to solicit, negotiate and effect the contracts
of insurance contemplated hereunder. In the event the
Broker/Dealer is not licensed as such, an insurance agency
affiliated with the Broker/Dealer shall be licensed as an
agent under applicable state insurance laws to solicit,
negotiate and effect the contracts of insurance contemplated
hereunder.
For the purpose of compliance with any applicable state
insurance laws or regulations promulgated under them, the
Broker/Dealer acknowledges and agrees that solely in
performing the insurance-selling functions reflected by this
agreement, it or its registered representative is acting as
the agent of the Insurance Companies, and in that capacity is
authorized only to solicit applications from the public for
the Contracts. Such Contracts will not become effective until
such applications are accepted after underwriting review by
the Insurance Companies at their Home Office.
In furtherance of its responsibilities as a Broker/Dealer, the
Broker/Dealer acknowledges that it is responsible for
compliance on any business it produces concerning the
Contracts. No Broker/Dealer will be entitled to compensation
with respect to any application for or payment credited to,
any Contract(s) that is rejected by the Insurance Companies in
the event the Insurance Companies or Tower Square determine
the solicitation or obtaining of purchasers, applications or
payments by the Broker/Dealer or any of its Associated persons
was done in
<PAGE> 4
4
violation of the securities or insurance laws of the United
States or any state or other jurisdiction.
No party to this Agreement will be liable for any obligation,
act or omission of the other. Each party to this Agreement
will hold harmless and indemnify the (1) Registered Investment
Companies which are used to fund the Contracts, (2) Insurance
Companies, (3) Tower Square, and (4) the Broker/Dealer, as
appropriate, for any loss or expense suffered as a result of
the violation or noncompliance by that party or the Associated
persons of that party of any applicable law or regulation or
any provision of the Agreement; provided, however, that no
party or any of its employees or agents will be liable to the
other party for any direct, special or consequential damages
arising out of or in connection with the performance of any
services pursuant to the Agreement.
12. All notices to the Insurance Companies or Tower Square
relating to this Agreement should be sent to the attention of
The Travelers Insurance Companies, FS Law Department, One
Tower Square, Hartford, CT 06183. All notices to the
Broker/Dealer will be duly given if mailed or faxed to the
address shown below.
13. The terms "Associated Person", "member" and "rules of the
Corporation" as used herein shall be defined consistently with
the definition of similar terms as contained in Article I of
the NASD By-Laws. This Agreement will be construed in
accordance with the laws of the State of Connecticut.
In reliance on the representations set forth and in consideration of the
undertakings described herein, the parties represented below do hereby contract
and agree.
<TABLE>
<S> <C>
TOWER SQUARE SECURITIES, INC. The Broker/Dealer
By:
------------------------------ ----------------------------------
Title:
------------------------------ ----------------------------------
Street Address
Date:
------------------------------ ----------------------------------
By:
----------------------------------
Title:
----------------------------------
Taxpayer I.D.:
----------------------------------
Date:
----------------------------------
Fax:
----------------------------------
</TABLE>
<PAGE> 1
Exhibit 6
THE TRAVELERS INSURANCE COMPANY ONE TOWER SQUARE o HARTFORD, CONNECTICUT o
06183
CONTRACT OWNER SPECIMEN GRP GTSAl MSTR CA
CONTRACT NUMBER 000000-3434333 (7G) CONTRACT DATE 02/14/1996
We are pleased to provide you the benefits of this Annuity Contract.
EMERGENCY PROCEDURE
If a national stock exchange is closed (except for holidays or
weekends) or trading is restricted due to an existing emergency as
defined by the Securities and Exchange Commission so that we cannot
value the Separate Account(s), we may postpone all procedures which
require valuation of the Separate Account(s) until valuation is
possible. Any provision of this contract which specifies a Valuation
Date will be superseded by this Emergency Procedure.
This contract is issued in consideration of the application and the payment of
premium. It is subject to the terms and conditions stated on the attached
pages, all of which are a part of it. It is made effective as stated in the
application.
This contract is delivered in the state where the application for it was
completed by the Applicant and is subject to the laws of that state.
Executed at Hartford. Connecticut
President
This is a legal contract between you and us. READ YOUR CONTRACT CAREFULLY.
GROUP VARIABLE ANNUITY CONTRACT
ANNUITY AND INCOME OPTIONS
ELECTIVE OPTIONS WITHOUT DIVIDENDS
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT ARE BASED ON
INVESTMENT EXPERIENCE OF SEPARATE ACCOUNTS AND ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.
LVA-FPG(u) TIC Ed. 1-83
<PAGE> 2
DEFINITIONS
(a) "We, us, our" means The Travelers Insurance Company;
(b) "You, your" means the Contract Owner;
(c) "Separate Accounts" means those separate accounts shown in the CONTRACT
SUMMARY which we established for this class of contracts and certain other
contracts;
(d) "Underlying Fund" means an open-end diversified investment management
company indicated in the CONTRACT SUMMARY, which is an underlying
investment for a Separate Account;
(e) "Sub-Account" means that portion of the assets of a Separate Account
which is allocated to a particular Underlying Fund. If there is no
Underlying Fund for a Separate Account, the entire Separate Account is a
Sub-Account;
(f) "Valuation Period" means the period between successive valuations;
(g) "Valuation Date" means a date on which a Separate Account is valued:
(h) "Age" means age last birthday;
(i) "Contract years" means twelve month periods beginning with the Contract
Date;
(j) "Basic contract" means this contract excluding any additional benefit for
which a separate premium is charged;
(k) "Our Office" means the Home Office of The Travelers Insurance Company or
any other office which we may designate for the purpose of administering
this contract;
(l) "Participant" means an eligible person who participates in the Plan;
(m) "Participant's Interest" means the Value to which the Participant is
entitled under the Plan. The Participant's Interest will be the value of
that Participant's Individual Accounts unless you instruct us otherwise;
(n) "Plan" means the Plan described in this contract;
(o) "Individual Account" means Accumulation Units credited to a Participant
or beneficiary;
(p) "Owner's Account" means Accumulation Units credited to you;
(q) "Account" means either the Owner's Account or a Participant's Individual
Account. A Participant may have more than one Individual Account;
(r) "Annuity Commencement Date" means the date on which a Participant's
Annuity payments are to begin; and
(s) "Due Proof of Death" means (i) a copy of a certified death certificate;
(ii) a copy of a certified decree of a court of competent jurisdiction as
to the finding of death; (iii) a written statement by a medical doctor who
attended the deceased; or (iv) any other proof satisfactory to us.
2
<PAGE> 3
CONTRACT SUMMARY
CONTRACT OWNER SPECIMEN GRP GTSAl MSTR CA
CONTRACT NUMBER 000000-3434333 (7G) 02/14/1996 CONTRACT DATE
BENEFIT DESCRIPTION
GROUP VARIABLE ANNUITY CONTRACT WITH ANNUITY AND INCOME OPTIONS.
GROSS PREMIUM IS PAYABLE BEGINNING ON 02/14/1996
THE NET PREMIUM UNDER THE BASIC CONTRACT IS EQUAL TO THE GROSS PREMIUM LESS
ANY APPLICABLE PREMIUM TAX.
AMOUNTS DEDUCTED ON SURRENDER (FIRST IN, FIRST OUT BASIS):
<TABLE>
<CAPTION>
YEARS SINCE GROSS PERCENT OF GROSS PREMIUM
PREMIUM WAS PAID PAYMENTS (NOT PREVIOUSLY SURRENDERED)
----------------- ----------------------------------------
<S> <C>
1-5 5%
6 AND THEREAFTER 0%
</TABLE>
SEMI-ANNUAL ACCOUNT CHARGE - $15.00, ON EACH ACCOUNT. NO ACCOUNT CHARGE WILL BE
DEDUCTED FROM FLEXIBLE ACCOUNT.
SUB-ACCOUNT TRANSFER CHARGE: $0.00
ACCOUNT DISTRIBUTION CHARGE: $0.00
<TABLE>
<CAPTION>
SUBACCOUNT
DEDUCTION PER DAY
-----------------
<S> <C>
SEPARATE ACCOUNTS-
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR .0000466
VARIABLE ANNUITIES UNDERLYING FUNDS - NONE
THE TRAVELERS TIMED GROWTH AND INCOME STOCK ACCOUNT FOR .0000774
VARIABLE ANNUITIES UNDERLYING FUNDS - NONE
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE .0000822
ANNUITIES UNDERLYING FUNDS - NONE
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES .0000431
UNDERLYING FUNDS - NONE
THE TRAVELERS TIMED BOND ACCOUNT FOR VARIABLE ANNUITIES .0000822
UNDERLYING FUNDS - NONE
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES .0000431
UNDERLYING FUNDS - NONE
THE TRAVELERS TIMED SHORT-TERM BOND ACCOUNT FOR VARIABLE .0000774
ANNUITIES UNDERLYING FUNDS - NONE
THE TRAVELERS FUND U FOR VARIABLE ANNUITIES
UNDERLYING FUNDS
MANAGED ASSETS TRUST .00003425
HIGH YIELD BOND TRUST .00003425
CAPITAL APPRECIATION FUND .00003425
</TABLE>
(BENEFITS CONTINUED)
FPGUl*LW058*LW282*GBU*GATU*L13411*LVAE9A*L13089*L13804*LH389B*L13193*
L 7GGl--CAM01
S-3 TIC Ed. 5-94
3
<PAGE> 4
CONTRACT SUMMARY
CONTRACT OWNER SPECIMEN GRP GTSAl MSTR CA
CONTRACT NUMBER 000000-3434333 (7G) 02/14/1996 CONTRACT DATE
BENEFIT DESCRIPTION
<TABLE>
<CAPTION>
SUBACCOUNT
DEDUCTION PER DAY
-----------------
<S> <C>
AMERICAN ODYSSEY FUNDS, INC-
AMERICAN ODYSSEY CORE EQUITY FUND .00003425
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND .00003425
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND .00003425
AMERICAN ODYSSEY LONG-TERM BOND FUND .00003425
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND FUND .00003425
AMERICAN ODYSSEY SHORT-TERM BOND FUND .00003425
THE TRAVELERS SERIES TRUST-
U.S. GOVERNMENT SECURITIES PORTFOLIO .00003425
UTILITIES PORTFOLIO .00003425
SOCIAL AWARENESS STOCK PORTFOLIO .00003425
TEMPLETON VARIABLE PRODUCTS SERIES FUND-
TEMPLETON BOND FUND .00003425
TEMPLETON STOCK FUND .00003425
TEMPLETON ASSET ALLOCATION FUND .00003425
VARIABLE INSURANCE PRODUCTS FUND-
FIDELITY'S HIGH INCOME PORTFOLIO .00003425
FIDELITY'S GROWTH PORTFOLIO .00003425
FIDELITY'S EQUITY INCOME PORTFOLIO .00003425
VARIABLE INSURANCE PRODUCTS FUND II -
FIDELITY'S ASSET MANAGER PORTFOLIO .00003425
DREYFUS STOCK INDEX FUND INC. .00003425
SMITH BARNEY/TRAVELERS SERIES FUND, INC.-
SMITH BARNEY INCOME & GROWTH PORTFOLIO .00003425
ALLIANCE GROWTH PORTFOLIO .00003425
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO .00003425
PUTNAM DIVERSIFIED INCOME PORTFOLIO .00003425
GT GLOBAL STRATEGIC INCOME PORTFOLIO .00003425
SMITH BARNEY HIGH INCOME PORTFOLIO .00003425
MFS TOTAL RETURN PORTFOLIO .00003425
</TABLE>
ASSUMED DAILY NET INVESTMENT FACTOR IS 1.0000942 FOR ALL SEPARATE ACCOUNTS
PROVISION FOR FLEXIBLE ANNUITY ACCOUNT AND CASH LOANS
MAXIMUM LOAN AMOUNT: 80% OF THE CASH VALUE FOR ACCOUNTS WITH
BALANCES UP TO $12,500 OR 1/2 OF THE CASH
VALUE FOR ACCOUNTS WITH BALANCES OVER
$12,500 UP TO A MAXIMUM OF $50,000 REDUCED
BY THE HIGHEST OUTSTANDING LOAN BALANCE
DURING THE LAST 12 MONTHS.
MINIMUM LOAN AMOUNT: $1,000
MAXIMUM LOAN INTEREST RATE: 7.00% PER ANNUM IN ADVANCE
BENEFITS CONTINUED
FPGUl*LW058*LW282*GBU*GATU*L13411*LVAE9A*L13089*L13804*LH389B*L13193*L
7gg1 --CAM01
S3 TIC Ed. 2-95
4
<PAGE> 5
CONTRACT SUMMARY
CONTRACT OWNER SPECIMEN GRP GTSAl CA
CONTRACT NUMBER 00000-3434333 (7G) 02/14/1996 CONTRACT DATE
BENEFIT DESCRIPTION
WE RESERVE THE RIGHT TO TERMINATE THIS ACCOUNT OR ANY INACTIVE ACCOUNTS UNDER
THIS CONTRACT IF THE CASH VALUE OF THE CONTRACT OR THE ACCOUNT IS LESS THAN THE
TERMINATION AMOUNT OF $500 AND NO PREMIUM PAYMENTS HAVE BEEN MADE FOR AT LEAST
THREE YEARS.
NO GROSS PREMIUM MAY BE DECREASED TO AN AMOUNT WHICH IS LESS THAN THE MINIMUM
PREMIUM THEN REQUIRED UNDER VARIABLE ANNUITY CONTRACTS ISSUED FOR THE CLASS TO
WHICH THIS CONTRACT THEN BELONGS. NO PREMIUM PAYMENTS WILL BE ACCEPTED UNLESS
SUCH PAYMENTS ARE MADE UNDER AN EMPLOYEES' TRUST OR ANNUITY PLAN QUALIFIED
UNDER THE INTERNAL REVENUE CODE OF THE UNITED STATES.
FPGUl*LW058*LW282*GBU*GATU*L13411*LVAE9A*L13089*L13804*LH389B*L13193*L
7GGl--CAM01
S3 TIC Ed. 2-95
5
<PAGE> 6
BENEFITS
If a Participant is living on that Participant's Annuity Commencement date:
1. we will apply the Participant's Interest to provide an Annuity; and
2. we will pay to you or that Participant, as provided in the Plan,
the first of a series of Annuity payments.
You or the Participant, as provided in the Plan, may elect:
1. another form of Annuity or Income; or
2. an earlier date for Commencement or an Annuity or an Income, or both;
as provided in this contract. We will determine the dollar amounts of Annuity
or Income payments as described in the Annuity Provisions or Income Provisions.
If a Participant dies:
1. while this contract continues; and
2. before the payment of that Participant's Annuity or Income:
we will, on receipt of due proof of that Participant's death, pay to you or
that Participant's beneficiary, as provided in the Plan, that Participant's
Interest less any applicable premium tax not previously deducted. We will
determine the value of the Participant's Interest as of the valuation next
following receipt of due proof of that Participant's death at our Office.
If:
1. a Participant's Interest is to be applied to effect an Annuity or
Income Option; and
2. that Interest is other than the Cash Value of that Participant's
Individual Accounts;
we must receive your instructions at least 30 days before that Participant's
first Annuity or Income Payment is to be made.
VALUATION PROVISIONS
We will apply the first net premium to provide Accumulation Units:
1. as directed or as provided in the Plan;
2. as of the valuation next following receipt of the premium for the basic
contract at our Office; or
3. on the date indicated in the application for:
a. this contract; or
b. the Individual Account:
if later.
We will apply any net premium after the first as of the valuation next
following its receipt at our Office. The net premium will be allocated to the
Sub-Accounts in the proportion specified:
LVA-GB(U) TIC Ed. 1-83
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<PAGE> 7
1. in the application for this contract; or
2. as you or the Participant, as provided in the Plan, tell us from time
to time.
NET PREMIUM--The net premium is as stated in the CONTRACT SUMMARY.
NUMBER OF ACCUMULATION UNITS--We will determine the number of Accumulation
Units to be credited to the basic contract in each Sub-Account on payment of
premium by dividing (a) by (b) where:
(a) is the net premium applied to that Sub-Account; and
(b) is by the then Accumulation Unit Value of that Sub-Account.
ACCUMULATION UNIT VALUE--The initial value of an Accumulation Unit for each
Sub-Account was set at $1.00. We determine the value of an Accumulation Unit in
each Sub-Account:
1. on each Valuation Date;
2. by multiplying:
a. the value on the immediately preceding Valuation Date; by
b. the net investment factor for that Sub-Account for the Valuation
Period just ended.
The value of an Accumulation Unit on any date other than a Valuation Date will
be equal to its value as of the next Valuation Date
NET INVESTMENT RATE AND NET INVESTMENT FACTOR--Each Sub-Account's net
investment rate for a Valuation Period is equal to:
1. the gross investment rate for that Sub-Account; less
2. the applicable Sub-Account deduction for the interval in the Valuation
Period.
All Sub-Account deductions are shown in the CONTRACT SUMMARY.
The gross investment rate of a Sub-Account for a Valuation Period is equal to
(a) divided by (b) where (a) is:
1. investment income; plus
2. capital gains and losses, whether realized or unrealized; less
3. a deduction for any applicable taxes, including income taxes arising
from:
a. income; and
b. realized and unrealized capital gains; and
(b) is the amount of the assets at the beginning of the Valuation Period
The gross investment rate for a Sub-Account may be either positive or negative.
If a Sub-Account is invested in shares of an Underlying Fund, assets are based
on the net asset value of the Underlying Fund. Investment income includes any
distribution whose ex-dividend date occurs during the Valuation Period.
The net investment factor for a Sub-Account for any Valuation Period is the sum
of
1. 1.0000000; plus
2. the net investment rate.
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TRANSFER BETWEEN SUB-ACCOUNTS--We will transfer all or any part of an
Individual's Account:
l. from one Sub-Account;
2. to any other Sub-Account stated in the CONTRACT SUMMARY;
3. at any time up to 30 days before the due date of a Participant's first
Annuity payment;
4. on written request:
a. by you; or
b. the Participant;
as provided in the Plan.
We will:
1. at any time;
2. during the continuance of this contract;
3. on your written request;
transfer all or any part of the Cash Value in the Owner's Account from one
Sub-Account to any other Sub-Account shown on the CONTRACT SUMMARY.
We reserve the right to limit the number of transfers in an Account between
Sub-Accounts. We will not limit transfers to less than one in any six month
period. In the event of a transfer, the number of Accumulation Units credited
to the Sub-Account from which the transfer is made will be reduced. The
reduction will be determined by dividing:
1. the amount transferred; by
2. the Accumulation Unit Value for that Sub-Account as of the next
valuation after we receive your written request for transfer at our
Office.
The number of Accumulation Units credited to the Sub-Account to which the
transfer is being made will be increased. The increase will equal:
1. the amount transferred; less
2. any Transfer Charge stated on the CONTRACT SUMMARY; and all divided by
3. the Accumulation Unit Value for that Sub-Account determined as of
the next valuation after we receive the request at our Office.
After Annuity payments begin, you may make transfers only as described in the
ANNUITY PROVISIONS.
DISTRIBUTION FROM ONE ACCOUNT TO ANOTHER ACCOUNT--You may, as provided in the
Plan, distribute Cash Value from the Owner's Account to one or more Individual
Accounts. We will reduce the total Cash Value distributed to an Individual
Account, as necessary, to reflect any Account Distribution Charge shown on the
CONTRACT SUMMARY. We will allocate the charge between the Sub-Accounts in the
proportion that the Cash Value distributed to each Sub-Account bears to the
total Cash Value distributed to that Account. No distribution is allowed
between Individual Accounts. You may, as required and as provided in the Plan,
move Cash Value from any or all Individual Accounts to the Owner's Account
without a charge.
CASH VALUE AND BENEFITS IN THE EVENT OF TERMINATION
CASH VALUE--The Cash Value of an Account on any date equals the sum of the
accumulated values in the Sub-Accounts. The accumulated value in a Sub-Account
equals (a) less (b) times (c) where:
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<PAGE> 9
(a) is the number of Accumulation Units credited to the Account in that
Sub-Account:
(b) is any reductions as specified in the "Administrative Charge"
provision; and
(c) is the then Accumulation Unit Value for that Sub-Account.
ACCOUNT CHARGE--We will deduct from the Cash Value an Administrative Charge in
the amount and for the period shown on the CONTRACT SUMMARY.
We will allocate the charge between the Sub-Accounts in the proportion that the
Cash Value of an Account in each Sub-Account bears to the total Cash Value of
an Account.
The charge will be made by reducing the number of Accumulation Units.
We will make a pro rata charge for any part of a period before determination of
the Cash Value if:
1. the Participant dies; or
2. Annuity payments begin.
CASH SURRENDER--We will, unless the Plan provides otherwise:
1. before the due date of a Participant's first Annuity payment; and
2. without the consent of any beneficiary unless irrecoverably named;
pay you all or any part of that Participant's Interest, less any applicable
premium tax not previously deducted, if you or that Participant, as provided in
the Plan, request it in writing. You may surrender the Owner's Account for
cash, as provided in the Plan, without the consent of any Participant. We may
delay payment of the Cash Surrender Value for a period of not more than seven
days after we receive the request.
CASH SURRENDER VALUE--The Cash Surrender Value of an Account is equal to (d)
less (e) less (f) where:
(d) is the Cash Value;
(e) is any amounts deducted on surrender which are shown on the CONTRACT
SUMMARY; and
(f) is any applicable premium tax not previously deducted.
TERMINATION OF CONTRACT OR ACCOUNT
TERMINATION BY OWNER--If:
1. you terminate an Account, in whole or in part, while the contract
remains in effect; and
2. the value of the terminated Account is to be:
a. paid in cash to you or to a Participant; or
b. transferred to any other funding vehicle;
we will pay or transfer the Cash Surrender Value of the terminated Account.
If:
1. you terminate this contract, whether or not the Plan is terminated; and
2. you or the Participant, as provided in the Plan, elect that
values are not to be paid out in cash or transferred;
we may, at our discretion, agree to apply a Participant's Interest:
1. as instructed by you or the Participant;
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<PAGE> 10
2. under one of the options described under "Options in the Event of
Termination of a Participant."
TERMINATION BY PARTICIPANT--If:
1 a Participant terminates an Individual Account, in whole or in
part, while the contract remains in effect; and
2. the value of the terminated Individual Account is to be:
a. paid in cash to the Participant; or
b. transferred to any other funding vehicle;
we will pay or transfer the Cash Surrender Value of the terminated Account.
TERMINATION BY US AND TERMINATION AMOUNT--If:
1. the Cash Value in a Participant's Individual Account is less than
the Termination Amount stated on the CONTRACT SUMMARY; and
2. no premium has been applied to the Account for at least three years;
we reserve the right:
1. to terminate that Account; and
2. to move the Cash Value of that Participant's Individual Account to the
Owner's Account.
If the Plan does not allow for this movement to the Owner's Account, we will
pay the Cash Value, less any applicable premium tax not previously deducted, to
that Participant or to you, as provided in the Plan.
We reserve the right to terminate this contract on any Valuation Date if:
1. there is no Cash Value in any Participant's Individual Account: and
2. the Cash Value of the Owner's Account, if any, is less than the
Termination Amount shown on the CONTRACT SUMMARY; and
3. premium has not been paid for at least three years.
If this contract is terminated, we will pay to you the Cash Value of the
Owner's Account, if any, less any applicable premium tax not previously
deducted.
Termination will not occur until 31 days after we have mailed notice of
termination:
1. to you or the Participant, as provided in the Plan, at the last known
address; and
2. to any assignee of record.
OPTIONS IN THE EVENT OF TERMINATION OF A PARTICIPANT--IN the event that, before
the Annuity Commencement Date of a Participant, that Participant terminates
participation in the Plan, you or that Participant, as provided in the Plan,
with respect to that Participant's Interest may elect:
1. If that Participant is at least 50 years of age, to have that
Participant's Interest applied to provide an Annuity or Income as
provided under "Annuity Provisions" or "Income Provisions."
2. If the contract is continued, to have that Participant's Interest
applied to continue as a paid-up deferred annuity for that
Participant, as provided in the "Paid-Up Deferred Annuity" provision.
3. To have you or that Participant, as provided in the Plan, receive
in cash, as provided in the "Cash Surrender" provision, that
Participant's Interest.
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<PAGE> 11
4. If that Participant becomes a Participant under another group
contract of this same type which is in effect with us, to transfer
that Participant's Interest to that group contract.
5. To make any other arrangements as may be mutually agreed on.
If this contract is continued, any Cash Value to which a terminating
Participant is not entitled under the Plan, will be moved to the Owner's
Account.
AUTOMATIC BENEFIT --In the event of termination, unless otherwise provided in
the Plan, a Participant's Interest will be:
1. If this contract is continued, to continue as a paid-up deferred
annuity in accordance with option 2. above; or
2. If this contract is terminated, will be paid in cash to you or that
Participant, as provided in the Plan.
PAID-UP DEFERRED ANNUITY--We will determine the amount of any Paid-Up Deferred
Annuity Payment as described in the "Valuation Provisions" and "Annuity
Provisions." The paid-up deferred annuity will be payable under the same terms
and conditions as the Annuity that would have otherwise been payable at the
Annuity Commencement Date.
ANNUITY PAYMENTS--Termination of this contract or the Plan will not affect
payments we are making under any Annuity Option which began before the date of
termination.
ANNUITY PROVISIONS
SUB-ACCOUNT ALLOCATION--The accumulated value in each Sub-Account will be
applied:
1. when annuity payments start;
2. to provide an annuity which varies with the investment experience of
that same Sub-Account.
You may elect to transfer Cash Value from one Sub-Account to another:
1. as described in the provision "Transfer Between Sub-Accounts;"
2. in order to reallocate the basis on which Annuity payments will be
determined.
TRANSFERS BETWEEN SUB-ACCOUNTS--After Annuity payments start, you may, with our
consent, change the allocation of your values in each Sub-Account. We will base
each transfer on the actuarial reserve which we determine.
AMOUNT OF FIRST PAYMENT--The ANNUITY TABLES are used to determine the first
monthly Annuity payment. They show the dollar amount of the first monthly
Annuity payment which can be purchased with each $1,000 applied. The amount
applied to effect an Annuity will be:
1. the Cash Value of an Individual Account as of 14 days before the date
Annuity payments start;
2. less any applicable premium taxes not previously deducted.
ANNUITY UNIT VALUE--The initial value of an Annuity Unit for each Separate
Account was set at $1.00. On any Valuation Date the Annuity Unit Value for a
Sub-Account equals:
1. the value of the Sub-Account Annuity Unit on the immediately preceding
Valuation Date; times
2. the net investment factor of that Sub-Account for the Valuation
Period ending on or next following 14 days before the current
Valuation Date;
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3. divided by the Assumed Net Investment Factor. The Assumed Daily
Net Investment Factor is shown on the CONTRACT SUMMARY.
The value of an Annuity Unit as of any date other than a Valuation Date will be
equal to its value as of the next succeeding Valuation Date.
NUMBER OF ANNUITY UNITS--We determine the number of Annuity Units credited to
the basic contract in each Sub-Account by dividing (a) by (b) where:
1. (a) is the basic first monthly Annuity payment attributable to that
Sub-Account; and
2. (b) is the Sub-Account's Annuity Unit Value as of the due date of the
first Annuity payment.
The number of Annuity Units is fixed during the annuity period unless a
transfer is made after Annuity Payments begin.
AMOUNT OF SECOND AND SUBSEQUENT PAYMENTS--The dollar amount of the second and
subsequent payments may change from month to month. The total amount of each
Annuity payment will be equal to:
1. the sum of the payments in each Sub-Account; less
2. any applicable Administrative Charge shown on the CONTRACT SUMMARY.
The actual amount of the payments in each Sub-Account is found by multiplying
(c) by (d) where:
(c) is the number of Annuity Units credited to the Account in that
Sub-Account; and
(d) is the Annuity Unit Value of the Sub-Account as of the date on which
the payment is due.
ANNUITY OPTIONS--We will, subject to the conditions stated in "Election of
Options," and the Plan, pay:
1. all or any part of a Participant's Interest otherwise payable to you or
that Participant:
a. in one sum on that Participant's Annuity Commencement Date; or
b. on prior Cash Surrender of an Individual Account; or
amounts payable:
1. in one sum;
2. to the beneficiary;
3. on death of that Participant;
maybe paid under one or more of the Annuity Options below.
AUTOMATIC OPTION--Unless the Plan provides otherwise, if:
1. the Participant is living and has a spouse; and
2. no election has been made;
we will pay:
1. on that Participant's Annuity Commencement Date;
2. a series of Annuity Payments:
a. based on the life of the Participant as the primary payee and the
Participant's spouse;
b. in accordance with Option 5.
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Unless the Plan provides otherwise, if:
1. the Participant is living; and
2. has no spouse; and
3. no election has been made;
we will:
1. on that Participant's Annuity Commencement Date;
2. pay to the Participant the first of a series of Annuity payments;
a. based on the life of the Participant;
b. in accordance with Option 2;
c. with 120 monthly payments assured.
OPTION 1.--LIFE ANNUITY--NO REFUND--We will make monthly Annuity Payments:
1. during the lifetime of the person on whose life the payments are based;
2. ending with the last monthly payment preceding death.
OPTION 2.--LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENT ASSURED--We will
make monthly Annuity payments:
1. during the lifetime of the person on whose life the payments are based;
and
2. under the conditions stated below.
If at the death of that person, payments have been made for less than 120, 180
or 240 months, as elected, we will continue to make payments:
1. to the designated beneficiary;
2. during the remainder of the period.
OPTION 3. CASH REFUND LIFE ANNUITY--We will make monthly Annuity payments:
1. during the lifetime of the person on whose life the payments are based;
2. ending with the last payment due before the death of that person under
the conditions stated below.
At death of the person on whose life the payments are based, the beneficiary
will receive in one sum the then dollar value of the number of Annuity Units
equal to (a) minus (b) (if that difference is positive) where:
(a) is the total amount applied under this option divided by the
Annuity Unit Value on the due date of the first Annuity payment; and
(b) is:
1) the number of Annuity Units represented by each payment; times
2) the number of payments made.
OPTION 4. JOINT AND LAST SURVIVOR LIFE ANNUITY--We will make monthly annuity
payments:
1. during the joint lifetime of two persons on whose lives payments are
based; and
2. during the lifetime of the survivor.
No more payments will be made after the death of the survivor.
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OPTION 5. JOINT AND LAST SURVIVOR LIFE ANNUITY--ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE--We will make monthly Annuity payments during the joint lifetime
of two persons on whose lives payments are based. One of the two persons will
be designated as the primary payee. The other will be designated the secondary
payee. On the death of the secondary payee, if survived by the primary payee,
we will continue to make monthly Annuity payments:
1. to the primary payee;
2. in the same amount that would have been payable during the joint
lifetime of the two persons.
On the death of the primary payee, if survived by the secondary payee, we will
continue to make monthly Annuity payments:
1. to the secondary payee;
2. in an amount equal to 50% of the payments which would have been
made during the lifetime of the primary payee.
No further payments will be made following the death of the survivor.
OPTION 6. OTHER ANNUITY OPTIONS--We will make any other arrangements for
Annuity payments as may be mutually agreed on.
The first payments under Annuity Options 1, 2, 3, 4 and 5 will be determined
from the ANNUITY TABLES. We reserve the right to require satisfactory proof of
the age of any person on whose life Annuity payments are based before making
the first payment under any of these options.
INCOME PROVISIONS
We will, subject to the conditions stated in "Election of Options" and the
Plan, pay:
1. all or any part of a Participant's Interest otherwise payable to you or
that Participant:
a. in one sum on that Participant's Annuity Commencement Date; or
b. on prior Cash Surrender of an Individual Account; or
2. amounts payable:
a. in one sum;
b. to the beneficiary;
c. on the death of that Participant;
under one or more of the Income Options below. Cash Surrender Value used to
determine the amount of any Income payment will be:
1. based on the Accumulation Unit Value as of 14 days before the date an
Income payment is due; and
2. determined the same way as in the Accumulation period.
OPTION 1. PAYMENTS OF A FIXED AMOUNT--We will make equal payments each month:
1. of the amount elected;
2. until the value applied under this option is gone.
The first monthly payment will be paid from each Sub-Account in proportion to
its Cash Surrender Values applied.
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The second payment and all later payments from each Sub-Account will be the
same as the first payment under this option. The final payment will include any
amount that is not enough to make another full payment.
OPTION 2. PAYMENTS FOR A FIXED PERIOD--We will make monthly payments for the
period selected. The amount of each payment will be equal to:
1. the then remaining Cash Surrender Value applied under this option;
2. divided by the number of remaining payments.
OPTION 3. INVESTMENT INCOME--We will make monthly payments:
1. during the lifetime of the primary payee; or
2. for the period agreed on.
The amount to be paid will be equal to (a) minus (b), if positive, where:
(a) is the excess, if any, of the then Cash Surrender Value under this
option; and
(b) is the amount applied under this option.
ELECTION OF OPTIONS
We will pay any amount payable under this contract under the terms of any
Option if:
1. the amount is payable in one sum; and
2. the amount placed under an option is at least $2,000 unless we consent
to a lesser amount; and
3. the election is made:
a. in writing; and
b. by you or the Participant, if that Participant is living; or
c. by the beneficiary, if the participant has died.
If any periodic payment due any payee is less than $20.00, we reserve the right
to make payments at less frequent intervals.
Any election you or the Participant, as provided in the Plan, makes as to
payments after that Participant dies is not binding on the payee unless
restricted in the election.
While the Participant is living, you or that Participant as provided in the
Plan, may change an election if the election has not been made irrevocable, if
the change is made:
(a) during the lifetime of that Participant; and
(b) before that Participant's Annuity Commencement Date or prior
surrender.
On revocation of an election of:
1. any Annuity Option; or
2. any Income Option;
to be paid on the death of a Participant, any death benefit will be paid:
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1. in one sum: and
2. to the beneficiary designated.
PAYMENT DATE--The first payment under an option, except Income Option 3, is due
on the Participant's Annuity Commencement Date or any other date elected. Under
Income Option 3 the first payment is due one month after that date.
PAYEE--We will make each payment to the person designated, with the designation
applying at the due date of each payment.
Each payment under any other elected option will be made to you or a
Participant, as provided in the Plan.
If the last surviving payee dies while receiving payments, we will pay in one
sum:
1. any unpaid Cash Value in an Individual Account; or
2. the present value of any remaining payments assured;
to the executors or administrators of that payee, unless otherwise provided.
When payments under any Annuity option are made to other than the person on
whose life the Annuity is based, we will require assurance that that person is
living on the due date of each Annuity payment.
RIGHTS OF PAYEE--Unless otherwise provided in the Plan, and except as
restricted, the payee under any option will not:
1. have the right to assign any payments under that option; and
2. have the right to receive the present value of any remaining payments;
or
3. have the right to withdraw any unpaid Cash Surrender Value in an
Individual Account.
A payee has no right to receive the present value of future payments under an
Annuity option during the lifetime of the person on whose life the payments are
based.
Any payee who has a right to withdraw or receive the present value of future
payments can:
1. exercise that right to the exclusion on the rights of any succeeding
payee; and
2. have the right to elect to have all or part of that amount paid under
an Annuity or Income option.
PRESENT VALUE--The calculation of the present value of future payments under an
Annuity option will be at an interest rate equivalent to the rate or rates at
which the first monthly payment was computed.
EXEMPTION--All amounts held and payments made under an option will be exempt
from the claims of all creditors, to the extent allowed by law.
GENERAL PROVISIONS
THE CONTRACT- The entire contract between us and the Applicant consists of the
contract, all attached pages, and the written application. All statements made
in the application are considered to be to the best knowledge and belief of the
Applicant and not as promises of truth. Unless it is contained in the written
application, we will not use any statement to void this contract or to deny a
claim.
No person other than one of our officers can, for us, alter or waive any terms
or provisions of this contract.
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CERTIFICATES--We will issue to you for delivery to each participant an
individual Certificate stating in substance the benefits to which each
Participant is entitled under this contract.
The word "certificate" as used here will include:
1. certificate riders; and
2. certificate supplements;
if any. The certificates will not, unless otherwise stated on the CONTRACT
SUMMARY, constitute a part of this contract.
PREMIUM PAYMENT--Each premium is payable to us at our office or to one of our
authorized representatives. We will accept each premium payment after the first
subject to the conditions and provisions stated on the CONTRACT SUMMARY and the
requirements of the Plan.
No gross premium allocated to an Account may be decreased to an amount which is
less than the minimum premium then required under Group Variable Annuity
contracts issued for the class to which this contract belongs.
SEX AND AGE--IF the Participant's sex or date of birth was misstated in the
Participant's Account Authorization, all benefits of this contract are what the
premium paid would have purchased at the correct sex and age.
Proof of a Participant's age may be filed at any time at our office.
INCONTESTABILITY--We will not contest the basic contract from its Date of
Issue.
OWNERSHIP-ASSIGNMENT--THE owner is shown in the application. Unless otherwise
provided in the Plan, no rights or benefits under this contract are assignable.
BENEFICIARY--Unless the Plan provides otherwise, a Participant's beneficiary
will be as designated in that Participant's Account Authorization. Without the
consent of any beneficiary unless irrevocably named you or the Participant, as
provided in the Plan, may change the designation of beneficiary:
1. during the Participant's lifetime; and
2. while this contract continues.
Any change of designation will be effective from the date you or the
Participant, as provided in the Plan, sign the request for change, whether or
not the Participant is living when we receive the request. We will not be
responsible for any payment we made before we received the request at our
Office. The interest of any beneficiary will be subject to the rights of any
assignee. The interest of any beneficiary who does not survive a participant
will pass to you, the Participant or the Participant's executors,
administrators or assignees, as provided in the Plan.
CHANGE OF CONTRACT--We may, at any time, make any changes, including
retroactive changes, in this contract to the extent that the change is required
to meet the requirements of any law or regulation issued by any governmental
agency to which we or you are subject.
Except as provided in the paragraph above, no changes may be made in the
provisions of this contract before the 5th anniversary of the Contract Date
and, in no event will changes be made with respect to payments being made by us
under any Annuity Option which began before the date of change. On and after
the 5th anniversary of the Contract Date, unless otherwise stated on the
CONTRACT SUMMARY, we reserve the right to change:
17
<PAGE> 18
1. the deductions from premium payments;
2. the administrative charge;
3. the Account Distribution Charge;
4. the Termination Amount;
5. the calculation of:
a. the net investment rate;
b. the Unit Values; and
6. the Annuity Tables.
Any change in the Annuity Tables will be applicable only to premiums we
receive:
1. under this contract;
2. after the change.
Other changes may be applicable:
1. to all Accounts under this contract; or
2. only to Accounts established after the change; or
3. only to premiums received under this contract after the date of the
change;
as we declare at the time of change.
We will give notice to you at least 90 days before the date of change is to
take effect.
REQUIRED REPORTS--We will furnish a report to you:
1. as often as required by law; but
2. at least once in each contract year.
The report will show:
1. the value of the contract as of the date of the report; and
2. any other information required.
VOTING RIGHTS--For each Separate Account:
1. you or the Participant, as provided in the Plan during the lifetime of
the Participant; or
2. the beneficiary after the death of the Participant; will be
entitled to certain voting rights with respect to each Separate
Account in which this contract is credited with Accumulation Units or
Annuity Units. These will be determined in accordance with the
provisions of the Rules and Regulations of each Separate Account.
If:
1. a Separate Account is invested in Underlying Funds; and
2. current law allows,
you will instead be entitled to instruct us how to vote at meetings of the
shareholders of the Underlying Funds. We will determine the number of votes as
to which you will be entitled to instruct us. If there is a change in the law
which permits us to vote the shares:
18
<PAGE> 19
1. of the Underlying Funds;
2. without direction from you;
we reserve the right to do so.
MORTALITY AND EXPENSES--Our actual mortality and expense experience will not
affect:
1. the amount of any Annuity or Income payments; or
2. any other values under the basic contract.
NO DIVIDENDS--This contract will not be entitled to share in our surplus
earnings.
RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNTS--We will have exclusive and
absolute ownership and control of the assets of our Separate Accounts. Our
determination of the value of an Accumulation Unit and an Annuity Unit by the
method described in this contract will be conclusive.
19
<PAGE> 20
ANNUITY TABLES
DOLLAR AMOUNT OF THE FIRST MONTHLY ANNUITY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 APPLIED
Options 1,2, and 3-Single Life Annuities
<TABLE>
<S> <C> <C> <C> <C> <C>
120 180 240
MONTHLY MONTHLY MONTHLY
ADJUSTED NO PAYMENTS PAYMENTS PAYMENTS CASH
AGE REFUND ASSURED ASSURED ASSURED REFUND
50 $4.74 $4.69 $4.62 $4.52 $4.53
51 4.84 4.78 4.70 4.58 4.60
52 4.94 4.87 4.78 4.65 4.67
53 5.04 4.97 4.87 4.71 4.75
54 5.16 5.07 4.95 4.78 4.84
55 5.28 5.18 5.04 4.85 4.93
56 5.40 5.29 5.13 4.91 5.02
57 5.54 5.41 5.23 4.98 5.12
58 5.69 5.53 5.33 5.05 5.22
59 5.84 5.66 5.43 5.11 5.32
60 6.01 5.79 5.53 5.18 5.44
61 6.18 5.94 5.63 5.24 5.56
62 6.37 6.08 5.74 5.30 5.68
63 6.57 6.24 5.84 5.36 5.82
64 6.79 6.40 5.95 5.41 5.96
65 7.02 6.57 6.05 5.46 6.10
66 7.27 6.74 6.15 5.51 6.26
67 7.54 6.91 6.26 5.55 6.43
68 7.83 7.10 6.35 5.59 6.60
69 8.14 7.28 6.45 5.62 6.78
70 8.48 7.47 6.54 5.65 6.98
71 8.84 7.66 6.62 5.68 7.19
72 9.23 7.85 6.70 5.70 7.41
73 9.65 8.04 6.77 5.71 7.65
74 10.11 8.23 6.83 5.72 7.89
75 10.61 8.41 6.88 5.73 8.16
</TABLE>
OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
ADJUSTED AGE OF ADJUSTED AGE OF SECOND LIFE
FIRST LIFE 51 56 58 61 63 66 71
50 $4.21 $4.35 $4.40 $4.47 $4.51 $4.57 $4.64
55 4.37 4.58 4.66 4.78 4.85 4.94 5.07
57 4.43 4.67 4.77 4.90 4.99 5.10 5.26
60 4.51 4.80 4.92 5.09 5.20 5.36 5.59
62 4.55 4.88 5.01 5.22 5.35 5.54 5.82
65 4.62 4.99 5.15 5.39 5.56 5.81 6.19
70 4.70 5.14 5.34 5.65 5.88 6.23 6.83
</TABLE>
U-83
LVA-GAT(u) TIC Ed.1-83
20
<PAGE> 21
OPTION 5 - JOINT AND LAST SURVIVOR LIFE ANNUITY
ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
<TABLE>
<S> <C> <C> <C> <C>
ADJUSTED AGE OF
PRIMARY PAYEE ADJUSTED AGE OF SECOND PAYEE
46 51 56 61
50 $4.37 $4.46 $4.54 $4.61
55 4.65 4.78 4.91 5.02
60 4.97 5.15 5.34 5.51
65 5.34 5.57 5.83 6.10
70 5.75 6.05 6.40 6.78
</TABLE>
Dollar amounts of the first monthly payments for ages not shown in these Tables
will be calculated on the same basis as those shown and may be obtained from
us. Amounts shown in these Tables are based on the Progressive Annuity Table,
with a two year set-back, (assuming births in the year 1900) with interest at
the rate of 3 1/2% per annum. The adjusted age of the person on whose life the
Annuity is based is determined from the actual age last birthday on the due
date of the first Annuity payment in the following manner.
<TABLE>
<S> <C> <C> <C> <C>
Calendar Year in which
First Payment is Due . . 1981-1990 1991-2000 2001-2010 2011 & later
Adjusted Age is Actual Age . . . minus 3 minus 4 minus 5 minus 6
</TABLE>
21
<PAGE> 22
FLEXIBLE ANNUITY RIDER
This rider is made a part of the basic contract to which it is attached. The
Date of Issue of the rider is the same as that of the basic contract unless a
different date is shown in the Contract Summary. Except as provided in this
rider, a Flexible Annuity Account is treated the same as a Sub-Account.
When you direct us to do so, we will
1. apply all or any part of a Participant's net premium; or
2. transfer all or any part of a Participant's Interest under the
contract;
to a Flexible Annuity Account.
PREMIUM PAYMENT--PREMIUMS are payable to us at our office. We will accept
premiums subject to the conditions stated in the Contract Summary. No premium
payment after the first is required to keep this rider in effect, as long as
the basic contract is in effect.
We will apply the first net premium paid for this rider:
1. to provide Accumulation Units;
2. to the credit of this rider;
3. as of the day the premium is received at our office; or
4. on the date shown in the application for this rider, if later.
We will apply any net premium after the first net premium as of the day we
receive it at our office.
For the purpose of this rider, the "VALUATION PROVISIONS" of the basic contract
are amended by deleting the following provisions:
1. "Number of Accumulation Units;"
2. "Accumulation Unit Value;" and
3. "Net Investment Rate and Net Investment Factor;"
and the following provisions are added.
NUMBER OF ACCUMULATION UNITS--We will determine the number of Accumulation
Units to be credited to this rider on payment of premiums by dividing the net
premium by the then dollar value of one Accumulation Unit.
ACCUMULATION UNIT VALUE--We will determine the value of an Accumulation Unit on
any day by multiplying:
1. the value on the immediately preceding day; by
2. the net interest factor for the day on which the value is being
determined.
NET INTEREST FACTOR--The net interest factor for a day is:
1. the assured Net Interest Rate which is equivalent to an annual interest
rate of 3 1/2%, plus
2. any additional net interest return, plus
3. 1.0000.
L-13411 TIC Ed. 6-91
22
<PAGE> 23
CASH VALUE--The Cash Value of a Flexible Annuity Account on any date equals:
1. the number of Accumulation Units credited to this rider: minus
2. any reductions as stated in the "Account Charge" provision of the basic
contract; and multiplied by
3. the then Accumulation Unit Value.
For the assured values of a Flexible Annuity Account, see the TABLE OF VALUES
of this rider.
CASH SURRENDER--We will:
1. before the due date of a Participant's first Annuity payment; and
2. without the consent of any beneficiary unless irrevocably named,
pay you all or any part of that Participant's interest in the value of this
rider if you request it in writing. We may delay payment of the Cash Surrender
Value of a Flexible Annuity Account for a period of not more than six months
after we receive the request.
CASH SURRENDER VALUE--The Cash Surrender Value of a Flexible Annuity Account is
equal to:
1. the Cash Value of a Flexible Annuity Account; minus
2. any amounts deducted on surrender which are shown on the contract
summary, minus
3. any applicable premium tax not previously deducted.
BENEFITS--In addition to the benefits of the basic contract, you may apply all
or any part of a Participant's Interest to provide a Flexible Annuity Account
(fixed dollar) Annuity. The fixed dollar annuity provisions available:
1. are of the same type; and
2. payable under the same terms and conditions as indicated in the
"ANNUITY PROVISIONS" of the contract except for Option 3, Unit Refund
Life Annuity, which is not available. However you may elect a Cash
Refund Life Annuity.
CASH REFUND LIFE ANNUITY--We will make monthly annuity payments to you:
1. during the lifetime of the Participant on whose life the payments are
based;
2. ending with the last payment due before the death of that Participant;
provided that at death the beneficiary will receive in one sum the excess, if
any, of:
1. the total amount applied under the option; minus
2. the sum of the annuity payments previously made.
We will determine the first payment under this option from the ANNUITY TABLES
in the contract. It will be the same as that shown for a Unit Refund Life
Annuity.
The rights and benefits stated in the provision of the basic contract entitled
"ELECTIONS OF OPTIONS" will apply to the Cash Refund Life Annuity.
The dollar amount of the first fixed dollar annuity payment will be as
indicated in the provision of the basic contract entitled "Amount of First
Payment." The amount applied to effect an annuity will be the Cash Value as of
the date the first payment is paid. All subsequent payments will be in the same
amount and that amount will
23
<PAGE> 24
be assured throughout the payment period. If it would produce a larger payment,
we agree that the fixed dollar annuity payment will be determined on the same
mortality and interest basis used in determining rates for fixed dollar
payments under annuity contracts being issued for the same class of Annuitants
on the date the first fixed dollar annuity payment is paid under this contract.
LOANS--You may request a loan for a Participant at any time as long as the
request is made in writing on a form that is acceptable to us.
The loan:
1. must be made before the due date of the first annuity payment for the
Participant; and
2. will be made without the consent of any beneficiary or other
party unless irrevocably named, or unless required by Federal law: and
3. cannot exceed the maximum loan value.
We may defer granting a loan for the period permitted by law but not for more
than six months. We will not grant an additional loan for any Participant until
the first loan has been repaid in full.
MINIMUM LOAN VALUE--The minimum loan value is shown on the Contract Summary.
MAXIMUM LOAN VALUE--The maximum loan value is shown on the Contract Summary.
You must transfer Cash Value from the basic contract equal to the loan amount
to the Flexible Annuity Account prior to our granting the loan. The amount
transferred to the Flexible Annuity Account will be taken pro rata from each of
the other contract Sub-Accounts which have Cash Value, unless you instruct us
otherwise. An express condition of us lending the loan amount to you is that
you will grant us a security interest in the Cash Value of the Flexible Annuity
Account equal to the loan amount.
LOAN INTEREST--Interest on the loan is payable in advance on a quarterly basis.
The interest rate will be a fixed rate as stated in the Contract Summary.
EFFECT OF A LOAN ON CASH VALUE OF THE FLEXIBLE ANNUITY ACCOUNT--To the extent
that the loan remains outstanding, the Cash Value that is equal to the loan
amount will be credited with an interest rate of 3-1/2% a year.
The Cash Value may be decreased as stated in the Loan and Interest Repayments
section of this rider.
EFFECT OF A LOAN ON CASH SURRENDER VALUE OF THE FLEXIBLE ANNUITY ACCOUNT--While
a loan remains outstanding, the Cash Surrender Value of the Flexible Annuity
Account equals;
1. the Cash Value; less
2. any amounts deducted on surrender which are shown on the Contract
Summary; less
3. any applicable premium tax not previously deducted; and less
4. the amount of any outstanding loan and accrued interest.
EFFECT OF LOAN ON TRANSFERS FROM THE FLEXIBLE ANNUITY ACCOUNT TO OTHER
SUB-ACCOUNTS--While a loan remains outstanding, the maximum Cash Value that you
may transfer from the Flexible Annuity Account to any other Sub-Account(s) is
the Cash Surrender Value.
LOAN AND INTEREST REPAYMENTS--We will send you periodic bills, except when the
loan is in default, for the loan and interest amount due. Payments must be made
on a quarterly basis. Unless the loan was used to purchase a principal
residence, the loan must be repaid within 5 years of the date the loan is made.
We must be
24
<PAGE> 25
notified in writing when the loan is being used to purchase a principal
residence. We will notify you regarding the repayment schedule for the loan.
If the entire billed amount is not paid within 31 days of the due date, one of
the following events will occur:
1. If there is Cash Value of the Flexible Annuity Account that is
not restricted and it is sufficient to pay the Participant's entire
billed amount, we will surrender that billed amount from that
unrestricted Cash Value. Cash Value that is not restricted consists of
any amount that is:
a. not restricted according to the Internal Revenue Code; and
b. attributable to the Participant's contributions.
When the billed amount is surrendered from the Cash Value of the Flexible
Annuity Account, the Cash Value will also be reduced by:
a. any amounts deducted on surrender, if applicable, which are shown
on the Contract Summary; plus
b. any applicable premium tax not previously deducted.
2. When the entire billed amount cannot be paid as described in item
1 above, we will send you a notice reminding you that the amount for a
Participant has not been paid. If you do not pay that billed amount
within 60 days of the date of our notice, the outstanding loan plus
any accrued interest will be considered a loan in default. We will not
send you any more bills.
Interest will continue to be charged and credited to the loan in default while
the loan is outstanding. Repayment of the loan amount and/or accrued interest
will be allowed at any time.
When an event that is recognized under federal tax law or regulation as one
which allows the Cash Value of the Flexible Annuity Account to be distributed,
the Cash Value will be reduced by:
1. the amount of the outstanding loan plus any accrued interest; plus
2. the amounts deducted on surrender, if applicable, which are shown on
the Contract Summary; plus
3. any applicable premium tax not previously deducted.
The loan amount is then considered no longer outstanding. Interest will no
longer be charged or credited to the loan amount.
BENEFITS IN THE EVENT PREMIUM IS NOT PAID--
AUTOMATIC BENEFIT--This rider will automatically continue as a Paid-Up Deferred
Annuity starting at a Participant's Annuity Commencement Date if:
1. this rider has a Cash Value; and
2. no further premium payments are made for this rider.
PAID-UP DEFERRED ANNUITY--We will determine the amount of any Paid-Up Deferred
Annuity payment as described in the "Cash Value" provision above. The annuity
will be payable:
1. on the Participant's Annuity Commencement Date;
2. if the Annuitant is then living;
3. unless you elect otherwise;
25
<PAGE> 26
4. under the same terms and conditions as the Annuity that would have
otherwise been payable at the Participant's Annuity Commencement Date.
The Cash Value and the Cash Surrender Value of this Paid-up Deferred Annuity
provision on and before an Annuity Commencement Date will be calculated as
described in the "VALUATION PROVISIONS" of the basic contract.
CASH--You may surrender this rider for cash as described in the "Cash
Surrender" provision.
MINIMUM VALUES--Any Paid-Up Deferred Annuity Value or Cash Surrender Value
provided by this rider are not less than the minimum required by the law of the
state in which this contract is delivered.
ANNUAL REPORTS--We will furnish you a report for this rider as often as
required by law but at least once in each contract year before the due date of
the first Annuity payment.
The report will show the Cash Value of the Flexible Annuity Account as of the
date of the report.
THE TRAVELERS INSURANCE COMPANY
President
26
<PAGE> 27
TABLE OF VALUES
Cash Values per $1,000 of Net Premium Payment Applied to Provide Accumulation
Units
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
No. of Full No. of Full No. of Full No. of Full No. of Full
Years From Years From Years From Years From Years From
Date Prem. Cash Date Prem. Cash Date Prem. Cash Date Prem. Cash Date Prem. Cash
is Applied Value is Applied Value is Applied Value is Applied Value is Applied Value
1 1035 15 1675 29 2711 43 4389 57 7105
2 1071 16 1733 30 2806 44 4543 58 7354
3 1108 17 1794 31 2905 45 4702 59 7611
4 1147 18 1857 32 3006 46 4866 60 7878
5 1187 19 1922 33 3111 47 5037 61 8153
6 1229 20 1989 34 3220 48 5213 62 8439
7 1272 21 2059 35 3333 49 5396 63 8734
8 1316 22 2131 36 3450 50 5584 64 9040
9 1362 23 2206 37 3571 51 5780 65 9356
10 1410 24 2283 38 3696 52 5982 66 9684
11 1459 25 2363 39 3825 53 6192 67 10023
12 1511 26 2445 40 3959 54 6408 68 10373
13 1563 27 2531 41 4097 55 6633 69 10737
14 1618 28 2620 42 4241 56 6865 70 11112
</TABLE>
L-13411
27
<PAGE> 28
OWNERSHIP--NON-TRANSFERABLE
You may not:
1. sell;
2. assign; or
3. discount;
this contract. You may not pledge this contract:
1. as collateral for a loan; or
2. as security for the performance;
a. of an obligation; or
b. for any other purpose;
to any person or organization other than us.
These restrictions will not apply to:
1. the Trustee of any Trust described in Section 401(a); or
2. the Administrator of any Annuity Plan described in Section 403(a);
of the Internal Revenue Code. This restriction supersedes an provisions of the
contract which may be inconsistent with it
LIMITATION ON SETTLEMENT OPTION ELECTION
To conform this contract with:
1. the applicable sections of the Internal Revenue Code of 1954; and
2. the rulings and regulations under the Code;
the provision of this contract relating to "ELECTION OF OPTIONS," if
applicable, is amended by the addition of the following provision:
A settlement option may not be elected under which the present value of the
payments to be made to the Participant is less than fifty percent (50%) of the
present value of the total payments to be made to the Participant and his or
her beneficiary. To conform this contract with:
1. the applicable sections of the Internal Revenue Code of 1954; and
2. the rulings and limitations under the Code;
the provision of this contract relating to "INCOME PROVISIONS," if applicable,
is amended by the deletion of "Option 3. Amounts Held at Interest" when this
contract has been transferred or assigned to the Annuitant/Participant.
THE TRAVELERS INSURANCE COMPANY
President
LVA-E9-A TIC Ed. 3-83
28
<PAGE> 29
ENDORSEMENT
This endorsement is made a part of this contract in order to comply with
Section 403(b) of the Internal Revenue Code. The following conditions,
restrictions and limitations apply.
ELECTIVE DEFERRAL CONTRIBUTION LIMITS
In order to meet the qualification requirements of Internal Revenue Code
Section 403(b), elective deferral contributions may not exceed the limitations
in effect under Internal Revenue Code Section 402(g).
This rule is effective for plan years beginning after December 31, 1987 and
applies to all elective deferral plans, contracts or arrangements.
WITHDRAWAL RESTRICTIONS
To qualify as a contract which can defer compensation under an Internal Revenue
Code 403(b) plan or arrangement, the withdrawal restrictions under Internal
Revenue Section 403(b)(11) must be met.
Withdrawals attributable to contributions made pursuant to a salary reduction
agreement may be paid only upon or after attainment of age 59-1/2, separation
from service, death, total or permanent disability (as defined in Internal
Revenue Code Section 72(m)(7)) or in the case of hardship (as defined in the
Treasury Regulations). The hardship exception applies only to the salary
reduction contribution and not to any income attributable to such contribution.
These withdrawal restrictions apply to years beginning after December 31, 1988
but only with respect to assets other than those assets held as of the close of
the last year beginning before January 1, 1989.
NONDISCRIMINATION RULES
In order to meet the qualification requirements of Internal Revenue Code
Section 403(b), except in the case of a contract purchased by a church, all
plans must meet the nondiscrimination rules set forth in Internal Revenue Code
Section 403(b) (12). These rules apply to years beginning after December
31, 1988.
MANDATORY DISTRIBUTION RULES
In order to meet the qualification requirements of Internal Revenue Code
Section 403(b), all plans must meet the mandatory distribution rules in
Internal Revenue Code Section 401(a)(9). These rules apply to years beginning
after December 31, 1986.
ADMINISTRATIVE COMPLIANCE
We intend to administer this contract so that it will maintain its tax deferred
qualification under Internal Revenue Code Section 403(b). If temporary or final
regulations require a change in the contract language in order to maintain
qualification, we will administer this contract in accordance with the
regulations.
THE TRAVELERS INSURANCE COMPANY
President
L-13089
29
<PAGE> 30
ENDORSEMENT
This endorsement is made a part of the contract to which it is attached at its
Date of Issue.
The "Relation of This Contract to the Separate Accounts" under the "General
Provisions" is amended by deleting the provisions and replacing it with the
following:
We will have exclusive and absolute ownership and control of the assets of our
Separate Accounts. That portion of the assets of a Separate Account equal to
the reserves and other contract liabilities with respect to such Separate
Account shall not be chargeable with liabilities arising out of any other
business we may conduct. Our determination of the value of an Accumulation Unit
and an Annuity Unit by the method described in this contract will be
conclusive.
THE TRAVELERS INSURANCE COMPANY
President
L-13804 TIC Ed. 5-92
30
<PAGE> 31
ENDORSEMENT
This endorsement is made a part of this Contract at its Date of Issue.
This endorsement deletes any and all reference to "sex" in the contract to
which it is attached.
THE TRAVELERS INSURANCE COMPANY
President
L-13193
31
<PAGE> 32
ENDORSEMENT
This endorsement is made a part of this contract form at its Date of Issue.
The "Benefits" provision is amended by deleting the existing provision and
replacing it with the following:
If the Participant is living on that Participant's Annuity Commencement date:
1. we will apply the Participant's Interest to provide an Annuity; and
2. we will pay to you or that Participant, as provided in the Plan, the
first of a series of Annuity payments.
You or the Participant, as provided in the Plan, may elect:
1. another form of Annuity or Income; or
2. an earlier date for the commencement of an Annuity or an Income, or
both:
as provided in this contract. We will determine the dollar amounts of Annuity
or Income Payments as described in the Annuity Provisions or the Income
Provisions.
If:
1. a Participant's Interest is to be applied to effect an Annuity or
Income Option; and
2. that Interest is other than the Cash Value of that Participant's
Individual Accounts;
we must receive your instructions at least 30 days before that Participant's
first Annuity or Income Payment is to be made.
If the Participant dies before age 75 while this contract continues and before
the payment of that Participant's Annuity or Income, we will, after receipt of
due proof of that Participant's death, pay to you or that Participant's
beneficiary as provided in the Plan, the greater of 1), 2), or 3) below, less
any applicable premium tax, or outstanding loans as of the date of receipt of
due proof of death:
1. the Cash Value of the Participant's Account;
2. the gross premium paid under that Participant's Account less any
surrenders not previously deducted; or
3. the Cash Value of that Participant's Account on the fifth Year
anniversary of the Effective Date of the certificate immediately
preceding the date of receipt by us of due proof of that Participant's
death less any surrenders not previously deducted.
If the Participant dies on or after age 75 while this contract continues; and
before the payment of that Participant's Annuity or Income, we will, after
receipt of due proof of that Participant's death, pay to you or that
Participant's beneficiary, as provided in the Plan:
1. the Cash Value of the Participant's Account, less any applicable
premium tax, or outstanding loans not previously deducted.
The Cash Value of the Participant's Account will be determined as of the next
valuation following receipt by us at our office of due proof of that
Participant's death.
THE TRAVELERS INSURANCE COMPANY
President
L-12862 TIC Ed. 5-94
32
<PAGE> 33
Group Variable Annuity Contract
Annuity and Income Options
Elective Options Without Dividends
ENDORSEMENTS
LVA-FP(u)
33
<PAGE> 1
EXHIBIT 17
In connection with the solicitation and sale of variable annuity
contracts to participants of plans qualified under Section 403(b) of the
Internal Revenue Code, the Registrant hereby represents, in reliance upon
No-Action Letter IP-6-88, that it has:
(1) included appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in each registration
statement, including the prospectus, used in connection with the
offer of the contract;
(2) included appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in any sales
literature used in connection with the offer of the contract;
(3) instructed sales representatives who solicit participants to
purchase the contract specifically to bring the redemption
restrictions imposed by Section 403(b)(11) to the attention of
the potential participants; and
(4) obtained from each plan participant who purchases a Section
403(b) annuity contact, prior to or at the time of such purchase,
a signed statement acknowledging the participant's understanding
of (i) the restrictions on redemption imposed by Section
403(b)(11), and (ii) the investment alternatives available under
the employer's Section 403(b) arrangement, to which the
participant may elect to transfer his or her contract value.
By:
----------------------------------
Name: Robert C. Hamilton
Title: Vice President
Date: February 29, 1996
<PAGE> 1
EXHIBIT 18.a
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Heath B. McLendon of Summit, New Jersey, Chair-man of
the Board of Managers of The Travelers Timed Aggressive Stock Account for
Variable Annuities of The Travelers Insurance Company, do hereby make,
constitute and appoint ERNEST J. WRIGHT, Secretary of said Fund, and KATHLEEN
A. McGAH, Assistant Secretary of said Fund, either one of them acting alone, my
true and lawful attorney-in-fact, for me, and in my name, place and stead, to
sign registration statements of said Fund on Form N-3 or other applicable form
under the Securities Act of 1933 for the registration of Variable Annuity
Contracts funded in The Travelers Timed Aggressive Stock Account for Variable
Annuities and to sign any and all amendments thereto that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/ Heath B. McLendon
------------------------------------
Chairman of the Board of Managers
The Travelers Timed Aggressive Stock
Account for Variable Annuities
<PAGE> 2
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Knight Edwards of Providence, Rhode Island, a member
of the Board of Managers of The Travelers Timed Aggressive Stock Account for
Variable Annuities of The Travelers Insurance Company, do hereby make,
constitute and appoint ERNEST J. WRIGHT, Secretary of said Fund, and KATHLEEN
A. McGAH, Assistant Secretary of said Fund, either one of them acting alone, my
true and lawful attorney-in-fact, for me, and in my name, place and stead, to
sign registration statements of said Fund on Form N-3 or other applicable form
under the Securities Act of 1933 for the registration of Variable Annuity
Contracts funded in The Travelers Timed Aggressive Stock Account for Variable
Annuities and to sign any and all amendments thereto that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/ Knight Edwards
------------------------------------
Member of the Board of Managers
The Travelers Timed Aggressive Stock
Account for Variable Annuities
<PAGE> 3
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert E. McGill, III of Williamstown, Massachusetts,
a member of the Board of Managers of The Travelers Timed Aggressive Stock
Account for Variable Annuities of The Travelers Insurance Company, do hereby
make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Fund, and
KATHLEEN A. McGAH, Assistant Secretary of said Fund, either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my name, place and
stead, to sign registration statements of said Fund on Form N-3 or other
applicable form under the Securities Act of 1933 for the registration of
Variable Annuity Contracts funded in The Travelers Timed Aggressive Stock
Account for Variable Annuities and to sign any and all amendments thereto that
may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/ Robert B. McGill, III
------------------------------------
Member of the Board of Managers
The Travelers Timed Aggressive Stock
Account for Variable Annuities
<PAGE> 4
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Lewis Mandell of Shorewood, Wisconsin, a member of the
Board of Managers of The Travelers Timed Aggressive Stock Account for Variable
Annuities of The Travelers Insurance Company, do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Fund, and KATHLEEN A. McGAH,
Assistant Secretary of said Fund, either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements of said Fund on Form N-3 or other applicable form under
the Securities Act of 1933 for the registration of Variable Annuity Contracts
funded in The Travelers Timed Aggressive Stock Account for Variable Annuities
and to sign any and all amendments thereto that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/ Lewis Mandell
------------------------------------
Member of the Board of Managers
The Travelers Timed Aggressive Stock
Account for Variable Annuities
<PAGE> 5
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Frances M. Hawk of Sherborn, Massachusetts, a member
of the Board of Managers of The Travelers Timed Aggressive Stock Account for
Variable Annuities of The Travelers Insurance Company, do hereby make,
constitute and appoint ERNEST J. WRIGHT, Secretary of said Fund, and KATHLEEN
A. McGAH, Assistant Secretary of said Fund, either one of them acting alone, my
true and lawful attorney-in-fact, for me, and in my name, place and stead, to
sign registration statements of said Fund on Form N-3 or other applicable form
under the Securities Act of 1933 for the registration of Variable Annuity
Contracts funded in The Travelers Timed Aggressive Stock Account for Variable
Annuities and to sign any and all amendments thereto that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/ Frances M. Hawk
------------------------------------
Member of the Board of Managers
The Travelers Timed Aggressive Stock
Account for Variable Annuities
<PAGE> 1
Exhibit 18.d
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, Director,
President and Chief Executive Officer of The Travelers Insurance Company
(hereinafter the "Company"), do hereby make, constitute and appoint JAY S.
FISHMAN, Director and Chief Financial Officer of said Company, and ERNEST J.
WRIGHT, Assistant Secretary of said Company, or either one of them acting
alone, my true and lawful attorney-in-fact, for me, and in my name, place and
stead, to sign registration statements on behalf of said Company on Form N-3 or
other appropriate form under the Securities Act of 1933 for The Travelers Timed
Aggressive Stock Account for Variable Annuities, a separate account of the
Company dedicated specifically to the funding of variable annuity contracts to
be offered by the Company, and further, to sign any and all amendments thereto,
including post-effective amendments, that may be filed by the Company on behalf
of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of June,
1995.
/s/ Michael A. Carpenter
-------------------------------
Director, President and
Chief Executive Officer
The Travelers Insurance Company
<PAGE> 2
EXHIBIT 18.d
THE TRAVELERS TIMED AGGRESSIVE STOCK ACCOUNT
FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Christine B. Mead of Avon, Connecticut, Vice President and
Controller of The Travelers Insurance Company (hereinafter the "Company"), do
hereby make, constitute and appoint JAY S. FISHMAN, Director and Chief
Financial Officer of said Company, and ERNEST J. WRIGHT, Assistant Secretary of
said Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-3 or other appropriate form
under the Securities Act of 1933 for The Travelers Timed Aggressive Stock
Account for Variable Annuities, a separate account of the Company dedicated
specifically to the funding of variable annuity contracts to be offered by the
Company, and further, to sign any and all amendments thereto, including
post-effective amendments, that may be filed by the Company on behalf of said
registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of June,
1995.
/s/ Christine B. Mead
-------------------------------
Vice President and Controller
The Travelers Insurance Company
