TRAVELERS SERIES TRUST, 497, 1996-11-12

TRAVELERS SERIES TRUST
497, 1996-11-12

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THE TRAVELERS SERIES TRUST

TRAVELERS QUALITY BOND PORTFOLIO
LAZARD INTERNATIONAL STOCK PORTFOLIO
MFS EMERGING GROWTH PORTFOLIO
FEDERATED HIGH YIELD PORTFOLIO
FEDERATED STOCK PORTFOLIO
LARGE CAP PORTFOLIO
EQUITY INCOME PORTFOLIO

ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE 1-860-277-0111
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The Travelers Series Trust (the "Series Trust") is a diversified open-end
management investment company (mutual fund) consisting of multiple series of
shares (the "Portfolios"), each with its own investment objectives and policies.
Seven of the Portfolios of the Series Trust are described herein: Travelers
Quality Bond Portfolio, Lazard International Stock Portfolio, MFS Emerging
Growth Portfolio, Federated Stock Portfolio, Federated High Yield Portfolio,
Large Cap Portfolio and Equity Income Portfolio.

Shares of the Portfolios are currently offered without a sales charge to
certain separate accounts of The Travelers Insurance Company and Travelers Life
and Annuity Company (collectively, "Company" or "Travelers"). The Portfolios
serve as investment vehicles for variable annuity and variable life insurance
contracts issued by Travelers. All Portfolios described herein may not be
available under all variable contracts. The term "shareholder" as used herein
refers to any insurance company separate account that may use shares of the
Portfolios as investment vehicles now or in the future.

This Prospectus concisely sets forth the information about the Series Trust
and the Portfolios that you should know before investing. Please read it and
retain it for future reference. Additional information about the Series Trust
and the Portfolios is contained in a Statement of Additional Information ("SAI")
dated July 31, 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 1-860-277-0111.

THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR A VARIABLE
ANNUITY OR VARIABLE LIFE INSURANCE CONTRACT ISSUED BY TRAVELERS. BOTH THIS
PROSPECTUS AND THE CONTRACT PROSPECTUS SHOULD BE READ CAREFULLY 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.

THE DATE OF THIS PROSPECTUS IS JULY 31, 1996.
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TABLE OF CONTENTS

<TABLE>
<S> <C>
THE TRAVELERS SERIES TRUST............................................................ 3
FUNDAMENTAL INVESTMENT POLICIES....................................................... 3
TRAVELERS QUALITY BOND PORTFOLIO...................................................... 3
LAZARD INTERNATIONAL STOCK PORTFOLIO.................................................. 5
MFS EMERGING GROWTH PORTFOLIO......................................................... 7
FEDERATED HIGH YIELD PORTFOLIO........................................................ 11
FEDERATED STOCK PORTFOLIO............................................................. 15
LARGE CAP PORTFOLIO................................................................... 16
EQUITY INCOME PORTFOLIO............................................................... 19
PORTFOLIO TURNOVER.................................................................... 20
BOARD OF TRUSTEES..................................................................... 20
INVESTMENT MANAGER.................................................................... 20
INVESTMENT SUBADVISERS................................................................ 21
FUND ADMINISTRATION................................................................... 25
SECURITIES TRANSACTIONS............................................................... 25
FUND EXPENSES......................................................................... 25
SHARES OF THE SERIES TRUST............................................................ 26
PRICING SHARES........................................................................ 27
SHARE REDEMPTION...................................................................... 27
Dividends and Tax Status............................................................ 27
LEGAL PROCEEDINGS..................................................................... 28
ADDITIONAL INFORMATION................................................................ 28
EXHIBIT A............................................................................. 29
EXHIBIT B............................................................................. 46
</TABLE>

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THE TRAVELERS SERIES TRUST
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The Series Trust is registered with the SEC as an open-end management
investment company. The Series Trust is organized as a business trust under the
laws of the Commonwealth of Massachusetts. An Agreement and Declaration of Trust
dated October 11, 1991 (the "Declaration of Trust") authorizes the shares of the
Series Trust to be divided into two or more series related to separate
portfolios of investments, and further allows the Board of Trustees to establish
additional portfolios at any time.

The Series Trust is currently divided into thirteen series (the
"Portfolios"), each with its own investment objective and policies, all of which
are diversified portfolios under the Investment Company Act of 1940, as amended
("1940 Act"). Seven Portfolios, as described below, are contained in this
prospectus. The other Portfolios are described in a separate prospectus. While
there is no assurance that a Portfolio will achieve its objective, each
Portfolio endeavors to do so by following its investment policies as described
below.

FUNDAMENTAL INVESTMENT POLICIES

Each of the Portfolios follows certain investment policies and adopts
specific investment techniques which cannot be modified without shareholder
approval. These "fundamental" investment policies are mandated by either the
provisions of the The Investment Company Act of 1940, as amended (the "1940
Act") or pursuant to procedures that the Board of Trustees has decided to adopt.
In contrast, each Portfolio also follows certain nonfundamental investment
policies. Unlike the fundamental investment policies, nonfundamental policies
may be changed, subject to the approval of the Board, at the discretion of the
Investment Adviser or Subadviser for the affected Portfolio without shareholder
approval. Except as noted, all of the investment policies discussed herein are
nonfundamental.

TRAVELERS QUALITY BOND PORTFOLIO
("TRAVELERS BOND PORTFOLIO")
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INVESTMENT OBJECTIVE

The basic investment objective of Travelers Bond Portfolio is to seek
current income, moderate capital volatility and total return.

INVESTMENT POLICIES

The assets of Travelers Bond Portfolio will be primarily invested in the
following securities:

- money market obligations;
- treasury bills;
- repurchase agreements;
- commercial paper;
- bank certificates of deposit and bankers' acceptances; and
- publicly traded debt securities, including bonds, notes, debentures,
equipment trust certificates and short-term instruments.

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obligations may be made if the Investment Adviser concludes that the investment
yields justify a longer term commitment. No more than 25% of the value of
Travelers Bond Portfolio'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 Travelers Bond Portfolio are generally
not listed securities, there are firms which make markets in the type of debt
instruments that Travelers Bond Portfolio holds. No problems of liquidity are
anticipated with regard to the investments of Travelers Bond Portfolio.

From time to time, Travelers Bond Portfolio may commit to purchase
new-issue government or agency securities on a "when-issued" basis (referred to
throughout as "when-issued securities"). Travelers Bond Fund 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 the
Travelers Bond Portfolios securities. See attached Exhibit A for a more complete
description of these investment techniques.

INVESTMENT RESTRICTIONS

The Travelers Bond Portfolio is subject to certain investment restrictions.
Specifically, the Investment Adviser, on behalf of Travelers Bond Portfolio may:

- 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);
- borrow from banks in amounts of up to 5% of its assets, but only for
emergency purposes;
- purchase interests in real estate represented by securities for which
there is an established market;
- 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;
- acquire up to 10% of the voting securities of any one issuer (it is the
present practice of Travelers Bond Portfolio not to exceed 5% of the
voting securities of any one issuer);
- 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
- invest up to 15% of its assets in restricted securities (securities which
may not be publicly offered without registration under the Securities Act
of 1933).

RISK FACTORS

The Investment Adviser will weigh considerations of risks, yield and
ratings in implementing Travelers Bond Portfolio's fundamental investment
policies. There are no specific criteria with regard to quality or ratings of
the investments of Travelers Bond Portfolio, but it is anticipated that they
will be of investment grade or its equivalent. Debt instruments that the
Portfolio purchases may, however, not be rated since such instruments may be
government securities or of short durations. 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.

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LAZARD INTERNATIONAL STOCK PORTFOLIO
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INVESTMENT OBJECTIVE

The investment objective of the Lazard International Stock Portfolio is to
seek capital appreciation through investing primarily in the equity securities
of non-United States companies (i.e., incorporated or organized outside the
United States).

INVESTMENT POLICIES

The Portfolio expects to invest its assets principally in the following:

- equity securities of non-U.S. companies, (although the Portfolio may have
substantial investments in American Depository Receipts), ("ADRs" and
Global Depository Receipts -- "GDRs");
- convertible bonds; and
- other convertible securities.

There is no requirement, however, that the Portfolio invest exclusively in
common stocks or other equity securities, and, if deemed advisable, it may
invest up to 20% of the value of its total assets in fixed-income securities and
short-term money market instruments. The Portfolio will not invest in
fixed-income securities rated lower than investment grade.

It is the present intention of the Subadviser to invest the Portfolio's
assets in companies based in Continental Europe, the United Kingdom, the Pacific
Basin and in such other areas and countries as the Subadviser may determine from
time to time. Under normal market conditions, the Portfolio will invest at least
80% of the value of its total assets in the equity securities of companies
within not less than three different countries (not including the United
States). The percentage of the Portfolio's assets invested in particular
geographic sectors may shift from time to time in accordance with the judgment
of the Subadviser.

In selecting investments for the Portfolio, the Subadviser attempts to
identify inexpensive markets world-wide through traditional measures of value,
including low price to earnings ratio, high yield, unrecognized assets,
potential for management change and/or the potential to improve profitability.
In addition, the Subadviser seeks to identify companies that it believes are
financially productive and undervalued in those markets. The Subadviser focuses
on individual stock selection (a "bottom-up" approach) rather than on
forecasting stock market trends (a "top-down" approach).

The Subadviser recognizes that some of the best opportunities are in
securities not generally followed by investment professionals. Thus the
Subadviser relies on its research capability and also maintains a dialogue with
foreign brokers and with the management of foreign companies in an effort to
gather the type of "local knowledge" that it believes is critical to successful
investment abroad. To this end, the Subadviser communicates with its affiliates,
Lazard Freres & Cie. in Paris, Lazard Brothers & Co. Ltd. in London, and Lazard
Asset Management K.K. in Tokyo, for information concerning current business
trends, as well as for a better understanding of the management of local
businesses. The information supplied by these affiliates will be limited to
statistical and factual information, advice regarding economic factors and
trends or advice as to occasional transactions in specific securities.

The Portfolio may enter into foreign currency forward exchange contracts in
order to protect against anticipated changes in foreign currency exchange rates.

When, in the judgment of the Subadviser, business or financial conditions
warrant, the Portfolio may assume a temporary defensive position and invest
without limit in the equity securities of U.S. Companies or short-term money
market instruments or hold its assets in cash.

Please review Exhibit A attached hereto for a more detailed discussion of
the investment techniques the Portfolio will use to attempt to achieve its
investment objectives. In addition, the

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Lazard International Stock Portfolio may engage in certain investment activities
described in greater detail in the Exhibit A.

INVESTMENT RESTRICTIONS

The following represents the fundamental investment policies of the
Portfolio. Please consult the SAI for additional information concerning
investment restrictions.

The Lazard International Stock Portfolio may not:

- issue senior securities, borrow money or pledge or mortgage its assets,
except that the Portfolio may borrow from banks for temporary purposes,
including the meeting of redemption requests which might require the
untimely disposition of securities. For purposes of this investment
restriction, the Portfolio's entry into options, forward contracts,
futures contracts, including those related to indexes shall not
constitute borrowing;
- make loans, except loans of portfolio securities not having a value in
excess of 10% of the Portfolio's total assets and except that the
Portfolio may purchase debt obligations in accordance with its investment
objectives and policies;
- invest in illiquid securities if immediately after such investment more
than 10% of the value of the Portfolio's net assets, taken at market
value, would be invested in such securities;
- purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization; provided,
however, the Lazard International Stock Portfolio may purchase securities
in an amount up to 5% of the value of its total assets in any one
closed-end fund and may purchase in the aggregate securities of
closed-end funds in an amount of up to 10% of the value of the
Portfolio's total assets;
- purchase the securities of issuers conducting their principal business in
the same industry, if the value of the value of the Portfolio's
investment exceeds 25% of the Portfolio's then current net asset value;
- purchase or sell real estate except in a manner consistent with specific
rules described in greater detail in the SAI;
- purchase securities on margin;
- underwrite securities; or
- make investments for the purpose of exercising control or management.

RISK FACTORS

Lazard International Stock Portfolio may invest without limitation in
foreign securities.

Investing in securities issued by foreign governments and corporations or
entities involves considerations and possible risks not typically associated
with investing in obligations issued by the U.S. government and domestic
corporations. The values of foreign investments are affected by changes in
currency rates or exchange control regulations, application of foreign tax laws,
including withholding taxes, changes in governmental administration or economic
or monetary policy (in the United States or abroad) or changed circumstances in
dealings between nations. Costs are incurred in connection with conversions
between various currencies. In addition, foreign brokerage commissions are
generally higher than in the United States, and foreign securities markets may
be less liquid, more volatile and less subject to governmental supervision than
in the United States. Investments in foreign countries could be affected by
other factors not present in the United States, including expropriation,
confiscatory taxation, lack of uniform accounting and auditing standards and
potential difficulties in enforcing contractual obligations, and could be
subject to extended settlement periods.

In addition, many emerging market countries have experienced substantial,
and in some periods extremely high, rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had and may continue to have
adverse effects on the economies and securities markets of certain of these
countries. In an attempt to control inflation, wage and price controls have been
imposed in certain countries. In many cases, emerging market countries are among
the world's largest debtors to commercial banks, foreign governments,
international financial organizations and other financial institutions. In
recent years, the governments of some of these countries have encountered
difficulties

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in servicing their external debt obligations, which led to defaults on certain
obligations and the restructuring of certain indebtedness.

MFS EMERGING GROWTH PORTFOLIO
("MFS PORTFOLIO")
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INVESTMENT OBJECTIVE

INVESTMENT POLICY

MFS Portfolio's policy is to invest primarily (i.e., at least 80% of its
assets under normal circumstances) in common stocks of companies that the
Subadviser believes are early in their life cycle but which have the potential
to become major enterprises (emerging growth companies). Such companies
generally would be expected to show earnings growth over time that is well above
the growth rate of the overall economy and the rate of inflation, and would have
the products, technologies, management and market and other opportunities which
are usually necessary to become more widely recognized as growth companies.

Emerging growth companies can be of any size, and the MFS Portfolio may
also invest in more established companies whose rates of earnings growth are
expected to accelerate because of special factors, such as rejuvenated
management, new products, changes in consumer demand, or basic changes in the
economic environment.

The MFS Portfolio is aggressively managed and, therefore, the value of its
shares is subject to greater fluctuation and investments in its shares involve
the assumption of a higher degree of risk than would be the case with an
investment in a conservative equity fund or a growth fund investing entirely in
proven growth equities.

The MFS Portfolio will invest primarily in common stocks. Other investments
are allowed, including, but not limited to those described below. (Refer to
Exhibit A for a discussion of these investment techniques.) MFS may invest in,
or write (as applicable), the following:

- foreign or convertible securities and warrants when relative values make
such purchases appear attractive either as individual issues or as types
of securities in certain economic environments (see Exhibit A);

- foreign currency and forward foreign currency exchange contracts for the
purchase or sale of foreign currency for hedging purposes and non-hedging
purposes, including transactions entered into for the purpose of
profiting from anticipated changes in foreign currency exchange rates, as
well as options on foreign currencies;

- foreign securities (up to 25% of its total assets) which may be traded on
foreign exchanges (not including American Depository Receipts ("ADRs")).
(It expects generally to invest between 0% to 10% in such securities.);

- emerging market securities;

- cash equivalents or other forms of debt securities as a reserve for
future purchases of common stock or to meet liquidity needs;

- corporate asset-backed securities;

- covered call and put options and may purchase call and put options on
securities and stock indices in an effort to increase current income and
for hedging purposes;

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- stock index futures contracts and options thereon for hedging purposes
and for non-hedging purposes, subject to applicable law;

- portfolio securities purchased on a "when-issued" or on a "forward
delivery" basis; and

- loan participations.

While it is not generally MFS Portfolio's policy to invest or trade for
short-term profits, it may dispose of a portfolio security whenever the
Subadviser is of the opinion that such security no longer has an appropriate
appreciation potential or when another security appears to offer relatively
greater appreciation potential. Subject to tax requirements, portfolio changes
are made without regard to the length of time a security has been held, or
whether a sale would result in a profit or loss.

The nature of investing in emerging growth companies involves greater risk
than is customarily associated with investments in more established companies.
Emerging growth companies often have limited product lines, markets or financial
resources, and they may be dependent on one-person management. In addition,
there may be less research available on many promising small and medium sized
emerging growth companies making it more difficult to find and analyze these
companies. The securities of emerging growth companies may have limited
marketability and may be subject to more abrupt or erratic market movements than
securities of larger, more established growth companies or the market averages
in general. Shares of the MFS Portfolio, therefore, are subject to greater
fluctuation in value than shares of a conservative equity portfolio or of a
growth portfolio which invests entirely in proven growth stocks.

During periods of unusual market conditions when the Subadviser believes
that investing for defensive purposes is appropriate, or in order to meet
anticipated redemption requests, a large portion or all of the assets of MFS
Portfolio may be invested in cash or cash equivalents including, but not limited
to, obligations of banks with assets of $1 billion or more (including
certificates of deposit, bankers' acceptances and repurchase agreements),
commercial paper, short-term notes, obligations issued or guaranteed by the U.S.
Government or any of its agencies, authorities or instrumentalities and related
repurchase agreements. U.S. Government securities also include interests in
trusts or other entities representing interests in obligations that are issued
or guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities. See Exhibit A to this Prospectus for a description of U.S.
Government obligations and certain short-term investments.

In addition, please see Exhibit A for a discussion of the following
investment activities in which MFS Portfolio may engage: (i) lending of
Portfolio securities; (ii) repurchase agreements; (iii) purchase and sales of
restricted securities; (iv) when-issued securities; (v) corporate asset-backed
securities; (vi) loan participation and other direct indebtedness; (vi) foreign
securities; (vii) ADRs; (viii) emerging market securities; (ix) various futures
and option trading techniques; and (x) lending of Portfolio securities.

INVESTMENT RESTRICTIONS

The MFS Portfolio is subject to certain fundamental investment restrictions
listed below. The MFS Portfolio may not:

- borrow amounts in excess of 33 1/3% of its assets including amounts
borrowed and then only as a temporary measure for extraordinary or
emergency purposes;

- underwrite securities issued by other persons except insofar as the
Portfolio may technically be deemed an underwriter under the Securities
Act of 1933, as amended (the "1933 Act") in selling a portfolio security;

- purchase or sell real estate (including limited partnership interest but
excluding securities secured by real estate or interest therein and
securities of companies, such as real estate investment trusts, which
deal in real estate or interests therein), interests in oil, gas or
mineral leases, commodities or commodity contracts (excluding currencies
and any type of option, future contracts and forward contracts) in the
ordinary course of its business. The Portfolio does however, reserve the
right to hold and sell real estate, mineral leases, commodities or

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commodity contracts (including currencies and any type of option, future
contracts and forward contracts) acquired as a result of the ownership of
securities;
- issue any senior securities except as permitted by the 1940 Act. For
purposes of this restriction, collateral arrangements with respect to any
type of swap, option, forward contract and futures contracts and
collateral arrangements with respect to initial and variation margin are
not deemed to be the issuance of a senior security;

- make loans to other persons. For these purposes, the purchase of
commercial paper, the purchase of a portion or all of an issue of debt
securities, the lending of portfolio securities, or the investment of the
Portfolio's assets in repurchase agreements, shall not be considered the
making of a loan; or

- purchase any securities of an issuer of a particular industry, if as a
result, more than 25% of its gross assets would be invested in securities
of issuers whose principal business activities are in the same industry
(except there is no limitation with respect to obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities
and repurchase agreements collateralized by such obligations).

In addition to the fundamental investment restrictions listed directly
above, the MFS Portfolio may not:

- invest in illiquid investments, including securities subject to legal or
contractual restrictions on resale or for which there is no readily
available market (e.g., trading in the security is suspended, or, in the
case of unlisted securities, where no market exists) if more than 15% of
the Portfolio's assets (taken at market value) would be invested in such
securities. Repurchase agreements maturing in more than seven days will
be deemed to be illiquid for purposes of the Portfolio's limitation on
investment in illiquid securities. Securities that are not registered
under the 1933 Act and issued in reliance on Rule 144A thereunder, but
are determined to be liquid by the Trust's Board of Trustees (or its
delegee), will not be subject to this 15% limitation;

- purchase securities issued by any other investment company in excess of
the amount permitted by the 1940 Act, except when such purchase is part
of a plan of merger or consolidation;

- purchase any securities or evidences of interest therein on margin,
except that the Portfolio may obtain such short-term credit as may be
necessary for the clearance of any transaction and except that the
Portfolio may make margin deposits in connection with any type of swap,
option, futures contracts and forward contracts;

- sell any security which the Portfolio does not own unless by virtue of
its ownership of other securities the Portfolio has at the time of sale a
right to obtain securities without payment of further consideration
equivalent in kind and amount to the securities sold and provided that if
such right is conditional, the sale is made upon the same conditions;

- pledge, mortgage or hypothecate in excess of 33 1/3% of its gross assets.
For purposes of this restriction, collateral arrangements with respect to
any type of swap, option, futures contracts and forward contracts and
payments of initial and variation margin in connection therewith, are not
considered a pledge of assets;

- purchase or sell any put or call option or any combination thereof,
provided that this shall not prevent the purchase, ownership, holding or
sale of (i) warrants where the grantor of the warrants is the issuer of
the underlying securities or (ii) put or call options or combinations
thereof with respect to securities, indices of securities, swaps, foreign
currencies and Futures Contracts;

- invest for the purposes of exercising control or management; or

- invest in the securities of any government agency or instrumentality, at
the end of any calendar quarter (or within 30 days thereafter), to the
extent such holdings would cause the Series to fail to comply with the
diversification requirements imposed by Section 817(h) of the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury regulations
issued thereunder on segregated asset accounts that fund variable
contracts.

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RISK FACTORS

RISK FACTORS REGARDING LOWER RATED SECURITIES -- MFS Portfolio may invest
to a limited extent in lower-rated fixed income securities or comparable unrated
securities. Investments in lower-rated fixed income securities, while generally
providing greater income and opportunity for gain than investments in higher
rated securities, usually entail greater risk of principal and income (including
the possibility of default or bankruptcy of the issuers of such securities), and
involve greater volatility of price (especially during periods of economic
uncertainty or change) than investments in higher rated securities. Because
yields may vary over time, no specified level of income can ever be assured. In
particular, securities rated lower than Baa by Moody's Investors Service, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Services ("S&P") or by Fitch
Investors Services, Inc. ("Fitch") or comparable unrated securities (commonly
known as "junk bonds") are considered speculative.

These lower rated high yielding fixed income securities generally tend to
reflect economic changes (and the outlook for economic growth), short-term
corporate and industry developments and the market's perception of their credit
quality (especially during times of adverse publicity) to a greater extent than
higher rated securities which react primarily to fluctuations in the general
level of interest rates (although these lower rated fixed income securities are
also affected by changes in interest rates). In the past, economic downturns or
an increase in interest rates have under certain circumstances caused a higher
incidence of default by the issuers of these securities and may do so in the
future, especially in the case of highly leveraged issuers. During certain
periods, the higher yields on MFS Portfolio's lower rated high yielding fixed
income securities are paid primarily because of the increased risk of loss of
principal and income, arising from such factors as the heightened possibility of
default or bankruptcy of the issuers of such securities. Due to the fixed income
payments of these securities, MFS Portfolio may continue to earn the same level
of interest income while its net asset value declines due to portfolio losses,
which could result in an increase in MFS Portfolio's yield despite the actual
loss of principal. The prices for these securities may be affected by
legislative and regulatory developments.

Changes in the value of securities subsequent to their acquisition will not
affect cash income or yield to maturity to MFS Portfolio but will be reflected
in the net asset value of shares of MFS Portfolio. The market for these lower
rated fixed-income securities may be less liquid than the market for investment
grade fixed-income securities. Furthermore, the liquidity of these lower rated
securities may be affected by the market's perception of their credit quality.
Therefore, the Subadviser's judgment may at times play a greater role in valuing
these securities than in the case of investment grade fixed-income securities,
and it also may be more difficult during times of certain adverse market
conditions to sell these lower rated securities at their fair value to meet
redemption requests or to respond to changes in the market. No minimum rating
standard is required by MFS Portfolio. To the extent MFS Portfolio invests in
these lower rated fixed-income securities, the achievement of its investment
objective may be more dependent on the Subadviser's own credit analysis than in
the case of a Portfolio investing in higher quality bonds. While the Subadviser
may refer to ratings issued by established credit rating agencies, it is not a
policy of MFS Portfolio to rely exclusively on ratings issued by these agencies,
but rather to supplement such ratings with the Subadviser's own independent and
ongoing review of credit quality.

MFS Portfolio may also invest in fixed income securities rated Baa by
Moody's or BBB by S&P and Fitch and comparable unrated securities. These
securities, while normally exhibiting adequate protection parameters, may have
speculative characteristics and changes in economic conditions and other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than in the case of higher grade fixed income securities.

ADDITIONAL RISK FACTORS -- The net asset value of the shares of an open-end
investment company which may invest to a limited extent in fixed income
securities changes as the general levels of interest rates fluctuate. When
interest rates decline, the value of a fixed income portfolio can be expected to
rise. Conversely, when interest rates rise, the value of a fixed income
portfolio can be expected to decline.

SERIES-10
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THE USE OF OPTIONS, FUTURES CONTRACTS, OPTIONS ON FUTURES CONTRACTS,
FORWARD CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES MAY RESULT IN THE LOSS OF
PRINCIPAL, PARTICULARLY WHERE SUCH INSTRUMENTS ARE TRADED FOR OTHER THAN HEDGING
PURPOSES (E.G., TO ENHANCE CURRENT YIELD).

As a result of its investments in foreign securities, MFS Portfolio may
receive interest or dividend payments, or the proceeds of the sale or redemption
of such securities, in the foreign currencies in which such securities are
denominated. In that event, MFS Portfolio may promptly convert such currencies
into dollars at the then current exchange rate. Under certain circumstances,
however, such as where the Subadviser believes that the applicable exchange rate
is unfavorable at the time the currencies are received or the Subadviser
anticipates, for any other reason, that the exchange rate will improve, MFS
Portfolio may hold such currencies for an indefinite period of time.

In addition, MFS Portfolio may be required to receive delivery of the
foreign currency underlying forward foreign currency contracts it has entered
into. This could occur, for example, if an option written by MFS Portfolio is
exercised or MFS Portfolio is unable to close out a forward contract. MFS
Portfolio may hold foreign currency in anticipation of purchasing foreign
securities. MFS Portfolio may also elect to take delivery of the currencies
underlying options or forward contracts if, in the judgment of the Subadviser,
it is in the best interest of MFS Portfolio to do so. In such instances as well,
MFS Portfolio may promptly convert the foreign currencies to dollars at the then
current exchange rate, or may hold such currencies for an indefinite period of
time.

While the holding of currencies will permit MFS Portfolio to take advantage
of favorable movements in the applicable exchange rate, it also exposes MFS
Portfolio to risk of loss if such rates move in a direction adverse to MFS
Portfolio's position. Such losses could reduce any profits or increase any
losses sustained by MFS Portfolio from the sale or redemption of securities, and
could reduce the dollar value of interest or dividend payments received. In
addition, the holding of currencies could adversely affect MFS Portfolio's
profit or loss on currency options or forward contracts, as well as its hedging
strategies.

See Exhibit A and the SAI for further discussion of foreign securities and
the holding of foreign currency as well as the associated risks.

The policies described above are not fundamental and may be changed without
shareholder approval, as may MFS Portfolio's investment objective. A change in
MFS Portfolio's investment objective may result in MFS Portfolio having an
investment objective different from the objective which the shareholder
considered appropriate at the time of investment in MFS Portfolio.

The SAI includes a discussion of other investment policies and a listing of
specific investment restrictions which govern MFS Portfolio's investment
policies. The specific investment restrictions listed in the SAI may not be
changed without shareholder approval (see "Investment Restrictions" in the SAI).
MFS Portfolio's investment limitations, policies and rating standards are
adhered to at the time of purchase or utilization of assets; a subsequent change
in circumstances will not be considered to result in a violation of policy.

FEDERATED HIGH YIELD PORTFOLIO
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Federated High Yield Portfolio is to seek
high current income by investing primarily in a professionally managed,
diversified portfolio of fixed income securities.

INVESTMENT POLICIES

The Federated High Yield Portfolio will invest primarily in fixed rate
corporate debt obligations. The fixed rate corporate debt obligations in which
the Federated High Yield Portfolio intends to invest are expected to be
lower-rated (and higher risk), but may include investment grade securities as
well.

SERIES-11
<PAGE> 12

The fixed income securities in which the Portfolio may invest may involve equity
features. Permitted investments currently include, but are not limited to, the
following:

- corporate debt obligations having fixed or floating rates of interest and
which generally are rated BBB or lower by nationally recognized
statistical rating organizations;
- preferred stocks; foreign securities and ADRs;
- asset backed securities;
- equipment trust and lease certificates;
- commercial paper;
- zero coupon bonds;
- pay-in-kind securities;
- obligations of the United States;
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives and Banks for Cooperatives; Federal Home
Loan Banks; Federal Home Loan Mortgage Corporation; Federal National
Mortgage Association; Government National Mortgage Association;
Export-Import Bank of the United States; Commodity Credit Corporation;
Federal Financing Bank; Student Loan Marketing Association; National
Credit Union Administration and Tennessee Valley Authority;
- time and savings deposits (including certificates of deposit) in
commercial or savings banks whose deposits are insured by the Bank
Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"), including certificates of deposit issued by and other time
deposits in foreign branches of BIF-insured banks;
- bankers' acceptances issued by a BIF-insured bank, or issued by the
bank's Edge Act subsidiary and guaranteed by the bank, with remaining
maturities of nine months or less;
- general obligations of any state, territory, or possession of the United
States, or their political subdivisions; and
- equity securities, including unit offerings that combine fixed rate
securities common stock and common stock equivalents such as warrants,
rights, and options.

The investment policies and limitations of the Federated High Yield
Portfolio described herein may be changed without approval of shareholders,
unless otherwise noted.

The corporate debt obligations in which the Federated High Yield Portfolio
may invest are generally rated BBB or lower by Standard & Poor's Ratings Group
("S&P") or Baa or lower by Moody's Investors Service, Inc. ("Moody's"), or are
not rated but are determined by the Federated High Yield Portfolio's investment
Subadviser to be of comparable quality. See Exhibit B for a discussion of the
rating agency criteria.

The Federated High Yield Portfolio is aggressively managed and, therefore,
the value of its shares is subject to greater fluctuation and investments in its
shares involve the assumption of a higher degree of risk than would be the case
with an investment in a conservative equity fund or a growth fund investing
entirely in proven growth equities.

Certain of the following investment techniques in which The Federated High
Yield Portfolio may engage are described in greater detail in the attached
Exhibit A: (i) restricted securities; (ii) when-issued securities; (iii)
temporary investments; (iv) repurchase agreements; (v) reverse repurchase
agreements; (vi) various futures trading techniques; and (vii) lending of
portfolio securities; (viii) floating and variable rate instruments; (ix) ADRs;
(x) emerging market securities; (xi) temporary bank borrowing; (xii) corporate
asset backed securities; (xiii) loan participation, and other direct
indebtedness.

SERIES-12
<PAGE> 13

INVESTMENT RESTRICTIONS

The following investment restrictions are fundamental. The Federated High
Yield Portfolio will not:

- borrow money directly or through reverse repurchase agreements
(arrangements in which the Federated High Yield Portfolio sells a
portfolio instrument for a percentage of its cash value with an agreement
to buy it back on a set date) except, under certain circumstances, the
Federated High Yield Portfolio may borrow up to one-third of the value of
its net assets;
- sell securities short except, under strict limitations, the Federated
High Yield Portfolio may maintain open short positions so long as not
more than 10% of the value of its net assets is held as collateral for
those positions; or
- pledge assets except to secure permitted borrowing.

The following investment policies are nonfundamental and, subject to the
Board's approval, may be changed without shareholder approval. The Portfolio
will not:

- commit more than 5% of the value of its total assets to premiums on open
put option positions;
- invest more than 5% of the value of its total assets in securities of one
issuer (except cash and cash items, repurchase agreements, and U.S.
government obligations) or acquire more than 10% of any class of voting
securities of any one issuer;
- invest more than 10% of the value of its total assets in foreign
securities (foreign securities are defined for these purposes as either
non-U.S. dollar denominated or which are not publicly traded in the
United States); invest directly in minerals;
- underwrite securities;
- invest more than 5% in put options;
- write covered call options unless the securities are held by the
Portfolio;
- invest in real estate, (although the Federated High Yield Portfolio may
invest in the securities of companies whose business involves the
purchase or sale of real estate or in securities which are secured by
real estate or interest in real estate); or
- purchase the securities of other investment companies, except in limited
situations.

RISK FACTORS

The corporate debt obligations in which the Federated High Yield Portfolio
invests are usually not in the three highest rating categories of a nationally
recognized statistical rating organization (AAA, AA, or A for S&P and Aaa, Aa,
or A for Moody's -- see Exhibit B for a more detailed discussion) but are in the
lower rating categories or are unrated but are of comparable quality and have
speculative characteristics or are speculative. Lower-rated or unrated bonds are
commonly referred to as "junk bonds." There is no minimum acceptable rating for
a security to be purchased or held in the Federated High Yield Portfolio's
portfolio, and the Federated High Yield Portfolio may, from time to time,
purchase or hold securities rated in the lowest rating category. It should be
borne in mind that credit ratings evaluate the safety of the principal and
interest payments, and not the market value of high yield bonds. Further, the
value of such bonds is likely to fluctuate over time.

Lower-rated securities will usually offer higher yields than higher-rated
securities. However, there is more risk associated with these investments. There
is an increased risk associated with such lower rated bonds that the issuer of
such bonds will default on principal and interest payments. This is because of
reduced creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments to a
greater extent than higher-rated securities which react primarily to
fluctuations in the general level of interest rates. Short-term corporate and
market developments affecting the price or liquidity of lower-rated securities
could include adverse news affecting major issuers, underwriters, or dealers of
lower-rated corporate debt obligations. In addition, since there are fewer
investors in lower-rated securities, it may be harder to sell the securities at
an optimum time.

SERIES-13
<PAGE> 14

As a result of these factors, lower-rated securities tend to have more
price volatility and carry more risk to principal and income than higher-rated
securities.

An economic downturn may adversely affect the value of some lower-rated
bonds. Such a downturn may especially affect highly leveraged companies or
companies in cyclically sensitive industries, where deterioration in a company's
cash flow may impair its ability to meet its obligation to pay principal and
interest to bondholders in a timely fashion. From time to time, as a result of
changing conditions, issuers of lower-rated bonds may seek or may be required to
restructure the terms and conditions of the securities they have issued. As a
result of these restructurings, holders of lower-rated securities may receive
less principal and interest than they had bargained for at the time such bonds
were purchased. In the event of a restructuring, the Federated High Yield
Portfolio may bear additional legal or administrative expenses in order to
maximize recovery from an issuer. Additionally, an increase in interest rates
may also adversely impact the value of high yield bonds.

The secondary trading market for lower-rated bonds is generally less liquid
than the secondary trading market for higher-rated bonds. Adverse publicity and
the perception of investors relating to issuers, underwriters, dealers or
underlying business conditions, whether or not warranted by fundamental
analysis, may affect the price or liquidity of lower-rated bonds. On occasion,
therefore, it may become difficult to price or dispose of a particular security
in the portfolio.

The Federated High Yield Portfolio may, from time to time, own zero coupon
bonds and pay-in-kind securities. A zero coupon bond makes no periodic interest
payments and the entire obligation becomes due only upon maturity. Pay-in-kind
securities make periodic payments in the form of additional securities (as
opposed to cash). The price of zero coupon bonds and pay-in-kind securities is
generally more sensitive to fluctuations in interest rates than are conventional
bonds. Additionally, federal tax law requires that interest on zero coupon bonds
be reported as income to the Federated High Yield Portfolio even though the
Federated High Yield Portfolio receives no cash interest until the maturity or
payment date of such securities.

Many corporate debt obligations, including many lower-rated bonds, permit
the issuers to call the security and thereby redeem their obligations earlier
than the stated maturity dates. Issuers are more likely to call bonds during
periods of declining interest rates. In these cases, if the Federated High Yield
Portfolio owns a bond which is called, the Federated Portfolio will receive its
return of principal earlier than expected and would likely be required to
reinvest the proceeds at lower interest rates, thus reducing income to the
Federated Portfolio.

EVALUATING THE RISKS OF LOWER-RATED SECURITIES. The Federated Portfolio's
Subadviser will follow certain steps to evaluate the risks associated with
investing in lower-rated securities. These techniques include:

CREDIT RESEARCH. The Federated High Yield Portfolio's Subadviser will
perform its own credit analysis in addition to using nationally recognized
statistical rating organizations and other sources, including discussions
with the issuer's management, the judgment of other investment analysts,
and its own informed judgment. The Federated High Yield Portfolio's
Subadviser's credit analysis will consider the issuer's financial
soundness, its responsiveness to changes in interest rates and business
conditions, and its anticipated cash flow, interest or dividend coverage
and earnings. In evaluating an issuer, the Federated High Yield Portfolio's
investment adviser places special emphasis on the estimated current value
of the issuer's assets rather than historical costs.

DIVERSIFICATION. The Federated High Yield Portfolio invests in
securities of many different issuers, industries, and economic sectors to
reduce portfolio risk.

ECONOMIC ANALYSIS. The Federated High Yield Portfolio's investment
adviser will also analyze current developments and trends in the economy
and in the financial markets. When investing in lower-rated securities,
timing and selection are critical and analysis of the business cycle can be
important.

SERIES-14
<PAGE> 15

Achievement of the Federated High Yield Portfolio's investment objectives
may be more dependent on the Subadviser's credit analysis of lower rated bonds
than would be the case if the Portfolio invested exclusively in higher rated
bonds.

FEDERATED STOCK PORTFOLIO
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Portfolio is to provide growth of income
and capital by investing principally in a professionally managed and diversified
portfolio of common stock of high-quality companies. These companies generally
are leaders in their industries and are characterized by sound management and
the ability to finance expected growth. While there is no assurance that the
Portfolio will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus. Unless otherwise
noted the investment policies and limitations described below for the Federated
Stock Portfolio can be changed without the approval of shareholders.

INVESTMENT POLICIES

The Portfolio's investment approach is based on the conviction that over
the long term the economy will continue to expand and develop and that this
economic growth will be reflected in the growth of the revenues and earnings of
major corporations. The Portfolio invests primarily in common stocks of
companies selected by the Portfolio's Subadviser on the basis of traditional
research techniques, including assessment of earnings and dividend growth
prospects and of the risk and volatility of the company's industry. Ordinarily,
these companies will be in the top 25% of their industries with regard to
revenues. However, other factors, such as product position or market share, will
be considered by the Portfolio's Subadviser and may outweigh revenues. Other
permitted investments include, but are not limited to:

- preferred stocks, corporate bonds, notes, and warrants of these
companies. The prices of fixed income securities generally fluctuate
inversely to the direction of interest rates;
- U.S. government securities;
- repurchase agreements;
- reverse repurchase agreements;
- money market instruments;
- securities of foreign issuers which are freely traded on United States
securities exchanges or in the over-the-counter market in the form of
American Depository Receipts ("ADRs") (in an amount of not more than 10%
if its assets);
- when-issued securities;
- restricted and illiquid securities;
- lending of portfolio securities; and
- temporary bank borrowing.

See Exhibit A and the SAI for a more detailed discussion of the above
investments.

RISK FACTORS

As with other mutual funds that invest primarily in equity securities, the
Federated Stock Portfolio is subject to market risks. That is, the possibility
exists that common stocks will decline in value over short or extended periods
of time, and equity markets tend to be cyclical, experiencing both periods of
when prices generally increase and periods when common stock prices generally
decline.

INVESTMENT RESTRICTIONS

The fundamental investment restrictions of the Federated Stock Portfolio
are set forth below. The Federated Stock Portfolio will not:

SERIES-15
<PAGE> 16

- borrow money or pledge securities except, under certain circumstances,
the Portfolio may borrow up to one-third of the value of its total assets
and pledge up to 10% of the value of those assets to secure such
borrowings;
- invest more than 5% of its total assets in the securities of one issuer
(except cash and cash items and U.S. government securities);
- acquire more than 10% of the voting securities of any one issuer;
- invest in real estate, (although the Federated Stock Portfolio may invest
in the securities of companies whose business involves the purchase or
sale of real estate or in securities which are secured by real estate or
interests in real estate).
- issue senior securities;
- trade in puts and calls; or
- underwrite securities.

LARGE CAP PORTFOLIO
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES

Large Cap Portfolio seeks long-term growth of capital by investing
primarily in equity securities of companies with large market capitalizations.

INVESTMENT POLICIES

The Subadviser normally invests at least 65% of the Portfolio's total
assets in equity securities of companies with large market capitalizations. For
purposes of the Portfolio's investment policies, large market capitalization
companies are defined as those companies with market capitalizations of $1
billion or more at the time of the Portfolio's investment. Companies whose
market capitalization falls below this level after purchase continue to be
considered large-capitalized for purposes of the 65% policy. The Large Cap
Portfolio will invest primarily in common stocks. Other investments are allowed,
including, but not limited to those described below. (Refer to Exhibit A for a
discussion of these investment techniques.) The Subadviser, on behalf of the
Portfolios, may invest in, or write (as applicable), the following:

- cash investments;
- equity securities;
- debt securities;
- foreign securities;
- repurchase agreements;
- reverse repurchase agreements;
- various futures and option related techniques and instruments;
- ADRs;
- emerging market securities;
- lending of portfolio securities;
- real estate related instruments;
- corporate asset-backed securities;
- loans participation and other direct indebtedness;
- indexed securities;
- short sales "against the box" (see Exhibit A for more information about
this investment technique);
- swap agreements; and
- restricted securities.

Please review Exhibit A and the SAI for a detailed discussion of these
investment techniques.

SERIES-16
<PAGE> 17

The Portfolio also reserves the right to invest without limitation in
preferred stocks and investment-grade debt instruments for temporary, defensive
purposes, and to lend portfolio securities.

Policies and limitations are considered at the time of purchase; the sale
of instruments is not required in the event of a subsequent change in
circumstances.

The Large Cap Portfolio may use various investment techniques to hedge a
portion of the fund's risks, but there is no guarantee that these strategies
will work as intended. The Portfolio seeks to spread investment risk by
diversifying its holdings among many companies and industries.

The Portfolio may not buy all of these instruments or use all of these
techniques to the full extent permitted unless it believes that doing so will
help achieve its goals. Current holdings and recent investment strategies are
described in the Portfolio's financial reports which are sent to shareholders
twice a year.

More detailed information about the Portfolio's investments policies and
restrictions is contained in the SAI.

ADJUSTING INVESTMENT EXPOSURE. The Portfolio can use various techniques to
increase or decrease its exposure to changing security prices, interest rates,
currency exchange rates, commodity prices or other factors that affect security
prices.

RISK FACTORS

Companies with large market capitalizations typically have a large number
of publicly held shares and a high trading volume, resulting in a high degree of
liquidity. These tend to be quality companies with strong management
organizations. Large capitalization companies may have less growth potential
than smaller companies and may be able to react less quickly to changes in the
marketplace.

The value of the Portfolio's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the activities
of individual companies, and general market and economic conditions. Investments
in foreign securities may involve risks in addition to those of U.S.
investments, including increased political and economic risk, as well as
exposure to currency fluctuations.

INVESTMENT RESTRICTIONS

Set forth below are the Large Cap Portfolio's fundamental investment
policies. The Portfolio may not:

- with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than securities of other investment
companies or securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities) if, as a result, (a) more than
5% of the Portfolio's total assets would be invested in the securities of
that issuer, or (b) the Portfolio's would hold more than 10% of the
outstanding voting securities of that issuer;
- issue senior securities, except as permitted under the 1940 Act;
- borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed)
less liabilities (other than borrowings). Any borrowings that come to
exceed this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation;
- underwrite securities issued by others, except to the extent that the
Portfolio may be considered to be an underwriter within the meaning of
the 1933 Act in the disposition of restricted securities;
- purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the

SERIES-17
<PAGE> 18

Portfolio's total assets would be invested in the securities of companies
whose principal business activities are in the same industry;
- purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Portfolio
from investing in securities or other instruments backed by real estate
or securities or companies engaged in the real estate business);
- purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Portfolio from purchasing or selling options and futures contracts or
from investing in securities or other instruments backed by physical
commodities);
- lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to
repurchase agreements;
- the Portfolio may, notwithstanding any other fundamental investment
policy or limitation, invest all the assets in the securities of a single
open-end management investment company managed by the Subadviser or any
affiliate or successor with substantially the same investment objective,
policies, and limitations as the Portfolio.

THE FOLLOWING INVESTMENT LIMITATIONS ARE NONFUNDAMENTAL.

- The Portfolio does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
- The Portfolio does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transaction, and provided that margin payments in
connection with futures contracts and options on futures shall not
constitute purchasing securities on margin.
- The Portfolio may borrow money only (a) from a bank or from a registered
investment company or portfolio for which the Subadviser or an affiliate
serves as investment adviser or (b) by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements are treated as
borrowings for purposes of fundamental investment limitation
definitions). The Portfolio will not borrow money in excess of 25% of net
assets so long as this limitation is required for certification by
certain state insurance departments. Any borrowings that come to exceed
this amount will be reduced within seven days (not including Sundays and
holidays) to the extent necessary to comply with the 25% limitation. The
Portfolio will not purchase any security while borrowings representing
more than 5% of its total assets are outstanding. The Portfolio will not
borrow from other funds advised by the Subadviser or its affiliates if
total outstanding borrowings immediately after such borrowing would
exceed 15% of the Portfolio's total assets.
The Portfolio will not purchase any security while borrowings
representing more than 5% of its total assets are outstanding. The
Portfolio will not borrow from other funds advised by the Subadviser or
its affiliates if total outstanding borrowings immediately after such
borrowing would exceed 15% of the fund's total assets.
- The Portfolio does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the
prices at which they are valued.
- The Portfolio does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which the Subadviser or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations (where such participations have not
been securitized), or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities
or to repurchase agreements.)

SERIES-18
<PAGE> 19

- The Portfolio does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than
three years of continuous operation. For the purposes of this limitation
pass through entities and other special purpose vehicles or pools of
financial assets such as issuers of asset backed securities or investment
companies are not considered "business enterprises."
- The Portfolio does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of the Subadviser who individually own more than 1/2 of 1% of
the securities of such issuer together own more than 5% of such issuer's
securities.
- The Portfolio does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
sub-advised by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment objective,
policies, and limitations as the Portfolio.

EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The Portfolio seeks reasonable income by investing primarily in
income-producing equity securities. Normally, at least 65% of the Portfolio's
total assets will be invested in these securities. The Portfolio has the
flexibility, however, to invest the balance in all types of domestic and foreign
securities, including bonds. The Portfolio seeks to achieve a yield that exceeds
that of the securities comprising the S&P 500. The Portfolio does not expect to
invest in debt securities of companies that do not have proven earnings or
credit. When choosing the Portfolio's investments, the Subadviser also considers
the potential for capital appreciation.

INVESTMENT POLICIES

The value of the Portfolio's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the activities
of individual companies, and general market and economic conditions. The value
of bonds fluctuates based on changes in interest rates and in the credit quality
of the issuer. Investments in foreign securities may involve risks in addition
to those of U.S. investments, including increased political and economic risk,
as well as exposure to currency fluctuations. The Subadviser may use various
investment techniques to hedge the Portfolio's risks, but there is no guarantee
that these strategies will work as the Subadviser intends. The Portfolio seeks
to spread investment risk by diversifying its holdings among many companies and
industries.

The Subadviser normally invests the Portfolio's assets according to its
investment strategy. The Portfolio also reserves the right to invest without
limitation in preferred stocks and investment-grade debt instruments for
temporary, defensive purposes.

Policies and limitations are considered at the time of purchase; the sale
of instruments is not required in the event of a subsequent change in
circumstances.

Equity Income Portfolio may engage in trade of certain other securities and
use other investment techniques as described more fully in Exhibit A attached
hereto including: (i) equity securities; (ii) debt securities; (iii) foreign
securities (including ADRs); (iv) repurchase agreements; (v) reverse repurchase
agreements; (vi) restricted securities; (vii) Portfolio lending (viii) various
futures and options trading activities and techniques; (ix) emerging market
securities; (x) real estate related instruments; (xi) loan participations and
other direct indebtedness; (xii) indexed securities; (xiii) short sales "against
the box;" (xiv) cash instruments; and (xv) swap agreements.

SERIES-19
<PAGE> 20

More detailed information about the Portfolio's investments is contained in
Exhibit A and the Portfolio's SAI.

RISK FACTORS

Lower-quality debt securities (sometimes called "junk bonds") are often
considered to be speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness, or they may already be
in default. The market prices of these securities may fluctuate more than
higher-quality securities and may decline significantly in periods of general
economic difficulty.

INVESTMENT RESTRICTIONS

The Equity Income Portfolio is subject to the same fundamental and
nonfundamental investment limitations as the Large Cap Portfolio described
above. Please refer to "Large Cap -- Investment Restrictions" section of this
prospectus and to the SAI for a complete discussion of such applicable
limitations.

In addition to those limitations, the Equity Income Portfolio will conform
its purchases of debt security to a stated debt quality policy. The Portfolio
currently intends to limit its investments in lower than Baa-quality debt
securities to 20% of its assets. (See Exhibit B for a discussion of rating
agency procedures.) For example, the Portfolio may make purchases of lower-rated
debt securities if such securities are rated at or above the stated level by
Moody's or rated in the equivalent categories of S&P, or is unrated but judged
to be of equivalent quality by the Subadviser.

PORTFOLIO TURNOVER
- --------------------------------------------------------------------------------

Although none of the Portfolios intends to invest for the purpose of
seeking short-term profits, securities held by each Portfolio will be sold
whenever the Portfolio's investment adviser or Subadviser believes it is
appropriate to do so in light of the Portfolio's investment objective, without
regard to the length of time a particular security may have been held. Because
the Portfolios are new, no Portfolio turnover information is presently
available. We anticipate the Portfolio turnover rates will be as follows:
Quality Bond Portfolio, 200% or less; Lazard International Stock Portfolio, 60%
to 70%; MFS Emerging Growth Portfolio, less than 100%; Federated High Yield
Portfolio, less than 100%; Federated Stock Portfolio, less than 100%; Large Cap
Portfolio, 155% to 160%; and Equity Income Portfolio, less than 100%.

BOARD OF TRUSTEES
- --------------------------------------------------------------------------------

Under Massachusetts law, the Series Trust's Board of Trustees has absolute
and exclusive control over the management and disposition of all assets of the
Series Trust. Subject to the provisions of the Declaration of Trust, the
business and affairs of the Series Trust shall be managed by the Trustees or
other parties so designated by the Trustees. Information relating to the Board
of Trustees, including its members and their compensation, is contained in the
SAI.

INVESTMENT MANAGER
- --------------------------------------------------------------------------------

As described above, the Board of Trustees monitors the activities of those
entities which provide investment management and Subadvisory services to the
Portfolios. The Travelers Asset Management

SERIES-20
<PAGE> 21

International Corporation ("TAMIC," also referred to throughout this prospectus
as the "Investment Adviser") provides investment supervision to the Portfolios
described herein (with the exception of the Quality Bond Portfolio) in
accordance with each Portfolio's investment objectives, policies and
restrictions. TAMIC'S responsibilities generally include the following:

(1) engaging the services of one or more firms to serve as investment
adviser to the Portfolios;

(2) reviewing from time to time the investment policies and restrictions of
the Portfolios in light of the Portfolio's performance and otherwise
and after consultation with the Board, recommending any appropriate
changes to the Board;

(3) supervising the investment program prepared for the Portfolios by the
Subadviser;

(4) monitoring, on a continuing basis, the performance of the Portfolio's
securities;

(5) arranging for the provision of such economic and statistical data as
TAMIC shall determine or as may be requested by the Board; and

(6) providing the Board with such information concerning important economic
and political developments as TAMIC deems appropriate or as the Board
requests.

TAMIC is a registered investment adviser which has provided investment
advisory services since its incorporation in 1978. TAMIC is an indirect wholly
owned subsidiary of Travelers Group, Inc., and its principal offices are located
at One Tower Square, Hartford, Connecticut, 06183. In addition to providing
investment advice to the Portfolio, TAMIC also acts as investment adviser for
other investment companies used to fund variable insurance products. TAMIC also
provides investment advice to individual and pooled pension and profit-sharing
accounts and non-affiliated insurance companies. For serving as investment
adviser to the Trust, TAMIC receives a fee, equal to the average daily net asset
value of each of the following Portfolios: Lazard International Stock Portfolio
0.35%; MFS Emerging Growth 0.375 %; Federated High Yield Portfolio 0.25%;
Federated Stock Portfolio 0.25%; Large Cap Portfolio 0.30%; and Equity Income
Portfolio 0.30%. Investment Advisory fees are computed daily and are paid
monthly. These fees do not reflect the Subadvisory fees paid to the Subadvisers.
Additionally, TAMIC provides investment advisory services to the Travelers Bond
Quality Portfolio.

QUALITY BOND PORTFOLIO
INVESTMENT ADVISER: TAMIC

Under its Investment Advisory Agreement with the Trust, TAMIC is paid an
amount equivalent on an annual basis to .3233% of the average daily net assets
of the Portfolio. The fee is computed daily and paid monthly.

PORTFOLIO MANAGER

The Portfolio is managed by F. Denney Voss. Mr. Voss joined The Travelers
Insurance Company in 1980 and currently Mr. Voss is a Senior Vice President of
The Travelers Insurance Company. Mr. Voss is also a Vice President of TAMIC. Mr.
Voss has also managed TAMIC's Quality Bond Account for Variable Annuities since
March 1995 and has been responsible for managing the Travelers portfolios
backing general account insurance products since August 1994. Prior to
transferring to the Travelers Securities Department in 1994, Mr. Voss performed
various sales and trading functions for Smith Barney Inc., a Travelers Group
subsidiary.

INVESTMENT SUBADVISERS
- --------------------------------------------------------------------------------

GENERAL

Under the terms of the Investment Advisory and Subadvisory Agreements, the
Subadviser provides an investment program for the Portfolios. The Subadvisers
make all determinations with

SERIES-21
<PAGE> 22

respect to the purchase and sale of the portfolio securities (subject to the
terms and conditions of the investment objectives, policies, and restrictions of
the Portfolio and to the supervision of the Board of Trustees and TAMIC) and
places, in the name of the Portfolio, call orders for execution of the portfolio
transactions. In addition, only Fidelity Management Resource, Inc. ("FMR") also
executes the offers, while MFS, Lazard and Federated only place the orders for
TAMIC to execute.

For services rendered to the Portfolios, the Subadvisers charge a fee to
TAMIC. The Portfolios do not pay the Subadvisers' fee nor any part thereof, nor
will they have any obligation or responsibility to do so. The Subadvisory fees
that TAMIC pays to the various Subadvisers are not dependent on the particular
Portfolio's performance.

LAZARD INTERNATIONAL STOCK PORTFOLIO
SUBADVISER: LAZARD FRERES ASSET MANAGEMENT

Lazard Freres Asset Management ("Lazard"), 30 Rockefeller Plaza, New York,
New York 10020, has entered into an investment Subadvisory agreement (the
"Lazard Subadvisory Agreement") on behalf of the Portfolio with TAMIC to provide
Subadvisory services to the Lazard International Stock Portfolio. Pursuant to
the Lazard Subadvisory Agreement, Lazard will regularly provide the Portfolio
with investment research, advice and supervision and furnish continuously an
investment program for the Portfolio consistent with its investment objectives
and policies, including the purchase, retention and disposition of securities.

Lazard Freres Asset Management is a division of Lazard Freres & Co. LLC
("Lazard Freres"), a New York limited liability company, which is registered as
an investment adviser with the Commission and is a member of the New York,
American and Midwest Stock Exchanges. Lazard Freres provides its clients with a
wide variety of investment banking, brokerage and related services in addition
to asset management services.

Under its Subadvisory Agreement with TAMIC, Lazard Freres is paid an amount
equivalent on an annual basis of .475% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

MANAGEMENT OF LAZARD PORTFOLIO

Herbert Gullquist is primarily responsible for the day-to-day management of
the assets of the Portfolio. Mr. Gullquist is a Managing Director and Chief
Investment Officer of Lazard Freres, and has been with the Subadviser since
1982. He has been the President of The Lazard Funds, Inc., which includes
several mutual funds including the Lazard International Stock Portfolio, a
publicly traded mutual fund offered by Lazard Freres since that fund's inception
in 1991.

MFS PORTFOLIO
SUBADVISER: MFS

MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund in the United States, Massachusetts Investors
Trust. Net assets under the management of MFS were approximately $43.9 billion
on behalf of approximately 1.9 million investor accounts as of February 29,
1996. As of such date, MFS managed approximately $20 billion of assets invested
in equity securities and approximately $20 billion of assets invested in fixed
income securities. Approximately $3.8 billion of the assets managed by MFS are
invested in securities of foreign issuers and non-U.S. dollar denominated
securities of U.S. issuers. MFS is a subsidiary of Sun Life of Canada (U.S.),
which in turn is a wholly owned subsidiary of Sun Life Assurance Company of
Canada ("Sun Life").

Under its Subadvisory Agreement with TAMIC, MFS is paid an amount
equivalent on an annual basis to .375% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

SERIES-22
<PAGE> 23

MANAGEMENT OF MFS PORTFOLIO

John W. Ballen a Senior Vice President of MFS, serves as a co-manager of
the MFS Portfolio and in such capacity Mr. Ballen is charged with responsibility
for the day-to-day operations of the MFS Portfolio. Mr. Ballen has been employed
as a portfolio manager by MFS since 1984. Mr. Ballen is a graduate of Harvard
College, University of New South Wales, and Stanford University Graduate School
of Business Administration.

Also charged with management of the Fund is Toni Shimura, who joined MFS in
1987 as a member of the Research Department. A graduate of Wellesley College and
the Sloan School of Management at the Massachusetts Institute of Technology, she
was named Investment Officer in 1990, Assistant Vice President -- Investments in
1991, and Vice President -- Investments in 1992. She also manages MFS Emerging
Growth Series a retail Mutual Fund Series since November 1995.

FEDERATED HIGH YIELD PORTFOLIO
SUBADVISER: FEDERATED INVESTMENT COUNSELING

Federated Investment Counseling ("Federated") a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the 1940
Act. It is a subsidiary of Federated Investors. All of the Class A (voting)
shares of Federated Investors are owned by a trust, the trustees of which are
John F. Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Trustee of Federated Investors.

Federated and other subsidiaries of Federated Investors serve as investment
advisers to a number of investment companies and private accounts. Certain other
subsidiaries also provide administrative services to a number of investment
companies. With over $80 billion invested across more than 250 funds under
management and/or administration by its subsidiaries, as of December 31, 1995,
Federated Investors is one of the largest mutual fund investment managers in the
United States. Federated funds are presently at work in and through 4,000
financial institutions nationwide.

Pursuant to an agreement between TAMIC and Federated, Federated acts as the
Subadviser for the Federated High Yield Portfolio. In its capacity as
Subadviser, Federated continually conducts investment research and supervision
for the Federated Portfolio and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the investment
adviser.

Under its Subadvisory Agreement with TAMIC, Federated is paid an amount
equivalent on an annual basis to .40% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

MANAGEMENT OF THE FEDERATED HIGH YIELD PORTFOLIO

Mark E. Durbiano serves as the Federated High Yield Portfolio manager. Mr.
Durbiano joined Federated Investors in 1982 and has been a Senior Vice President
of an affiliate of the Portfolio's subadviser since January, 1996. From 1988
through 1995, Mr. Durbiano was a Vice President of an affiliate of Federated.
Mr. Durbiano is a Chartered Financial Analyst and received his MBA in Finance
from the University of Pittsburgh.

FEDERATED STOCK PORTFOLIO
SUBADVISER: FEDERATED INVESTMENT COUNSELING

Federated also serves as the Subadviser to the Federated Stock Portfolio.
(See "Federated High Yield Portfolio--Background" above for a discussion of
Federated.)

Federated serves as Subadviser to the Federated Stock Portfolio pursuant to
an agreement between itself and TAMIC. Pursuant to this agreement, Federated
will continually conduct investment research and supervision for the Portfolio
and is responsible for the purchase or sale of portfolio instruments.

SERIES-23
<PAGE> 24

Under its Subadvisory Agreement with TAMIC, Federated is paid an amount
equivalent on an annual basis to .375% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

MANAGEMENT OF FEDERATED STOCK PORTFOLIO

Peter R. Anderson serves as the Federated Stock Portfolio's co-manager.
Anderson joined Federated Investors in 1972 as, and is presently, a Senior Vice
President of an affiliate of the Subadviser. Mr. Anderson is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Wisconsin.

Scott B. Schermerhorn serves as the Federated Stock Portfolio's co-manager.
Mr. Schermerhorn joined Federated Investors in 1996 as Vice President of an
affiliate of the Subadviser. From 1990 through 1996, Mr. Schermerhorn was a
Senior Vice President and Senior Investment Officer at J W Seligman & Co., Inc.
Mr. Schermerhorn received his M.B.A. in Finance and International Business from
Seton Hall University.

LARGE CAP PORTFOLIO
SUBADVISER: FIDELITY MANAGEMENT & RESEARCH COMPANY

Fidelity Management & Research Company ("FMR"), pursuant to a Subadvisory
Agreement with TAMIC, serves as the investment Subadviser to the Large Cap
Portfolio. FMR is an investment adviser registered as such with the SEC. Its
principal office is located at 82 Devonshire Street, Boston, MA 02109-3614.

At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer and
shareholder servicing agent for certain of the funds advised by FMR; Fidelity
Investments Institutional Operations Company, which performs shareholder
servicing functions for institutional customers and funds sold through
intermediaries; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.

All of the stock of FMR is owned by FMR Corp., its parent company organized
in 1972. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson 3rd, Johnson family members,
and various trusts for the benefit of the Johnson family form a controlling
group with respect to FMR. Corp.

Under its Subadvisory Agreement with TAMIC, FMR is paid an amount
equivalent on an annualized basis to .45% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

FMR has sub-subadvisory agreements with FMR U.K. and FMR Far East. TAMIC is
also a party to these agreements in its capacity as Investment Adviser. These
sub-Subadvisers provide FMR with investment research and advice on issuers based
outside the United States. Under the sub-subadvisory agreements, FMR pays FMR
U.K. and FMR Far East fees equal to 110% and 105%, respectively, of the costs of
providing such services.

The sub-Subadvisers may also provide investment management services. In
return, FMR pays FMR U.K. and FMR Far East a fee equal to 60% of its management
fee rate with respect to a Portfolio's investments that the sub-Subadviser
manages on a discretionary basis.

MANAGEMENT OF LARGE CAP PORTFOLIO

Thomas B. Sprague is the manager of Large Cap Portfolio. Mr. Sprague is
also the manager of Fidelity Adviser Large Cap Fund and Fidelity Large Cap Stock
Fund which are publicly offered retail mutual funds. He joined Fidelity in 1985.
Mr. Sprague is a graduate of Cornell University and Wharton School of Business.

SERIES-24
<PAGE> 25

EQUITY INCOME PORTFOLIO
SUBADVISER: FIDELITY MANAGEMENT & RESEARCH COMPANY

FMR, pursuant to a Subadvisory Agreement with TAMIC, also serves as the
Subadviser to the Equity Income Portfolio. See "Large Cap
Portfolio -- Subadviser: Fidelity Resource Management" above for a discussion of
FMR.

Under its Subadvisory Agreement with TAMIC, FMR is paid an amount
equivalent on an annual basis to .45% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

Stephen Petersen is manager of Equity Income Portfolio. He also manages
Fidelity Equity Income Fund, a publicly traded mutual fund. Mr. Petersen is also
Senior Vice President of Fidelity Management Trust Co. Previously, he was vice
president and manager of several trust accounts. Mr. Petersen joined Fidelity in
October 1980.

FUND ADMINISTRATION
- --------------------------------------------------------------------------------

The Series Trust, on behalf of MFS Emerging Growth Portfolio, Federated
High Yield Portfolio, Federated Stock Portfolio, Lazard International Stock
Portfolio, and the Travelers Quality Bond Portfolio entered into an
Administrative Services Agreement, whereby Travelers Insurance will be
responsible for the pricing and bookkeeping services for the five portfolios at
an annualized rate of .06% of the daily net assets of the Portfolios. The
Travelers Insurance Company at its expense may appoint a sub-administrator to
perform these services. The sub-administrator may be affiliated with The
Travelers Insurance Company.

The Series Trust, on behalf of the Large Cap Portfolio and Equity Income
Portfolio entered into a Service Agent Agreement with Fidelity Service Company
to provide pricing and bookkeeping services to the two Portfolios at an
annualized rate of .06% of the daily net assets of the Portfolios under $500
million, and .03% over $500 million. There is a minimum total annual fee of
$60,000 per Portfolio.

Travelers Insurance Company has entered into a sub-contract with Fidelity
Investments Institutional Operations Company ("FIIOC"), an affiliate of FMR,
under the terms of which FIIOC performs certain transfer and dividend-disbursing
services for Large Cap and Equity Income Portfolios.

SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------

Under policies established by the Board of Trustees, the Subadvisers select
broker-dealers to execute transactions subject to the receipt of best execution.
When selecting broker-dealers to execute portfolio transactions for the
Portfolios, the Subadvisers may follow a policy of considering as a factor the
number of shares of a Portfolio sold by such broker-dealers. In addition,
broker-dealers may from time to time be affiliated with the Series Trust, the
investment advisers or their affiliates.

The Portfolios may pay higher commissions to broker-dealers which provide
research services. The Subadvisers may use these services in advising the
Portfolios, as well as in advising their other clients.

FUND EXPENSES
- --------------------------------------------------------------------------------

In addition to the investment advisory fees discussed above, the other
principal expenses of the Series Trust and the Portfolios include the charges
and expenses of the transfer agent, the custodian, the independent auditors, and
any outside legal counsel employed by either the Series Trust or the Board of
Trustees; the compensation for the unaffiliated members of the Board of
Trustees; the costs of printing and mailing the Series Trust's prospectus, proxy
solicitation materials, and annual,

SERIES-25
<PAGE> 26

semiannual and periodic reports; brokerage commissions, interest charges and
taxes; and any registration, filing and other fees payable to government
agencies in connection with the registration of the Series Trust and its shares
under federal and state securities laws. Higher portfolio turnover may involve
correspondingly greater brokerage commissions and other transaction costs, which
will be borne directly by the Portfolios, as well as additional gains and/or
losses to shareholders.

Pursuant to a Management Agreement originally executed on May 1, 1993, and
amended as of July 31, 1996, between the Series Trust and the Company, the
Company agreed to reimburse the Series Trust for the amount by which each
Portfolio's aggregate annual expenses, including investment advisory fees but
excluding brokerage commissions, interest charges and taxes, exceed a certain
percentage of each Portfolio's average net assets for any fiscal year. For
Lazard International Stock Portfolio the amount is 1.25%, Travelers Quality Bond
Portfolio is 0.75%. For all other Portfolios described herein, the amount is
0.95%. This agreement will remain in effect until terminated by either party
upon sixty days' notice.

SHARES OF THE SERIES TRUST
- --------------------------------------------------------------------------------

The Series Trust currently issues one class of shares divided into thirteen
separate series. Under the Declaration of Trust, the Board of Trustees is
authorized to create new series of shares without the necessity of a vote of
shareholders of the Series Trust. All shares of each series of the Series Trust
have equal voting, dividend and liquidation rights. When issued and paid for,
the shares will be fully paid and nonassessable by the Series Trust and will
have no preference, conversion, exchange or preemptive rights.

Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares. Shares of each series are entitled to
vote separately to approve investment advisory agreements or changes in
fundamental investment restrictions, but shares of all series vote together in
the election of Trustees and the selection of accountants. Shares are
redeemable, transferable and freely assignable as collateral. There are no
sinking fund provisions. (See the accompanying separate account prospectus for a
discussion of voting rights applicable to purchasers of variable annuity and
variable life insurance contracts.)

Shares of the Series Trust are currently sold only to insurance company
separate accounts in connection with variable annuity and variable life
insurance contracts issued by the Company. Shares are not sold to the general
public. The Trust reserves the right to reject any purchase request. Shares of
the Series Trust are sold on a continuing basis, without a sales charge, at the
net asset value next computed after payment is made by the insurance company to
the Series Trust's custodian. However, the separate accounts to which shares are
sold may impose sales and other charges, as described in the appropriate
contract prospectus.

Under Massachusetts law, it is possible that a shareholder of any series
may be held personally liable for a Portfolio's obligations. However, the Series
Trust's Declaration of Trust provides that shareholders shall not be subject to
any personal liability for the Series Trust's obligations and provides
indemnification from Series Trust assets for any shareholder held personally
liable for the Series Trust's obligations. Disclaimers of such liability are
included in each agreement entered into by the Series Trust or its Portfolios.

Although the Series Trust is not currently aware of any disadvantages to
contract owners of either variable annuity or variable life insurance contracts
because the Series Trust's shares are available with respect to both products,
an irreconcilable material conflict may conceivably arise between contract
owners of different separate accounts investing in the Series Trust due to
differences in tax treatment, management of the Trust's investments, or other
considerations. The Series Trust's Board of Trustees will monitor events in
order to identify any material conflicts between variable annuity contract
owners and variable life insurance policy owners, and will determine what
action, if any, should be taken in the event of such a conflict.

SERIES-26
<PAGE> 27

PRICING SHARES
- --------------------------------------------------------------------------------

The net asset value of a Portfolio share is computed as of the close of
trading on each day on which the New York Stock Exchange is open for trading,
except on days when changes in the value of the Portfolio's securities do not
affect the current net asset value of its shares. The net asset value per share
is arrived at by determining the value of the Portfolio's assets, subtracting
its liabilities, and dividing the result by the number of shares outstanding.

The Portfolios value short-term money market instruments with maturities of
sixty days or less at amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount) which, when combined with
accrued interest, approximates market. All other investments are valued at
market value, or where market quotations are not readily available, at fair
value as determined in good faith by the Series Trust's Board of Trustees or by
a committee appointed by the Trustees. The procedure set forth above need not be
used to determine the value of the securities owned by a portfolio if, in the
opinion of the Trustees or the committee appointed by the Trustees, some other
method (e.g., closing over-the-counter bid prices in the case of debt
instruments traded off an exchange) would more accurately reflect the fair
market value of such securities.

SHARE REDEMPTION
- --------------------------------------------------------------------------------

Full and fractional shares of the Portfolios may be redeemed on any
business day. Redemptions are effected at the per share net asset value next
determined after receipt by the Portfolio of a proper redemption request. The
redemption value is the net asset value adjusted for fractions of a cent and may
be more or less than the shareholder's cost depending upon changes in the value
of the Portfolio's securities between purchase and redemption.

The Portfolio computes the redemption value at the close of the New York
Stock Exchange ("Exchange") at the end of the day on which they have received
all proper documentation from the shareholder. Redemption proceeds are normally
wired or mailed either the same or the next business day, but in no event later
than seven days thereafter.

The Series Trust or the Portfolio may temporarily suspend the right to
redeem their shares when: (1) the Exchange is closed, other than customary
weekend and holiday closings; (2) trading on the Exchange is restricted; (3) an
emergency exists as determined by the SEC so that disposal of the Portfolio's
investments or determination of its net asset value is not reasonably
practicable; or (4) the SEC, for the protection of shareholders, so orders.

DIVIDENDS AND TAX STATUS

The Series Trust and its Portfolios have qualified and intend to qualify in
the future as a regulated investment company under Subchapter M of the Internal
Revenue Code, as amended. A Portfolio qualifies if, among other things, it
distributes to its shareholders at least 90% of its investment company taxable
income during each fiscal year.

Capital gains and dividends are distributed in cash or reinvested in
additional shares of a Portfolio without a sales charge. Although purchasers of
variable contracts are not currently subject to federal income taxes on
distributions made by the Portfolios, they may be subject to state and local
taxes and should review the accompanying contract prospectus for a discussion of
the tax treatment applicable to purchasers of variable annuity and variable life
insurance contracts.

SERIES-27
<PAGE> 28

LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------

There are no pending material legal proceedings affecting the Series Trust
or the Portfolios.

ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

Except as otherwise stated in this Prospectus or as required by law, the
Series Trust reserves the right to change the terms of the offer stated in this
Prospectus without shareholder approval, including the right to impose or change
fees for services provided.

SERIES-28
<PAGE> 29

EXHIBIT A
- --------------------------------------------------------------------------------

DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS AND
INVESTMENT TECHNIQUES AVAILABLE TO THE PORTFOLIOS

The following types of investments and investment techniques are available
to the Portfolios as set forth herein or in the prospectus. Please refer to the
investment objective and policies of each Portfolio for a list of available
investments.

CASH INSTRUMENTS

The Portfolios may invest temporarily in cash and cash items during times
of unusual market conditions for defensive purposes and to maintain liquidity.
Cash items may include, but are not limited to, obligations such as: commercial
paper (generally lower-rated); short-term notes; obligations issued or
guaranteed as to principal and interest by the U.S. government or any of its
agencies or instrumentalities (see "U.S. Government Obligations" below).

SHORT-TERM MONEY MARKET INSTRUMENTS

Certain of the Portfolios, including the Large Cap, Equity Income, and
Lazard International Stock Portfolios may at any time invest funds awaiting
investment or held as reserves for the purposes of satisfying redemption
requests, payment of dividends or making other distributions to shareholders, in
cash and short-term money market instruments; provided, however, that, for the
Lazard International Stock Portfolio only, such investments will not ordinarily
exceed 5% of the total assets of the Portfolio. Short-term money market
instruments in which the Portfolio may invest include (i) short-term U.S.
Government Securities and, short-term obligations of foreign sovereign
governments and their agencies and instrumentalities, (ii) interest bearing
savings deposits on, and certificates of deposit and bankers' acceptances of,
United States and foreign banks, (iii) commercial paper of U.S. or of foreign
issuers rated A-l or higher by S&P or Prime-1 by Moody's, issued by companies
which have an outstanding debt issue rated AA or higher by S&P or Aa or higher
by Moody's or, if not rated, determined by the Investment Subadviser to be of
comparable quality to those rated obligations which may be purchased by the
Portfolio and (iv) repurchase agreements relating to the foregoing.

CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES

Certain of the Portfolios, including the Federated High Yield, Large Cap,
Equity Income and the Lazard Stock International Portfolio may purchase
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 can usually be traded in the secondary market
prior to maturity.

Bankers' Acceptances are short-term credit arrangements designed to enable
business 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 a bank that, 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. The MFS
Portfolio may use this investment technique.

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, and
savings and loan associations which are insured by the FDIC).

SERIES-29
<PAGE> 30

U.S. GOVERNMENT OBLIGATIONS

All of the Portfolios may invest in direct obligations of the U.S. Treasury
(such as U.S. Treasury bills, notes, and bonds) and obligations issued or
guaranteed by U.S. government agencies or instrumentalities. These securities
are backed by the full faith and credit of the U.S. Treasury.

The Federated, Large Cap, and Equity Income Portfolios may also invest in
U.S. Government obligations which may not always receive financial support from
the U.S. government including obligations of the:

- Federal Land Banks;
- Central Bank for Cooperatives;
- Federal Intermediate Credit Banks;
- Federal Home Loan Banks;
- Farmers Home Administration; and
- Federal National Mortgage Association.

EQUITY SECURITIES

Certain of the Portfolios, including Large Cap and Equity Income, may
invest in equity securities. By definition, equity securities include common
stocks, convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation. Although equity
securities have a history of long-term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors. The Federated High Yield, Large Cap, and Equity Income Portfolios may
invest in debt obligations which involve equity features such as conversion or
exchange rights, warrants for the acquisition of common stock of the same or a
different issuer, participations based on revenues, sales or profits, or the
purchase of common stock in a unit transaction (where corporate debt securities
and common stock are offered as a unit).

DEBT SECURITIES

Additionally, the Portfolios' investments may be made in bonds and other
debt instruments used by issuers to borrow money from investors. Debt
instruments involve the promise, by the issuer of the instrument to pay the
investor a fixed or variable rate of interest. Such repayment will occur at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In general,
bond prices rise when interest rates fall, and vice versa. Debt securities have
varying degrees of quality and varying levels of sensitivity to changes in
interest rates. Longer-term bonds are generally more sensitive to interest rate
changes than short-term bonds.

Investment-grade debt securities are medium- and high-quality securities.
Some, however, may possess speculative characteristics and may be more sensitive
to economic changes and to changes in the financial condition of issuers.

Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness, or
they may already be in default. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly in
periods of general economic difficulty. Certain of the Portfolios may be
permitted to invest in such lower-quality debt securities.

FLOATING AND VARIABLE RATE INSTRUMENTS

The Lazard International Stock Portfolio, Large Cap, Equity Income and the
Federated High Yield Portfolios may purchase obligations that have a floating or
variable rate of interest. Such obligations bear interest at rates that are not
fixed, but vary with changes in specified market rates or indices, such as the
prime rate, and at specified intervals. Certain of these obligations may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. Each

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Portfolio limits its purchases of floating and variable rate obligations to
those of the same quality as it otherwise is allowed to purchase. The Investment
Subadviser monitors on an ongoing basis the ability of an issuer of a demand
instrument to pay principal and interest on demand. Each Portfolio's right to
obtain payment at par on a demand instrument can be affected by events occurring
between the date the Portfolio elects to demand payment and the date payment is
due, such events may affect the ability of the issuer of the instrument to make
payment when due, except when such demand instruments permit same-day
settlement. To facilitate settlement, these same-day demand instruments may be
held in book entry form at a bank other than the Portfolio's custodian, subject
to a subcustodian agreement approved by the Portfolio between that bank and the
Portfolio's custodian.

The floating and variable rate obligations that the Portfolio may purchase
include certificates of participation in obligations purchased from banks. A
certificate of participation gives the Portfolio an undivided interest in the
underlying obligations in the proportion that the Portfolio's interest bears to
the total principal amount of such obligations. Certain of such certificates of
participation may carry a demand feature that would permit the holder to tender
them back to the issuer prior to maturity.

To the extent that floating and variable rate instruments without demand
features are not readily marketable, they will be subject to the investment
restriction that the Portfolio may not invest an amount equal to 10% or more of
the current value of its net assets in illiquid securities. See "Illiquid
Securities" and "Investment Restrictions" below.

VARIABLE AMOUNT MASTER DEMAND NOTES

Variable amount master demand notes are unsecured obligations that permit
the investment of fluctuating amounts by a Portfolio at varying rates of
interest pursuant to direct arrangements between the Portfolio as lender and the
issuer as borrower. Master demand notes permit daily fluctuations in the
interest rate and daily changes in the amounts borrowed. A Portfolio 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. Because these types of
notes are direct lending arrangements between the lender and the borrower, it is
not generally contemplated that such instruments will be 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, a Portfolio's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. In connection with master
demand note arrangements, the Investment adviser and Subadvisers will consider
the earning power, cash flow and other liquidity ratios of the issuer. These
notes, as such, are not typically rated by credit rating agencies. Unless they
are so rated, the Portfolios will invest in them only if, at the time of an
investment, the issuer meets the criteria set forth for all other commercial
paper. Pursuant to procedures established by the Investment adviser or
Subadviser, such notes are treated as instruments maturing in one day and valued
at their par value. The investment adviser and Subadviser intend to continuously
monitor factors related to the ability of the borrower to pay principal and
interest on demand.

REPURCHASE AGREEMENTS

The Travelers Quality Bond, Lazard International Stock, MFS, Federated High
Yield, Federated Stock, Large Cap and Equity Income Portfolios each may enter
into repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell U.S.
government securities and or other securities to a Portfolio and each agrees at
the time of the sale to repurchase the securities at a mutually agreed upon time
and price. Interim cash balances may be invested from time to time in repurchase
agreements with approved counterparties (i.e., banks or reporting broker-dealers
meeting the investment advisor's credit quality standards as presenting minimal
risk of default). 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.

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In any repurchase agreement, the risk that the original seller does not
repurchase the securities as called for in the repurchase agreement exists. A
Portfolio could receive less than the repurchase price on any sale of such
securities. Additionally, if the seller becomes subject to a proceeding under
the bankruptcy laws or its assets are otherwise subject to a stay order, a
Portfolio's right to liquidate the securities may be restricted (during which
time the value of the securities could decline). The Investment Adviser and
Subadviser, however, each believe that under the regular procedures normally in
effect for custody of the Portfolio's securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Portfolio and allow retention or disposition of such securities.

Each of the Portfolios may adopt rules concerning the collateralization of
repurchase agreements so long as the repurchase agreement is collateralized
fully.

The Portfolios will only enter into repurchase agreements with banks and
other recognized financial institutions such as broker/dealers that are found by
the particular Portfolio's adviser to be creditworthy pursuant to guidelines
established for the Portfolio.

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.

The Portfolio or its custodian will take possession of the securities
subject to repurchase agreements, and these securities will be marked to market
daily.

REVERSE REPURCHASE AGREEMENTS

The Federated High Yield, Federated Stock, Large Cap, Lazard International
Stock, and Equity Income Portfolios may enter into reverse repurchase
agreements. This transaction is similar to borrowing cash. In a reverse
repurchase agreement the Portfolio transfers possession of a portfolio
instrument to another person, such as a financial institution, broker, or
dealer, in return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Portfolio will repurchase the
portfolio instrument by remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements may enable the
Portfolio to avoid selling portfolio instruments at a time when a sale may be
deemed to be disadvantageous, but the ability to enter into reverse repurchase
agreements does not ensure that the Portfolio will be able to avoid selling
portfolio instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the
Portfolio, in a dollar amount sufficient to make payment for the obligations to
be purchased, are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled. During the
period any reverse repurchase agreement are outstanding, but only to the extent
necessary to assure completion of the reverse repurchase agreements, the
Portfolio will restrict the purchase of portfolio instruments to money market
instruments maturing on or before the expiration date of the reverse repurchase
agreements.

WHEN-ISSUED SECURITIES

Each of the Portfolios may purchase securities on a when-issued or delayed
delivery basis. Transactions of this type are arrangements in which the
particular Portfolio purchases securities with payment and delivery scheduled
for a future time. Their purpose is to help to ensure the availability of
suitable securities.

SERIES-32
<PAGE> 33

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 generally will be marked to market and reflected in the Portfolio'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 Travelers Quality Bond Portfolio to make
when-issued purchases for settlement no more than 90 days beyond the commitment
date. The Travelers Quality Bond Portfolio may only purchase when issued
securities of new issue government or agency securities.

While it is the intention of each Portfolio to take physical delivery of
these securities, offsetting transactions may be made prior to settlement, if it
is advantageous to do so. For example, Travelers Quality Bond Portfolio does not
make payment or begin to accrue interest on these securities until settlement
date. In order to invest its assets pending settlement, Travelers Quality Bond
Portfolio will normally invest in short-term money market instruments and other
securities maturing no later than the scheduled settlement date.

Travelers Quality Bond Portfolio does not intend to purchase when-issued
securities for speculative or "leverage" purposes. Consistent with Section 18 of
the 1940 Act and the General Policy Statement of the SEC thereunder, when
Travelers Quality Bond Portfolio 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

The Investment Adviser and Subadvisers engaged in trades of when issued
securities each believes that purchasing securities in this manner will be
advantageous. This practice, however does include certain risks, namely the
default of the counterparty on its obligation to deliver the security as
scheduled. In this event, an affected Portfolio would endure a loss (or gain)
equal to the price appreciation (or depreciation) in value from the commitment
date. Further, such failure to complete a transaction may cause the affected
Portfolio to miss other opportunities.

To guard against such risks, the Investment Adviser and Subadviser employ 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.

It is expected that, under normal circumstances, the Portfolios will take
delivery of such securities. In general, the Portfolios do not pay for the
securities until received and the Portfolios do not start earning interest on
the obligations until the contractual settlement date. While awaiting delivery
of the obligations purchased on such bases, the Portfolios will establish a
segregated account consisting of cash, short-term money market instruments or
high quality debt securities equal to the amount of the commitments to purchase
when-issued securities.

The MFS Portfolio may engage in trades of when-issued securities. The value
of this Portfolio's securities, together with the value of all securities of the
issuer of the "when-issued security" may not exceed 5% of the value of the
Portfolio's total assets at the time that the initial commitment to purchase
such securities is made. An increase in the percentage of the Portfolio's assets
committed to the purchase of securities on a when-issued basis may increase the
volatility of its net asset value.

A Portfolio may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Portfolio may enter in
transactions to sell its purchase commitments to third parties at current market
values and simultaneously acquire other commitments to purchase similar
securities at later dates. A Portfolio may realize short-term profits or losses
upon the sale of such commitments.

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FUTURES CONTRACTS

Certain of the Portfolios including Large Cap, Equity Income, MFS, and
Lazard International Stock Portfolios may use exchange-traded financial futures
for various purposes including contracts as a hedge to protect against changes
in interest rates or stock prices. Financial futures contracts consist of stock
index futures contracts and futures contracts on debt securities. An interest
rate futures contract is a contract to buy or sell specified debt securities at
a future time for a fixed price. 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.

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. At no time will any Portfolios' futures trading
transactions be employed for speculative purposes.

Stock index futures may 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). 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.

When a futures contract is purchased, the Portfolios 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
Portfolios will not purchase or sell futures contracts for which the aggregate
initial margin exceeds five percent (5%) of the fair market value of their
respective assets, after taking into account unrealized profits and unrealized
losses on any such contracts they have entered into.

Positions taken in the futures market 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 debt security and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if less, a loss. While futures
positions taken by the Portfolios will usually be liquidated in this manner, the
Portfolios 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 be taken into account. There can be no
assurance that the Portfolios will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time.

All interest rate and stock index 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, the Portfolios 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. The Portfolios 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,
or for other risk reduction strategies, though there can be no assurance the
expected result will always be achieved.

As evidence of its hedging intent, the Portfolios 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 as they close out 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.

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TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS: Several of the
Portfolios, including the Large Cap, Equity Income, Lazard International Stock
and MFS Portfolios may enter into transactions in options, futures and forward
contracts on a variety of instruments and indices, in order to protect against
declines in the value of portfolio securities or increases in the cost of
securities or other assets to be acquired and, subject to applicable law, to
increase MFS Portfolio's gross income or in the case of Large Cap and Equity
Income Portfolios to adjust investment exposure.

SPECIAL RISKS RELATING TO FUTURES CONTRACTS

While certain futures contracts may be purchased and sold to reduce certain
risks, these transactions may entail other risks. Thus, while the Portfolios may
benefit from the use of such futures, changes in interest rates or stock price
movements may result in a poorer overall performance for the Portfolios than if
they 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 Portfolios 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 margin deposit requirements
should a futures contract value move adversely, investors may close future
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.

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. The Investment Adviser and Subadvisers believe that over time the
value of the investments of the 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.

WRITING COVERED CALL OPTIONS

The Federated High Yield, Large Cap, Equity Income, Lazard International
Stock and MFS Portfolios may write (i.e., sell) covered call options. By writing
a call option, a Portfolio becomes obligated during the term of the option to
deliver the securities underlying the option upon payment of the exercise price.

The principal reason for writing call options is to obtain, through a
receipt of premiums, a greater current return than would be realized on the
underlying securities alone. Purchases of puts or sales of calls are intended to
protect against price movements in particular securities in a Portfolio's
portfolio. Sales of calls may also generate income. The Portfolios receive a
premium from writing a call option which they retain whether or not the option
is exercised.

Certain risks exist in this practice. By writing a call option, a Portfolio
might lose the potential for gain on the underlying security while the option is
open. Prior to exercise or expiration, an option position can only be terminated
by entering into a closing purchase or sale transaction. This requires a
secondary market on an exchange for call or put options which may or may not
exist for any particular call or put option at any specific time. The absence of
a liquid secondary market also may limit the

SERIES-35
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Portfolio's ability to dispose of the securities underlying an option. The
inability to close options also could have an adverse impact on the Portfolio's
ability to effectively hedge.

The Portfolios may only write "covered" options. This means that as long as
a Portfolio is obligated as the writer of a call option, it will own the
underlying securities subject to the option or, in the case of call options on
U.S. Treasury bills, a Portfolio might own substantially similar U.S. Treasury
bills.

Options on some securities are relatively new and it is impossible to
predict the amount of trading interest that will exist in such options. There
can be no assurance that viable markets will develop or continue. The failure of
such markets to develop or continue could significantly impair a Portfolio's
ability to use such options to achieve its investment objectives.

BUYING PUT AND CALL OPTIONS

The Large Cap, Equity Income, Federated High Yield, Lazard International
Stock and MFS Portfolios 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 shareholders' capital when
market conditions warrant. The Portfolios 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 Portfolios, in
anticipation of or as a substitute for the purchase of the securities
themselves. These options may (must, in the case of the Federated Portfolios) 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 in duration.

The Portfolios will pay a premium in exchange for the right to purchase
(call) or sell (put) a specific par value of a fixed income or equity security
or futures contract at a specified price (the strike price) on or before the
expiration date of the option contract. In either case, a Portfolio's risk is
limited to the option premium paid and the risk of depreciation in value of
securities on which it has written call options. By writing a call option on a
security, however, a Portfolio limits its opportunity to profit from any
increase in the market value of the underlying security, since the holder will
usually exercise the call option when the market value of the underlying
security exceeds the exercise price of the call.

The Portfolios may sell the put and call options prior to their expiration
and thereby realize a gain or loss. 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.

Liquid securities sufficient to fulfill a 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.

If a Portfolio writes an option which expires unexercised or is closed out
by the Portfolio at a profit, it will retain the premium paid for the option
which will increase its gross income and will offset in part the reduced value
of the portfolio security underlying the option, or the increased cost of
portfolio securities to be acquired. In contrast, however, if the price of the
underlying security moves adversely to the Portfolio's position, the option may
be exercised and the Portfolio will be required to purchase or sell the
underlying security at a disadvantageous price, which may only be partially
offset by the amount of the premium. MFS Portfolio may also write combinations
of put and call options on the same security, known as "straddles." Such
transactions can generate additional premium income but also present increased
risk.

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The Portfolios that engage in buying put and call options may also purchase
put or call options in anticipation of market fluctuations which may adversely
affect the value of its portfolio or the prices of securities that such
Portfolio wants to purchase at a later date. In the event that the expected
market fluctuations occur, the Portfolio may be able to offset the resulting
adverse effect on its portfolio, in whole or in part, through the options
purchased. The premium paid for a put or call option plus any transaction costs
will reduce the benefit, if any, realized by such Portfolio upon exercise or
liquidation of the option, and, unless the price of the underlying security
changes sufficiently, the option may expire without value to the Portfolio.

In certain instances, the Portfolio may enter into options on Treasury
securities which may be referred to as "reset" options or "adjustable strike"
options. These options provide for periodic adjustment of the strike price and
may also provide for the periodic adjustment of the premium during the term of
the option.

OPTIONS ON STOCK INDICES -- MFS, Large Cap, Equity Income and Lazard
International Stock Portfolios may write (sell) covered call and put options and
purchase call and put options on stock indices. These Portfolios may write
options on stock indices for the purpose of increasing its gross income and to
protect its portfolio against declines in the value of securities it owns or
increases in the value of securities to be acquired. When such Portfolios write
an option on a stock index, and the value of the index moves adversely to the
holder's position, the option will not be exercised, and the Portfolio will
either close out the option at a profit or allow it to expire unexercised. The
Portfolio writing the covered call or put option will thereby retain the amount
of the premium, less related transaction costs, which will increase its gross
income and offset part of the reduced value of portfolio securities or the
increased cost of securities to be acquired. Such transactions, however, will
constitute only partial hedges against adverse price fluctuations, since any
such fluctuations will be offset only to the extent of the premium received by
the Portfolio for the writing of the option, less related transaction costs. In
addition if the value of an underlying index moves adversely to the Portfolios'
option position, the option may be exercised, and the Portfolios will experience
a loss which may only be partially offset by the amount of the premium received.

The MFS, Lazard International Stock, Large Cap, Equity Income Portfolios
may also purchase put or call options on stock indices in order, respectively,
to hedge its investments against a decline in value or to attempt to reduce the
risk of missing a market or industry segment advance.

INDEX FUTURES CONTRACTS

FUTURES CONTRACTS -- MFS Portfolio, Large Cap Portfolio, Equity Income
Portfolio, and Lazard International Stock Portfolio may enter into stock index
futures contracts (Index Futures). The Portfolios will utilize Index Futures for
hedging and non-hedging purposes, subject to applicable law. Purchases or sales
of stock index futures contracts for hedging purposes are used to attempt to
protect the Portfolios' current or intended stock investments from broad
fluctuations in stock prices. In the event that an anticipated decrease in the
value of portfolio securities occurs as a result of a general stock market
decline, a general increase in interest rates or a decline in the dollar value
of foreign currencies in which portfolio securities are denominated, the adverse
effects of such changes may be offset, in whole or part, by gains on the sale of
futures contracts. Conversely, the increased cost of portfolio securities to be
acquired, caused by a general rise in the stock market, a general decline in
interest rates or a rise in the dollar value of foreign currencies, may be
offset, in whole or part, by gains on Index Futures contracts purchased by the
Portfolios. A Portfolio will incur brokerage fees when it purchases and sells
Index Futures contracts, and it will be required to make and maintain margin
deposits.

OPTIONS ON INDEX FUTURES CONTRACTS -- MFS, Large Cap, Equity Income, and
Lazard International Stock Portfolios may purchase and write options on stock
index futures contracts. Such investment strategies will be used for hedging and
non-hedging purposes, subject to applicable law. Put and call options on futures
contracts may be traded by the Portfolios in order to protect against declines
in the values of portfolio securities or against increases in the cost of
securities to be acquired. Purchases of

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options on futures contracts may present less risk in hedging the portfolios of
the Portfolios than the purchase or sale of the underlying futures contracts
since the potential loss is limited to the amount of the premium plus related
transaction costs. The writing of such options, however, does not present less
risk than the trading of futures contracts and will constitute only a partial
hedge, up to the amount of the premium received. In addition, if an option is
exercised, the Portfolios may suffer a loss on the transaction.

FORWARD CONTRACTS ON FOREIGN CURRENCY -- MFS Portfolio, Large Cap
Portfolio, Equity Income Portfolio, and Lazard International Stock Portfolio may
enter into contracts for the purchase or sale of a specific currency at a future
date at a price set at the time of the contract (a "Forward Contract"). The
Portfolios will enter into Forward Contracts for hedging and non-hedging
purposes, including transactions entered into for the purpose of profiting from
anticipated changes in foreign currency exchange rates. Transactions in Forward
Contracts entered into for hedging purposes may include forward purchases or
sales of foreign currencies for the purpose of protecting the dollar value of
securities denominated in a foreign currency or protecting the dollar equivalent
of interest or dividends to be paid on such securities. The Portfolios may also
enter into Forward Contracts for "cross hedging" purposes, e.g., the purchase or
sale of a Forward Contract on one type of currency as a hedge against adverse
fluctuations in the value of a second type of currency. By entering into such
transactions, however, the Portfolios may be required to forgo the benefits of
advantageous changes in exchange rates. The Portfolios may also enter into
transactions in Forward Contracts for other than hedging purposes. For example,
if the Subadviser believes that the value of a particular foreign currency will
increase or decrease relative to the value of the U.S. dollar, the Portfolios
may purchase or sell such currency, respectively, through a Forward Contract. If
the expected changes in the value of the currency occur, the Portfolios will
realize profits which will increase its gross income. Such transactions,
however, may be considered speculative and could involve significant risk of
loss, as set forth below. the Portfolios have established procedures consistent
with statements of the SEC and its staff regarding the use of Forward Contracts
by registered investment companies, which requires use of segregated assets or
"cover" in connection with the purchase and sale of such Contracts.

Forward Contracts are traded over-the-counter, and not on organized
commodities or securities exchanges. As a result, such contracts operate in a
manner distinct from exchange-traded instruments, and their use involves certain
risks beyond those associated with transactions in the Futures and Options
contracts described above.

OPTIONS ON FOREIGN CURRENCIES -- MFS Portfolio, Large Cap Portfolio, Equity
Income Portfolio, and Lazard International Stock Portfolio may purchase and
write put and call options on foreign currencies for the purpose of protecting
against declines in the dollar value of portfolio securities, and against
increases in the dollar cost of securities to be acquired. As in the case of
other types of options, however, the writing of an option on foreign currency
will constitute only a partial hedge, up to the amount of the premium received,
and the Portfolios could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate movements adverse
to the Portfolio's position, it may forfeit the entire amount of the premium
plus related transaction costs. As in the case of Forward Contracts, certain
options on foreign currencies are traded over-the-counter and involve risks
which may not be present in the case of exchange-traded instruments.

"NON-PUBLICLY TRADED" OR "ILLIQUID SECURITIES"

Lazard International Stock, MFS, Federated High Yield, Federated Stock,
Large Cap, and Equity Income Portfolios may purchase and sell securities that
are not registered under the Securities Act of 1933, as amended (the "1933 Act")
("restricted securities"), including those that can be offered and sold to
"qualified institutional buyers" under Rule 144A under the 1933 Act ("Rule 144A
securities"). Sale of this type of security is typically restricted under the
federal securities laws. The above

SERIES-38
<PAGE> 39

mentioned Portfolios may also purchase and sell securities that are subject to
transfer restrictions, and may therefore be illiquid.

Such securities are referred to as "illiquid" because sale of these
securities may be difficult and the Portfolio engaging in trading of illiquid
securities may not be able to sell them (or sell them at fair market value) when
the investment adviser or Subadviser believes it is desirable to do so.
Accordingly such sales may be made at less than fair market value or may not be
able to sell them when the investment adviser believes it is desirable to do so.

The following Portfolios currently limit the amount of net assets that may
be invested in illiquid securities to 15% of their respective Portfolio's net
assets: Large Cap, Equity Income, MFS, Federated Stock, Federated High Yield,
and Lazard International Stock Portfolios.

Securities may be illiquid securities for different reasons including,
among others, (i)absence of a readily available market or legal or contractual
restrictions on resale; and (ii) repurchase agreements not terminable within
seven days. Securities eligible for resale under Rule 144A under the Securities
Act that have legal or contractual restrictions on resale but have a readily
available market are not deemed illiquid securities for this purpose.

Each Subadviser will monitor the liquidity of such restricted securities.
This monitoring process will involve a continuing review of the trading markets
for the specific Rule 144A security, whether such security is illiquid and thus
subject to the particular Portfolio's limitation on investing its net assets in
illiquid investments. In monitoring a restricted security, the Investment
adviser or Subadviser will review the current value of the security based on
currently available information. The Subadviser, however, will retain sufficient
oversight and be ultimately responsible for the determinations.

Subject to the limitation on investments in illiquid investments, the
Portfolios may also invest in restricted securities that may not be sold under
Rule 144A, which presents certain risks. As a result, a Portfolio might not be
able to sell these securities when the Subadviser wishes to do so, or might have
to sell them at less than fair value. In addition, market quotations are less
readily available. Therefore, the judgment of the Subadviser may at times play a
greater role in valuing these securities than in the case of unrestricted
securities.

Additionally, the Equity Income, Large Cap and the Federated Portfolios may
engage in trading of commercial paper which is illiquid. The limitation for
illiquid securities are not applicable to commercial paper issued under Section
4(2) of the Securities Act of 1933. As a matter of investment practice, which
may be changed without shareholder approval, the Federated Portfolios will limit
investments in illiquid securities, including certain restricted securities not
determined by the Subadviser to be liquid, and repurchase agreements providing
for settlement in more than seven days after notice, to 15% of net assets.

The Equity Income, Large Cap and the Federated Portfolios may also invest
in commercial paper issued in reliance on the exemption from registration
afforded by Section 4(2) of the 1933 Act. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally sold
to institutional investors, such as the Portfolio, who agree that it is
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be pursuant to an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Portfolio through or with the assistance of the
issuer or the investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. These Portfolios believe that Section 4(2)
commercial paper and possibly certain other restricted securities which meet the
criteria for liquidity established by the Portfolios' Subadviser are quite
liquid. The Portfolios may, therefore, treat the restricted securities which
meet the criteria for liquidity established by the Subadviser, including Section
4(2) commercial paper, as determined by the Subadviser of the Portfolio, as
liquid and not subject to the investment limitation applicable to illiquid
securities.

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FOREIGN SECURITIES AND AMERICAN DEPOSITORY RECEIPTS

The MFS, Large Cap, Lazard International Stock, Federated High Yield, and
Equity Income Portfolios may each purchase foreign securities or American
Depository Receipts ("ADRs"). ADRs are U.S. dollar-denominated receipts issued
generally by domestic banks representing the deposit with the bank of a security
of a foreign issuer. ADRs are publicly traded on exchanges or over the counter
in the United States.

Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks include differences in accounting, auditing and financial reporting
standards, changes in currency rates, generally higher brokerage or commission
rates on foreign trades, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investments in foreign countries,
potential difficulties in enforcing contractual relationships, and potential
restrictions on the flow of international capital. Additionally, dividends
payable on foreign securities may be subject to foreign taxes withheld prior to
distribution. Foreign securities often trade with less frequency and volume than
domestic securities and therefore may exhibit greater price volatility. Changes
in foreign exchange rates will affect the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar. Many of the
foreign securities held by a Portfolio will not be registered with, nor will the
issuers thereof be subject to the reporting requirements of, the SEC.
Accordingly, foreign securities are subject to less supervision and there may be
less publicly available information about the securities and the foreign company
or government issuing them than is available about a domestic company of
government entity. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.

Certain restrictions may apply concerning the amount of a Portfolio's net
assets which may be invested in foreign securities. For example MFS Portfolio
may invest up to 25% of its net assets in such securities, although it generally
expects to invest between 0% and 10% of its total assets in foreign securities
(not including ADRs).

The Portfolios may hold foreign currency received in connection with
investments in foreign securities when, in the judgment of the Subadviser, it
would be beneficial to convert such currency into U.S. dollars at a later date,
based on anticipated changes in the relevant exchange rate. MFS Portfolio may
also hold foreign currency in anticipation of purchasing foreign securities.

AMERICAN DEPOSITORY RECEIPTS

As noted above, ADRs are certificates issued by a U.S. depository (usually
a bank) and represent a specified quantity of shares of an underlying non-U.S.
stock on deposit with a custodian bank as collateral. Because ADRs trade on
United States securities exchanges, the Subadviser does not treat them as
foreign securities. However, they are subject to many of the risks of foreign
securities described above.

EMERGING MARKET SECURITIES

The MFS, Large Cap, Federated High Yield, Lazard International Stock, and
Equity Income Portfolios may invest in countries or regions with relatively low
gross national product per capita compared to the world's major economies, and
in countries or regions with the potential for rapid economic growth (emerging
markets). Emerging markets will include any country: (i) having an "emerging
stock market" as defined by the International Finance Corporation; (ii) with
low-to-middle-income economies according to the International Bank for
Reconstruction and Development (the "World Bank"); (iii) listed in World Bank
publications as developing; or (iv) determined by the Subadviser to be an
emerging market as defined above. Additionally, the Portfolios may invest in
securities of: (i) companies the principal securities trading market for which
is an emerging market

SERIES-40
<PAGE> 41

country; (ii) companies organized under the laws of, and with a principal office
in, an emerging market country; (iii) companies whose principal activities are
located in emerging market countries; or (iv) companies traded in any market
that derives 50% or more of their total revenue from either goods or services
produced in an emerging market or sold in an emerging market.

The risks of investing in foreign securities may be intensified in the case
of investments in emerging markets. Securities of many issuers in emerging
markets may be less liquid and more volatile than securities of comparable
domestic issuers. Emerging markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Countries with emerging markets may have
relatively unstable governments, present the risk of nationalization of
businesses, restrictions on foreign ownership, or prohibitions of repatriation
of assets, and may have less protection of property rights than more developed
countries. The economies of countries with emerging markets may be predominantly
based on only a few industries, may be highly vulnerable to changes in local or
global trade conditions. Delays in settlement could result in temporary periods
when a portion of the assets of a Portfolio is uninvested and no return is
earned thereon. The inability of a Portfolio to make intended security purchases
due to settlement problems could cause the Portfolio to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result in losses to a Portfolio. Emerging nations may
suffer from extreme and volatile debt burdens or inflation rates. Securities of
issuers located in countries with emerging markets may have limited
marketability and may be subject to more abrupt or erratic price movements.

Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. A Portfolio could
be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to a Portfolio of any restrictions on investments. Investments in certain
foreign emerging market debt obligations may be restricted or controlled to
varying degrees. These restrictions or controls may at times preclude investment
in certain foreign emerging market debt obligations and increase the expenses of
a Portfolio.

LENDING PORTFOLIO SECURITIES

The Lazard International Stock, MFS, Federated High Yield, Federated Stock,
Large Cap and Equity Income Portfolios are each authorized to lend their
portfolio securities to brokers, dealers and other financial organizations. The
purpose of this lending activity is to generate additional income. The primary
risk associated with lending portfolio securities, as with other extensions of
credit, consists of possible loss of rights in the collateral should the
borrower fail financially.

As with any securities lending, a risk exists that when the Portfolio lends
portfolio securities, the securities may not be available to the Portfolio on a
timely basis and the Portfolio may, therefore, lose the opportunity to sell the
securities at a desirable price. In addition, in the event that a borrower of
securities files for bankruptcy or becomes insolvent, disposition of the
securities may be delayed pending court action.

Each of the Portfolios engaging in securities lending will follow certain
guidelines in determining whether a particular potential securities borrower is
appropriate. For example, MFS will usually only make loans to member banks of
the Federal Reserve System and member firms (and subsidiaries thereof) of the
New York Stock Exchange (the "Exchange") and would be required to be secured
continuously by collateral in cash, cash equivalents or U. S. Government
securities maintained on a current basis at an amount at least equal to the
market value of the securities loaned. MFS Portfolio would continue to collect
the equivalent of the interest on the securities loaned and would also receive
either interest (through investment of cash collateral) or a fee (if the
collateral is U. S. Government securities or a letter of credit). The Lazard
International Stock and Federated Portfolios

SERIES-41
<PAGE> 42

may lend securities from its portfolio to brokers, dealers and financial
institutions if cash or cash equivalent collateral, including letters of credit,
marked-to-market daily and equal to at least 100% of the current market value of
the securities loaned (including accrued interest and dividends thereon) plus
the interest payable to the Portfolio with respect to the loan is maintained by
the borrower with the Portfolio in a segregated account.

In determining whether to lend a security to a particular broker, dealer or
financial institution, the Investment Subadviser will consider all relevant
facts and circumstances, including the creditworthiness of the broker, dealer or
financial institution. A Portfolio will not enter into any portfolio security
lending arrangement having a duration of longer than one year. Any securities
that the Portfolio may receive as collateral will not become part of the
Portfolio's investment Portfolio at the time of the loan and, in the event of a
default by the borrower, the Portfolio will, if permitted by law, dispose of
such collateral except for such part thereof that is a security in which the
Portfolio is permitted to invest. During the time securities are on loan, the
borrower will pay the Portfolio any accrued income on those securities and the
Portfolio may invest the cash collateral and earn additional income or receive
an agreed upon fee from a borrower that has delivered cash equivalent
collateral. The Portfolio will not lend securities having a value that exceeds
10% of the current value of its total assets. Loans of securities will be
subject to termination at the Portfolio's or the borrower's option. The
Portfolio may pay reasonable administrative and custodial fees in connection
with a securities loan and may pay a negotiated portion of the interest or fee
earned with respect to the collateral to the borrower or the placing broker.

TEMPORARY BANK BORROWING

All of the Portfolios may borrow from banks for temporary purposes,
including the meeting of redemption requests which might require the untimely
disposition of securities. The Federated Portfolios may borrow up to 33% of
their respective assets for such reasons as well.

Temporary or emergency borrowing in the aggregate may not exceed 15%, and
borrowing for purposes other than meeting redemptions may not exceed 5%, of the
value of the Lazard International Stock Portfolio's total assets (including the
amount borrowed) less liabilities (including the amount borrowed) at the time
the borrowing is made. Securities may not be purchased by the Portfolio while
borrowings in excess of 5% of the value of the Lazard International Stock
Portfolio's total assets are outstanding. The foregoing policies do not apply to
MFS, Equity Income, and Large Cap Portfolios, whose policies permit borrowing of
up to 33 1/3% of total assets.

LETTERS OF CREDIT

The Lazard International Stock Portfolio may also engage in trades of
municipal obligations, certificates of participation therein, commercial paper
and other short-term obligations that are backed by irrevocable letters of
credit issued by banks which assume the obligation for payment of principal and
interest in the event of default by an issuer. Only banks the securities of
which, in the opinion of the Investment Subadviser, are of investment quality
comparable to other permitted investments of the Lazard International Stock
Portfolio may be used for letter of credit-backed investment.

INVESTMENT IN UNSEASONED COMPANIES

The Lazard International Stock, Equity Income, and Large Cap Portfolios may
also invest Portfolio assets in securities of companies that have operated for
less than three years, including the operations of predecessors. The Lazard
International Stock Portfolio has undertaken that it will not make investments
that will result in more than 5% of its total assets being invested in the
securities of newly formed companies and equity securities that are not readily
marketable. Investing in securities of unseasoned companies may, under certain
circumstances, involve greater risk than is customarily associated with
investment in more established companies.

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<PAGE> 43

REAL ESTATE-RELATED INSTRUMENTS

The Large Cap and Equity Income Portfolios may engage in the purchase and
sale of real estate related instruments including real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such as
real estate values and property taxes, interest rates, cash flow of underlying
real estate assets, over building, and the management skill and creditworthiness
of the issuer. Real estate-related instruments may also be affected by tax and
regulatory requirements, such as those relating to the environment.

CORPORATE ASSET-BACKED SECURITIES

Federated High Yield, MFS Portfolio, Large Cap Portfolio and Equity Income
Portfolio may invest in corporate asset-backed securities. These securities,
issued by trusts and special purpose corporations, are backed by a pool of
assets, such as credit card or automobile loan receivables, representing the
obligations of a number of different parties. Corporate asset-backed securities
present certain risks. For instance, in the case of credit card receivables,
these securities may not have the benefit of any security interest in the
related collateral.

ASSET-BACKED MORTGAGE SECURITIES

Securities of this type include interests in pools of lower-rated debt
securities, or consumer loans or mortgages, or complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed securities. The
value of these securities may be significantly affected by changes in interest
rates, the market's perception of the issuers, and the creditworthiness of the
parties involved. Some securities may have a structure that makes their reaction
to interest rates and other factors difficult to predict, making their value
highly volatile. These securities may also be subject to prepayment risk.

LOAN PARTICIPATIONS AND OTHER DIRECT INDEBTEDNESS

MFS Portfolio, Federated High Yield, Large Cap and Equity Income Portfolios
may invest a portion of their assets in "loan participations" and other direct
indebtedness. By purchasing a loan participation, the Portfolios acquire some or
all of the interest of a bank or other lending institution in a loan to a
corporate borrower. Many such loans are secured, and most impose restrictive
covenants which must be met by the borrower. These loans are made generally to
finance internal growth, mergers, acquisitions, stock repurchases, leveraged
buy-outs and other corporate activities. Such loans may be in default at the
time of purchase.

MFS, Large Cap and Equity Income Portfolios may also purchase other direct
indebtedness such as trade or other claims against companies, which generally
represent money owed by the company to a supplier of goods and services. These
claims may also be purchased at a time when the company is in default. Certain
of the loan participations and other direct indebtedness acquired by these
Portfolios may involve revolving credit facilities or other standby financing
commitments which obligate the Portfolios to pay additional cash on a certain
date or on demand.

The highly leveraged nature of many such loans and other direct
indebtedness may make such loans especially vulnerable to adverse changes in
economic or market conditions. Loan participations and other direct indebtedness
may not be in the form of securities or may be subject to restrictions on
transfer, and only limited opportunities may exist to resell such instruments.
As a result, the Portfolios may be unable to sell such investments at an
opportune time or may have to resell them at less than fair market value. For a
further discussion of loan participations, other direct indebtedness and the
risks related to transactions therein, please review the SAI.

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<PAGE> 44

INVESTMENT COMPANY SECURITIES

The Large Cap, Equity Income, and Lazard International Stock Portfolios may
purchase and sell securities of closed-end investment companies.

AFFILIATED BANK TRANSACTIONS

The Large Cap and Equity Income Portfolios may engage in transactions with
financial institutions that are, or may be considered to be "affiliated persons"
of the fund under the Investment Company Act of 1940. These transactions may
include repurchase agreements with custodian banks; short-term obligations of,
and repurchase agreements with, the 50 largest U.S. banks (measured by
deposits): municipal securities, U. S. government securities with affiliated
financial institutions that are primary dealers in these securities; short-term
currency transactions; and short-term borrowings. The Board of Trustees and the
Subadvisers of Portfolios engaged in affiliated bank transactions have
established and will periodically review procedures applicable to transactions
involving affiliated financial institutions.

INDEXED SECURITIES

The Large Cap, Equity Income, and Lazard International Stock Portfolios may
purchase securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price of
gold, resulting, in a security whose price tends to rise and fall together with
gold prices. Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest rates are
determined by reference to the values of one or more specified foreign
currencies, and may offer higher yields than U.S. dollar-denominated securities
of equivalent issuers. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may increase when the
specified currency value increases, resulting in a security that performs
similarly to a foreign-denominated instrument, or their maturity value may
decline when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency,
Currency-indexed securities may also have prices that depend on the values of a
number of different foreign currencies relative to each other.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the United
States and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates. Recent
issuers of indexed securities have included banks, corporations, and certain
U.S. government agencies. Indexed securities may be more volatile than the
underlying instruments.

SHORT SALES "AGAINST THE BOX"

The Large Cap, Equity Income, and Lazard International Stock Portfolios may
enter into a short sale against the box. If a Portfolio decides to enter into
such transitions, it will be required to set aside securities equivalent in kind
and amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to hold such securities
while the short sale is outstanding.

SWAP AGREEMENTS

The Large Cap and Equity Income Portfolios may engage in swap agreements
which can be individually negotiated and structured to include exposure to a
variety of different types of investments or market factors. Depending on their
structure, swap agreements may increase or decrease a fund's exposure to long-or
short-term interest rates (in the United States or abroad), foreign currency
values, mortgage securities, corporate borrowing rates, or other factors such as
security prices or

SERIES-44
<PAGE> 45

inflation rates. Swap agreements can take many different forms and are known by
a variety of names. A Portfolio is not limited to any particular form of swap
agreement if the Subadviser determines it is consistent with the fund's
investment objective and policies.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.

Swap agreements will tend to shift a Portfolio's investment exposure from
one type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement would
tend to decrease the fund's exposure to U.S. interest rates and increase its
exposure to foreign currency and interest rates. Caps and floors have an effect
similar to buying or writing options. Depending on how they are used, swap
agreements may increase or decrease the overall volatility of a fund's
investments and its share price.

The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that determine
the amounts of payments due to and from a fund. If a swap agreement calls for
payments by the fund, the fund must be prepared to make such payments when due.
In addition, if the counterparty's creditworthiness declined, the value of a
swap agreement would be likely to decline, potentially resulting in losses. Each
Portfolio expects to be able to eliminate its exposure under swap agreements
either by assignment or other disposition, or by entering into an offsetting
swap agreement with the same party or a similarly creditworthy party.

Each Portfolio will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap agreements. If a
Portfolio enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the Portfolio's
accrued obligations under the swap agreement over the accrued amount the
Portfolio is entitled to receive under the agreement. If a Portfolio enters into
a swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the Portfolio's accrued obligations under the
agreement.

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<PAGE> 46

EXHIBIT B
- --------------------------------------------------------------------------------

A. DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS

Aaa -- Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa -- Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

A -- Bonds rated A possess many favorable investment attributes are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest susceptibility to impairment sometime in the future.

Baa -- Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba -- Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B -- Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period of time may be small.

Caa -- Bonds rate Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Ca -- Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other market short-comings.

C -- Bonds rate C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

B. DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS

AAA -- Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is extremely
strong.

AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issued only in small degree.

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<PAGE> 47

A -- Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.

BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

BB -- Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

B -- Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB- rating.

CCC -- Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest or repay principal.

CC -- Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.

C -- The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating. The C rating may be used
to cover a situation where a bankruptcy petition has been filed but debt service
payments are continued.

CI -- The rating CI is reserved for income bonds on which no interest is
being paid.

D -- Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.

SERIES-47
<PAGE> 48

THE TRAVELERS SERIES TRUST

L-11788-3NC
<PAGE> 49
STATEMENT OF ADDITIONAL INFORMATION

- -------------------------------------------------------------------------------
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO
ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)
TRAVELERS QUALITY BOND PORTFOLIO
LAZARD INTERNATIONAL STOCK PORTFOLIO
MFS EMERGING GROWTH PORTFOLIO
FEDERATED HIGH YIELD PORTFOLIO
FEDERATED STOCK PORTFOLIO
LARGE CAP PORTFOLIO
EQUITY INCOME PORTFOLIO
- -------------------------------------------------------------------------------

JULY 31, 1996

This Statement of Additional Information ("SAI") is not a prospectus but
relates to, and should be read in conjunction with, The Travelers Series
Trust's (the "Trust") prospectus dated July 31, 1996. A copy of the Prospectus
is available from the office of the Series Trust at The Travelers Insurance
Company, Annuity Services, One Tower Square, Hartford, Connecticut 06183-5030
or by calling 860-422-3985.
<PAGE> 50
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE TRAVELERS SERIES TRUST .................................. 4

U.S. GOVERNMENT SECURITIES PORTFOLIO ........................ 4
Investment Objectives and Policies ...................... 4
Investment Restrictions ................................. 4

SOCIAL AWARENESS STOCK PORTFOLIO ............................ 5
Investment Objectives and Policies ...................... 5
Social Criteria ......................................... 5
Investment Restrictions ................................. 6

UTILITIES PORTFOLIO ......................................... 7
Investment Objectives and Policies ...................... 7
Investment Restrictions ................................. 7

ZERO COUPON BOND FUND PORTFOLIOS (Series 1998, 2000, 2005) .. 8
Investment Objectives and Policies ...................... 8
Investment Securities, Strategies and Techniques ........ 9
Investment Restrictions ................................. 9

TRAVELERS QUALITY BOND PORTFOLIO ............................ 10
Investment Objectives and Policies ...................... 10
Investment Restrictions ................................. 11

LAZARD INTERNATIONAL STOCK PORTFOLIO ........................ 11
Investment Objectives and Policies ...................... 11
Investment Restrictions ................................. 12

MFS EMERGING GROWTH PORTFOLIO ............................... 13
Investment Objectives and Policies ...................... 13
Investment Restrictions ................................. 14

FEDERATED HIGH YIELD PORTFOLIO .............................. 14
Investment Objectives and Policies ...................... 14
Investment Restrictions ................................. 15

FEDERATED STOCK PORTFOLIO ................................... 16
Investment Objectives and Policies ...................... 16
Investment Restrictions ................................. 17

LARGE CAP PORTFOLIO ......................................... 17
Investment Objectives and Policies ...................... 17
Investment Restrictions ................................. 18

EQUITY INCOME PORTFOLIO ..................................... 19
Investment Objectives and Policies ...................... 19
Investment Restrictions ................................. 20

VALUATION OF SECURITIES ..................................... 20

DISTRIBUTIONS AND TAXES ..................................... 21

TRUSTEES AND OFFICERS ....................................... 21

DECLARATION OF TRUST ........................................ 23

INVESTMENT ADVISORY SERVICES ................................ 24
</TABLE>

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<PAGE> 51
<TABLE>
<S> <C>
INVESTMENT SUBADVISERS ...................................... 24
General ................................................. 24
TAMIC ................................................... 24
Lazard .................................................. 25
MFS ..................................................... 25
Federated ............................................... 26
Fidelity ................................................ 27
SBMFM ................................................... 28
Securities Transactions ................................. 29
The Advisory Agreements ................................. 29

REDEMPTIONS IN KIND ......................................... 30

BROKERAGE ................................................... 30

ADDITIONAL INFORMATION ...................................... 31

APPENDIX .................................................... 33

FINANCIAL STATEMENTS ........................................ 34
</TABLE>

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<PAGE> 52
THE TRAVELERS SERIES TRUST

The Travelers Series Trust (the "Series Trust") is registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company, and is organized as a business trust under the laws of the Commonwealth
of Massachusetts. An Agreement and Declaration of Trust dated October 11, 1991
(the "Declaration of Trust") authorizes the shares of the Series Trust to be
divided into two or more series related to separate portfolios of investments,
and further allows the Board of Trustees to establish additional portfolios at
any time.

The Series Trust is currently divided into thirteen series (the
"Portfolios"), each with its own investment objective and policies, each of
which are diversified portfolios under the Investment Company Act of 1940 as
amended (the "1940 Act").

U.S. GOVERNMENT SECURITIES PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment 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. To
achieve this objective, the Portfolio invests primarily in direct obligations of
the United States Government, in obligations of its instrumentalities supported
by its full faith and credit, 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 supervisory oversight, but which do not carry
the full faith and credit obligations of the United States.

INVESTMENT RESTRICTIONS

The following restrictions are fundamental and may not be changed
without a vote of a majority of the outstanding voting securities of the
Portfolio, as defined in the 1940 Act. The U.S. Government Securities
Portfolio will not:

(1) invest more than 5% of its total assets, computed at market value, in
the securities of any one issuer (exclusive of securities issued by
the United States Government, its agencies or instrumentalities, for
which there is no limit);

(2) invest in more than 10% of any class of securities of any one issuer;

(3) 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; the Portfolio
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;

(4) underwrite securities, except that the Portfolio may purchase
securities from issuers thereof or others and dispose of such
securities in a manner consistent with its other investment policies;
in the is position of restricted securities, the Portfolio may be
deemed to be an underwriter, as defined in the Securities Act of 1933;

(5) 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

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<PAGE> 53
mortgages, or commodities or commodity contracts, except transactions
involving financial futures in order to limit transactions and
borrowing costs and for hedging purposes;

(6) invest for the primary purpose of control or management;

(7) 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;

(8) make loans, except that the Portfolio 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 investment objective and policies;

(9) invest more than 25% of its total assets in the securities of issuers
in any single industry (other than securities issued by the United
States Government, its agencies or instrumentalities); or

(10) purchase securities of other investment companies, 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, the Portfolio may purchase securities
of brokers, dealers, underwriters or investment advisers.

SOCIAL AWARENESS STOCK PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The investment 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, that Smith Barney Mutual Fund Management, Inc. ("SBMFM")
determines meet certain social criteria, based on analysis of data. It is up to
the discretion of the investment adviser to determine the source for the data.
This principal objective does not preclude the realization of short-term gains
when conditions suggest the long-term goal is accomplished by such short-term
transactions.

The assets of the Social Awareness Portfolio generally will be invested in
a portfolio of equity securities, primarily common stocks, diversified across
industries and companies. However, when it is determined that investments of
other types may be advantageous for defensive purposes or for temporary
investment of cash flows, investments may be made in bonds, notes or other
evidence of indebtedness, issued publicly or placed privately, deemed to be of
suitable credit quality, including obligations of the United States Government.

SOCIAL CRITERIA

The Social Awareness Stock Portfolio utilizes certain social criteria to
define a universe of common stocks that are acceptable investment vehicles for
the Portfolio. Companies will not meet the social criteria established for the
Portfolio if a significant portion of their revenues, as determined by SBMFM,
are derived from (a) the production of tobacco, tobacco products, alcohol, or
military defense systems; or (b) the provision of military defense related
services, or gambling services. These investment restrictions are not
fundamental and may be changed without shareholder approval.

If a company fails a social criteria restriction after the Social
Awareness Portfolio has purchased its common stock or should the Portfolio
inadvertently acquire a security which is not an acceptable investment, SBMFM
will eliminate the securities of such company from the Social Awareness
Portfolio's portfolio in an orderly manner within a reasonable period of time.

5
<PAGE> 54
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 the Portfolio, as defined in the 1940 Act.

Items 10 through 13 may be changed by a vote of the Board of Trustees. The
Social Awareness Stock Portfolio will not:

(1) invest more than 5% of its total assets in securities of any one
issuer, except obligations of the United States Government and its
instrumentalities;

(2) borrow money, 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 the Portfolio 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 Portfolio;

(3) underwrite securities of other issuers, except that the Portfolio
could be deemed an underwriter when engaged in the sale of restricted
securities (see item 13);

(4) purchase interests in real estate, except as may be represented by
securities for which there is an established market;

(5) purchase commodities or commodity contracts, except transactions
involving financial futures in order to limit transaction and
borrowing costs and for hedging purposes;

(6) make loans, except 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) invest in the securities of a company for the purpose of exercising
management or control;

(8) acquire more than 10% of the voting securities of any one issuer (it
is the present practice of the Portfolio not to exceed 5% of the
voting securities of any one issuer);

(9) issue senior securities;

(10) make short sales of securities;

(11) make purchases on margins, 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;

(12) invest in securities of other investment companies, except as part of
a plan of merger, consolidation or acquisition of assets; or

(13) invest more than 5% of the value of the assets of the Portfolio in
restricted securities (securities which may not be publicly offered
without registration under the Securities Act of 1933).

Changes in the investments of the Portfolio may be made from time to time
to take into account changes in the outlook for particular industries or
companies. The Portfolio's investments will not, however, be concentrated in any
one industry; that is, no more than twenty-five percent (25%) of the value of
its assets will be

6
<PAGE> 55
invested in any one industry. While the Portfolio may occasionally invest in
foreign securities, it is not anticipated that such investments will, at any
time, account for more than ten percent (10%) of its investment portfolio.

The assets of the Portfolio 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 investments in accordance with their
respective investment policies.

UTILITIES PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The primary investment objective of the Utilities Portfolio (the
"Portfolio") is to provide current income. Long-term capital appreciation is a
secondary objective. The Portfolio seeks to achieve its objectives by investing
in equity and debt securities of companies in the utility industries, which
industries are deemed for these purposes to be comprised of companies
principally engaged (that is, at least 50% of a company's assets, gross income
or net profits results from utility operations or the company is regulated as a
utility by a government agency or authority) in the manufacture, production,
generation, transmission and sale of electric and gas energy and companies
principally engaged in the communications field, including entities such as
telephone, telegraph, satellite, microwave and other companies regulated by
governmental agencies as utilities that provide communication facilities for the
public benefit, but not including those in public broadcasting. The Portfolio
will invest primarily in utility equity and debt securities that have a high
expected rate of return, as determined by the investment adviser. Under normal
market conditions, the Portfolio will invest at least 65% of its assets in such
securities. The Portfolio may invest up to 35% of its assets in equity and debt
securities of non-utility companies believed to afford a reasonable opportunity
for achieving the Portfolio's investment objectives. When the investment adviser
believes that market conditions warrant, the Portfolio may adopt a temporary
defensive posture and may invest, without limit, in debt securities (whether or
not they are utility securities) such as rated or unrated bonds, debentures and
commercial paper, United States government securities and money market
instruments. The Portfolio may invest up to 10% of its assets in securities
rated BB or B by Standard & Poor's Corporation ("S&P") or Ba or B by Moody's
Investors Service, Inc. ("Moody's") whenever the investment adviser believes
that the incremental yield on such securities is advantageous to the Portfolio
in comparison to the additional risk involved. The yields on lower-rated
fixed-income securities generally are higher than the yields available on
higher-rated securities. However, investments in lower-rated securities may be
subject to greater market fluctuations and greater risks of loss of income or
principal (including the possibility of default by, or bankruptcy of, the
issuers of such securities) than higher-rated securities. Lower-rated securities
also may have speculative characteristics. In addition, the Portfolio may enter
into repurchase agreements.

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 the
Portfolio, as defined in the 1940 Act. The Utilities Portfolio will not:

(1) purchase the securities of any issuer (other than U.S. government
securities) if as a result more than 5% of the value of the
Portfolio's total assets would be invested in the securities of the
issuer, except that up to 25% of the value of the Portfolio's total
assets may be invested without regard to this 5% limitation;

(2) purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in
U.S. government securities;

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<PAGE> 56
(3) purchase securities on margin, except that the Portfolio may obtain
any short-term credits necessary for the clearance of purchases and
sales of securities (for purposes of this restriction, the deposit or
payment of initial or variation margin in connection with futures
contracts or related options will not be deemed to be a purchase of
securities on margin by the Portfolio);

(4) make short sales of securities or maintaining a short position, except
to the extent of 5% of the Portfolio's net assets and except that the
Portfolio may engage in such activities without limit if, at all times
when a short position is open, the Portfolio owns an equal amount of
the securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same
issuer as, and at least equal in amount to, the securities sold short;

(5) borrow money, including reverse repurchase agreements, except that the
Portfolio may borrow from banks for temporary or emergency (not
leveraging) purposes including the meeting of redemption requests that
might otherwise require the untimely disposition of securities, in an
amount not exceeding 20% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of the Portfolio's total
assets, the Portfolio will not make any additional investments;

(6) pledge, hypothecate, mortgage or otherwise encumber more than 10% of
the value of the Portfolio's total assets as security for any
indebtedness (for purposes of this restriction (a) the deposit of
assets in escrow in connection with the writing of covered put or call
options and the purchase of securities on a when-issued or
delayed-delivery basis and (b) collateral arrangements with respect to
(i) the purchase and sale of stock options, options on foreign
currencies and options on stock indexes and (ii) initial or variation
margin for futures contracts will not be deemed to be pledges of the
Portfolio's assets);

(7) invest in commodities, except that the Portfolio may purchase or write
futures contracts and options on futures contracts;

(8) make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into
repurchase agreements; and

(9) concentrate in any industry, except that the Portfolio will
concentrate in excess of 25% of its assets in the securities of
companies within the utility industries.

In addition, the Portfolio will not purchase restricted securities,
illiquid securities (such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily marketable if more than 10%
of the total assets of the Portfolio would be invested in such securities.

ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000, 2005)

INVESTMENT OBJECTIVE AND POLICIES

The objective of each of the three Zero Coupon Bond Portfolios is to
provide as high an investment return as is consistent with the preservation of
capital. Each Portfolio's investment objective may be changed only with the
approval of a majority of the Portfolio's outstanding shares. There can be no
assurance that a Portfolio will achieve its investment objective.

8
<PAGE> 57
Each Portfolio seeks to return a reasonably assured targeted dollar amount,
predictable at the time of investment, on a specific target date in the future
by investing in primarily zero coupon securities that pay no cash income but are
acquired by the Portfolio at substantial discounts from their value at maturity.
The Zero Coupon Bond Portfolios may not be appropriate for contract owners who
do not plan to have their premiums invested in shares of the Portfolios for the
long-term or until maturity.

INVESTMENT SECURITIES, STRATEGIES AND TECHNIQUES

Under normal circumstances, each Zero Coupon Bond Portfolio will invest at
least 65% of its net assets in "Stripped Securities," a term used collectively
for Stripped Treasury Securities, Stripped Government Securities, Stripped
Corporate Securities and Stripped Eurodollar Obligations and other stripped
securities, all described below. The Stripped Securities in which each Portfolio
will invest consist of:

(1) debt obligations issued by the U.S. Treasury that have been stripped
of their unmatured interest coupons, interest coupons that have been
stripped from debt obligations issued by the U.S. Treasury, and
receipts and certificates for stripped debt obligations and stripped
coupons, including U.S. government trust certificates (collectively,
"Stripped Treasury Securities") (but currently not anticipated to be
in excess of 55% of the Funds' assets);

(2) other zero coupon securities issued by the U.S. government and its
agencies and instrumentalities, by a variety of tax-exempt issuers
such as state and local governments and their agencies and
instrumentalities and by "mixed-ownership government corporations"
(collectively, "Stripped Government Securities");

(3) zero coupon securities issued by domestic corporations which consist
of corporate debt obligations without interest coupons, and, if
available, interest coupons that have been stripped from corporate
debt obligations, and receipts and certificates for such stripped debt
obligations and stripped coupons (collectively, "Stripped Corporate
Securities");

(4) zero coupon securities issued by certain entities which consist of
stripped debt obligations and stripped coupons of asset-backed
securities, which zero coupon-type securities may exist today or may
be developed in the future. These securities may be illiquid and are
subject to the 10% limitation for such restricted securities, as
described on page 4.

(5) stripped Eurodollar obligations, which are debt securities denominated
in U.S. dollars that are issued by foreign issuers, often subsidiaries
of domestic corporations ("Stripped Eurodollar Obligations").

As to the remaining 35% of each Zero Coupon Bond Portfolio, the assets may
be invested in non-zero coupon securities such as common stock and other equity
securities, bonds and other debt securities, and money market instruments.

INVESTMENT RESTRICTIONS

The investment restrictions set forth below are fundamental and may not be
changed without a vote of majority of the outstanding voting securities of each
Zero Coupon Bond Portfolio, as defined in the Investment Company Act of 1940, as
amended. Each of the Zero Coupon Bond Portfolios will not:

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<PAGE> 58
(2) purchase more than 10% of the voting securities of any one issuer,
provided that this limitation shall not apply to investments in U.S.
government securities;

(3) purchase securities on margin, except that each Portfolio may obtain
any short-term credits necessary for the clearance of purchases and
sales of securities. For purposes of this restriction, the deposit or
payment of initial or variation margin in connection with futures
contracts or related options will not be deemed to be a purchase of
securities on margin by a Portfolio;

(4) make short sales of securities or maintain a short position, except to
the extent of 5% of each Portfolio's net assets and except that a
Portfolio may engage in such activities without limit if, at all times
when a short position is open, the Portfolio owns an equal amount of
the securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same
issuer as, and at least equal in amount to, the securities sold short;

(5) borrow money, including reverse repurchase agreements, except that
each Portfolio may borrow from banks for temporary or emergency (not
leveraging) purposes including the meeting of redemption requests that
might otherwise require the untimely disposition of securities, in an
amount not exceeding 20% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of a Portfolio's total
assets, the Portfolio will not make any additional investments;

(6) pledge, hypothecate, mortgage or otherwise encumber more than 10% of
the value of a Portfolio's total assets as security for any
indebtedness. For purposes of this restriction (a) the deposit of
assets in escrow in connection with the writing of covered put or call
options and the purchase of securities on a when-issued or
delayed-delivery basis and (b) collateral arrangements with respect to
(i) the purchase and sale of stock options, options on foreign
currencies and options on stock indexes and (ii) initial or variation
margin for futures contracts will not be deemed to be pledges of a
Portfolio's assets;

(7) invest in commodities, except that each Portfolio may purchase or
write futures contracts and options on futures contracts;

(8) make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and the entry into
repurchase agreements; and

(9) concentrate in any industry.

In addition, the Portfolios will not purchase restricted securities,
illiquid securities (such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily marketable if more than 10%
of the total assets of a Portfolio would be invested in such securities.

TRAVELERS QUALITY BOND PORTFOLIO ("TRAVELERS BOND PORTFOLIO")
INVESTMENT OBJECTIVES AND POLICIES

The basic investment objective of Travelers Bond Portfolio is to seek current
income, moderate capital volatility and total return.

The assets of Travelers Bond Portfolio will be primarily invested in money
market obligations, including, but not limited to:

- - treasury bills;
- - repurchase agreements;

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<PAGE> 59
- - commercial paper;
- - bank certificates of deposit and bankers' acceptances; and
- - 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
Investment Adviser concludes that the investment yields justify a longer term
commitment. No more than 25% of the value of Travelers Bond Portfolio's assets
will be invested in any one industry.

From time to time, Travelers Bond Portfolio may commit to purchase new-issue
government or agency securities on a "when-issued" basis (referred to throughout
as "when-issued securities"). Travelers Bond Fund 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 the Travelers Bond
Portfolios securities. See Exhibit A to the prospectus for a more complete
description of these investment techniques.

INVESTMENT RESTRICTIONS

The Travelers Bond Portfolio is subject to certain investment restrictions.
Specifically, the Investment Adviser, on behalf of Travelers Bond Portfolio may:

- - 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);

- - borrow from banks in amounts of up to 5% of its assets, but only for
emergency purposes;

- - purchase interests in real estate represented by securities for which there
is an established market;

- - 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;

- - acquire up to 10% of the voting securities of any one issuer (it is the
present practice of Travelers Bond Portfolio not to exceed 5% of the voting
securities of any one issuer);

- - 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

- - 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).

Please see the prospectus for additional information concerning this Portfolio.

LAZARD INTERNATIONAL STOCK PORTFOLIO ("LAZARD INTERNATIONAL STOCK PORTFOLIO")
INVESTMENT OBJECTIVES AND POLICIES

The investment objective of the Lazard International Stock Portfolio is to seek
capital appreciation through investing primarily in the equity securities of
non-United States companies (i.e., incorporated or organized outside the United
States).

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"The Portfolio expects to invest its assets principally in the common stocks of
non-U.S. companies, (although the Portfolio may have substantial investments in
American Depository Receipts ("ADRs" and Global Depository Receipts),
convertible bonds, and other convertible securities.

There is no requirement, however, that the Lazard International Stock Portfolio
invest exclusively in common stocks or other equity securities, and, if deemed
advisable, it may invest up to 20% of the value of its total assets in
fixed-income securities and short-term money market instruments. The Portfolio
will not invest in fixed-income securities rated lower than investment grade.

It is the present intention of the Subadviser to invest the Lazard International
Stock Portfolio's assets in companies based in Continental Europe, the United
Kingdom, the Pacific Basin and in such other areas and countries as the
Subadviser may determine from time to time. Under normal market conditions, the
Lazard International Stock Portfolio will invest at least 80% of the value of
its total assets in the equity securities of companies within not less than
three different countries (not including the United States). The percentage of
the Portfolio's assets invested in particular geographic sectors may shift from
time to time in accordance with the judgment of the Subadviser.

In selecting investments for the Lazard International Stock Portfolio, the
Subadviser attempts to identify inexpensive markets world-wide through
traditional measures of value, including low price to earnings ratio, high
yield, unrecognized assets, potential for management change and/or the potential
to improve profitability. In addition, the Subadviser seeks to identify
companies that it believes are financially productive and undervalued in those
markets. The Subadviser focuses on individual stock selection (a "bottom-up"
approach) rather than on forecasting stock market trends (a "top-down"
approach).

The Subadviser recognizes that some of the best opportunities are in securities
not generally followed by investment professionals. Thus the Subadviser relies
on its research capability and also maintains a dialogue with foreign brokers
and with the management of foreign companies in an effort to gather the type of
"local knowledge" that it believes is critical to successful investment abroad.
To this end, the Subadviser communicates with its affiliates, Lazard Freres &
Cie. in Paris, Lazard Brothers & Co. Ltd. in London, and Lazard Freres K.K. in
Japan, for information concerning current business trends, as well as for a
better understanding of the management of local businesses. The information
supplied by these affiliates will be limited to statistical and factual
information, advice regarding economic factors and trends or advice as to
occasional transactions in specific securities.

The Lazard International Stock Portfolio may enter into foreign currency forward
exchange contracts in order to protect against anticipated changes in foreign
currency exchange rates.

In addition, the Lazard International Stock Portfolio may engage in the
following additional investment activities described in greater detail in
Exhibit A to the prospectus: (i) trading of short term money market instruments;
(ii) lending of Portfolio securities; (iii) floating and variable rate
instruments; (iv) letters of credit; (v) purchase and sales of restricted
securities; (vi) investments in emerging or unseasoned companies.

INVESTMENT RESTRICTIONS

The following investment restrictions are fundamental policies of the Lazard
International Stock Portfolio. The Lazard International Stock Portfolio may not:

- - issue senior securities, borrow money or pledge or mortgage its assets,
except that the Portfolio may borrow from banks for temporary purposes,
including the meeting of redemption requests which might require the
untimely disposition of securities. For purposes of this investment
restriction, the Portfolio's

12
<PAGE> 61
entry into options, forward contracts, futures contracts, including those
related to indexes shall not constitute borrowing;

- - make loans, except loans of portfolio securities not having a value in
excess of 10% of the Portfolio's total assets and except that the Portfolio
may purchase debt obligations in accordance with its investment objectives
and policies;

- - invest in illiquid securities if immediately after such investment more
than 15% of the value of the Portfolio's net assets, taken at market value,
would be invested in such securities;

- - purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization; provided,
however, the Lazard International Stock Portfolio may purchase securities in
an amount up to 5% of the value of its total assets in any one closed-end
fund and may purchase in the aggregate securities of closed-end funds in an
amount of up to 10% of the value of the Portfolio's total assets;

- - purchase the securities of issuers conducting their principal business in
the same industry, if the value of the value of the Portfolio's investment
exceeds 25% of the Portfolio's then current net asset value;

- - purchase or sell real estate except in a manner consistent with specific
rules described in greater detail in the prospectus;

- - purchase securities on margin;

- - underwrite securities; or

- - make investments for the purpose of exercising control or management.

MFS EMERGING GROWTH PORTFOLIO ("MFS PORTFOLIO")
INVESTMENT OBJECTIVES AND POLICIES

MFS Portfolio's investment objective is to seek to provide long-term growth of
capital. Dividend and interest income from portfolio securities, if any, is
incidental to the MFS Portfolio's investment objective. MFS Portfolio's policy
is to invest primarily (i.e., at least 80% of its assets under normal
circumstances) in common stocks of small and medium-sized companies that are
early in their life cycle but which have the potential to become major
enterprises (emerging growth companies). Such companies generally would be
expected to show earnings growth over time that is well above the growth rate of
the overall economy and the rate of inflation, and would have the products,
management and market opportunities which are usually necessary to become more
widely recognized as growth companies.

However, the MFS Portfolio may also invest in more established companies whose
rates of earnings growth are expected to accelerate because of special factors,
such as rejuvenated management, new products, changes in consumer demand, or
basic changes in the economic environment.

The MFS Portfolio will invest primarily in common stocks. Other investments are
allowed, including, but not limited to those described below. (Refer to Exhibit
A to the prospectus for a discussion of these investment techniques.) MFS may
invest in, or write (as applicable), the following:

- - foreign or convertible securities and warrants when relative values make
such purchases appear attractive either as individual issues or as types of
securities in certain economic environments (see Exhibit A);

- - foreign currency and forward foreign currency exchange contracts for the
purchase or sale of foreign currency for hedging purposes and non-hedging
purposes, including transactions entered into for the purpose of profiting
from anticipated changes in foreign currency exchange rates, as well as
options on foreign currencies;

13
<PAGE> 62
- - foreign securities (up to 25% of its total assets) which may be traded on
foreign exchanges (not including American Depository Receipts ("ADRs")). (It
expects generally to invest between 0% to 10% in such securities.);

- - emerging market securities;

- - cash equivalents or other forms of debt securities as a reserve for future
purchases of common stock or to meet liquidity needs;

- - corporate asset-backed securities;

- - covered call and put options and may purchase call and put options on
securities and stock indices in an effort to increase current income and for
hedging purposes;

- - stock index futures contracts and options thereon for hedging purposes and
for non-hedging purposes, subject to applicable law;

- - portfolio securities purchased on a "when-issued" or on a "forward delivery"
basis; and

- - loan participations.
In addition, MFS Portfolio may engage in certain investment activity described
in greater detail in Exhibit A to the prospectus: (i) lending of Portfolio
securities; (ii) repurchase agreements; (iii) purchase and sales of restricted
securities; (iv) when issued securities; (v) corporate asset-backed securities;
(vi) loan participation and other direct indebtedness; (vi) foreign securities;
(vii) ADRs; (viii) emerging market securities; and (ix) various futures and
option trading techniques.

INVESTMENT RESTRICTIONS

The MFS Portfolio is subject to certain fundamental investment restrictions
listed below. The MFS Portfolio will not:

- - borrow money in an amount in excess of 33 1/3% of its net assets;

- - underwrite securities;

- - concentrate its investments in any particular industry in excess of 25% of
its total net assets;

- - purchase or sell real estate in the ordinary course of its business;

Additionally, certain other nonfundamental restrictions apply, including the
following:

- - make loans except by the purchase of obligations in which the Portfolio is
authorized to invest;

- - purchase the securities of any issuer if such purchase, at the time thereof,
would cause more than 15% of its total assets to be invested in the
securities of such issuer;

- - invest for the purpose of control or management;

- - purchase securities on margin, except as provided in the prospectus;

- - issue any senior security; and

- - purchase, except on a limited basis, securities issued by any other
registered investment company.

FEDERATED HIGH YIELD PORTFOLIO ("FEDERATED HIGH YIELD PORTFOLIO")
INVESTMENT OBJECTIVES AND POLICIES

The investment objective of the Federated High Yield Portfolio is to seek high
current income by investing primarily in a professionally managed, diversified
portfolio of fixed income securities. The fixed income securities in which the
Federated High Yield Portfolio intends to invest are expected to be lower-rated
corporate debt obligations. The investment objective stated above cannot be
changed without approval of shareholders.

The Federated High Yield Portfolio will invest primarily in fixed rate corporate
debt obligations. The fixed rate corporate debt obligations in which the
Federated High Yield Portfolio intends to invest are expected to be lower-rated.
Permitted investments currently include, but are not limited to, the following:

- - corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or lower by nationally recognized statistical rating
organizations;

14
<PAGE> 63
- - preferred stocks; foreign securities and ADRs;
- - asset backed securities;
- - equipment trust and lease certificates
- - commercial paper;
- - zero coupon bonds;
- - pay-in-kind securities;
- - obligations of the United States;

- - notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the National
Bank for Cooperatives and Banks for Cooperatives; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; Export-Import Bank of
the United States; Commodity Credit Corporation; Federal Financing Bank;
Student Loan Marketing Association; National Credit Union Administration and
Tennessee Valley Authority;

- - time and savings deposits (including certificates of deposit) in commercial
or savings banks whose deposits are insured by the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF"), including
certificates of deposit issued by and other time deposits in foreign
branches of BIF-insured banks;

- - bankers' acceptances issued by a BIF-insured bank, or issued by the bank's
Edge Act subsidiary and guaranteed by the bank, with remaining maturities of
nine months or less

- - general obligations of any state, territory, or possession of the United
States, or their political subdivisions, so long as they are either (1)
rated in one of the four highest grades by nationally recognized statistical
rating organizations, or (2) issued by a public housing agency and backed by
the full faith and the United States; and

- - equity securities, including unit offerings that combine fixed rate
securities and common stock and common stock equivalents such as warrants,
rights and options.

The corporate debt obligations in which the Federated High Yield Portfolio may
invest are generally rated BBB or lower by Standard & Poor's Ratings Group
("S&P") or Baa or lower by Moody's Investors Service, Inc. ("Moody's"), or are
not rated but are determined by the Federated High Yield Portfolio's investment
Subadviser to be of comparable quality.

The Federated High Yield Portfolio is aggressively managed and, therefore, the
value of its shares is subject to greater fluctuation and investments in its
shares involve the assumption of a higher degree of risk than would be the case
with an investment in a conservative equity fund or a growth fund investing
entirely in proven growth equities.

In addition to the investment techniques described above, the Federated High
Yield Portfolio may also engage in the following investment techniques described
in greater detail in Exhibit A to the prospectus: (i) restricted securities;
(ii) when-issued securities; (iii) temporary investments; (iv) repurchase
agreements; (v) put and call options; and (vi) lending of portfolio securities.

INVESTMENT RESTRICTIONS

The Federated High Yield Portfolio will not:

- - borrow money directly or through reverse repurchase agreements (arrangements
in which the Federated High Yield Portfolio sells a portfolio instrument for
a percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Federated High Yield
Portfolio may borrow up to one-third of the value of its net assets;

- - sell securities short except, under strict limitations, the Federated High
Yield Portfolio may maintain open short positions so long as not more than
10% of the value of its net assets is held as collateral for those positions
or

- - pledge assets except to secure permitted borrowing.

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<PAGE> 64
The above are the fundamental investment limitations of the Federated High
Yield Portfolio. The following limitations, however, are nonfundamental. The
Federated High Yield Portfolio will not:

- - invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations;

- - commit more than 5% of the value of its total assets to premiums on open put
option positions;

- - invest more than 5% of the value of its total assets in securities of one
issuer (except cash and cash items, repurchase agreements, and U.S.
government obligations) or acquire more than 10% of any class of voting
securities of any one issuer;

- - invest more than 10% of the value of its total assets in foreign securities
which are not publicly traded in the United States;

- - invest directly in minerals;

- - underwrite securities;

- - invest more than 5% in put options;

- - write covered call options unless the securities are held by the Portfolio;

- - invest in real estate; or

- - purchase the securities of other investment companies, except in limited
situations.

FEDERATED STOCK PORTFOLIO ("FEDERATED STOCK PORTFOLIO")
INVESTMENT OBJECTIVES AND POLICIES

The investment objective of the Portfolio is to provide growth of income and
capital by investing principally in a professionally managed and diversified
portfolio of common stock of high-quality companies. These companies generally
are leaders in their industries and are characterized by sound management and
the ability to finance expected growth. While there is no assurance that the
Portfolio will achieve its investment objective, it endeavors to do so by
following the investment policies described in the prospectus. This investment
objective cannot be changed without the approval of shareholders.

The Portfolio's investment approach is based on the conviction that over the
long term the economy will continue to expand and develop and that this economic
growth will be reflected in the growth of the revenues and earnings of major
corporations. The Portfolio invests primarily in common stocks of companies
selected by the Portfolio's Subadviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth prospects and
of the risk and volatility of the company's industry. Ordinarily, these
companies will be in the top 25% of their industries with regard to revenues.
However, other factors, such as product position or market share, will be
considered by the Portfolio's Subadviser and may outweigh revenues. Other
permitted investments include, but are not limited to:

- - preferred stocks, corporate bonds, notes, and warrants of these companies.
The prices of fixed income securities generally fluctuate inversely to the
direction of interest rates.;

- - U.S. government securities;

- - repurchase agreements;

- - money market instruments;

- - securities of foreign issuers which are freely traded on United States
securities exchanges or in the over-the-counter market in the form of
American Depository Receipts ("ADRs") (in an amount of not more than 10% if
its assets); and

- - when-issued securities.

See Exhibit A to the prospectus for a more detailed discussion of the above
investments.

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<PAGE> 65
INVESTMENT RESTRICTIONS

The fundamental investment restrictions of the Federated Stock Portfolio are set
forth below. The Federated Stock Portfolio will not:

- - borrow money or pledge securities except, under certain circumstances, the
Portfolio may borrow up to one-third of the value of its total assets and
pledge up to 10% of the value of those assets to secure such borrowings;

- - invest more than 5% of its total assets in the securities of one issuer
(except cash and cash items and U.S. government securities);

- - acquire more than 10% of the voting securities of any one issuer;

- - invest in real estate;

- - issue senior securities;

- - trade in puts and calls; or

- - underwrite securities.

LARGE CAP PORTFOLIO ("LARGE CAP PORTFOLIO")

INVESTMENT OBJECTIVES AND POLICIES

Large Cap Portfolio seeks long-term growth of capital by investing primarily in
equity securities of companies with large market capitalizations

The Subadviser normally invests at least 65% of the Portfolio's total assets in
equity securities of companies with large market capitalizations. For purposes
of the Portfolio's investment policies, large market capitalization companies
are defined as those companies with market capitalizations of $1 billion or more
at the time of the Portfolio's investment. Companies whose market capitalization
falls below this level after purchase continue to be considered
large-capitalized for purposes of the 65% policy. The Large Cap Portfolio will
invest primarily in common stocks. Other investments are allowed, including, but
not limited to those described below. (Refer to Exhibit A for a discussion of
these investment techniques.) The Subadviser, on behalf of the Portfolios, may
invest in, or write (as applicable), the following:

- - cash instruments;

- - equity securities;

- - debt securities;

- - foreign securities;

- - repurchase agreements;

- - reverse repurchased agreements;

- - various futures and option-related techniques and instruments;

- - ADRs;

- - emerging market securities;

- - lending of portfolio securities;

- - real estate related instruments;

- - corporate asset-backed securities;

17
<PAGE> 66
- - loan participation and other direct indebtedness;

- - indexed securities;

- - short sales "against the box" (see Exhibit A to the prospectus for more
information about this investment technique);

- - swap agreements; and

- - restricted securities.

The Portfolio also reserves the right to invest without limitation in preferred
stocks and investment-grade debt instruments for temporary, defensive purposes,
and to lend portfolio securities.

Policies and limitations are considered at the time of purchase; the sale of
instruments is not required in the event of a subsequent change in
circumstances.

The Large Cap Portfolio may use various investment techniques to hedge a portion
of the fund's risks, but there is no guarantee that these strategies will work
as intended. The Portfolio seeks to spread investment risk by diversifying its
holdings among many companies and industries.

The Portfolio may not buy all of these instruments or use all of these
techniques to and those described in the prospectus the full extent permitted
unless it believes that doing so will help achieve its goals. Current holdings
and recent investment strategies are described in the Portfolio's financial
reports which are sent to shareholders twice a year.

INVESTMENT RESTRICTIONS

The following restrictions are fundamental. The Portfolio will not:

- - With respect to 75% of the Portfolio's total assets, purchase the securities
of any issuer (other than securities of other investment companies or
securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities) if, as a result, (a) more than 5% of the
Portfolio's total assets would be invested in the securities of that issuer,
or (b) the Portfolio's would hold more than 10% of the outstanding voting
securities of that issuer;

- - Issue senior securities, except as permitted under the 1940 Act;

- - Borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed this
amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;

- - underwrite securities issued by others, except to the extent that the
Portfolio may be considered to be an underwriter within the meaning of the
1933 Act in the disposition of restricted securities;

- - purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Portfolio's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;

- - purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Portfolio
from investing in securities or other instruments backed by real estate or
securities or companies engaged in the real estate business);

- - purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;

- - lend any security or make any other loan if, as a result, more than 33 1/3%
of its total assets would be lent to other parties, but this limitation does
not apply to purchases of debt securities or to repurchase agreements;

- - the Portfolio may, notwithstanding any other fundamental investment policy
or limitation, invest all the assets in the securities of a single open-end
management investment company managed by the Subadviser or any

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<PAGE> 67
affiliate or successor with substantially the same investment objective,
policies, and limitations as the Portfolio.

The following investment limitations are nonfundamental:

- - The Portfolio does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.

- - The Portfolio does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary for
the clearance of transaction, and provided that margin payments in
connection with futures contracts and options on futures shall not
constitute purchasing securities on margin.

- - The Portfolio may borrow money only (a) from a bank or from a registered
investment company or portfolio for which the Subadviser or an affiliate
serves as investment adviser or (b) by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements are treated as
borrowings for purposes of fundamental investment limitation definitions).
The Portfolio will not borrow money in excess of 25% of net assets so long
as this limitation is required for certification by certain state insurance
departments. Any borrowings that come to exceed this amount will be reduced
within seven days (not including Sundays and holidays) to the extent
necessary to comply with the 25% limitation. The Portfolio will not purchase
any security while borrowings representing more than 5% of its total assets
are outstanding. The Portfolio will not borrow from other funds advised by
the Subadviser or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the Portfolio's total assets.

- - The Portfolio does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities that
are deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.

- - The Portfolio does not currently intend to lend assets other than securities
to other parties, except by (a) lending money (up to 5% of the fund's net
assets) to a registered investment company or portfolio for which the
Subadviser or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations (where such participations have not been
securitized), or other forms of direct debt instruments and, in connection
therewith, assuming any associated unfunded commitments of the sellers.
(This limitation does not apply to purchases of debt securities or
to repurchase agreements.)

- - The Portfolio does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than 5%
of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation. For purposes of this limitation pass through
entities and other special purpose vehicles or pools of financial assets
such as issues of asset backed securities or investment companies are not
considered "business enterprises."

EQUITY INCOME PORTFOLIO ("EQUITY INCOME PORTFOLIO")
INVESTMENT OBJECTIVES AND POLICIES

The Portfolio seeks reasonable income by investing primarily in income-producing
equity securities. Normally, at least 65% of the Portfolio's total assets will
be invested in these securities. The Portfolio has the flexibility, however, to
invest the balance in all types of domestic and foreign securities, including
bonds. The Portfolio seeks to achieve a yield that beats that of the S&P 500.
The Portfolio does not expect to invest in debt securities of companies that do
not have proven earnings or credit. When choosing the Portfolio's investments,
the Subadviser also considers the potential for capital appreciation.

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<PAGE> 68
foreign securities may involve risks in addition to those of U.S. investments,
including increased political and economic risk, as well as exposure to currency
fluctuations. The Subadviser may use various investment techniques to hedge the
Portfolio's risks, but there is no guarantee that these strategies will work as
the Subadviser intends. The Portfolio seeks to spread investment risk by
diversifying its holdings among many companies and industries.

Policies and limitations are considered at the time of purchase; the sale of
instruments is not required in the event of a subsequent change in
circumstances.

Equity Income Portfolio may engage in trade of certain other securities and use
other investment techniques as described more fully in Exhibit A in the
prospectus including: (i) equity securities; (ii) debt securities; (iii) foreign
securities; (iv) repurchase agreements; (v) restricted securities; and (vi)
lending.

INVESTMENT RESTRICTIONS

The Equity Income Portfolio is subject to the same investment limitations as the
Large Cap Portfolio described above. Please refer to "Large Cap --Investment
Restrictions" above for a complete discussion of such applicable limitations.

In addition to those limitations, the Equity Income Portfolio will conform its
purchases of debt security to a stated debt quality policy. For example, the
Portfolio may make purchases of lower-rated debt securities if such securities
are rated at or above the stated level by Moody's or rated in the equivalent
categories of S&P, or is unrated but judged to be of equivalent quality by the
Subadviser. The Portfolio currently intends to limit its investments in lower
than Baa-quality debt securities to 20% of its assets. (See Exhibit B to the
prospectus for a discussion of rating agency procedures.)

VALUATION OF SECURITIES

The current values for the portfolio securities of the Portfolios are
determined as follows. Securities that are traded on an established exchange are
valued on the basis of the last sales price on the exchange where primarily
traded prior to the time of valuation. Securities traded in the over-the-counter
market, for which complete quotations are readily available, are valued at the
mean of the bid and asked prices at the time of valuation. Short-term money
market instruments having maturities of sixty days or less are valued at
amortized cost (original purchase price as adjusted for amortization of premium
or accretion of discount) which, when combined with accrued interest,
approximates market. Short-term money market instruments having maturities of
more than sixty days, for which complete quotations are readily available, are
valued at current market value. The Board of Trustees of the Series Trust values
the following at prices it deems in good faith to be fair: (1) securities,
including restricted securities, for which complete quotations are not readily
available, (2) listed securities if in the Board's opinion the last sales price
does not reflect a current market value or if no sale occurred, and (3) other
assets.

The Series Trust believes that reliable market quotations generally are
not readily available for purposes of valuing fixed income securities. As a
result, depending on the particular securities owned by either Portfolio, it is
likely that most of the valuations for such securities will be based upon their
fair value determined under procedures which have been approved by the Board of
Trustees. The Board of Trustees has authorized the use of a

20
<PAGE> 69
pricing service to determine the fair value of the Portfolios' securities.
Securities for which market quotations are readily available are valued on a
consistent basis at that price quoted which, in the opinion of the Trustees or
the person designated by the Trustees to make the determination, most nearly
represents the market value of the particular security. Any securities for which
market quotations are not readily available or other assets are valued on a
consistent basis at fair value as determined in good faith using methods
prescribed by the Trustees or by a committee appointed by the Trustees. The
procedures set forth above need not be used to determine the value of the
securities owned by the Portfolios if, in the opinion of the Trustees or the
Committee, some other method (e.g., closing over-the-counter bid prices in the
case of debt instruments traded off an exchange) would more accurately reflect
the fair market value of such securities.

DISTRIBUTIONS AND TAXES

It is the Series Trust's intention to distribute dividends from net
investment income and all net realized capital gains from the Portfolios
annually in shares or, at the option of the shareholder, in cash. All of the
Portfolios have qualified, and intend to qualify in the future, as a regulated
investment company under Subchapter M of the Internal Revenue Code. Thus the
Portfolios are relieved of any federal income tax liability by distributing all
of their net investment income and net capital gains, if any, to its
shareholders.

When any Portfolio makes a distribution, it intends to distribute only its
net capital gains and such income as has been predetermined to the best of the
Portfolio's ability to be taxable as ordinary income. Therefore, net investment
income distributions will not be made on the basis of distributable income as
computed on the Portfolio's books, but will be made on a federal taxation basis.

TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
Name Present Position and Principal Occupation During Last Five Years
- ---- ----------------------------------------------------------------
<S> <C>
*Heath B. McLendon Managing Director (1993-present), Smith Barney
Chairman and Member Inc. ("Smith Barney"); Chairman (1993-present),
388 Greenwich Street Smith Barney Strategy Advisors, Inc.; President
New York, New York (1994-present), Smith Barney Mutual Funds
Age 62 Management Inc.; Chairman and Director of
forty-one investment companies associated with 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),
Member Edwards & Angell, Attorneys; Member, Advisory
2700 Hospital Trust Tower Board (1973-1994), thirty-one mutual funds
Providence, Rhode Island sponsored by Keystone Group, Inc.; Member, Board
Age 72 of Managers, seven Variable Annuity Separate
Accounts of The Travelers Insurance Company+;
Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++

Robert E. McGill, III Retired manufacturing executive. Director
Member (1983-1995), Executive Vice President (1989-1994)
295 Hancock Street and Senior Vice President, Finance and
Williamstown, Administration (1983-1989), The Dexter Corporation
Massachusetts (manufacturer of specialty chemicals and
Age 64 materials); Vice Chairman (1990-1992), Director
(1983-1995), Life Technologies, Inc. (life
science/biotechnology products); Director,
(1994-present), The Connecticut Surety Corporation
(insurance);
</TABLE>

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<PAGE> 70
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
Member (1995-present), Marquette University; Professor of
606 N. 13th Street Finance (1980-1995) and Associate Dean
Milwaukee, WI 53233 (1993-1995), School of Business Administration,
Age 53 and Director, Center for Research and Development
in Financial Services (1980-1995), 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.++

Frances M. Hawk Portfolio Manager (1992-present), HLM Management
Member Company, Inc. (investment management); Assistant
222 Berkeley Street Treasurer, Pensions and Benefits. Management
Boston, Massachusetts (1989-1992), United Technologies Corporation
Age 48 (broad- based designer and manufacturer of high
technology products); Member, Board 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
Secretary to the Board (1987-present), The Travelers Insurance Company;
One Tower Square Secretary, Board of Managers, seven Variable
Hartford, Connecticut Annuity Separate Accounts of The Travelers
Age 55 Insurance Company+; Secretary, Board of Trustees,
five Mutual Funds sponsored by The Travelers
Insurance Company.++

Kathleen A. McGah Assistant Secretary and Counsel (1995-present),
Assistant Secretary to The Travelers Insurance Company; Assistant
the Board Secretary, Board of Managers, seven Variable
One Tower Square Annuity Separate Accounts of The Travelers
Hartford, Connecticut Insurance Company+; Assistant Secretary, Board of
Age 45 Trustees, five Mutual Funds sponsored by The
Travelers Insurance Company.++ Prior to January
1995, Counsel, ITT Hartford Life Insurance Company.

Ian R. Stuart Vice President and Financial Officer, Financial
Treasurer Services Department (1994-present), Second Vice
One Tower Square President and Financial Officer, Financial
Hartford, Connecticut Services Department (1991-1994), The Travelers
39 Insurance Company; Senior Manager (1986-1991),
Price Waterhouse; Treasurer, Board of Trustees,
five Mutual Funds sponsored by The Travelers
Insurance Company.++

+ 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.

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<PAGE> 71
++ 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.

Members of the Board of Trustees who are also officers or employees of
Travelers Group Inc. or its subsidiaries are not entitled to any fee. Members of
the Board of Trustees 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 five Mutual Funds sponsored by The Travelers Insurance Company
and the seven Variable Annuity Separate Accounts established by The Travelers
Insurance Company. They also receive an aggregate fee of $2,000 for each meeting
of such Boards attended.

DECLARATION OF TRUST

The Series Trust is organized as a Massachusetts business trust. Pursuant
to certain decisions of the Supreme Judicial Court of Massachusetts,
shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for the obligations of the trust. However, even if
the Series Trust were held to be a partnership, the possibility of its
shareholders incurring financial loss for that reason appears remote because the
Series Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for obligations of the Series Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Series Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of Series Trust property
for any shareholder held personally liable for the obligations of the Series
Trust.

The Declaration of Trust provides that a Trustee shall be liable only for
his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, a Trustee shall
not be liable for the neglect or wrongdoing of any such person; provided,
however, that nothing in the Declaration of Trust shall protect a Trustee
against any liability for his willful misfeasance, bad faith, gross negligence
or the reckless disregard of his duties.

The Trustees were elected by Shareholders at a meeting held on October 30,
1992. After such meeting, no further meetings of shareholders for the purpose of
electing Trustees will be held, unless required by law, and unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders, or if at the time of filling a vacancy less than
two-thirds of the Trustees holding office after filling the vacancy were elected
by shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees.

Except as set forth above, the Trustees shall continue to hold office
indefinitely, unless otherwise required by law, and may appoint successor
Trustees. Any Trustee may voluntarily resign from office, or Trustees may be
removed from office (1) at any time by two-thirds vote of the Trustees; (2) by a
majority vote of Trustees where any Trustee becomes mentally or physically
incapacitated; and (3) either by declaration in writing or at a meeting called
for such purpose by the holders of not less than two-thirds of the outstanding
shares or other voting interests of the Trust. The Trustees are required to call
a meeting for the purpose of considering the removal of a person serving as
trustee, if requested in writing to do so by the holders of not less than 10% of
the outstanding shares or other voting interests of the Trust. The Series Trust
is required to assist in Shareholders' communications. In accordance with
current laws, insurance companies will request voting instructions from contract
owners participating in variable annuity and/or variable life insurance
contracts held by their respective separate accounts. Insurance companies will
vote shares of the Portfolios in the same proportion as the voting instructions
received.

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<PAGE> 72
Voting rights are not cumulative, that is, the holders of more than 50% of
the shares voting on the election of Trustees can, if they choose to do so,
elect all of the Trustees of the Series Trust, in which event the holders of the
remaining shares will be unable to elect any person as a Trustee.

No amendment may be made to the Declaration of Trust without a "vote of a
majority of the outstanding voting securities" of the Series Trust (as defined
in the 1940 Act).

INVESTMENT ADVISORY SERVICES

As described above, the Board of Trustees monitors the activities of those
entities which provide investment management and Subadvisory services to the
Portfolios. Travelers Asset Management International Corporation ("TAMIC," also
referred to throughout this prospectus as the "Investment Adviser") provides
investment supervision to the Portfolios described herein in accordance with
each Portfolio's investment objectives, policies and restrictions. TAMIC's
responsibilities generally include the following:

(1) engaging the services of one or more firms to serve as investment
adviser to the Portfolios;

(2) reviewing from time to time the investment policies and restrictions
of the Portfolios in light of the Portfolio's performance and
otherwise and after consultation with the Board, recommending any
appropriate changes to the Board;

(3) supervising the investment program prepared for the Portfolios by the
Subadviser;

(4) monitoring, on a continuing basis, the performance of the Portfolio's
securities;

(5) arranging for the provision of such economic and statistical data as
TAMIC shall determine or as may be requested by the Board; and

(6) providing the Board with such information concerning important
economic and political developments as TAMIC deems appropriate or as
the Board requests.

INVESTMENT SUBADVISERS

GENERAL

Under the terms of the Investment Subadvisory Agreements, the Subadviser
provides an investment program for the Portfolios. The Subadvisers make all
determinations with respect to the purchase and sale of the portfolio securities
(subject to the terms and conditions of the investment objectives, policies, and
restrictions of the Portfolio and to the supervision of the Board of Trustees
and TAMIC) and places, in the name of the Portfolio, call orders for execution
of the portfolio transactions. In addition, only Fidelity Management Resource,
Inc. ("FMR") also executes the offers, while MFS, Lazard and Federated only
place the orders for TAMIC to execute.

ADVISER: TAMIC - - ZERO COUPON BOND PORTFOLIOS, QUALITY BOND AND U.S.
GOVERNMENT SECURITIES PORTFOLIOS

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<PAGE> 73
TAMIC also provides investment management and advisory services to the
U.S. Government Securities Portfolio, the Zero Coupon Bond Fund Portfolios and
the Quality Bond Portfolio in accordance with separate Investment Advisory
Agreements which were approved by shareholders at meetings held for that
purpose.

For furnishing investment management and advisory services to the U.S.
Government Securities Portfolio, TAMIC is paid an amount equivalent on an annual
basis to 0.3233% of the average daily net assets of the Portfolio. The fee is
computed daily and paid weekly. The total advisory fees paid to TAMIC by the
U.S. Government Securities Portfolio for the years ended December 31, 1993, 1994
and 1995 were $56,276, $82,937 and $85,175, respectively. Since the Travelers
Quality Bond is new, to date no advisory or subadvisory fees have been paid to
TAMIC to date.

LAZARD INTERNATIONAL STOCK PORTFOLIO
SUBADVISER: LAZARD FRERES ASSET MANAGEMENT

Lazard Freres Asset Management ("Lazard"), 30 Rockefeller Plaza, New York, New
York 10020, has entered into an investment Subadvisory agreement (the "Lazard
Subadvisory Agreement") on behalf of the Portfolio with TAMIC to provide
Subadvisory services to the Lazard International Stock Portfolio. Pursuant to
the Lazard Subadvisory Agreement, Lazard will regularly provide the Portfolio
with investment research, advice and supervision and furnish continuously an
investment program for the Portfolio consistent with its investment objectives
and policies, including the purchase, retention and disposition of securities.

Lazard Freres Asset Management is a division of Lazard Freres, a New York
limited liability company, which is registered as an investment adviser with the
Commission and is a member of the New York, American and Midwest Stock
Exchanges. Lazard Freres provides its clients with a wide variety of investment
banking, brokerage and related services.

Lazard Freres performs such brokerage services in conformity with Rule 17e-1
under the 1940 Act and procedures adopted by the Board of Trustees.

TAMIC pays the Subadviser an investment Subadvisory fee at the annual
rate of 0.475% of the average daily net asset value of the Portfolio. The
fee is accrued daily and paid monthly.

MANAGEMENT OF LAZARD PORTFOLIO

Herbert Gullquist is primarily responsible for the day-to-day management of the
assets of the Portfolio. Mr. Gullquist is a Managing Director of Lazard Freres,
and has been with the Subadviser since 1982 He has also acted as the Managing
Director of the Lazard International Equity Fund, a publicly traded mutual fund
offered by Lazard Freres since that fund's inception in 1992.

MFS PORTFOLIO
SUBADVISER: MFS

MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund in the United States, Massachusetts Investors
Trust. Net assets under the management of the MFS organization were
approximately $43.9 billion on behalf of approximately 1.9 million investor
accounts as of February 29, 1996. As of such date, the MFS organization managed
approximately $20 billion of assets invested in equity securities and
approximately $20 billion of assets invested in fixed income securities.
Approximately $3.8 billion of the assets managed by MFS are invested in
securities of foreign issuers and non-U.S. dollar denominated securities of U.S.
issuers. MFS

25
<PAGE> 74
is a subsidiary of Sun Life of Canada (U.S.), which in turn is a wholly
owned subsidiary of Sun Life Assurance Company of Canada ("Sun Life").

TAMIC pays MFS an investment subadvisory fee at an annual rate of 0.375% of the
average daily net asset value of the Portfolio. The fee is accrued daily and
paid monthly.

MANAGEMENT OF MFS PORTFOLIO

John W. Ballen, a Senior Vice President of MFS. serves as the Portfolio
manager for the MFS Portfolio. Mr. Ballen also serves in a similar capacity
as a portfolio manager to certain retail mutual funds offered by MFS. He has
acted in such a capacity for MFS since 1986.

FEDERATED HIGH YIELD PORTFOLIO
SUBADVISER: FEDERATED INVESTMENT COUNSELING

Federated Investment Counseling. ("Federated") a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
1940 Act. It is a subsidiary of Federated Investors. All of the Class A
(voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.

Federated and other subsidiaries of Federated Investors serve as investment
advisers to a number of investment companies and private accounts. Certain other
subsidiaries also provide administrative services to a number of investment
companies. With over $80 billion invested across more than 250 funds under
management and/or administration by its subsidiaries, as of December 31, 1995,
Federated Investors is one of the largest mutual fund investment managers in the
United States. With more than 1,800 employees, Federated continues to be led by
the management who founded the company in 1955. Federated funds are presently at
work in and through 4,000 financial institutions nationwide.

Pursuant to an investment subadvisory agreement between TAMIC and Federated ,
Federated acts as the Subadviser for the Federated High Yield Portfolio. In its
capacity as Subadviser, Federated continually conducts investment research and
supervision for the Federated Portfolio and is responsible for the purchase or
sale of portfolio instruments, for which it receives an annual fee from the
investment adviser.

Under its Subadvisory Agreement with TAMIC, Federated is paid an amount
equivalent on an annual basis to 0.40% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

MANAGEMENT OF THE FEDERATED HIGH YIELD PORTFOLIO

Mark E. Durbiano serves as the Federated High Yield Portfolio manager. Mr.
Durbiano joined Federated Investors in 1982 and has been a Vice President of
an affiliate of the Portfolio's subadviser since 1988. Mr. Durbiano is a
Chartered Financial Analyst and received his MBA in Finance from the
University of Pittsburgh.

FEDERATED STOCK PORTFOLIO
SUBADVISER: FEDERATED INVESTMENT COUNSELING

Federated also serves as the Subadviser to the Federated Stock Portfolio.
(See "Federated High Yield Portfolio--Subadviser: Federated Investment
Counseling, Inc." above for a discussion of Federated.)

Federated also serves as Subadviser to the Federated Stock Portfolio pursuant to
an agreement between itself and TAMIC. Pursuant to this agreement, Federated
will continually conduct investment research and supervision for the Portfolio
and is responsible for the purchase or sale of portfolio instruments.

26
<PAGE> 75
Under its Subadvisory Agreement with TAMIC, Federated is paid an amount
equivalent on an annual basis to 0.375% of the average daily net assets of the
Portfolio. The fee is accrued daily and paid monthly.

MANAGEMENT OF FEDERATED STOCK PORTFOLIO

Peter R. Anderson serves as the Federated Stock Portfolio's co-manager. Mr.
Anderson joined Federated Investors in 1972 as, and is presently, a Senior
Vice President of an affiliate of the Subadviser. Mr. Anderson is a
Chartered Financial Analyst and received his MBA in Finance from the
University of Wisconsin.

Scott B. Schermerhorn serves as the Federated Stock Portfolio's co-manager.
Mr. Schermerhorn joined Federated Investors in 1996 as Vice President of an
affiliate of the Subadviser. From 1990 through 1996, Mr. Schermerhorn was a
Senior Vice President and Senior Investment Officer at J.W. Seligman & Co.,
Inc., Mr. Schermerhorn received his M.B.A. in Finance and International
Business from Seton Hall University.

LARGE CAP PORTFOLIO
SUBADVISER: FIDELITY MANAGEMENT & RESEARCH COMPANY

Fidelity Management & Research Company. ("FMR"), pursuant to a Subadvisory
Agreement with TAMIC, serves as the investment Subadviser to the Large Cap
Portfolio. FMR is an investment adviser registered as such with the SEC. Its
principal office is located at 82 Devonshire Street, Boston, MA 02109-3614.

At present, the principal operating activities of FMR Corp. are those conducted
by three of its divisions as follows: FSC, which is the transfer and shareholder
servicing agent for certain of the funds advised by FMR; Fidelity Investments
Institutional Operations Company, which performs shareholder servicing functions
for institutional customers and funds sold through intermediaries; and Fidelity
Investments Retail Marketing Company, which provides marketing services to
various companies within the Fidelity organization.

All of the stock of FMR is owned by FMR Corp., its parent company organized in
1972. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson 3d, Johnson family members,
and various trusts for the benefit of the Johnson family form a controlling
group with respect to FMR. Corp.

Under its Subadvisory Agreement with TAMIC, FMR is paid an amount equivalent on
an annualized basis to 0.45% of the average daily net assets of the Portfolio.
The fee is accrued daily and paid monthly.

FMR has sub-subadvisory agreements with FMR U.K. and FMR Far East. TAMIC is also
a party to these agreements in its capacity as Investment Adviser. These
sub-Subadvisers provide FMR with investment research and advice on issuers based
outside the United States. Under the sub-subadvisory agreements, FMR pays FMR
U.K. and FMR Far East fees equal to 110% and 106%, respectively, of the costs of
providing these services.

The sub-Subadvisers may also provide investment management services. In return,
FMR pays FMR U.K. and FMR Far East a fee equal to 60% of its management fee rate
with respect to a Portfolio's investments that the sub-Subadviser manages on a
discretionary basis.

MANAGEMENT OF LARGE CAP PORTFOLIO

Thomas M. Sprague is the manager of Large Cap Portfolio. Mr. Sprague is also the
manager of Fidelity Adviser Large Cap Fund and Fidelity Large Cap Stock Fund,
each publically traded retail mutual funds. He joined Fidelity in 1989. He is a
graduate of both Cornell University and Wharton School of Business.

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<PAGE> 76
EQUITY INCOME PORTFOLIO
SUBADVISER: FIDELITY RESOURCE MANAGEMENT

FMR, pursuant to a Subadvisory Agreement with TAMIC, also serves as the
Subadviser to the Equity Income Portfolio. See "Large Cap Portfolio--Fidelity
Resource Management--Background" above for a discussion of FMR.

Under its Subadvisory Agreement with TAMIC, FMR is paid an amount equivalent on
an annual basis to 0.45% of the average daily net assets of the Portfolio. The
fee is accrued daily and paid monthly.

MANAGEMENT OF EQUITY INCOME PORTFOLIO

Stephen Peterson is manager of Equity Income Portfolio. Since 1983, he has
also managed Fidelity Equity Income Fund a publicly traded retail mutual
fund. Mr. Peterson is also Senior Vice President of Fidelity Management Trust
Co. Previously, he was Vice President and manager of several trust accounts.

Mr. Peterson joined Fidelity in October 1980.

SBMFM

Smith Barney Mutual Funds Management Inc. (SBMFM) an indirect wholly owned
subsidiary of Travelers Group Inc., furnishes investment management and advisory
services to the Social Awareness Stock Portfolio through Greenwich Street
Advisors, a division of SBMFM, in accordance with the terms of an Investment
Advisory Agreement dated May 1, 1995 which was approved by shareholders at a
meeting held on April 28, 1995. Prior to May 1, 1995, The Travelers Investment
Management Company (TIMCO) provided investment management and advisory services.
For furnishing investment management and advisory services to the Fund, SBMFM is
paid any amount equivalent on an annual basis to the advisory fee schedule set
forth in the table below. The fee is computed daily and paid weekly.

<TABLE>
<CAPTION>
AGGREGATE NET ASSET VALUE
ANNUAL MANAGEMENT FEE OF THE PORTFOLIO
--------------------- -------------------------
<S> <C> <C>
0.65% of the first $ 50,000,000, plus
0.55% of the next $ 50,000,000, plus
0.45% of the next $100,000,000, plus
0.40% of amounts over $200,000,000.
</TABLE>

The total advisory fees paid to TIMCO by the Social Awareness Stock
Portfolio for the period ended December 31, 1993, and for the year ended
December 1994 and for the period January through April 1995 were $15,961,
$23,474 and $ 9,877, respectively. The total advisory fee paid to SBMFM for the
period May 1, 1995 through December 31, 1995 was $28,613.

Greenwich Street Advisors, a division of SBMFM, also manages the
day-to-day investment operations of the Utilities Portfolio pursuant to an
Investment Advisory Agreement approved by the Board of Trustees. Under the
Advisory Agreement, SBMFM is responsible for furnishing or causing to be
furnished to the Utilities Portfolio advice and assistance with respect to the
acquisition, holding or disposal of securities and recommendations with respect
to other aspects and affairs of the Portfolio. The Utilities Portfolio pays
SBMFM an advisory fee equal to 0.65% on an annual basis for its services as
investment adviser. The fee is computed daily and paid monthly.

The total advisory fees paid to SBMFM by the Utilities Portfolio for the
period ended December 1994 and for the year ended December 1995 were $21,804 and
$67,791, respectively.

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<PAGE> 77
SECURITIES TRANSACTIONS

The Subadviser for the Large Cap and Equity Income Portfolios is
authorized to use research services provided by and to place portfolio
transactions with brokerage firms that have provided assistance in the
distribution of shares of the Portfolios or shares of other funds advised by the
Subadviser to the extent permitted by law. The Subadviser may use research
services provided by and place transactions through Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Serviced (FBS), subsidiaries of FMR Corp., if
the commissions are fair and reasonable, and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services.

The Subadviser for the Large Cap and Equity Income Portfolios may allocate
brokerage transactions to broker-dealers who have entered into arrangements with
the Subadviser under which the broker-dealer allocates a portion of the
commissions paid by the portfolio toward payment of the portfolio's expenses,
such as transfer agent fees or custodian fees. The transaction quality must,
however, be comparable to those of Section 11(a) of the Securities Act of 1934,
as amended, which prohibit members of national securities exchanges from
executing exchange transactions for account which they or their affiliates
managed, unless certain requirements are satisfied. Pursuance to such
requirements, the Subadviser's Board of Trustees has authorized FBSI to execute
portfolio transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.

THE ADVISORY AGREEMENTS

Under the terms of their respective Advisory and Subadvisory Agreements,
the Parties to such agreements shall:

(1) obtain and evaluate pertinent economic, statistical and financial data
and other information relevant to the investment policy of the
Portfolios, affecting the economy generally and individual companies
or industries, the securities of which are included in the Portfolios
or are under consideration for inclusion therein;

(2) be authorized to purchase supplemental research and other services
from brokers at an additional cost to the Portfolios;

(3) regularly furnish recommendations to the Board of Trustees with
respect to an investment program for approval, modification or
rejection by the Board of Trustees;

(4) take such steps as are necessary to implement the investment programs
approved by the Board of Trustees; and

(5) regularly report to the Board of Trustees with respect to
implementation of the approved investment programs and any other
activities in connection with the administration of the assets of the
Portfolios.

As required by the 1940 Act, each Advisory Agreement 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 (i)
by a vote of a majority of the Board of Trustees, or (ii) by a vote of a
majority of the outstanding voting securities of the Portfolios. In addition,
and in either event, the terms of the Advisory Agreements must be approved
annually by a vote of a majority of the Board of Trustees who are not parties
to, or interested persons of any party to, the Advisory Agreements, cast in
person at a meeting called for the purpose of voting on such approval and at
which the Board of Trustees is furnished such information as may be reasonably
necessary to evaluate the terms of the Advisory Agreements. The Advisory
Agreements further provide that they will terminate automatically upon
assignment; may be amended only with prior approval of a majority of the
outstanding voting securities of the Portfolios; may be terminated without the
payment of any penalty at any

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<PAGE> 78
time upon sixty days' notice by the Board of Trustees or by a vote of a majority
of the outstanding voting securities of the Portfolios; and may not be
terminated by TAMIC without prior approval of a new investment advisory
agreement by a vote of a majority of the outstanding voting securities of the
Portfolios.

REDEMPTIONS IN KIND

If conditions arise that would make it undesirable for the Fund to pay for
all redemptions in cash, the Fund may authorize payment to be made in portfolio
securities or other property.

However, the Fund has obligated itself under the 1940 Act to redeem for
cash all shares presented for redemption by any one shareholder up to $250,000,
or 1% of the Fund's net assets if that is less, in any 90-day period. Securities
delivered in payment of redemptions would be valued at the same value assigned
to them in computing the net asset value per share. Shareholders receiving such
securities would incur brokerage costs when these securities are sold.

BROKERAGE

Subject to approval of the Board of Trustees, it is the policy of TAMIC,
TIMCO, Lazard, MFS, Federated, FMR and SBMFM (collectively, the " advisers"), in
executing transactions in portfolio securities of the Portfolios, 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 the Portfolios, 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 potentially 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 to the Portfolios and the advisers is considered
to be in addition to and not in lieu of services required to be performed by the
advisers under their respective Investment Advisory Agreements. The cost, value
and specific application of such information are indeterminable and hence are
not practicably allocable among the Portfolios and other clients of either
TAMIC, TIMCO, Lazard, MFS, Federated, FMR or SBMFM who may indirectly benefit
from the availability of such information. Similarly, the Portfolios 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, the Portfolios will deal with primary market makers unless more
favorable prices are otherwise obtainable. Brokerage fees will be incurred in
connection with futures transactions, and the Portfolios will be required to
deposit and maintain funds with brokers as margin to guarantee performance of
future obligations.

Each of the advisers may follow a policy of considering the sale of shares
of the Series Trust a factor in the selection of broker-dealers to execute
portfolio transactions, subject to the requirements of best execution described
above.

The investment advisers' policies with respect to brokerage are and will
be reviewed by the Board of Trustees 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.

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<PAGE> 79
The total brokerage commissions paid by the U.S. Government Securities
Portfolio to TAMIC for the years ended December 31, 1993, 1994 and 1995 were
$35,756, $13,363 and $119,817, respectively. For the year ended December 31,
1995, no portfolio transactions were directed to certain brokers because of
research services. No formula is used in placing portfolio transactions with
brokers which provide research services and no specific amount of transactions
is allocated for research services. No brokerage business was placed with any
brokers affiliated with TAMIC during 1995.

The total brokerage commissions paid by the Social Awareness Stock
Portfolio to TIMCO and SBMFM for the years ended December 31, 1993, 1994 and
1995 were $2,121, $6,302 and $14,657, respectively. (SBMFM became the investment
adviser on May 1, 1995.) For the year ended December 31, 1995, portfolio
transactions in the amount of $8,984,565 were placed with certain brokers
because of research services, of which $13,803 was paid in commissions with
respect to such services. No formula was used in placing such transactions, and
no specific amount of transactions was allocated for research services. No
brokerage business was placed with any brokers affiliated with TIMCO during
1995.

The total brokerage commission paid by the Utilities Portfolio to SBMFM
for the period ended December 31, 1994 and the year ended December 31, 1995 were
$8,611 and $20,686. For the year ended December 31, 1995, no portfolio
transactions in the amount of $9,792,394 were placed with certain brokers
because of research services, of which $20,686 was paid in commissions with
respect to such services. No formula was used in placing such transactions, and
no specific amount of transactions was allocated for research services. No
brokerage business was placed with any brokers affiliated with SBMFM during
1995.

The total brokerage commission paid by the Zero Coupon Bond Portfolios,
Series 1998, 2000 and 2005 for the period ended December 31, 1995 was $2,064,
$2,808 and $3,309, respectively. For the year ended December 31, 1995, no
portfolio transactions were directed to certain brokers because of research
services. No formula is used in placing portfolio transactions with brokers
which provide research services and no specific amount of transactions is
allocated for research services. No brokerage business was placed with any
brokers affiliated with TAMIC during 1995.

Because the other Portfolios are new, as of the date of this SAI, no
brokerage commissions were incurred or paid by them.

ADDITIONAL INFORMATION

The Travelers Insurance Company acts as transfer agent and dividend
disbursing agent for the Portfolios. The Travelers Insurance Company is a stock
insurance company chartered in 1864 in Connecticut and continuously engaged in
the insurance business since that time. It is a wholly owned subsidiary of The
Travelers Insurance Group Inc., which is indirectly owned, through a wholly
owned subsidiary, by Travelers Group Inc., a financial services holding company.
The Company's Home Office is located at One Tower Square, Hartford, Connecticut
06183, telephone number 860-422-3985. On April 1, 1996, the Company owned 100%
of the Series Trust's outstanding shares.

Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York
11245, serves as the custodian of all securities and cash of the U.S. Government
Bond, Social Awareness, Utilities and the three Zero Coupon Bond Fund
Portfolios. For the Large Cap and Equity Income Portfolios, Brown Brothers
Harriman will serve as the custodian. For Federated Stock, Federated High Yield,
MFS Emerging Growth and Travelers Quality Bond Portfolios, the custodian is PNC
Bank NA, 200 Stevens Drive, Lester, PA 19113. For those portfolios, Barclay's
Bank, PLC may also act as a sub-custodian. For Lazard International Stock
Portfolio, the custodian is the Bank of New York, 90 Washington Street, New
York, NY 10286.

Coopers & Lybrand L.L.P., independent accountants, 100 Pearl Street,
Hartford, Connecticut 06103, are the independent auditors for the Series Trust
and its Portfolios, with the exception of Large Cap, Equity Income, Federated
Stock, Federated High Yield, MFS Emerging Growth, Travelers Quality Bond and
Lazard International Stock Portfolios. The services provided by Coopers &
Lybrand L.L.P., include primarily the audit of the applicable Series

31
<PAGE> 80
Trust's financial statements and financial highlights. The financial statements
and financial highlights included in the Registration Statement have been
audited by Coopers & Lybrand L.L.P., as indicated in their reports thereon, and
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing.

KPMG Peat Marwick LLP, independent certified public accountants, 345 Park
Avenue, New York, NY 10154 are the auditors for the Federated Stock, Federated
High Yield, MFS Emerging Growth, Travelers Quality Bond and Lazard International
Stock Portfolios.

Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110, are
the auditors for Large Cap and Equity Income Portfolios.

Except as otherwise stated in its prospectus or as required by law, the
Series Trust reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or change
fees for services provided.

No dealer, salesman or other person is authorized to give any information
or to make any representation not contained in the Series Trust's prospectus,
this SAI or any supplemental sales literature issued by the Series Trust, and no
person is entitled to rely on any information or representation not contained
therein.

The Series Trust's prospectus and this SAI omit certain information
contained in the Series Trust's registration statement filed with the Securities
and Exchange Commission which may be obtained from the Commission's principal
office in Washington, D.C. upon payment of the fee prescribed by the Rules and
Regulations promulgated by the Commission.

32
<PAGE> 81
APPENDIX

COMMERCIAL PAPER RATINGS

The Portfolio's investments in commercial paper are limited to those rated
A-1 by Standard & Poor's Corporation (S&P) or Prime-1 by Moody's Investors
Service, Inc. (Moody's). These ratings and other money market instruments are
described as follows.

Commercial paper rated A-1 by Standard & Poor's has the following
characteristics: liquidity ratios are adequate to meet cash requirements. The
issuer's long-term senior debt is rated "A" or better, although in some cases
"BBB" credits may be allowed. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances. Typically, the issuer's industry is
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) evaluation of 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
relationships which exist 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. Relative strength or weakness of the
above factors determines how the issuer's commercial paper is rated within
various categories.

33
<PAGE> 82
FINANCIAL STATEMENTS

34
<PAGE> 83
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $29,445,550) . . . . . . . . $ 30,242,611
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,159
Receivables:

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360,433
Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,657,031
---------------

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,342,234
---------------

LIABILITIES:
Payables:

Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . 6,147,812
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . 1,242
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 892
---------------

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,149,946
---------------

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,192,288
===============

NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,976,806
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 1,520,848
Accumulated net realized gains (losses) on investment security transactions . . . . . 897,573
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 797,061
---------------

Total net assets (applicable to 2,267,056 shares outstanding at $12.43 per share) $ 28,192,288
===============
</TABLE>

See Notes to Financial Statements

-50-
<PAGE> 84
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,667,448

EXPENSES:

Investment management and advisory fees . . . . . . . . . . . . . . $ 85,175
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 45,266
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 469
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 12,124
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,388
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 123
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,055
--------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . 146,600
---------------
Net investment income . . . . . . . . . . . . . . . . . . . 1,520,848
===============

REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 56,107,352

Cost of investment securities sold . . . . . . . . . . . . . . . 54,996,560
--------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 1,110,792
Change in unrealized gain (loss) on investment securities:

Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . (2,374,647)
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 797,061
--------------
Net change in unrealized gain (loss) for the year . . . . . 3,171,708
---------------
Net realized gain and change in unrealized gain (loss) . 4,282,500
---------------
Net increase in net assets resulting from operations . . . . . . . $ 5,803,348
===============
</TABLE>

See Notes to Financial Statements

-51-
<PAGE> 85
THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,520,848 $ 1,418,225
Net realized gain (loss) from investment security transactions . . . 1,110,792 (211,271)
Net change in unrealized gain (loss) on investment securities . . . . 3,171,708 (2,752,337)
--------------- ---------------
Net increase (decrease) in net assets resulting from operations . 5,803,348 (1,545,383)
--------------- ---------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income and net short-term realized gains from
investment security transactions . . . . . . . . . . . . . . . . . (1,404,917) (883,624)
Net long-term realized gains from investment security transactions - (63,504)
--------------- ---------------
Total distributions to shareholders . . . . . . . . . . . . . . . (1,404,917) (947,128)
--------------- ---------------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . 5,439,282 7,137,525
Dividend reinvestment . . . . . . . . . . . . . . . . . . . . . . . . 1,404,917 947,128
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . (7,572,507) (6,590,182)
--------------- ---------------
Net increase (decrease) in net assets resulting from
capital share transactions . . . . . . . . . . . . . . . . . . (728,308) 1,494,471
-------------- ---------------
Net increase (decrease) in net assets . . . . . . . . . . . 3,670,123 (998,040)

NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . 24,522,165 25,520,205
--------------- ---------------
End of year (including undistributed net investment income as follows:
December, 1995 $1,520,848 and December, 1994 $1,418,225) . . . . . $ 28,192,288 $ 24,522,165
=============== ===============
</TABLE>

See Notes to Financial Statements

-52-
<PAGE> 86

THE TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO

STATEMENT OF INVESTMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
BONDS (14.0%)

COLLATERALIZED MORTGAGE
OBLIGATIONS (14.0%)
Federal Farm Credit Banks,
5.93% Notes, 2003 $ 1,000,000 $ 1,009,065
FNMA Remic Trust 1993-05,
7.50% Pass Through, 2008 1,000,000 1,050,009
FNMA Remic Trust 1993-13,
6.50% Pass Through, 2000 1,201,619 1,195,645
Guaranteed Export Certificate 1994-A,
7.12% Sinking Fund, 2006 916,189 969,144
------------
TOTAL BONDS (COST $ 3,971,385) 4,223,863
------------
U.S. GOVERNMENT AGENCY
SECURITIES (31.1%)

Federal Home Loan Mortgage Corp,
7.00% Pass Through, 2010 4,000,000 4,076,252
FNMA,
7.55% Notes, 2004 1,000,000 1,044,571
GNMA 30-Year Single Family,
9.00% Pass Through, 2016 32,417 34,372
GNMA 30-Year Single Family,
9.00% Pass Through, 2019 71,940 76,279
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 371,732 390,551
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 437,973 460,146
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 434,297 456,283
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 394,478 414,449
GNMA 30-Year Single Family,
8.50% Pass Through, 2018 330,407 347,134
GNMA 30-Year Notification,
8.50% Pass Through, 2025 2,000,000 2,100,000
------------

TOTAL U.S. GOVERNMENT
AGENCY SECURITIES
(COST $9,345,280) 9,400,037
------------
U.S. GOVERNMENT
SECURITIES (42.1%)

United States of America Treasury,
0.00% Notes, 2015 4,000,000 1,242,396
United States of America Treasury,
7.875% Bonds, 2021 5,000,000 6,156,250
United States of America Treasury,
8.75% Bonds, 2017 1,000,000 1,323,125
United States of America Treasury,
11.25% Bonds, 2015 2,500,000 4,009,375
------------

TOTAL U.S. GOVERNMENT
SECURITIES (COST $12,241,249) 12,731,146
------------

SHORT-TERM INVESTMENTS (12.8%)

U.S. GOVERNMENT AGENCY
SECURITIES (12.8%)
Federal Farm Credit Banks,
5.45% due January 11, 1996 $ 2,000,000 $ 1,993,626
Federal Home Loan Banks,
5.46% due January 11, 1996 1,900,000 1,893,939
------------

TOTAL SHORT-TERM
INVESTMENTS (COST $3,887,636) 3,887,565
------------
TOTAL INVESTMENTS (100%)
(COST $ 29,445,550) (A) (B) $ 30,242,611
============
</TABLE>

NOTES

(A) At December 31, 1995, net unrealized appreciation for all securities
was $797,061. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over cost of $803,354 and aggregate gross unrealized
depreciation for all securities in which there was an excess of cost
over market value of $6,293.

(B) The cost of investments for federal income tax purposes amounted to
$29,475,915. Gross unrealized appreciation and depreciation of
investments, based on identified tax cost at December 31, 1995, were
as follows:

<TABLE>
<S> <C>
Gross unrealized appreciation $ 772,989
Gross unrealized depreciation (6,293)
-------------
Net unrealized appreciation $ 766,696
=============
</TABLE>

See Notes to Financial Statements

-53-
<PAGE> 87
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $5,699,643) . . . . . . . . . $ 6,989,256
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,458
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,928
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . 29,069
---------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,092,780
---------------
LIABILITIES:
Payable for investment management and advisory fees . . . . . . . . . . . . . . . . . 625
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,069
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,275
---------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,969
---------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,054,811
===============

NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,463,666
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 55,079
Accumulated net realized gains (losses) on investment security transactions . . . . . 246,453
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 1,289,613
---------------
Total net assets (applicable to 492,622 shares outstanding at $14.32 per share) . $ 7,054,811
===============
</TABLE>

See Notes to Financial Statements

-56-
<PAGE> 88
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 102,832
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,038
----------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 128,870

EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . 38,490
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 43,095
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 2,157
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 15,556
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,388
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 118
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,056
----------------
Total expenses before reimbursement from The Travelers . . . . . 102,860

Less: Reimbursement from The Travelers . . . . . . . . . . . . . . (29,069)
----------------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 73,791
---------------
Net investment income . . . . . . . . . . . . . . . . . . . 55,079
---------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON

INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 3,980,329
Cost of investment securities sold . . . . . . . . . . . . . . . 3,715,090
----------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 265,239

Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . (26,432)
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 1,289,613
----------------
Net change in unrealized gain (loss) for the year . . . . . 1,316,045
---------------
Net realized gain and change in unrealized gain (loss) . 1,581,284
---------------
Net increase in net assets resulting from operations . . . . . . . $ 1,636,363
===============
</TABLE>

See Notes to Financial Statements

-57-
<PAGE> 89
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,079 $ 51,650
Net realized gain from investment security transactions . . . . . . . . . 265,239 50,675
Net change in unrealized gain (loss) on investment securities . . . . . . 1,316,045 (195,236)
---------------- ----------------
Net increase (decrease) in net assets resulting from operations . . . 1,636,363 (92,911)
---------------- ----------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income and net short-term realized gains from
investment security transactions . . . . . . . . . . . . . . . . . . . (51,494) (70,411)
Net long-term realized gains from investment security transactions . . . (68,327) (17,258)
---------------- ----------------
Total distributions to shareholders . . . . . . . . . . . . . . . . . (119,821) (87,669)
---------------- ----------------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 2,552,645 1,378,970
Dividend reinvestment . . . . . . . . . . . . . . . . . . . . . . . . . . 119,821 87,669
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . . . (1,013,468) (768,126)
---------------- ----------------
Net increase in net assets resulting from capital share transactions . 1,658,998 698,513
---------------- ----------------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . 3,175,540 517,933

NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,879,271 3,361,338
---------------- ----------------
End of year (including undistributed net investment income as follows:
December, 1995 $55,079 and December, 1994 $51,650) . . . . . . . . . . $ 7,054,811 $ 3,879,271
================ ================
</TABLE>

See Notes to Financial Statements

-58-
<PAGE> 90
THE TRAVELERS SERIES TRUST
SOCIAL AWARENESS STOCK PORTFOLIO

STATEMENT OF INVESTMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ -----------
<S> <C> <C>
COMMON STOCKS (97.7%)

AMUSEMENTS (1.0%)
Walt Disney Co. 1,200 $ 70,800
-----------

BANKING (10.6%)
Banc One Corp. 1,200 45,300
Bank of Boston Corp. 500 23,125
Barnett Banks, Inc. 1,000 59,000
Chase Manhattan Corp. 300 18,187
Citicorp 1,500 100,875
First Chicago NBD 500 19,750
First Union Corp. 600 33,375
H.F. Ahmanson & Co. 1,400 37,100
Mellon Bank Corp. 2,000 107,500
MBNA Corp. 650 23,969
NationsBank Corp. 1,300 90,513
Norwest Corp. 900 29,700
State Street Boston Corp. 3,400 153,000
-----------
741,394
-----------
CHEMICALS, PHARMACEUTICALS, AND
ALLIED PRODUCTS (13.5%)
Air Products & Chemicals, Inc. 1,700 89,675
Amgen (A) 1,200 71,176
Bristol Myers Squibb Co. 1,100 94,463
Johnson & Johnson 1,500 128,437
Merck & Co., Inc. 2,300 151,225
Pfizer, Inc. 1,200 75,600
Praxair, Inc. 5,000 168,125
Procter & Gamble Co. 1,200 99,600
Schering-Plough Corp. 1,200 65,700
-----------
944,001
-----------
COMMUNICATION (5.6%)
Ameritech Corp. 1,400 82,600
Bell Atlantic Corp. 800 53,500
Bellsouth Corp. 1,800 78,300
Capital Cities ABC, Inc. 400 49,350
MCI Communications Corp. 1,000 26,188
NYNEX Corp. 700 37,800
Sprint Corp. 800 31,900
Tele-Communications, Inc. (A) 1,700 33,894
-----------
393,532
-----------
CONSTRUCTION (0.6%)
Kaufman & Broad Home CP 2,800 41,650
-----------

ELECTRICAL AND
ELECTRONIC MACHINERY (2.4%)
AMP, Inc. 500 19,187
DSC Communications, Inc. (A) 200 7,400
Intel Corp. 2,000 113,625
Time Warner, Inc. 700 26,513
-----------
166,725
-----------

FINANCE (4.7%)
American Express Co. 2,700 111,712
Dean Witter Discover & Co. 600 28,200
Federal Home Loan Corp. 1,000 83,500
Federal National Mortgage Assoc. 500 62,062
Green Tree Financial Corp. 600 15,825
Merrill Lynch & Co., Inc. 500 25,500
-----------
326,799
-----------
FOOD (3.9%)
Coca-Cola Co. 1,000 $ 74,250
Kellogg Co. 500 38,625
PepsiCo, Inc. 2,400 134,100
Unilever NV 200 28,150
-----------
275,125
-----------

INSURANCE (4.5%)
Aetna Life & Casualty Co. 200 13,850
American International Group 1,050 97,125
Transamerica Corp. 1,500 109,313
United Healthcare Corp. 1,400 91,700
-----------
311,988
-----------
MACHINERY (7.8%)
Cabletron System, Inc. (A) 300 24,300
Compaq Computer Corp. (A) 1,200 57,600
Deere & Co. 600 21,150
Digital Equipment Corp. (A) 700 44,887
EMC Corp. (A) 7,000 107,625
International Business Machines Corp. 1,100 100,925

Pitney Bowes, Inc. 700 32,900
Sun Microsystems (A) 600 27,413
York International, Inc. 2,800 131,600
-----------
548,400
-----------
METAL PRODUCTS (4.1%)
Belden, Inc. 4,500 115,875
Gillette Co. 800 41,700
Newell Company 5,000 129,375
-----------
286,950
-----------
MISCELLANEOUS MANUFACTURING (9.9%)
Beckman Instruments, Inc. 500 17,687
Dentsply International, Inc. 3,300 131,794
Emerson Electric Co. 1,000 81,750
Medtronic, Inc. 600 33,525
Perkin-Elmer Corp. 2,500 94,375
Stryker Corp. 3,100 162,557
Xerox Corp. 1,200 164,400
-----------

686,088
-----------
OIL & GAS (1.2%)
Anadarko Petroleum 1,500 81,187
-----------

PAPER AND ALLIED PRODUCTS (1.0%)
Tambrands, Inc. 1,500 71,625
-----------

PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (1.0%)
Tribune Co. 1,200 73,350
-----------

RETAIL (9.5%)
Home Depot, Inc. 2,900 138,837
Kroger Co. (A) 2,700 101,250
May Department Stores 1,500 63,375
McDonalds Corp. 2,000 90,250
Pep Boys-Manny, Moe, Jack 4,000 102,500
The GAP, Inc. 300 12,600
Toys R Us (A) 2,000 43,500
Wal-Mart Stores, Inc. 3,500 78,312
Wendy's International, Inc. 1,700 36,125
-----------
666,749
-----------
RUBBER AND PLASTIC PRODUCTS (0.4%)
Nike, Inc. 400 27,850
-----------
</TABLE>

-59-
<PAGE> 91
STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
SERVICES (6.5%)
Columbia/HCA Healthcare Corp. 2,500 $ 126,875
Computer Associates International 1,000 56,875
Microsoft (A) 1,100 96,594
Olsten Corp. 3,600 142,200
Oracle Systems Corp. (A) 700 29,663
-------------
452,207
-------------
TEXTILE MILL PRODUCTS (1.3%)
VF Corp. 1,700 89,675
-------------
TRANSPORTATION (1.3%)
Norfolk Southern Corp. 900 71,437
Southwest Airlines 800 18,600
-------------
90,037
-------------
TRANSPORTATION MANUFACTURING (3.6%)
Fleetwood Enterprises, Inc. 5,800 149,350
Varity Corp. (A) 2,800 103,950
-------------
253,300
-------------
WHOLESALE TRADE (3.3%)
Enron Corp. 3,300 125,813
Marshall Industries (A) 3,300 106,011
-------------
231,824
-------------
TOTAL COMMON STOCKS
(COST $ 5,541,643) 6,831,256
-------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (2.3%)

REPURCHASE AGREEMENTS (2.3%)
Barclays Bank PLC,
5.25% Repurchase Agreement
dated December 29, 1995 due
January 2, 1996 collateralized
by: United States of America
Treasury, $156,000,
5.875% due July 31, 1997 $ 158,000 $ 158,000
-------------
TOTAL SHORT-TERM
INVESTMENTS (COST $158,000) 158,000
-------------
TOTAL INVESTMENTS (100%)
(COST $5,699,643) (B) (C) $ 6,989,256
=============
</TABLE>

NOTES

(A) Non-income Producing Security.

(B) At December 31, 1995, net unrealized appreciation for all securities
was $1,289,613. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$1,379,690 and aggregate gross unrealized depreciation for all securities in
which there was an excess of cost over market value of $90,077.

(C) The cost of investments for federal income tax purposes amounted to
$5,711,602. Gross unrealized appreciation and depreciation of investments,
based on identified tax cost at December 31, 1995 were as follows:

<TABLE>
<S> <C>
Gross unrealized appreciation $ 1,360,418
Gross unrealized depreciation (82,763)
-------------
Net unrealized appreciation $ 1,277,655
=============
</TABLE>

See Notes to Financial Statements

-60-
<PAGE> 92
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $11,263,719) . . . . . . . . $ 13,356,856
Repurchase agreement, at market value (identified cost $2,144,000) . . . . . . . . . 2,144,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,210
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,122
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,846
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . 1,870
----------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,700,904
----------------
LIABILITIES:
Payables:
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . 353,662
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . 1,350
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,870
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,347
----------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361,229
----------------

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,339,675
================

NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,660,428
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 441,157
Accumulated net realized gains (losses) on investment security transactions . . . . . 144,953
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 2,093,137
----------------
Total net assets (applicable to 1,193,707 shares outstanding at $12.85 per share) $ 15,339,675
================
</TABLE>

See Notes to Financial Statements

-63-
<PAGE> 93
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 391,560
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,952
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 571,512

EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . 67,791
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 48,925
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 11,947
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,391
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 115
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,056
---------------
Total expenses before reimbursement from The Travelers . . . . . 132,225

Less: Reimbursement from The Travelers . . . . . . . . . . . . . . 1,870
---------------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 130,355
---------------
Net investment income . . . . . . . . . . . . . . . . . . . 441,157
---------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 2,272,015
Cost of investment securities sold . . . . . . . . . . . . . . . 2,127,062
---------------
Net realized gain . . . . . . . . . . . . . . . . . . . . . 144,953

Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994 . . . . . . . . . . . . . . (77,549)
Unrealized gain at December 31, 1995 . . . . . . . . . . . . . . 2,093,137
---------------
Net change in unrealized gain (loss) for the year . . . . . 2,170,686
---------------
Net realized gain and change in unrealized gain (loss) . 2,315,639
---------------
Net increase in net assets resulting from operations . . . . . . . $ 2,756,796
===============
</TABLE>

See Notes to Financial Statements

-64-
<PAGE> 94
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
THE PERIOD FEBRUARY 4, 1994 (DATE OPERATIONS COMMENCED)
TO DECEMBER 31, 1994

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 441,157 $ 139,138
Net realized gain from investment security transactions . . . . . . . 144,953 11,353
Net change in unrealized gain (loss) on investment securities . . . . 2,170,686 (77,549)
----------- ----------
Net increase in net assets resulting from operations . . . . . . . 2,756,796 72,942
----------- ----------

DISTRIBUTION TO SHAREHOLDERS FROM NET INVESTMENT INCOME AND
NET SHORT-TERM REALIZED GAINS FROM INVESTMENT SECURITY TRANSACTIONS . . (150,491) -
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . 9,178,587 7,595,972
Dividend reinvestment . . . . . . . . . . . . . . . . . . . . . . . . 150,491 -
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . (2,352,367) (1,912,255)
----------- ----------
Net increase in net assets resulting from capital share transactions 6,976,711 5,683,717
----------- ----------
Net increase in net assets . . . . . . . . . . . . . . . . . . 9,583,016 5,756,659

NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 5,756,659 -
----------- ----------
End of period (including undistributed net investment income as follows:
December, 1995 $441,157 and December, 1994 $139,138) . . . . . . . $15,339,675 $5,756,659
=========== ==========
</TABLE>

See Notes to Financial Statements

-65-
<PAGE> 95
THE TRAVELERS SERIES TRUST
UTILITIES PORTFOLIO

STATEMENT OF INVESTMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------ ------
<S> <C> <C>
COMMON STOCKS (76.7%)

COMMUNICATION (12.0%)
Ameritech Corp. 3,500 $ 206,500
AT&T Corp. 5,000 323,750
Bellsouth Corp. 10,000 435,000
GTE Corp. 7,500 330,000
NYNEX Corp. 3,500 189,000
Sprint Corp. 2,500 99,688
U.S. West, Inc. 5,000 178,750
US West Media (A) 5,000 95,000
-----------
1,857,688
-----------
UTILITIES (64.7%)
Allegheny Power System, Inc. 10,000 286,250
American Electric Power Co. 7,500 303,750
Baltimore Gas & Electric Co. 7,500 213,750
Carolina Power & Light Co. 7,500 258,750
Cinergy Corp. 10,000 306,250
Coastal Corp. 10,000 372,500
CIPSCO, Inc. 5,000 195,000
Dominion Resources, Inc. 7,000 288,750
Duquesne Light Co. 12,750 392,063
DPL, Inc. 10,000 247,500
El Paso Natural Gas Co. 5,000 141,875
Florida Power & Light Co. 12,500 579,687
Florida Progress Corp. 10,000 353,750
General Public Utilities 10,000 340,000
Houston Industries 16,000 388,000
Kansas City Power & Light Co. 10,000 261,250
New York State Electric & Gas Co. 7,500 194,063
NIPSCO Industries, Inc. 10,000 382,500
Ohio Edison Co. 10,000 235,000
Pacific Enterprises 10,000 282,500
Pacificorp 15,000 318,750
Peco Energy Co. 11,000 331,375
Portland General Electric Co. 13,100 381,537
Public Service of New Mexico (A) 15,000 264,375
Public Service Co. of Colorado 7,500 265,313
Public Service Enterprises Group 5,500 168,437
Southern Co. 7,500 184,688
SCE Corp. 6,000 106,500
Tenneco, Inc. 7,000 347,375
Texas Utilities Co. 12,000 493,500
Unicom Corporation 10,500 343,875
Wa Energy Co. 15,000 279,375
Westcoast Energy, Inc. 5,000 73,125
Williams Companies 5,000 219,375
Wisconsin Energy 7,500 229,687
-----------
10,030,475
-----------
TOTAL COMMON STOCKS
(COST $9,888,785)
11,888,163
-----------

<CAPTION>
PRINCIPAL
AMOUNT
---------

BONDS (2.7%)

UTILITIES (2.7%)
Arizona Public Service Co.,
7.25% Bonds, 2023 $ 200,000 198,262
PECO Energy Co.,
8.75% Bonds, 2022 200,000 217,307
-----------
TOTAL BONDS (COST $376,457) 415,569
-----------

<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------

U.S. GOVERNMENT
SECURITIES (6.8%)

United States of America Treasury,
7.50% Notes, 1996 $ 500,000 $ 511,250
United States of America Treasury,
7.75% Notes, 1999 500,000 541,874
-----------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $998,477) 1,053,124
-----------

SHORT-TERM INVESTMENTS (13.8%)

REPURCHASE AGREEMENTS (13.8%)
Barclays Bank PLC,
5.25% Repurchase Agreement
dated December 29, 1995 due
January 2, 1996 collateralized
by: United States of America
Treasury, $2,114,000,
5.875% due July 31, 1997 2,144,000 2,144,000
-----------

TOTAL SHORT-TERM
INVESTMENTS (COST $2,144,000) 2,144,000
-----------
TOTAL INVESTMENTS (100%)
(COST $13,407,719) (B)(C) $15,500,856
===========
</TABLE>

NOTES

(A) Non-income Producing Security.

(B) At December 31, 1995, net unrealized appreciation for all securities
was $2,093,137. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over cost of $2,123,451 and aggregate gross unrealized
depreciation for all securities in which there was an excess of cost
over market value of $30,314.

See Notes to Financial Statements

-66-
<PAGE> 96
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Series Trust (the "Series Trust") is a Massachusetts
business trust registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
The Declaration of Trust authorizes the shares of the Series Trust to
be divided into two or more series. As of December 31, 1995, the
Series Trust consisted of six series: U.S. Government Securities
Portfolio, Social Awareness Stock Portfolio, Utilities Portfolio (the
"Portfolios"), Zero Coupon Bond Fund Portfolio Series 1998, Zero
Coupon Bond Fund Portfolio Series 2000 and Zero Coupon Bond Fund
Portfolio Series 2005. Shares in each Portfolio are currently
offered, without a sales charge, to separate accounts of The Travelers
Insurance Company ("The Travelers") and The Travelers Life and Annuity
Company, indirect wholly owned subsidiaries of Travelers Group Inc.,
in connection with the issuance of certain variable annuity and
variable life insurance contracts. The accompanying notes do not
specifically pertain to the Zero Coupon Bond Fund Portfolios, as the
financial statements and accompanying notes for these portfolios are
published in their own annual report.

The following is a summary of significant accounting policies
consistently followed by each Portfolio in the preparation of its
financial statements.

SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last-reported sale price as of
the close of business of the New York Stock Exchange on the last
business day of the year; securities traded on the over-the-counter
market and listed securities with no reported sales are valued at the
mean between the last-reported bid and asked prices or on the basis
of quotations received from a reputable broker or other recognized
source.

When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally
stated at fair value on the basis of valuations furnished by a pricing
service. These valuations are determined for normal
institutional-size trading units of such securities using methods
based on market transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities,
for which pricing services are not readily available are valued by
management at prices which it deems in good faith to be fair.

Short-term investments for which a quoted market price is available
are valued at market. Short-term investments for which there is no
reliable quoted market price are valued by computing a market value
based upon quotations from dealers or issuers for securities of a
similar type, quality and maturity.

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

It is each Portfolio's practice to hold cash and cash equivalents
(including short-term investments) in an amount at least equal to the
notional value of outstanding purchased futures contracts, less the
initial margin. Cash and cash equivalents include cash on hand,
securities segregated under federal and brokerage regulations, and
short-term highly liquid investments with maturities generally three
months or less when purchased. Generally, futures contracts are
closed prior to expiration.

Futures contracts purchased by each Portfolio are priced and settled
daily; accordingly, changes in daily prices are recorded as realized
gains or losses and no asset is recorded in the Statements of
Investments. However, when each Portfolio holds open futures
contracts, it assumes a market risk generally equivalent to the
underlying market risk of changes in the value of the specified
indexes or debt securities associated with the futures contract.

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

-67-
<PAGE> 97
NOTES TO FINANCIAL STATEMENTS - CONTINUED

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

OTHER. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Security transactions are accounted for on the trade date. Interest
income is recorded on the accrual basis and dividend income is
recorded on the ex-dividend date. Distributions to shareholders are
recorded at the close of business on the record date.

2. INVESTMENTS

Purchases and sales of common stocks and bonds excluding short-term
investments aggregated $7,228,738 and $7,019,978, respectively, for
U.S. Government Securities Portfolio; $5,748,355 and $3,959,211,
respectively, for Social Awareness Stock Portfolio; and $7,493,306 and
$2,272,015, respectively, for Utilities Portfolio; for the year ended
December 31, 1995. Purchases and sales of direct and indirect U.S.
government obligations were $45,759,332 and $44,807,698, respectively,
for U.S. Government Securities Portfolio; and $498,789 for purchases
of Utilities Portfolio. Realized gains and losses from security
transactions are reported on an identified cost-basis.

Net realized gains (losses) from options transactions in the Social
Awareness Stock Portfolio were $21,118 and ($3,020) for the years
ended December 31, 1995 and 1994, respectively. These gains (losses)
are included in the net realized gain from investment security
transactions on both the Statement of Operations and the Statement of
Changes in Net Assets.

-68-
<PAGE> 98
NOTES TO FINANCIAL STATEMENTS - CONTINUED

3. PORTFOLIO CHARGES

Investment management and advisory fees for U.S. Government Securities
Portfolio are calculated daily at an annual rate of 0.3233% of the
Portfolio's average net assets. These fees are paid to Travelers
Asset Management International Corporation, an indirect wholly owned
subsidiary of Travelers Group Inc.

Investment management and advisory fees for Social Awareness Stock
Portfolio are calculated daily at annual rates which start at 0.65%
and decrease, as net assets increase, to 0.40% of the Portfolio's
average net assets. Prior to May 1, 1995, these fees were paid to The
Travelers Investment Management Company, an indirectly wholly owned
subsidiary of Travelers Group Inc. Effective May 1, 1995, these fees
are paid to Greenwich Street Advisors, a division of Smith Barney
Funds Management Inc. ("SBMFM"), an indirect wholly owned subsidiary
of Travelers Group Inc.

Investment management and advisory fees for Utilities Portfolio are
calculated daily at an annual rate of 0.65% of the Portfolio's average
net assets. These fees are paid to Greenwich Street Advisors, a
division of SBMFM, an indirect wholly owned subsidiary of Travelers
Group Inc.

The Travelers has agreed to reimburse U.S. Government Securities
Portfolio, Social Awareness Portfolio and Utilities Portfolio for the
amount by which each Portfolio's aggregate annualized operating
expenses, excluding brokerage commissions and any interest charges and
taxes, exceed 1.25% of each Portfolio's average net assets.

Trustees and officers of the Series Trust, who are also officers and
employees of Travelers Group Inc., or its subsidiaries, receive no
compensation directly from the Series Trust.

-69-
<PAGE> 99
NOTES TO FINANCIAL STATEMENTS - CONTINUED

4. SHARES OF BENEFICIAL INTEREST

The Declaration of Trust authorizes the issuance of an unlimited
number of shares of beneficial interest without par value.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES
PORTFOLIO
------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1995 1994
------------- -------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . 484,178 655,046
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (672,686) (616,041)
Shares issued in reinvestment of distributions:
from net investment income and net short-term realized gains 138,279 77,901
from net long-term realized gains . . . . . . . . . . . . - 5,990
------------- -------------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50,229) 122,896
============= =============
</TABLE>

<TABLE>
<CAPTION>
SOCIAL AWARENESS STOCK
PORTFOLIO
------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1995 1994
------------- -------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . 205,312 122,407
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (74,604) (67,708)
Shares issued in reinvestment of distributions:
from net investment income and net short-term realized gains 4,774 6,067
from net long-term realized gains . . . . . . . . . . . . 6,139 1,517
------------- -------------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,621 62,283
============= =============
</TABLE>

<TABLE>
<CAPTION>
UTILITIES PORTFOLIO
-------------------------------------
FOR THE YEAR FEBRUARY 4,*
ENDED TO
DECEMBER 31, DECEMBER 31,
1995 1994
------------- --------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . 822,640 754,802
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (209,288) (189,041)
Shares issued in reinvestment of distributions from
net investment income and net short-term realized gains . 14,594 -
------------- --------------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627,946 565,761
============= ==============
</TABLE>

* Date operations commenced.

As of December 31, 1995, all outstanding shares of beneficial interest
of each Portfolio were owned by The Travelers Fund U for Variable
Annuities, and/or The Travelers Fund UL for Variable Life Insurance,
both of which are separate accounts of The Travelers.

5. SUBSEQUENT EVENT

On January 23, 1996, in accordance with the Board of Trustees, a
dividend was declared with a distribution of net investment income and
net short-term realized gains of $1.06 per share from the
U.S.Government Securities Portfolio; a distribution of net investment
income of $0.28 and a distribution from net long-term realized gains
of $0.34 per share from Social Awareness Stock Portfolio; and a
distribution of net investment income and net short-term realized
gains of $0.47 per share from the Utilites Portfolio, payable on
January 23, 1996, to shareholders of record as of January 22, 1996.
These distributions are not reflected in the accompanying financial
statements.

-70-
<PAGE> 100
NOTES TO FINANCIAL STATEMENTS - CONTINUED

6. FINANCIAL HIGHLIGHTS*
(Selected data for a share outstanding throughout each period.)

U.S. GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
JANUARY 24,**
TO
FOR THE YEARS ENDED DECEMBER 31, DECEMBER 31,
--------------------------------- -------------
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
PER SHARE DATA:
- ---------------
Net asset value, beginning of period . . . . . . . . . . . . . . $ 10.58 $ 11.63 $ 10.79 $ 10.00

Income from operations
----------------------
Net investment income . . . . . . . . . . . . . . . . . . . . 0.65 0.60 0.57 0.53

Net gains or losses on securities (realized and unrealized).. 1.80 (1.23) 0.44 0.26
------- ------- ------- -------
Total from investment operations . . . . . . . . . . . . . 2.45 (0.63) 1.01 0.79

Less distributions
------------------
Distributions from net investment income and
net short-term realized gains . . . . . . . . . . . . . . (0.60) (0.39) (0.17) -

Distributions from net long-term realized gains . . . . . . . - (0.03) - -
------- ------- ------- -------
Total distributions . . . . . . . . . . . . . . . . . . . (0.60) (0.42) (0.17) -

Net asset value, end of period . . . . . . . . . . . . . . . . . $ 12.43 $ 10.58 $ 11.63 $ 10.79
------- ------- ------- -------
TOTAL RETURN*** 24.42 % (5.64)% 9.48 % 7.90%
- ------------

RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (thousands) . . . . . . . . . . . . $ 28,192 $ 24,522 $ 25,520 $ 9,017
Ratio of expenses to average net assets ## . . . . . . . . . 0.56 % 0.71 % 0.58 % 0.38%#
Ratio of net investment income to average net assets 5.80 % 5.56 % 5.04 % 4.72%#
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . 214 % 16 % 51 % 25%
</TABLE>

* This information set forth in Note 6 replaces the data presented in
prior periods as supplemental information.

** Date operations commenced.

*** Total return is determined by dividing the increase (decrease) in
value of a share during the period, after reflecting the reinvestment
of dividends declared during the period, by the beginning of period
share price. As described in Note 1, shares in the U.S. Government
Securities Portfolio are only sold to The Travelers separate accounts
in connection with the issuance of variable annuity and variable life
insurance contracts. The total return does not reflect the deduction
of any contract charges or fees assessed by The Travelers separate
accounts. For periods of less than one year, total returns are not
annualized.

# Annualized.

## The ratio of expenses to average net assets for 1992-1993 reflects an
expense reimbursement by The Travelers in connection with voluntary
expense limitations. Without the expense reimbursement, the ratios of
expenses to average net assets would have been 0.77% and 0.72% for the
year ended December 31, 1993 and the period ended December 31, 1992,
respectively. For the years ended December 31, 1995 and 1994, there
were no expense reimbursements by The Travelers in connection with the
voluntary expense limitations described in Note 3.

-71-
<PAGE> 101

NOTES TO FINANCIAL STATEMENTS - CONTINUED

7. FINANCIAL HIGHLIGHTS*
(Selected data for a share outstanding throughout each period.)

SOCIAL AWARENESS STOCK PORTFOLIO
<TABLE>
<CAPTION>
MAY 1,** TO
FOR THE YEARS ENDED DECEMBER 31, DECEMBER 31,
1995 1994 1993 1992
------ ------- ------- -----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
- ---------------
Net asset value, beginning of period . . . . . . . . . $ 11.05 $ 11.64 $ 10.95 $ 10.00

Income from operations
----------------------
Net investment income . . . . . . . . . . . . . . . 0.12 0.16 0.17 0.16

Net gains or losses on securities (realized and
unrealized) . . . . . . . . . . . . . . . . . . . . 3.47 (0.45) 0.65 0.79
------- ------- ------- -------
Total from investment operations . . . . . . . . 3.59 (0.29) 0.82 0.95

Less distributions
------------------
Distributions from net investment income and
net short-term realized gains . . . . . . . . . (0.14) (0.24) (0.13) -

Distributions from net long-term realized gains . . (0.18) (0.06) - -
------- ------- ------- -------
Total distribution . . . . . . . . . . . . . . . (0.32) (0.30) (0.13) -

Net asset value, end of period . . . . . . . . . . . . $ 14.32 $ 11.05 $ 11.64 $ 10.95
======= ======= ======= =======
TOTAL RETURN*** 33.37% (2.69)% 7.55% 9.50%
- ------------

RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (thousands) . . . . . . . $ 7,055 $ 3,879 $ 3,361 $ 1,394
Ratio of expenses to average net assets ## . . . . 1.25% 1.25% 1.05% 0.71%#
Ratio of net investment income to average net assets 0.99% 1.43% 1.50% 2.22%#
Portfolio turnover rate . . . . . . . . . . . . . . 73% 137% 60% 56%
</TABLE>

* This information set forth in Note 7 replaces the data presented in
prior periods as supplementary information.

** Date operations commenced.

*** Total return is determined by dividing the increase (decrease) in
value of a share during the period, after reflecting the reinvestment
of dividends declared during the period, by the beginning of period
share price. As described in Note 1, shares in the Social Awareness
Stock Portfolio are only sold to The Travelers separate accounts in
connection with the issuance of variable annuity contracts. The total
return does not reflect the deduction of any contract charges or fees
assessed by The Travelers separate accounts. For periods of less
than one year, total returns are not annualized.

# Annualized.

## The ratio of expenses to average net assets for 1992-1995 reflects an
expense reimbursement by The Travelers in connection with voluntary
expense limitations. Without the expense reimbursement, the ratios of
expenses to average net assets would have been 1.75%, 3.34%, 3.73% and
2.19% for the years ended December 31, 1995, 1994, 1993 and the period
ended December 31, 1992, respectively.

-72-
<PAGE> 102
NOTES TO FINANCIAL STATEMENTS - CONTINUED

8. FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout each period.)

UTILITIES PORTFOLIO

<TABLE>
<CAPTION>
FOR THE YEAR FEBRUARY 4,*
ENDED TO
DECEMBER 31, DECEMBER 31,
1995 1994
---- ----
<S> <C> <C>
PER SHARE DATA:
- ---------------
Net asset value, beginning of period . . . . . . . . . $ 10.17 $ 10.00

Income from operations
----------------------
Net investment income . . . . . . . . . . . . . . . 0.48 0.35

Net gains or losses on securities (realized and unrealized) 2.44 (0.18)
--------- ---------
Total from investment operations . . . . . . . . 2.92 0.17
Less distributions
------------------
Distributions from net investment income and
net short-term realized gains . . . . . . . . . (0.24) -
--------- ---------

Total distributions . . . . . . . . . . . . . (0.24) -

Net asset value, end of period . . . . . . . . . . . . $ 12.85 $ 10.17
========= =========

TOTAL RETURN** 29.29 % 1.70 %
- ------------

RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (thousands) . . . . . . . $ 15,340 $ 5,757
Ratio of expenses to average net assets ## . . . . 1.25 % 1.25 %#
Ratio of net investment income to average net assets 4.29 % 3.86 %#
Portfolio turnover rate . . . . . . . . . . . . . . 25 % 32 %
</TABLE>

* Date operations commenced.

** Total return is determined by dividing the increase (decrease) in
value of a share during the period, after reflecting the reinvestment
of dividends declared during the period, by the beginning of period
share price. As described in Note 1, shares in the Utilities
Portfolio are only sold to The Travelers separate accounts in
connection with the issuance of variable annuity and variable life
insurance contracts. The total return does not reflect the deduction
of any contract charges or fees assessed by The Travelers separate
accounts. For periods of less than one year, total returns are not
annualized.

# Annualized.

## The ratio of expenses to average net assets for 1994-1995 reflects an
expense reimbursement by The Travelers in connection with voluntary
expense limitations. Without the expense reimbursement, the ratios of
expenses to average net assets would have been 1.27% and 3.49%
annualized for the year ended December 31, 1995 and the period ended
December 31, 1994, respectively.

-73-
<PAGE> 103

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees and Shareholders of
The Travelers Series Trust:

We have audited the accompanying statements of assets and liabilities of the
U.S. Government Securities Portfolio, Social Awareness Stock Portfolio and the
Utilities Portfolio of The Travelers Series Trust, including the statements of
investments as of December 31, 1995, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of
the applicable periods ended December 31, 1995 and 1994, and the financial
highlights for each of the applicable periods ended December 31, 1995, 1994,
1993 and 1992. These financial statements and financial highlights are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and also
with brokers for the U.S. Government Securities Portfolio and the Utilities
Portfolio. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
U.S. Government Securities Portfolio, Social Awareness Stock Portfolio, and
Utilities Portfolio of The Travelers Series Trust as of December 31, 1995, the
results of their operations for the year then ended, the changes in their net
assets for each of the applicable periods ended December 31, 1995 and 1994, and
the financial highlights for each of the applicable periods ended December 31,
1995, 1994, 1993 and 1992, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 7, 1996

-74-
<PAGE> 104

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND PORTFOLIO FUND SERIES 1998

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (amortized cost $999,583) . . . . . . . . . . $1,012,572
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,352
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,257
----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,038,181
----------

LIABILITIES:
Payable for investment management and advisory fees . . . . . . . . . . . . . . . . . 14
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,257
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
----------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,383
----------

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,023,798
==========

NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 998,739
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 12,428
Accumulated net realized gains (losses) on investment security transactions . . . . . (358)
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 12,989
----------
Total net assets (applicable to 99,875 shares outstanding at $10.25 per share) $1,023,798
==========
</TABLE>

See Notes to Financial Statements

-4-
<PAGE> 105

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 1998

STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 11, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,764

EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . $ 224
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 5,322
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,215
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 6,425
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,407
--------
Total expenses before reimbursement from The Travelers . . . . . 14,593

Less: Reimbursement from The Travelers . . . . . . . . . . . . . . (14,257)
--------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 336
-------
Net investment income . . . . . . . . . . . . . . . . . . . 12,428
-------
REALIZED LOSS AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized loss from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . 196,886
Amortized cost of investment securities sold . . . . . . . . . . 197,244
--------
Net realized loss . . . . . . . . . . . . . . . . . . . . . (358)

Unrealized gain on investment securities:
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . 12,989
-------
Net realized loss and change in unrealized gain . . . . . 12,631
-------

Net increase in net assets resulting from operations . . . . . . . $25,059
=======
</TABLE>

See Notes to Financial Statements

-5-
<PAGE> 106

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 1998

STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD OCTOBER 11, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
1995
----
<S> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 12,428
Net realized loss from investment security transactions . . . . . . . (358)
Net change in unrealized gain on investment securities . . . . . . . 12,989
----------
Net increase in net assets resulting from operations . . . . . . . 25,059
----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . 1,000,000
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . (1,261)
----------
Net increase in net assets resulting from capital share transactions 998,739
----------
Net increase in net assets . . . . . . . . . . . . . . . . . . 1,023,798

NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . -
----------
End of period (including undistributed net investment income of $12,428) $1,023,798
==========
</TABLE>

See Notes to Financial Statements

-6-
<PAGE> 107

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 1998

STATEMENT OF INVESTMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ----------
<S> <C> <C>
BONDS (19.9%)

BANKING (4.9%)
Chemical New York Corp.,
0.00% Bonds, 1999 $ 60,000 $ 49,838
----------
FINANCE (5.0%)
Avco Financial Services, Inc.,
0.00% Notes, 1998 60,000 50,753
----------
FOOD (5.1%)
PepsiCo, Inc.,
0.00% Notes, 1999 62,000 51,150
----------
INSURANCE (4.9%)
New England Life,
0.00% Bonds, 1999 60,000 49,575
----------
TOTAL BONDS
(AMORTIZED COST $199,247) 201,316
----------
U.S. GOVERNMENT
SECURITIES (80.1%)

United States of America Treasury,
0.00% Notes, 1998 941,000 811,256
----------

TOTAL U.S. GOVERNMENT
SECURITIES
(AMORTIZED COST $800,336) 811,256
----------
TOTAL INVESTMENTS (100%)
AMORTIZED COST $999,583) (A) (B) $1,012,572
==========
</TABLE>

NOTES

(A) At December 31, 1995, net unrealized appreciation for all securities was
$12,989. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over amortized cost
of $12,989.

(B) The cost of investments for federal income tax purposes is identical.

See Notes to Financial Statements

-7-
<PAGE> 108

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2000

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (amortized cost $1,004,949) . . . . . . . . . $1,024,291
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,302
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,257
----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,043,850
----------

LIABILITIES:

Payable for investment management and advisory fees . . . . . . . . . . . . . . . . . 14
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,257
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
----------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,383
----------

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,029,467
==========
NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 998,743
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 12,592
Accumulated net realized gains (losses) on investment security transactions . . . . . (1,210)
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . 19,342
----------
Total net assets (applicable to 99,876 shares outstanding at $10.31 per share) $1,029,467
==========
</TABLE>

See Notes to Financial Statements

-8-
<PAGE> 109

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2000

STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 11, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,928

EXPENSES:
Investment management and advisory fees . . . . . . . . . . . $ 224
Accounting and audit fees . . . . . . . . . . . . . . . . . . 5,322
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . 1,215
Printing and postage . . . . . . . . . . . . . . . . . . . . . 6,425
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . 1,407
--------
Total expenses before reimbursement from The Travelers. . 14,593

Less: Reimbursement from The Travelers . . . . . . . . . . . . (14,257)
--------
Net expenses . . . . . . . . . . . . . . . . . . . . . 336
------
Net investment income . . . . . . . . . . . . . . . 12,592
------
REALIZED LOSS AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:

Realized loss from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . 343,073
Amortized cost of investment securities sold . . . . . . . 344,283
--------
Net realized loss . . . . . . . . . . . . . . . . . (1,210)

Unrealized gain on investment securities:
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . 19,342
-------
Net realized loss and change in unrealized gain . . 18,132
-------
Net increase in net assets resulting from operations . . . . . $30,724
=======

</TABLE>

See Notes to Financial Statements

-9-
<PAGE> 110

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2000

STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD OCTOBER 11, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
1995
----
<S> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,592
Net realized loss from investment security transactions . . . . . . . . . . . (1,210)
Net change in unrealized gain on investment securities . . . . . . . . . . . 19,342
----------
Net increase in net assets resulting from operations . . . . . . . . . . . 30,724
----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
Payment for shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . (1,257)
----------
Net increase in net assets resulting from capital share transactions . . . 998,743
----------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . 1,029,467

NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
----------
End of period (including undistributed net investment income of $12,592) . . $1,029,467
==========
</TABLE>

See Notes to Financial Statements

-10-
<PAGE> 111

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2000

STATEMENT OF INVESTMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
BONDS (24.5%)

BANKING (4.9%)
Chemical New York Corp.,
0.00% Bonds, 1999 $ 60,000 $ 49,837
----------
FINANCE (4.8%)
American Express, Co.,
0.00% Bonds, 2000 65,000 48,669
----------
FOOD (5.0%)
PepsiCo, Inc.,
0.00% Notes, 1999 62,000 51,150
----------
INSURANCE (4.8%)
New England Life,
0.00% Bonds, 1999 60,000 49,575
----------
SERVICES (5.0%)
Hospital Corp. of America,
0.00% Notes, 2000 65,000 51,348
----------
TOTAL BONDS
(AMORTIZED COST $246,210) 250,579
----------

U.S. GOVERNMENT
SECURITIES (75.5%)

United States of America
Treasury,
0.00% Notes, 2000 1,000,000 773,712
----------

TOTAL U.S. GOVERNMENT
SECURITIES
(AMORTIZED COST $758,739) 773,712
----------

TOTAL INVESTMENTS (100%)
(AMORTIZED COST $1,004,949)(A)(B) $1,024,291
==========
</TABLE>

NOTES

(A) At December 31, 1995, net unrealized appreciation for all securities was
$19,342. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over amortized cost
of $19,342.

(B) The cost of investments for federal income tax purposes amounted to
$1,005,372. Gross unrealized appreciation of investments, based on
identified tax cost at December 31, 1995 was $18,919.

See Notes to Financial Statements

-11-
<PAGE> 112

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2005

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (amortized cost $1,006,402) . . . . . . . . . . . $1,043,215
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,833
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,256
----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,064,304
----------

LIABILITIES:
Payable for investment management and advisory fees . . . . . . . . . . . . . . . . . . 14
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,256
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
----------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,383
----------

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,049,921
==========

NET ASSETS REPRESENTED BY:
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,001,717
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 13,259
Accumulated net realized gains (losses) on investment security transactions . . . . . . (1,868)
Net unrealized appreciation on investment securities . . . . . . . . . . . . . . . . . . 36,813
----------
Total net assets (applicable to 100,164 shares outstanding at $10.48 per share) . . . $1,049,921
==========
</TABLE>

See Notes to Financial Statements

-12-
<PAGE> 113

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2005

STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 11, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,597

EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . $ 225
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . 5,322
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . 1,215
Printing and postage . . . . . . . . . . . . . . . . . . . . . . 6,425
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . 1,407
--------
Total expenses before reimbursement from The Travelers . . . . 14,594
Less: Reimbursement from The Travelers . . . . . . . . . . . . . (14,256)
--------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . 338
-------
Net investment income . . . . . . . . . . . . . . . . . . . 13,259
-------

REALIZED LOSS AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized loss from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . 231,571
Amortized cost of investment securities sold . . . . . . . . . 233,439
--------
Net realized loss . . . . . . . . . . . . . . . . . . . . . . (1,868)

Unrealized gain on investment securities:
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . 36,813
-------
Net realized loss and change in unrealized gain . . . . . . 34,945
-------

Net increase in net assets resulting from operations . . . . . . $48,204
=======
</TABLE>

See Notes to Financial Statements

-13-
<PAGE> 114

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2005

STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD OCTOBER 11, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
1995
----
<S> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,259
Net realized loss from investment security transactions . . . . . . . . . . . . . . (1,868)
Net change in unrealized gain on investment securities . . . . . . . . . . . . . . 36,813
----------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 48,204
----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,002,907
Payment for shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,190)
----------
Net increase in net assets resulting from capital share transactions . . . . . . 1,001,717
----------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,049,921

NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
----------
End of period (including undistributed net investment income of $13,259) . . . . . $1,049,921
==========
</TABLE>

See Notes to Financial Statements

-14-
<PAGE> 115

THE TRAVELERS SERIES TRUST
ZERO COUPON BOND FUND PORTFOLIO SERIES 2005

STATEMENT OF INVESTMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
BONDS (23.2%)

BANKING (4.9%)
Chemical New York Corp.,
0.00% Bonds, 2002 $ 75,000 $ 51,094
----------
FINANCE (9.3%)
Exxon Capital,
0.00% Notes, 2004 80,000 47,200
Grand Met Investment Corp.,
0.00% Notes, 2004 80,000 49,404
----------
96,604
----------
FOOD (4.4%)
General Mills, Inc.,
0.00% Bonds, 2004 80,000 46,250
----------
INSURANCE (4.6%)
American International Group,
0.00% Bonds, 2004 80,000 47,950
----------
TOTAL BONDS
(AMORTIZED COST $234,613) 241,898
----------
U.S. GOVERNMENT
SECURITIES (76.8%)

United States of America Treasury,
0.00% Bonds, 2005 1,398,000 801,317
----------
TOTAL U.S. GOVERNMENT
SECURITIES
(AMORTIZED COST $771,789) 801,317
----------
TOTAL INVESTMENTS (100%)
(AMORTIZED COST $1,006,402) (A) (B) $1,043,215
==========
</TABLE>

NOTES

(A) At December 31, 1995, net unrealized appreciation for all securities was
$36,813. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over amortized cost
of $36,813.

(B) The cost of investments for federal income tax purposes is identical.

See Notes to Financial Statements

-15-
<PAGE> 116

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Series Trust (the "Series Trust") is a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Declaration of
Trust authorizes the shares of the Series Trust to be divided into two or
more series. As of December 31, 1995, the Series Trust consisted of six
series: Zero Coupon Bond Fund Portfolio Series 1998, Zero Coupon Bond Fund
Portfolio Series 2000 and Zero Coupon Bond Fund Portfolio Series 2005 (the
"Portfolios"), U.S. Government Securities Portfolio, Social Awareness Stock
Portfolio, and Utilities Portfolio. Shares in each Portfolio are currently
offered, without a sales charge, to separate accounts of The Travelers
Insurance Company ("The Travelers") and The Travelers Life and Annuity
Company, indirect wholly owned subsidiaries of Travelers Group Inc., in
connection with the issuance of certain variable life insurance contracts.

The following is a summary of significant accounting policies consistently
followed by each Portfolio in the preparation of its financial statements.

SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last-reported sale price as of the
close of business of the New York Stock Exchange on the last business day
of the period; securities traded on the over-the-counter market and listed
securities with no reported sales are valued at the mean between the last
reported bid and asked prices or on the basis of quotations received from a
reputable broker or other recognized source.

When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated
at fair value on the basis of valuations furnished by a pricing service.
These valuations are determined for normal institutional-size trading units
of such securities using methods based on market transactions for
comparable securities and various relationships between securities which
are generally recognized by institutional traders. Securities, including
restricted securities, for which pricing services are not readily available
are valued by management at prices which it deems in good faith to be fair.

Short-term investments for which a quoted market price is available are
valued at market. Short-term investments for which there is no reliable
quoted market price are valued by computing a market value based upon
quotations from dealers or issuers for securities of a similar type,
quality and maturity.

STRIPPED SECURITIES. Each Zero Coupon Bond Fund Portfolio will invest
primarily in "Stripped Securities", a term used collectively for Stripped
Treasury Securities, Stripped Government Securities, Stripped Corporate
Securities and Stripped Eurodollar Obligations; as well as other stripped
securities. Stripped Securities can be securities consisting of debt
obligations that have been stripped of unmatured interest coupons,
securities consisting of unmatured interest coupons that have been stripped
from debt obligations, or debt obligations that are issued without interest
coupons and are sold at substantial discounts from their face amounts.

Stripped Securities do not make periodic payments of interest prior to
maturity. The market value of stripped securities will fluctuate in
response to changes in economic conditions, interest rates and the market's
perception of the securities. Fluctuations in response to interest rates
may be greater than those for debt obligations of comparable maturities
that pay interest currently. The amount of fluctuation increases with a
longer period of maturity.

-16-
<PAGE> 117

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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

Futures contracts purchased by each Portfolio are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statements of Investments. However, when each
Portfolio holds open futures contracts, it assumes a market risk generally
equivalent to the underlying market risk of changes in the value of the
specified indexes or debt securities associated with the futures contract.

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

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

TAXES. Each Portfolio has qualified, or intends to qualify each year, as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. As a regulated investment company, each Portfolio is
relieved of any federal income tax liability by distributing all of its net
taxable investment income and net taxable capital gains, if any, to its
shareholders. Each Portfolio further intends to avoid excise tax liability by
distributing substantially all of its investment income. Therefore, no federal
income tax provision has been made by each Portfolio in its financial
statements. As of December 31, 1995, the Zero Coupon Bond Fund Portfolio
Series 1998, Zero Coupon Bond Fund Portfolio Series 2000 and Zero Coupon Bond
Fund Portfolio Series 2005 had capital loss carryovers of $358, $787, and
$1,868, respectively, which may be available to offset any future realized
taxable capital gains, to the extent provided by regulations. These amounts
expire during the year 2003.

OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Security transactions are accounted for on the trade date. Interest income is
recorded on the accrual basis and dividend income is recorded on the
ex-dividend date. For the Zero Coupon Bond Fund Portfolios all original issue
discounts are amortized to investment income for both financial reporting and
federal income tax purposes. The constant yield method of amortization is
utilized in these portfolios. Distributions to shareholders are recorded at
the close of business on the record date.

-17-
<PAGE> 118

NOTES TO FINANCIAL STATEMENTS - CONTINUED

2. INVESTMENTS

Purchases of bonds excluding short-term investments aggregated $197,321 for
Zero Coupon Bond Fund Portfolio Series 1998; $293,301 for Zero Coupon Bond
Fund Portfolio Series 2000; $232,206 for Zero Coupon Bond Fund Portfolio
Series 2005 for the period ended December 31, 1995. Sales of bonds
excluding short-term investments aggregated $49,406 for Zero Coupon Bond
Fund Portfolio Series 2000 for the same period. Purchases and sales of
direct and indirect U.S. government obligations were $987,858 and $196,886,
respectively for Zero Coupon Bond Fund Portfolio Series 1998; $1,044,119
and $293,667, respectively for Zero Coupon Bond Fund Portfolio Series 2000;
$995,154 and $231,571, respectively for Zero Coupon Bond Fund Portfolio
Series 2005 for the period ended December 31, 1995. Realized gains and
losses from security transactions are reported on an identified cost basis.

3. PORTFOLIO CHARGES

Investment management and advisory fees for the Zero Coupon Bond Fund
Portfolios are calculated daily at an annual rate of 0.10% of each Zero
Coupon Bond Fund Portfolios' average net assets. These fees are paid to
Travelers Asset Management International Corporation, an indirect wholly
owned subsidiary of Travelers Group Inc.

The Travelers has agreed to reimburse the Zero Coupon Bond Fund Portfolios
for the amount by which each of the Zero Coupon Bond Fund Portfolio's
aggregate annualized operating expenses, excluding brokerage commissions
and any interest charges and taxes, exceed 0.15% of each Zero Coupon Bond
Fund Portfolio's average net assets. Trustees and officers of the Series
Trust, who are also officers and employees of Travelers Group Inc., or its
subsidiaries, receive no compensation directly from the Series Trust.

-18-
<PAGE> 119

NOTES TO FINANCIAL STATEMENTS - CONTINUED

4. SHARES OF BENEFICIAL INTEREST

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of beneficial interest without par value. Transactions in shares of
each Portfolio were as follows:

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND
PORTFOLIO SERIES 1998
---------------------
OCTOBER 11,*
TO
DECEMBER 31, 1995
---------------------
<S> <C>
Shares sold ..................................................... 100,000
Shares redeemed ................................................. (125)
-------
Net ............................................................. 99,875
=======
</TABLE>

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND
PORTFOLIO SERIES 2000
---------------------
OCTOBER 11,*
TO
DECEMBER 31, 1995
---------------------
<S> <C>
Shares sold ..................................................... 100,000
Shares redeemed ................................................. (124)
-------
Net ............................................................. 99,876
=======
</TABLE>

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND
PORTFOLIO SERIES 2005
---------------------
OCTOBER 11,*
TO
DECEMBER 31, 1995
---------------------
<S> <C>
Shares sold ..................................................... 100,281
Shares redeemed ................................................. (117)
-------
Net ............................................................. 100,164
=======
</TABLE>

* Date operations commenced.

As of December 31, 1995, all outstanding shares of beneficial interest of
each Portfolio were owned by The Travelers Fund UL for Variable Life
Insurance, a separate account of The Travelers.

5. SUBSEQUENT EVENT

On January 23, 1996, in accordance with the Board of Trustees, a dividend
was declared with a distribution of net investment income of $0.12 per
share from the Zero Coupon Bond Fund Portfolio Series 1998; a distribution
of net investment income of $0.12 per share from the Zero Coupon Bond Fund
Portfolio Series 2000; a distribution of net investment income of $0.13 per
share from the Zero Coupon Bond Fund Portfolio Series 2005, payable on
January 23, 1996, to shareholders of record as of January 22, 1996. These
distributions are not reflected in the accompanying financial statements.

-19-
<PAGE> 120

NOTES TO FINANCIAL STATEMENTS - CONTINUED

6. FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period.)

ZERO COUPON BOND FUND PORTFOLIO SERIES 1998

<TABLE>
<CAPTION>
OCTOBER 11,*
TO
DECEMBER 31,
------------
1995
------------
<S> <C>
PER SHARE DATA:
- ---------------
Net asset value, beginning of period .......................... $ 10.00

Income from operations
----------------------
Net investment income ....................................... 0.12
Net gains or losses on securities (realized and unrealized).. 0.13
------------
Total from investment operations .......................... 0.25

Net asset value, end of period ................................ $ 10.25
============
TOTAL RETURN** 2.50%
- ------------

RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (thousands) ....................... $ 1,024
Ratio of expenses to average net assets ## .................. 0.15%#
Ratio of net investment income to average net assets ........ 5.55%#
Portfolio turnover rate ..................................... 20%
</TABLE>

* Date operations commenced.

** Total return is determined by dividing the increase (decrease) in
value of a share during the period, after reflecting the reinvestment
of dividends declared during the period, by the beginning of period
share price. As described in Note 1, shares of the Zero Coupon Bond
Fund Portfolio Series 1998 are only sold to The Travelers separate
accounts in connection with the issuance of variable life insurance
contracts. The total return does not reflect the deduction of any
contract charges or fees assessed by The Travelers separate accounts.
For periods of less than one year, total returns are not annualized.

# Annualized.

## The ratio of expenses to average net assets for 1995 reflects an
expense reimbursement by The Travelers in connection with voluntary
expense limitations. Without the expense reimbursement, the ratio of
expenses to average net assets would have been 6.51% annualized for
the period ended December 31, 1995.

-20-
<PAGE> 121

NOTES TO FINANCIAL STATEMENTS - CONTINUED

7. FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period.)

ZERO COUPON BOND FUND PORTFOLIO SERIES 2000

<TABLE>
<CAPTION>
OCTOBER 11,*
TO
DECEMBER 31,
------------
1995
------------
<S> <C>
PER SHARE DATA:
- ---------------
Net asset value, beginning of period ......................... $ 10.00

Income from operations
----------------------
Net investment income ........................................ 0.13
Net gains or losses on securities (realized and unrealized)... 0.18
------------
Total from investment operations ........................... 0.31

Net asset value, end of period ............................... $ 10.31
============
TOTAL RETURN** 3.10%
- ------------

RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (thousands)....................... $ 1,029
Ratio of expenses to average net assets ## ................. 0.15%#
Ratio of net investment income to average net assets ....... 5.61%#
Portfolio turnover rate .................................... 34%
</TABLE>

* Date operations commenced.

** Total return is determined by dividing the increase (decrease) in value of a
share during the period, after reflecting the reinvestment of dividends
declared during the period, by the beginning of period share price. As
described in Note 1, shares of the Zero Coupon Bond Fund Portfolio Series
2000 are only sold to The Travelers separate accounts in connection with the
issuance of variable life insurance contracts. The total return does not
reflect the deduction of any contract charges or fees assessed by The
Travelers separate accounts. For periods of less than one year, total
returns are not annualized.

# Annualized.

## The ratio of expenses to average net assets for 1995 reflects an expense
reimbursement by The Travelers in connection with voluntary expense
limitations. Without the expense reimbursement, the ratio of expenses to
average net assets would have been 6.51% annualized for the period ended
December 31, 1995.

-21-
<PAGE> 122

NOTES TO FINANCIAL STATEMENTS - CONTINUED

8. FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period.)

ZERO COUPON BOND FUND PORTFOLIO SERIES 2005

<TABLE>
<CAPTION>
OCTOBER 11,*
TO
DECEMBER 31,
------------
1995
------------
<S> <C>
PER SHARE DATA:
- ---------------
Net asset value, beginning of period ........................... $ 10.00

Income from operations
----------------------
Net investment income ....................................... 0.13

Net gains or losses on securities (realized and unrealized)... 0.35
------------
Total from investment operations ........................... 0.48

Net asset value, end of period ................................. $ 10.48
============
TOTAL RETURN** 4.80%
- ------------

RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (thousands) . . . . . . . . . . . . $ 1,050
Ratio of expenses to average net assets ## . . . . . . . . . . 0.15%#
Ratio of net investment income to average net assets . . . . . 5.89%#
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . 23%
</TABLE>

* Date operations commenced.

** Total return is determined by dividing the increase (decrease) in value of a
share during the period, after reflecting the reinvestment of dividends
declared during the period, by the beginning of period share price. As
described in Note 1, shares in the Zero Coupon Bond Fund Portfolio Series
2005 are only sold to The Travelers separate accounts in connection with the
issuance of variable life insurance contracts. The total return does not
reflect the deduction of any contract charges or fees assessed by The
Travelers separate accounts. For periods of less than one year, total
returns are not annualized.

# Annualized.

## The ratio of expenses to average net assets for 1995 reflects an expense
reimbursement by The Travelers in connection with voluntary expense
limitations. Without the expense reimbursement, the ratio of expenses to
average net assets would have been 6.48% annualized for the period ended
December 31, 1995.

-22-
<PAGE> 123

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees and Shareholders of
The Travelers Series Trust:

We have audited the accompanying statements of assets and liabilities of the
Zero Coupon Bond Fund Portfolio Series 1998, Zero Coupon Bond Fund Portfolio
Series 2000 and the Zero Coupon Bond Fund Portfolio Series 2005 of The
Travelers Series Trust, including the statements of investments as of December
31, 1995, and the related statements of operations for the period October 11,
1995 (date operations commenced) to December 31, 1995, the statements of
changes in net assets for the period October 11, 1995 (date operations
commenced) to December 31, 1995, and the financial highlights for the period
October 11, 1995 (date operations commenced) to December 31, 1995. These
financial statements and financial highlights are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Zero Coupon Bond Fund Portfolio Series 1998, Zero Coupon Bond Fund Portfolio
Series 2000 and the Zero Coupon Bond Fund Portfolio Series 2005 of The
Travelers Series Trust as of December 31, 1995, the results of their operations
for the period October 11, 1995 (date operations commenced) to December 31,
1995, the changes in their net assets for the period October 11, 1995 (date
operations commenced) to December 31, 1995, and the financial highlights for
the period October 11, 1995 (date operations commenced) to December 31, 1995,
in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 7, 1996

-23-
<PAGE> 124
STATEMENT OF ADDITIONAL INFORMATION
FOR

THE TRAVELERS SERIES TRUST

U.S. GOVERNMENT SECURITIES PORTFOLIO

SOCIAL AWARENESS STOCK PORTFOLIO

UTILITIES PORTFOLIO

ZERO COUPON BOND FUND PORTFOLIOS
(SERIES 1998, 2000,2005)

TRAVELERS QUALITY BOND PORTFOLIO

LAZARD INTERNATIONAL STOCK PORTFOLIO

MFS EMERGING GROWTH PORTFOLIO

FEDERATED HIGH YIELD PORTFOLIO

FEDERATED STOCK PORTFOLIO

LARGE CAP PORTFOLIO

EQUITY INCOME PORTFOLIO