TRAVELERS SERIES TRUST, 485APOS, 1998-02-12

TRAVELERS SERIES TRUST
485APOS, 1998-02-12

Previous: MISONIX INC, 10QSB, 1998-02-12

Next: GENTA INCORPORATED /DE/, SC 13G/A, 1998-02-12

<PAGE> 1
Registration Statement No. 33-43628
811-6465

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 22

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22

THE TRAVELERS SERIES TRUST
---------------------------
(Exact name of Registrant)

ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
----------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (860) 277-0111
--------------
ERNEST J. WRIGHT
Secretary to the Board of Trustees
The Travelers Series Trust
One Tower Square
Hartford, Connecticut 06183
----------------------------
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check appropriate box):

immediately upon filing pursuant to paragraph (b).
- -------
on May 1, 1997 pursuant to paragraph (b).
- ------
60 days after filing pursuant to paragraph (a)(1).
- -------
on __________ pursuant to paragraph (a)(1)
- -------
X 75 days after filing pursuant to paragraph (a)(2).
- -----
on __________ pursuant to paragraph (a)(2) of Rule 485.
- -------
on __________ pursuant to paragraph (a)(3) of Rule 485.
- ------
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
- ------ previously filed post-effective amendment.

<PAGE> 2
THE TRAVELERS SERIES TRUST

Cross-Reference Sheet pursuant to Rule 495 under the Securities Act of 1933

<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
- --- ---------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Cover Page
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; The Travelers Series Trust;
Investment Objectives and Policies
5. Management of the Fund Board of Trustees; Investment Manager;
Investment Subadvisers; Securities
Transactions; Fund Expenses; Additional
Information
6. Capital Stock and Other Securities Fund Description; Dividends and
Distributions; Shareholder Rights
Net Asset Value
7. Purchase of Securities Being Offered Shareholder Rights
8. Redemption or Repurchase Net Asset Value
9. Legal Proceedings Legal Proceedings

CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
--------------------------------------

10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions; Appendix
14. Management of the Registrant Trustees and Officers
15. Control Persons and Principal Additional Information
Holders of Securities
16. Investment Advisory and Investment Adviser; Investment Subadvisers;
Other Services Additional Information
17. Brokerage Allocation Brokerage
18. Capital Stock and Other Declaration of Trust
Securities
19. Purchase, Redemption and Pricing Valuation of Securities
of Securities Being Offered
20. Tax Status Distributions and Taxes
21. Underwriters Not Applicable
22. Calculation of Performance Data Not Applicable
23. Financial Statements Additional Information
</TABLE>
<PAGE> 3

PART A

INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
DRAFT

SPECIMEN COPY

SUPPLEMENT TO PROSPECTUS
DATED MAY 1, 1997

THE TRAVELERS SERIES TRUST

The following information supplements the Prospectus dated May 1, 1997 for the
Travelers Series Trust and its portfolios.

Effective _________________, the NWQ Large Cap Portfolio, Jurika & Voyles Core
Equity Portfolio, Disciplined Small Cap Stock Portfolio, Strategic Stock
Portfolio, and the Convertible Bond Portfolios (the "Portfolios"), are being
added as five new series of shares under The Travelers Series Trust.
Information relating to the new Portfolios, their investment objectives,
policies and investment risks, as well as the investment adviser and
subadviser, are provided below. The investment objective of each portfolio is
fundamental, and may not be changed without a vote of the majority of the
outstanding shareholders. There is no assurance that a portfolio will meet is
investment objective.

INVESTMENT OBJECTIVE AND POLICIES - NWQ LARGE CAP PORTFOLIO

The investment objective of the NWQ Large Cap Portfolio is to achieve
consistent, superior total return with minimum risk to principal. The Portfolio
invests, under normal circumstances, at least 65% of its total assets in the
common stocks of companies with above-average statistical value which are in
fundamentally attractive industries and which, in the Subadviser's opinion, are
undervalued at the time of purchase. The Portfolio may also invest in other
equity-related securities consisting of convertible bonds, convertible
preferred stocks, rights and warrants. The Portfolio's policy is to invest in a
universe of 1100 companies of medium to large capitalization. Companies with
market capitalization under $1 billion will be limited to 10% of the
Portfolio's total assets.

The Subadviser uses statistical measures to screen for the companies with the
best value characteristics such as below-average price-to-earnings and
price-to-book ratios, above-average dividend yield and strong financial
stability. Further, the Subadviser uses normalized earnings to value cyclical
companies, focuses on quality of earnings, looks for investment in relative
value, and concentrates in industries/sectors with strong long-term
fundamentals. As used in this discussion, "fundamentals" will vary by industry
and could relate to factors such as supply and demand, market share, economics,
distribution channels, barriers to entry, and organizational factors. An
economic "sector" consists of a variety of industries having some similar
business characteristics, for example, the producer durables sector includes
industries such as aerospace, heavy machinery, and electrical equipment.

In order to capture value, the Subadviser uses a multi-disciplined approach to
identify market sectors that are early in their cycle of fundamental
improvement, investor recognition and market exploitation. In its
decision-making process, the Subadviser uses business-trend analyses to
research industry and company fundamentals. The results are analyzed for the
impact of changing worldwide product demand/supply, direction of inflation and
interest rates, and expansion/contraction of business cycles. Once the
investment team identifies those industries/sectors with positive fundamentals,
companies are screened for value characteristics such as below-average
price-to-earnings and price-to-book ratios and above-average dividend yield.
The Portfolio typically holds approximately 40-55 stocks.

1
<PAGE> 5
Company visits and interviews with management help to verify the value in these
potential investments. The Subadviser also uses numerous independent firms, as
well as in-house resources, for economic, industry and securities research. The
Portfolio will be concentrated in those industries with positive fundamentals
and seeks to minimize risk by avoiding industries with deteriorating long-term
fundamentals.

The Portfolio expects the majority of its investments to be companies based in
the United States. However, from time to time, shares of foreign-based
companies may be purchased if they pass the selection process outlined above.

Other investments are allowed, including, but not limited to, those described
below. The description of these techniques and the associated risks appears in
the Travelers Series Trust prospectus. Subject to the investment restrictions
set forth below, the NWQ Large Cap Portfolio may invest in or engage in the
following:

- - repurchase agreements
- - money market instruments
- - securities lending (not more than 33 1/3% of the Portfolio's net assets)
- - domestic and foreign money market instruments, including:
- - certificates of deposit,
- - bankers' acceptances,
- - time deposits maturing in up to six days (purchases of maturities of two to
six days are not to exceed 15% of the Portfolio's total assets),
- - U.S. Government obligations,
- - U.S. Government agency securities,
- - short-term corporate debt securities, and commercial paper rated A-l or A-2
by Standard & Poor's Corporation or Prime-1 or Prime-2 by Moody's Investors
Service, Inc. or if unrated, of comparable quality;
- - when-issued, delayed settlement and FORWARD DELIVERY SECURITIES;
- - open or closed-end investment companies (up to 10% of its assets. No more
than 5% of the Portfolio's total assets may be invested in securities of
any one investment company nor may it acquire more than 3% of the voting
securities of any other investment company.);
- - foreign investments;
- - ADRs (up to 20% of the Portfolio's assets); and
- - illiquid securities

The Portfolio will not invest in any security issued by a commercial bank
unless (i) the bank has total assets of at least $1 billion, or the equivalent
in other currencies, (ii) in the case of U.S. banks, it is a member of the
Federal Deposit Insurance Corporation, and (iii) in the case of foreign
branches of U.S. banks, the security is, of an investment quality comparable
with other debt securities which may be purchased by the Portfolio.

The investment policies of the NWQ Large Cap Portfolio are not fundamental.

RISK FACTORS

2
<PAGE> 6
may also use various investment practices, including investing in repurchase
agreements, when-issued, forward delivery and delayed settlement securities and
lending of securities, which all involve a degree of risk. Please refer to the
Travelers Series Trust prospectus for a complete discussion of these risks.

INVESTMENT RESTRICTIONS

Investment restrictions (1), (2), (4), (5) and (6a) 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
Portfolio may not:

1. with respect to 75% of its assets, invest more than 5% of its total
assets, computed at market value, in the securities of any one issuer
(excluding U.S. Government Securities);

2. with respect to 75% of its assets, invest in more than 10% of any
class of securities of any one issuer;

3. invest more than 25% of its total assets in companies within a single
industry; however, there are no limitations on investment made in
instruments issued or guaranteed by the U.S. Government when the
Portfolio adopts a temporary defensive position;

4. make loans, except by purchasing debt securities as allowed by the
investment policies, or entering into repurchase agreements, or by
lending its portfolio securities to banks, brokers, dealers and other
financial institutions

5. (a) borrow amounts in excess of 10% of its gross assets (taken at the
lower of cost or market value), and then only as a temporary measure
for extraordinary or emergency purposes, and (b) the Portfolio may not
purchase additional securities when borrowings exceed 5% of total
assets;

6. pledge, mortgage or hypothecate an amount of assets which (taken at
market value) exceeds 10% of its gross assets (taken at the lower of
cost or market value);

7. purchase or sell real estate or interests in real estate, except
through the purchase of securities of a type commonly purchased by
financial institutions which do not include direct interest in real
estate or mortgages, or commodities or commodity contracts;;

8. purchase or sell commodities or commodities contracts except for
hedging purposes;

9. underwrite the securities of other issuers

10. issue senior securities (except that the portfolio may make permitted
borrowings and enter into repurchase agreements);

11. purchase on margin or sell short;

12. invest for the primary purpose of control or management;

13. invest more than 15% of the portfolio's assets in illiquid securities;

3
<PAGE> 7
PORTFOLIO TURNOVER

Portfolio turnover is expected to average in the range of 25%-50% annually.

INVESTMENT OBJECTIVE AND POLICIES - JURIKA & VOYLES CORE EQUITY PORTFOLIO

The investment objective of Jurika & Voyles Core Equity Portfolio is to seek
long-term capital appreciation. The Portfolio invests primarily in the common
stock of quality companies of all market capitalizations that offer current
value and significant future growth potential.

The Portfolio will invest at least 65% of its total assets in the common stock
of companies having market capitalizations at the time of purchase of $500
million and over. The Portfolio typically expects that at least 80% of its
equity holdings will fall within this capitalization range. The average and
median market capitalizations will fluctuate over time as a result of market
valuation levels and the availability of specific investment opportunities.

The Portfolio seeks value in quality companies normally offering lower
price-to-earnings multiples and higher earnings growth rates than the S&P 500
or other relevant benchmark. Quality companies possess some or all of the
following characteristics: significant potential for future growth in earnings,
a strong competitive advantage, a clearly defined business focus, strong
financial health, and management ownership.

The Subadviser emphasizes in-house research, which includes personal contacts,
site visits and meetings with company management. In unusual circumstances,
economic, monetary and other factors may cause the Subadviser to assume a
temporary, defensive position during which all or a substantial portion of the
Portfolio's assets may be invested in cash and short-term instruments.

Other investments are allowed, including, but not limited to, those described
below. The description of these techniques and the associated risks appears in
the Travelers Series Trust prospectus. Subject to the investment restrictions
set forth below, the Jurika & Voyles Core Equity Portfolio may invest in or
engage in the following:

- - convertible preferred stocks;
- - convertible debt securities;
- - warrants;
- - foreign securities such as U.S. dollar-denominated securities of foreign
issuers and ADRs, (up to 25% of its total assets) but will limit its
investments in any one foreign country to 5% of its total assets. As part
of this, the Portfolio may invest up to 5% of its net assets in securities
denominated in foreign currencies;
- - debt securities (up to 35% of its total assets) including up to 25% of its
total assets in debt securities (and convertible debt securities) rated
below investment grade sometimes referred to as "high yield/high risk" or
"junk bonds." Debt securities may include bonds, notes, convertible bonds,
mortgage-backed and asset-backed securities (including CMOs and REMICs) and
other types;
- - U.S. Government securities;
- - repurchase agreements; and
- - securities lending

4
<PAGE> 8
RISK FACTORS

The value of the Portfolio's shares can be expected to fluctuate in response to
changes in market and economic conditions as well as the financial conditions
and prospects of the issuers in which the Portfolio invests. The Portfolio may
invest the securities of smaller companies. Such investments present greater
opportunities for capital appreciation but may also involve greater risks than
larger companies. The prices of securities of such smaller companies may
fluctuate to a greater degree than the prices of the securities of other
issuers. The Portfolio may invest in securities of foreign issuers which may
involve greater risks than investments in domestic securities, such as foreign
currency risks. Debt securities held by the Portfolio may be subject to
several types of investment risk, including market or interest rate risk, which
relates to the change in market value caused by fluctuations in prevailing
interest rates and credit risk, which relates to the ability of the issuer to
make timely interest payments and to repay the principal upon maturity. Call or
income risk relates to corporate bonds during periods of falling interest
rates, and involves the possibility that securities with high interest rates
will be prepaid or "called" by the issuer prior to maturity. Investment-grade
debt securities are generally regarded as having adequate capacity to pay
interest and repay principal, but have speculative characteristics.
Below-investment grade debt securities (sometimes referred to as
"high-yield/high-risk" or "junk" bonds) have greater speculative
characteristics. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay principal. The
Portfolio may also use various investment practices, including investing in
repurchase agreements, when-issued, forward delivery and delayed settlement
securities and lending of securities, which all involve a degree of risk.
Please refer to the Travelers Series Trust prospectus for a complete discussion
of these risks.

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 Portfolios as defined in the 1940 Act. The Portfolios may not:

1. with respect to 75% of its assets, invest more than 5% of its total
assets, computed at market value, in the securities of any one issuer
(excluding U.S. Government Securities);

2. invest more than 25% of its assets in companies within a single
industry; except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;

3. borrow amounts in excess of 33 1/3% of its gross assets (taken at the
lower of cost or market value), and then only as a temporary measure
for extraordinary or emergency purposes. The Portfolio may not
purchase additional securities when borrowings exceed 5% of total
assets;

4. Issue senior securities;

5. make loans of more than one-third of the Portfolio's net assets,
including loans of securities;

6. Purchase or sell commodities or commodity contracts, or interests in
oil, gas or other mineral leases, or other mineral exploration or
development programs;

5
<PAGE> 9
8. underwrite securities of any other company, except that the Portfolio
may invest in companies that engage in such businesses, and except to
the extent that the Portfolio may technically be deemed to be an
underwriter, as defined in the Securities Act of 1933 (the "1933 Act")
in selling a portfolio security;

Notwithstanding any other fundamental investment restriction or policy, the
Portfolio reserves the right to invest all of its assets in the securities of a
single open-end investment company with substantially the same fundamental
investment objectives, restrictions and policies as the Portfolio.

As a matter of additional investment restriction, implemented at the discretion
of the Subadviser, the Portfolio may not:

- - purchase or write put, call straddle or spread options or engage in
futures transactions;
- - make short sales (except covered or "against the box" short sales) or
purchases on margin
- - mortgage, pledge or hypothecate any of its assets as security for any
of its obligations, except as allowed for permissible borrowings
- - purchase the securities of any company for the purpose of exercising
management or control;
- - purchase more than 10% of the outstanding voting securities of any one
issuer;
- - participate on a joint basis in any trading account in securities,
although the Adviser may aggregate orders for the sale or purchase of
securities with other accounts it manages to reduce brokerage costs or
to average prices;
- - invest, in the aggregate, more than 15% of its net assets in illiquid
securities;
- - invest more than 25% of its total assets in foreign securities, or
more than 5% in one foreign country, or more than 5%of its net assets
in securities denominated in foreign currencies and
- - invest more than 5% of its net assets in indexed securities.

PORTFOLIO TURNOVER

Portfolio turnover is expected to be approximately _____%.

INVESTMENT OBJECTIVE AND POLICIES - DISCIPLINED SMALL CAP STOCK PORTFOLIO

The Disciplined Small Cap Stock Portfolio seeks long term capital appreciation
by investing primarily (at least 65% of its total assets) in the common stocks
of U.S. Companies with relatively small market capitalizations at the time of
investment. Companies with relatively small market capitalization are defined
as those which fall in the lowest 20% of market capitalization of publicly
traded companies in the U.S. with market values above $100 million. Stocks will
be selected based on a disciplined quantitative screening process that seeks a
combination of attractive relative value and earnings growth.

In order to provide consistent relative performance, the Portfolio will hold a
portfolio that is comparable to the Russell 2500 Stock Index in terms of
overall risk, economic sector weightings, and market capitalization. The
Russell 2500 is a broad-based index of the smaller cap segment of the U.S.
stock market. By linking its investment strategy to the Russell 2500 Stock
Index, the Portfolio will provide diversified exposure to the universe of
stocks that comprise the lowest 25% of market capitalization of publicly traded
companies in the U.S. with market values of greater

6
<PAGE> 10
than $100 million. However, the Portfolio is an index fund and is not limited
to investing in the stocks that comprise the Russell 2500 Stock Index. Over
time, the Portfolio is expected to exhibit performance volatility that is
similar to that of the Russell 2500 Stock Index. Of course, there can be no
assurance the Portfolio's total return, before or after expenses, will match or
exceed that of the Russell 2500 Stock Index.

The Portfolio's active investment strategy focuses primarily on individual
stock selection. In selecting the Portfolio's holdings, the Subadviser will
apply a number of computerized investment models to identify stocks that have a
high probability of outperforming their respective industry/sector peer groups
within the Russell 2500. These investment models incorporate a diverse set of
valuation, earnings and relative price variables to produce a comprehensive
appraisal profile on every stock in the universe of securities described above.
Stocks that are determined to be attractive based on a combination of
quantitative and fundamental criteria will be overweighted relative to the
benchmark index. In general, the discipline will favor stocks that demonstrate
an improving trend of earnings and also appear attractive based on measures of
fundamental value. While these securities have the potential to outperform the
securities represented in the Russell 2500, they may in fact be more volatile
or have a lower return than the benchmark index. Although equity securities
have historically demonstrated long-term growth in value, their prices
fluctuate based on changes in a company's financial condition and general
economic conditions. This is especially true in the case of smaller companies.

Under normal circumstances, the Portfolio will seek to maintain full exposure
to the stock market. Other investments are allowed, including, but not limited
to, those described below. The description of these techniques and the
associated risks appears in the Travelers Series Trust prospectus. Subject to
the investment restrictions set forth below, the Disciplined Small Cap Stock
Portfolio may invest in or engage in the following:

- - short-term money market instruments including:
- - U.S. government securities,
- - certificates of deposit,
- - time deposits,
- - bankers' acceptances issued by domestic banks (including their branches
located outside the United States and subsidiaries located in Canada),
domestic branches of foreign banks, savings and loan associations and
similar institutions,
- - high-grade commercial paper,
- - repurchase agreements; and
- - exchange-traded stock index futures contracts (the Portfolio will not
purchase or sell futures contracts for which the aggregate initial margin
exceeds five percent (5%) of the fair market value of assets, after taking
into account unrealized profits and losses and any such contracts which it
is entered into.) The Portfolio expects that risk management transactions
involving futures contracts will not impact more than twenty percent (20%)
of its assets at any one time.
- - real estate investment trust securities
- - securities lending (not to exceed 33 1/3% of the Portfolio's total assets)
- - leveraging (i.e., temporary bank borrowing, in an amount not to exceed 33
1/3% of the total value of its assets less its liabilities)

RISK FACTORS

The Portfolio is expected to remain fully invested in common stocks to the
extent practicable, and is therefore subject to the general risk of the stock
market. The Portfolio will invest in stocks of smaller companies that may
individually exhibit more price volatility than the broad market

7
<PAGE> 11
averages. Moreover, the Portfolio will invest in stocks of growth-oriented
companies that end to reinvest earnings rather than pay dividends. As a result,
dividend income is not expected to be a significant component of the
Portfolio's total return. The Portfolio will make investments in stocks that
may at times have limited market liquidity and whose purchase or sale would
result in above average transaction costs. Another factor which would increase
the fundamental risk of investing in smaller companies is the lack of publicly
available information due to their relatively short operating record as public
companies. The Portfolio may not be appropriate for all investors.

PORTFOLIO TURNOVER

The Portfolio intends generally to purchase securities for long-term capital
appreciation. The Portfolio's annual portfolio turnover rate is not expected to
exceed 150%; however, the actual portfolio turnover rate will vary from year to
year. Higher portfolio turnover rates may result in corresponding increases in
brokerage commission. The Subadviser considers these effects when evaluating
the anticipated benefits of trading the portfolio's holdings.

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 Portfolio may not:

1. invest 25% or more of its total assets in any one industry;

2. borrow amounts in excess of 33 1/3% of its gross assets (taken at the
lower of cost or market value), except that as a temporary measure for
extraordinary or emergency purposes, the portfolio may borrow up to 5%
more;

3. issue senior securities;

4. make loans, except that the Portfolios may purchase debt securities,
may enter into repurchase agreements, and may lend its securities;

5. underwrite the securities of other issuers, except insofar as the
Portfolio may technically be deemed to be an underwriter, as defined
in the Securities Act of 1933 (the "1933 Act") in the disposition of a
portfolio security;

6. invest for the primary purpose of control or management;

7. purchase real estate or interests in real estate, other than
securities secured by real estate, participation therein or real
estate investment trusts and similar instruments;

8. purchase or sell commodities or commodities contracts except for
hedging purposes;

9. make any short sales of securities, except in conformity with
applicable laws, rules and regulations and unless, giving effect to
such sale, the market value of all securities sold short does not
exceed 25% of the value of the Portfolio's total assets and the
Portfolio's aggregate short sales of a particular class of an issuer's
securities to not exceed 25% of the then outstanding securities of
that class of the issuer's securities; or

10. purchase any security (other than U.S. obligations) such that (a) more
than 25% of the Portfolio's total assets would be invested in
securities of a single issuer or (b) as to 75% of

8
<PAGE> 12
the Portfolio's total assets (i) more than 5% of the Portfolio's total
assets would be then invested in securities of a single issuer or (ii)
the Portfolio would own more than 10% of the voting securities of a
single issuer.

INVESTMENT OBJECTIVE AND POLICIES - STRATEGIC STOCK PORTFOLIO

The investment objective of the Strategic Stock Portfolio is to provide
investors with an above-average total return through a combination of potential
capital appreciation and dividend income. The Portfolio attempts to achieve its
investment objective by investing primarily in a portfolio of equity securities
comprised of (i) high dividend yield stocks periodically selected from the
companies included in the Dow Jones Industrial Average (the "DJIA") and (ii)
high dividend yield stocks periodically selected from a pre-screened subset of
the companies included in the Russell 1000 Stock Index (the "Russell 1000").

The Strategic Stock Portfolio invests primarily in dividend paying equity
securities of companies included in the DJIA or in the Russell 1000. The
Portfolio is not designed to parallel or correlate with, nor is the share price
expected to parallel or correlate with any movements in the DJIA or the Russell
1000. The Portfolio will initially invest approximately equally in 20 securities
identified by the Subadviser according to the Strategic Selection Policies
listed below.

THE "STRATEGIC SELECTION POLICIES." A security's dividend yield is a primary
factor in the security selection process. "Dividend yield" is calculated for
each security by annualizing the last quarterly or semiannual ordinary dividend
declared on each security and dividing the result by the security's closing sale
price on the applicable date. This yield is historical, and there can be no
assurance that any dividends will be declared or paid in the future. The ten
highest dividend yielding securities in the DJIA will be identified for
investment. In addition, all companies having securities in the Russell 1000
will be reviewed by the Subadviser. Securities of companies in the financial or
utility sectors and securities included in the DJIA will be excluded. Russell
1000 securities of the remaining companies will be ranked by dividend yield, and
the ten highest-yielding such Russell 1000 securities will be identified for
investment. The 20 securities so identified (the "Strategic Securities") will
represent the Portfolio's initial investment.

Periodically, the Subadviser will employ the same Strategic Selection Policies
to identify a new list of 20 Strategic Securities. The Subadviser will review
and adjust a portion of all of the Portfolio's assets as to invest that portion
of the Portfolio's assets approximately equally in the new list of 20 Strategic
Securities. In this manner, the Subadviser expects that, beginning with the
reevaluation in month thirteen, each security in the Portfolio will be reviewed
and potentially adjusted approximately annually, although reviews and
adjustments may be made more frequently. Although each new list of Strategic
Securities will include only 20 securities, the Subadviser expects that the
number of securities held by the Portfolio will over time increase and that the
Portfolio in aggregate may eventually hold 40 or more different securities.

Application of the Strategic Selection Policies will be subject to and limited
by certain of the Portfolio's other investment policies and restrictions. This
includes restrictions and limitations required for the Portfolio to maintain
its status as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended, and those required by the Investment
Company Act of 1940, as amended (such as investment diversification
requirements and industry concentration limitations).

9
<PAGE> 13
The Subadviser intends to maintain the ratio of shares of Strategic Securities
by purchasing and/or selling approximately proportionate amounts of securities
from the Portfolio in response to purchases made or redemptions requested.

Under normal circumstances, the portfolio will seek to maintain full exposure to
the stock market. Other investments are allowed, including, but not limited to,
those described below. The description of these techniques and the associated
risks appears in the Travelers Series Trust prospectus. Subject to the
investment restrictions set forth below, the Strategic Stock Portfolio may
invest in or engage in the following:

The Portfolio follows a "buy and hold" strategy. Except to raise cash for
operational purposes, the Portfolio ordinarily will not sell securities or
reevaluate its portfolio investments except as periodically determined by the
Subadviser. Only a portion of the Portfolio's assets may be reviewed and
adjusted for any given period. As a result, an adverse change in the financial
condition of an issuer will not result in a security's elimination from the
Portfolio prior to scheduled review except under extraordinary circumstances.
(e.g., an issuer's defaulting on payments). Similarly, securities held in the
Portfolio ordinarily will not be sold by the Portfolio for the purpose of
taking advantage of market fluctuations or changes in anticipated rate of
appreciation.

RISK FACTORS

Risk factors associated with an investment in the Portfolio include the possible
deterioration of either the financial condition of the issuers or the general
condition of the stock market, and general price volatility. The Subadviser
generally will not take these considerations into account in implementing the
Strategic Selection Policies and, accordingly, the Portfolio may at times
acquire securities of companies that the market and the Subadviser believe are
more susceptible to financial difficulty and corresponding adverse market
performance than are other companies with securities included in the DJIA or in
the Russell 1000. The relatively high dividend yield (calculated based on the
current stock price and the annualized most recent dividend payment amount) of
certain securities that the Portfolio will acquire may reflect the market's
assessment of the risk that the company may reduce or eliminate the dividend in
the current period or in the future, or otherwise reflect the market's
unfavorable assessment of the company's performance outlook.

10
<PAGE> 14
PORTFOLIO TURNOVER

The turnover of the Portfolio is anticipated to be approximately 100%

INVESTMENT RESTRICTIONS

1. invest 25% or more of its total assets in any one industry;

3. issue senior securities;

4. make loans, except that the Portfolios may purchase debt securities,
may enter into repurchase agreements, and may lend its securities;

6. invest for the primary purpose of control or management;

7. purchase real estate or interests in real estate, other than
securities secured by real estate, participation therein or real
estate investment trusts and similar instruments;

8. purchase or sell commodities or commodities contracts except for
hedging purposes;

10. purchase any security (other than U.S. obligations) such that (a) more
than 25% of the Portfolio's total assets would be invested in
securities of a single issuer or (b) as to 75% of the Portfolio's
total assets (i) more than 5% of the Portfolio's total assets would be
then invested in securities of a single issuer or (ii) the Portfolio
would own more than 10% of the voting securities of a single issuer.

11
<PAGE> 15
Note: The Russell 1000 Index is the property of Frank Russell Company (FRC).
The DJIA is the property of Dow Jones & Company, Inc. Dow Jones & Company,
Inc. has not granted to the Strategic Stock Portfolio a license to use the
DJIA. Neither FRC nor Dow Jones & Company, Inc. has participated in any way in
the creation of the Strategic Stock Portfolio or in the selection of the stocks
included in such Portfolio and neither has approved any information herein
relating thereto.

INVESTMENT OBJECTIVE AND POLICIES - CONVERTIBLE BOND PORTFOLIO

The investment objective of the Convertible Bond Portfolio is to seek current
income and capital appreciation by investing in convertible securities and in
combinations of nonconvertible fixed-income securities and warrants or call
options that together resemble convertible securities ("synthetic convertible
securities"). Under normal circumstances, the Portfolio will invest at least
65% of its assets in convertible securities, and may invest up to 35% of its
assets in synthetic convertible securities and in equity and debt securities
that are not convertible into common stock.

The Portfolio is not required to sell securities to conform to this 65%
limitation and may retain, on a temporary basis, securities received upon
conversion of convertible securities or upon exercise of warrants or call
options that are components of synthetic convertible securities to permit their
orderly disposition, to establish long-term holding periods for tax purposes or
for other reasons.

Other investments are allowed, including, but not limited to, those described
below. The description of these techniques and the associated risks appears in
the Travelers Series Trust prospectus. Subject to the investment restrictions
set forth below, the Convertible Bond Portfolio may invest in or engage in the
following:

- - invest up to 35% of its assets in synthetic convertible securities and in
equity and debt securities that are not convertible into common stock (or,
when deemed appropriate by the Adviser for temporary defensive purposes may
invest in these securities without limitation);

- - purchase put and call options;

- - enter into interest rate futures contracts, stock index futures and related
options;

- - write covered call options, lend portfolio securities and enter into short
sales "against the box;" and

- - utilize up to 10% of its assets to purchase put options on securities for
hedging purposes.

The Portfolio will not invest in fixed-income securities that are rated lower
than B by Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's
Ratings Group ("S&P") or, if unrated, deemed by the Adviser to be comparable to
securities rated lower than B.

RISK FACTORS AND SPECIAL CONSIDERATIONS

Convertible Securities and Synthetic Convertible Securities. Convertible
securities are fixed-income securities that may be converted at either a stated
price or stated rate into underlying shares of common stock. Convertible
securities have general characteristics similar to both fixed-income and equity
securities. Although to a lesser extent than with fixed-income securities, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rate decline. In
addition, because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the
underlying common stocks and, therefore, also will react to variations in the
general market for equity securities. A unique feature of convertible
securities is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and so may
not experience market value declines to the same extent as the underlying
common stock. When the

12
<PAGE> 16
market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.

As fixed-income securities, convertible securities are investments which
provide for a stable stream of income with generally higher yields than common
stocks.Like all fixed-income securities, there can be no assurance of current
income because the issuers of the convertible securities may default on their
obligations. Convertible securities, however, generally offer lower interest or
dividend yields than non-convertible securities of similar quality because of
the potential for capital appreciation. A convertible security, in addition to
providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. However, there can be no
assurance of capital appreciation because securities prices fluctuate.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible
securities.

Unlike a convertible security which is a single security, a synthetic
convertible security is comprised of two distinct securities that together
resemble convertible securities in certain respects. Synthetic convertible
securities are created by combining non-convertible bonds or preferred stocks
with warrants or stock call options. The options that will form elements of
synthetic convertible securities will be listed on a securities exchange or on
the National Association of Securities Dealers Automated Quotations Systems.
The two components of a synthetic convertible security, which will be issued
with respect to the same entity, generally are not offered as a unit, and may
be purchased and sold by the Fund at different times. Synthetic convertible
securities differ from convertible securities in certain aspects, including
that each component of a synthetic convertible security has a separate market
value and responds differently to market fluctuations. Investing in synthetic
convertible securities involves the risks normally involved in holding the
securities comprising the synthetic convertible security.

Medium, Low- and Unrated Securities. The Portfolio may invest in medium- or
low-rated securities and unrated securities of comparable quality. Generally,
these securities offer a higher current yield than the yield offered by
higher-rated securities but involve greater volatility of price and risk of
loss of income and principal, including the probability of default by or
bankruptcy of the issuers of such securities. Medium- and-low-rated and
comparable unrated securities (a) will likely have some quality and protective
characteristics that, in the judgment of the Adviser, are outweighed by large
uncertainties or major risk exposures or subject to adverse conditions and (b)
are predominately speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
Accordingly, it is possible that these types of factors could, in certain
instances, reduce the value of securities held by the Portfolio, and thus the
value of the Portfolio's shares.

While the market values of medium- and low-rated and comparable unrated
securities tend to react less to fluctuations in interest rate levels than do
those of higher-rated securities, the market values of certain of these
securities also tend to be more sensitive to individual corporate developments
and changes in economic conditions than higher-rated securities. In addition,
medium-and low-rated and comparable unrated securities generally present a
higher degree of credit risk.

13
<PAGE> 17
The issuers of medium- and low-rated and comparable unrated securities are
often highly leveraged and may not have more traditional methods of financing
available to them so that their ability to service their debt obligations
during an economic downturn or during sustained periods of rising interest
rates may be impaired. The risk of loss due to default by such issuers is
significantly greater because medium-and low-rated and comparable unrated
securities generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness. The Portfolio may incur additional expenses to
the extent that it is required to seek recovery upon a default in the payment
of principal or interest on its portfolio holding. In addition, the markets in
which medium-and low-rated or comparable unrated securities are traded
generally are more limited than those in which higher-rated securities are
traded. The existence of limited markets for these securities may restrict the
availability of securities for the Portfolio to purchase and also may have the
effect of limiting the ability of the Portfolio to (a) obtain accurate market
quotations for purposes of valuing securities and calculating net asset value
and (b) sell securities at their fair value either to meet redemption requests
or to respond to changes in the economy or the financial markets. The market
for medium-and low-rated and comparable unrated securities is relatively new
and has not weathered a major economic recession. The effect that such a
recession might have on such securities is not known. Any such recession,
however, could likely disrupt severely the market for such securities and
adversely affect the value of such securities. Any such economic downturn also
could adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon.

Fixed-income securities, including medium-and low- rated and comparable unrated
securities, frequently have call or buy-back features that permit their issuers
to call or repurchase the securities from their holders, such as the Fund. If
an issuer exercises these rights during periods of declining interest rates,
the Fund may have to replace the security with a lower yielding security,
resulting in a decreased return to the Fund.

Securities rated Ba by Moody's or BB by S&P have speculative characteristics
with respect to capacity to pay interest and repay principal. Securities rated
B generally lack characteristics of the desirable investment and assurance of
interest and principal payments over any long period of time may be small.

In evaluating the creditworthiness of an issue, whether rated or unrated, TAMIC
considers various factors, which may include the following: the issuer's
financial resources, its sensitivity to economic conditions and trends, the
operating history of and the community support for the facility financed by the
issue, the ability of the issuer's management and regulatory matters.

INVESTMENT ADVISER

Travelers Asset Management Investment Company ("TAMIC") is a registered
investment adviser which has provided investment advisory services since it
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 Portfolio, TAMIC receives a fee, equal to the average daily net
asset value of each of the following Portfolios:

NWQ Large Cap Portfolio, 0.75%
Jurika & Voyles Core Equity Portfolio, 0.75%

14
<PAGE> 18
Disciplined Small Cap Stock Portfolio, _____%
Strategic Stock Portfolio 0.60%
Convertible Bond Portfolio _____%

CONVERTIBLE BOND PORTFOLIO - PORTFOLIO MANAGER

David A. Tyson, Ph.D., CFA is primarily responsible for the day-to-day
operations of the Portfolio, including making the investment decisions. Mr.
Tyson is an Executive Vice President and head of the Securities Department
Portfolio Management Group. He is also President and Chief Investment Officer of
TAMIC. He manages Travelers convertible portfolio, several Travelers business
line portfolios, and several other TAMIC portfolios. His previous
responsibilities have included managing The Travelers Derivatives,
Mortgage-Backed, and Quantitative Investment Groups.

SUBADVISERS

All of the portfolios, except the Convertible Bond Portfolio, have Subadvisers
that manage their day-to-day operations for which TAMIC pays a fee.
Information about the Subadvisers is listed below:

NWQ INVESTMENT MANAGEMENT COMPANY - SUBADVISER TO NWQ LARGE CAP PORTFOLIO

NWQ Investment Management Company ("NWQ") was founded in 1982 and is located at
2049 Century Park East, 4th Floor, Los Angeles, California 90067. It is a
wholly-owned subsidiary of United Asset Management and provides investment
management services to institutional and high net worth individuals. As of the
December 31, 1997, NWQ had over $8.3 billion in assets under management.

An Investment Committee is responsible for the investment process and decisions
of the Portfolio, consisting of Jon D. Bosse, CFA; E.C. (Ted) Friedel, CFS;
Thomas J. Laird, CFA; David A. Polak, CFA; Phyllis G. Thomas, CFA; with Mr.
Friedel primarily responsible for the day-to-day management of the Portfolio.
Mr. Friedel is a managing director and portfolio manager with twenty-seven
years of investment experience. Prior to joining the firm in 1983, he spent
twelve years with Beneficial Standard Investment Management Company where he
was a senior member of the investment committee. He holds a B.S. from the
University of California at Berkeley, and an MBA from Stanford. He a member of
the Association for Investment Management and Research.

As compensation for its services as Subadviser, TAMIC pays NWQ a fee of 0.375%
of the average daily net asset value of the Portfolio.

JURIKA & VOYLES - SUBADVISER TO THE JURIKA & VOYLES CORE EQUITY PORTFOLIO

Jurika & Voyles is a professional investment management firm founded in 1983 by
William K. Jurika and Glenn C. Voyles. As of June 30, 1997, the Subadviser had
discretionary management authority with respect to approximately $7 billion of
assets for various clients including corporations, pension plans, 401(k) plans,
profit sharing plans, trusts and estates, foundations and charitable
endowments, and high net worth individuals. The principal business address of
the Subadviser is 1999 Harrison Street, Suite 700, Oakland, California 94612.

The Subadviser is affiliated with New England Investment Companies, L.P.
("NEIC"). NEIC is a publicly traded limited partnership affiliated with
Metropolitan Life Insurance Company. NEIC is

15
<PAGE> 19
a holding company for several investment management firms including Loomis,
Sayles & Company, L.P., Reich & Tang Asset Management, L.P., Copley Real Estate
Advisors, Inc., Back Bay Advisors, L.P., Harris Associates, L.P., Vaughan,
Nelson Scarborough & McConnell, L.P., and Westpeak Investment Advisors, L.P.
NEIC's subsidiaries and an affiliated firm, Capital Growth Management Limited
Partnership.

Peter Goetz is the manager of the Fund. He is a Vice President and Portfolio
Manager working with institutional clients. He was a senior portfolio
manager at Bank of America in Newport Beach, CA, managing equity and balanced
portfolios for non-profit organizations, charitable foundations, and
high-networth individuals. Peter is a graduate of the University of Southern
California, where he earned a Master's degree in Business Administration, and
the University of California, Irvine, where he earned a Bachelor's degree in
Economics. He is a Chartered Financial Analyst.

As compensation for its services as Subadviser TAMIC pays Jurika & Voyles a fee
equal to the average daily net asset value of 0.375%

TRAVELERS INVESTMENT MANAGEMENT CORPORATION ("TIMCO") - SUBADVISER TO THE
DISCIPLINED SMALL CAP STOCK PORTFOLIO AND STRATEGIC STOCK PORTFOLIO

TIMCO, located at One Tower Square, Hartford, CT 06183-2030 serves as the
Portfolio's investment subadviser. The Subadviser, a registered investment
adviser since 1971, has been in the investment counseling business since 1967
and renders investment advice to a number of institutional accounts as well as
various registered investment companies and insurance company separate accounts
that had total assets under management as of December 31, 1996 in excess of
$1.3 billion. Subject to the supervision and direction of the Fund's Board of
Trustees, the Subadviser manages the Portfolio in accordance with the
Portfolio's stated investment objective and policies, makes investment
decisions for the Portfolio, placed orders to purchase and sell securities and
employs professional portfolio managers and securities analysts who provide
research services to the Portfolio.

The Subadvisory fee is 0.375% of the Disciplined Small Cap Stock Portfolio's
average daily net assets pursuant to an advisory agreement entered into by the
subadviser and TAMIC.

The Subadvisory fee is 0.20% of the Strategic Stock Portfolio's average daily
net assets pursuant to an advisory agreement entered into by the subadviser and
TAMIC.

Sandip Bhagat, president and chief executive officer, of TAMIC is primarily
responsible for the day-to-day operations of the Portfolios, including making
all investment decisions.

ADMINISTRATOR

Travelers Insurance Company ("Travelers") serves as the Portfolios'
administrator and oversees all aspects of the Portfolios' administration and
operation. Administration fees are computed daily and paid monthly at the
annual rate of 0.06% of each Portfolio's average daily net assets. Travelers
subcontracts with an affiliate to perform these services.

16
<PAGE> 20

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
DISCIPLINED MID CAP STOCK FUND

ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE 1-860-277-0111
- --------------------------------------------------------------------------------

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.
Eight of the Portfolios of the Series Trust are described herein: 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 and Disciplined Mid Cap Stock Fund.

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
May 1, 1998 which has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus. A copy may be
obtained, without charge, by writing to The Travelers Insurance Company, Annuity
Services, One Tower Square, Hartford, Connecticut 06183-5030, or by calling
1-800-842-8573.

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 MAY 1, 1998.
<PAGE> 21

TABLE OF CONTENTS

<TABLE>
<S> <C>
FINANCIAL HIGHLIGHTS.................................................................. 3
FUND DESCRIPTION...................................................................... 4
FUNDAMENTAL INVESTMENT POLICIES....................................................... 4
TRAVELERS QUALITY BOND PORTFOLIO...................................................... 4
LAZARD INTERNATIONAL STOCK PORTFOLIO.................................................. 5
MFS EMERGING GROWTH PORTFOLIO......................................................... 7
FEDERATED HIGH YIELD PORTFOLIO........................................................ 12
FEDERATED STOCK PORTFOLIO............................................................. 15
LARGE CAP PORTFOLIO................................................................... 16
EQUITY INCOME PORTFOLIO............................................................... 19
DISCIPLINED MID CAP STOCK FUND........................................................ 21
PORTFOLIO TURNOVER.................................................................... 23
BOARD OF TRUSTEES..................................................................... 24
INVESTMENT MANAGER.................................................................... 24
INVESTMENT SUBADVISERS................................................................ 25
FUND ADMINISTRATION................................................................... 28
SECURITIES TRANSACTIONS............................................................... 29
FUND EXPENSES......................................................................... 29
SHARES OF THE SERIES TRUST............................................................ 29
NET ASSET VALUE....................................................................... 30
TAX STATUS............................................................................ 31
DIVIDENDS AND DISTRIBUTIONS........................................................... 31
LEGAL PROCEEDINGS..................................................................... 31
ADDITIONAL INFORMATION................................................................ 31
FUND PERFORMANCE...................................................................... 31
EXHIBIT A............................................................................. 33
EXHIBIT B............................................................................. 50
</TABLE>

SERIES-2
<PAGE> 22

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

The following information on per share data for all of the portfolios except
Equity Income and Large Cap Portfolios for the period ended December 31, 1996
has been audited by KPMG Peat Marwick, L.L.P. Per share data for the Equity
Income and Large Cap Portfolios for the periods shown were audited by Price
Waterhouse LLP. It should be noted that because Mid Cap Disciplined Equity Fund
commenced operations subsequent to December 31, 1996 there is no per share data
available for this Fund. Each auditor's report (as applicable) on the per share
data for this period is contained in the Fund's Annual Report which should be
read along with this information and which is incorporated by reference into the
SAI:

<TABLE>
<CAPTION>
LAZARD MFS
EQUITY LARGE TRAVELERS INTERNATIONAL EMERGING FEDERATED FEDERATED
INCOME CAP QUALITY BOND STOCK GROWTH HIGH YIELD STOCK
PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD... $10.00 $10.00 $10.00 $ 10.00 $10.00 $10.00 $10.00
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
Net investment
income(4)........... 0.08 0.04 0.19 0.02 0.03 0.31 0.06
Net realized and
unrealized gains.... 1.09 1.29 0.16 0.76 0.57 0.46 1.20
- ------------------------------------------------------------------------------------------------------------------------------
Total Income From
Operations............ 1.17 1.33 0.35 0.78 0.60 0.77 1.26
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTION FROM:
Net investment
income.............. (0.08) (0.04) (0.19) -- (0.03) (0.31) (0.06)
Net realized gains.... -- -- (0.06) -- (0.01) (0.04) (0.09)
Capital............... -- -- -- -- (0.01) -- (0.01)
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions..... (0.08) (0.04) (0.25) -- (0.05) (0.35) (0.16)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD................ $11.09 $11.29 $10.10 $ 10.78 $10.55 $10.42 $11.10
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN++.......... 11.69% 13.30% 3.56% 7.80% 6.00% 7.61% 12.61%
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF
PERIOD (000'S)........ $3,600 $3,411 $5,273 $ 4,322 $ 12,924 $5,381 $3,380
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS+:
Expenses(4)........... 0.95% 0.95% 0.75% 1.25% 0.95% 0.95% 0.95%
Net investment
income.............. 2.34% 0.98% 5.62 0.42 0.55 8.78 1.55
- ------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER
RATE+................. 14% 57% 35% 9% 49% 23% 11%
- ------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMISSIONS PER
SHARE PAID ON EQUITY
TRANSACTIONS(3)....... $.0168 $.0214 -- $ 0.01 $ 0.03 -- $ 0.05
- ---------------------------------------------------------------------------------------------------
</TABLE>

(1) For the period from August 30, 1996 (commencement of operations) to December
31, 1996.
(2) For the period from August 1, 1996 (commencement of operations) to December
31, 1996.
(3) A fund is required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may vary from
period to period and Fund to Fund depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ.
(4) The Travelers has waived all of its fees for the period ended December 31,
1996. In addition, The Travelers has agreed to reimburse the Equity Income
Portfolio, Large Cap Portfolio, Travelers Quality Bond Portfolio, Lazard
International Stock Portfolio, MFS Emerging Growth Portfolio, Federated High
Yield Portfolio, and Federated Stock Portfolio for $31,911, $32,035,
$10,901, $12,454, $16,407, $9,268, and $15,460, respectively, of the
Portfolios' expenses for the period ended December 31, 1996. If such fees
were not waived or reimbursed, the per share effect on net investment income
and the expense ratios would have been as follows:

<TABLE>
<CAPTION>
PER SHARE DECREASE EXPENSE RATIOS WITHOUT
PORTFOLIO IN NET INVESTMENT INCOME FEE WAIVERS AND REIMBURSEMENT+
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Equity Income Portfolio................................. $ 0.12 4.64%
Large Cap Portfolio..................................... 0.15 4.66
Travelers Quality Bond Portfolio........................ 0.03 1.76
Lazard International Stock Portfolio.................... 0.07 2.87
MFS Emerging Growth Portfolio........................... 0.06 2.09
Federated High Yield Portfolio.......................... 0.04 2.19
Federated Stock Portfolio............................... 0.08 3.03
</TABLE>

++ Total return is not annualized, as it may not be representative of the
total return for the year. The total return would have been lower had
expenses not been reduced during the period shown.
+ Annualized.

SERIES-3
<PAGE> 23

FUND DESCRIPTION
- --------------------------------------------------------------------------------

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 fourteen 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"). Eight 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")
- --------------------------------------------------------------------------------

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.

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.

SERIES-4
<PAGE> 24

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.

LAZARD INTERNATIONAL STOCK PORTFOLIO
- --------------------------------------------------------------------------------

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).

SERIES-5
<PAGE> 25

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 offices in Paris, London and
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 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;

SERIES-6
<PAGE> 26

- - 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 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 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")
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

SERIES-7
<PAGE> 27

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 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;

- - 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

SERIES-8
<PAGE> 28

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 interests 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
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).

SERIES-9
<PAGE> 29

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.

RISK FACTORS

RISK FACTORS REGARDING LOWER RATED SECURITIES -- MFS Portfolio may invest up to
5% of its assets 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

SERIES-10
<PAGE> 30

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.

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

SERIES-11
<PAGE> 31

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 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. 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;

SERIES-12
<PAGE> 32

- 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; (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; and (xiv)
convertible securities.

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;

SERIES-13
<PAGE> 33

- 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 and may include
bonds in default. 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.

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.

SERIES-14
<PAGE> 34

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.

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

SERIES-15
<PAGE> 35

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;

- convertible securities;

- lending of portfolio securities; and
- temporary bank borrowing.

See Exhibit A 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:

- 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

SERIES-16
<PAGE> 36

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. 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;
- loan participations and other direct indebtedness;
- indexed securities;
- short sales "against the box";
- cash instruments;
- swap agreements; and
- restricted securities.

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

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 companies and industries.

The Portfolio may not buy all of these instruments or use all of these
techniques, and those described in Exhibit A, 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.

Purchase of a debt security is consistent with the Portfolio's debt quality
policy if it is rated at or above the stated level by Moody's Investors Service,
Inc., in the equivalent categories by Standard & Poor's Corporation, or is
unrated but judged to be of equivalent quality by the Portfolio Investment
Adviser. The Portfolio currently intends to limit its investments in lower than
Baa-quality debt securities to less than 35% of its assets.

The Portfolio may invest in money market securities, in a pooled account of
repurchase agreements, and in a money market fund available only to funds and
accounts managed by the Subadviser or its affiliates, whose goal is to seek a
high level of current income while maintaining a stable $1.00 share price. A
major change in interest rates or a default on the money market fund's
investments could cause its share price to change.

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.

SERIES-17
<PAGE> 37

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 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 ALONG WITH ALL OTHER POLICIES OR
LIMITATIONS NOT SPECIFICALLY IDENTIFIED AS FUNDAMENTAL, ARE NOT FUNDAMENTAL.

- 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.

SERIES-18
<PAGE> 38

- 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.)
- 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

SERIES-19
<PAGE> 39

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.

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

SERIES-20
<PAGE> 40

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.

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

DISCIPLINED MID CAP STOCK FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Disciplined Mid Cap Stock Fund (formerly Mid Cap
Disciplined Equity Fund) is to seek growth of capital by investing primarily in
a broadly diversified portfolio of U.S. common stocks.

The investment Subadviser's approach to equity management is designed to provide
diversified exposure to the mid and small capitalization segments of the U.S.
equity market. Travelers Investment Management Company ("TIMCO") selects stocks
with a primarily quantitative screening process that seeks attractive relative
value and earnings growth. In order to achieve consistent relative performance,
TIMCO manages the portfolio to mirror the overall risk, sector weightings and
style characteristics of the Standard & Poor's 400 stock index ("S&P 400
Index"). The S&P 400 Index is a value-weighted stock index consisting of 400
mid-sized U.S. companies.

Stock selection is based on the intersection of various appraisal models
reflecting valuation, earnings, and relative price performance. Valuation
rankings are derived by comparing price/earnings ratios relative to expected
long-term earnings growth. Stocks are also ranked on the trend and magnitude of
reported earnings, earnings surprises and changes in analysts' earnings
estimates. These fundamental appraisal factors are supplemented by an analysis
of short-term price changes exhibited by individual securities that deviate
significantly from related industry group performance.

Portfolio decision-making follows a disciplined process. Stocks which are ranked
favorable by TIMCO's appraisal models are reviewed by a team of senior portfolio
managers. A sophisticated risk model is used to evaluate each stock's potential
contribution to overall portfolio risk. Stocks that are determined to be
underpriced on a risk-adjusted basis are overweighted in the portfolio relative
to the S&P 400 Index.

Conversely, TIMCO will sell a stock holding if the earnings outlook for the
issuing company becomes less favorable or the stock's valuation is no longer
attractive relative to the company's expected growth rate or risk.

The Disciplined Mid Cap Stock Fund will use exchange-traded financial futures
contracts consisting of stock index futures contracts and futures contracts on
debt securities ("interest rate futures") as a hedge to protect against changes
in stock prices or interest rates. A stock index futures contract is a
contractual obligation to buy or sell a specified index of stocks at a future
date for a fixed price.

The Portfolio will not purchase or sell futures contracts for which the
aggregate initial margin exceeds 5% of the fair market value of its assets,
after taking into account unrealized profits and losses on any such contracts
which it has entered into. When a futures contract is purchased, the Portfolio
will set aside an amount of cash and cash equivalents equal to the total market
value of the futures contact, less the amount of the initial margin. At no time
will the Portfolio's transactions in such futures be used for speculative
purposes.

All financial futures contracts will be traded on exchanges that are licensed
and regulated by the Commodity Futures Trading Commission ("CFTC"). To ensure
that its futures transactions meet CFTC standards, the Portfolio 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 Securities and Exchange Commission).

The Disciplined Mid Cap Stock Fund may write covered call options on portfolio
securities for which call options are available and which are listed on a
national securities exchange. It may also purchase

SERIES-21
<PAGE> 41

index or individual equity call options as an alternative to holding stocks or
stock index futures, or purchase index or individual equity put options as a
defensive measure.

RISK FACTORS

There can, of course, be no assurance that the Portfolio will achieve its
investment objective since there is uncertainty in every investment. Equity
securities are subject to financial risks relating to the earning stability and
overall financial soundness of an issue. They are also subject to market risks
relating to the effect of general changes in the securities market on the price
of a security. In addition, there may be more risk associated with the Portfolio
to the extent that it invests in small or mid-sized companies. More risk is
associated with investment in small or mid-sized companies than with larger
companies because such companies may be dependent on only one or two products
and may be more vulnerable to competition from larger companies with greater
resources and to economic conditions affecting their market sector. Small or
mid-sized companies may be new, without long business or management histories,
and perceived by the market as unproven. Their securities may be held primarily
by insiders or institutional investors, which may affect marketabilty. The
prices of these stocks often fluctuate more than the overall stock market.

FUNDAMENTAL INVESTMENT POLICIES

The investment policies of the Disciplined Mid Cap Stock Fund are fundamental
and may not be changed without a vote of the majority of the outstanding voting
securities of the Fund, as defined in the Investment Company Act of 1940 ("1940
Act"). These policies permit the Fund to:

1. invest up to 5% of its assets in the securities of any one issuer;

2. borrow money from banks in amounts of up to 10% of its assets, but only
as a temporary measure for emergency or extraordinary purposes;

3. pledge up to 10% of its assets to secure borrowings;

4. invest up to 25% of its assets in the securities of issuers in the same
industry; and

5. invest up to 10% of its assets in repurchase agreements maturing in
more than seven days and securities for which market quotations are not
readily available.

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 Disciplined Mid Cap Stock Fund may
not:

1. invest more than 5% of its total assets, computed at market value, in
the securities of any one issuer;

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

3. invest more than 5% of the value of its total assets in companies which
have been in operation for less than three years;

4. borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of up to
33 1/3% of its gross assets computed at cost; while outstanding, a
borrowing may not exceed one-third of the value of its net assets,
including the amount borrowed; the Portfolio has no intention of
attempting to increase its net income by means of borrowing and all
borrowings will be repaid before additional investments are made;
assets pledged to secure borrowings shall be no more than the lesser of
the amount borrowed or 10% of the gross assets of the Portfolio
computed at cost;

5. 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 disposition of restricted securities the Account may be deemed
to be an underwriter, as defined in the Securities Act of 1933 (the
"1933 Act");

SERIES-22
<PAGE> 42

6. purchase real estate or interests in real estate, except through the
purchase of securities of a type commonly purchased by financial
institutions which do not include direct interest in real estate or
mortgages, or commodities or commodity contracts, except transactions
involving financial futures in order to limit transaction and borrowing
costs and for hedging purposes as described above;

7. invest for the primary purpose of control or management;

8. make margin purchases or short sales of securities, except for
short-term credits which are necessary for the clearance of
transactions, and to place not more than 5% of its net asset value in
total margin deposits for positions in futures contracts;

9. make loans, except that 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 Account's investment objective and policies;

10. invest more than 25% of its total assets in the securities of issuers
in any single industry;

11. purchase the securities of any other investment company, except in the
open market and at customary brokerage rates and in no event more than
3% of the voting securities of any investment company;

12. invest in interests in oil, gas or other mineral exploration or
development programs; or

13. invest more than 5% of its net assets in warrants, valued at the lower
of cost or market; warrants acquired by the Account in units or
attached to securities will be deemed to be without value with regard
to this restriction. The Portfolio is subject to restrictions in the
sale of portfolio securities to, and in its purchase or retention of
securities of, companies in which the management personnel of TIMCO
have a substantial interest.

The Portfolio may make investments in an amount of up to 15% of the value of its
net assets in restricted securities which may not be publicly sold without
registration under the 1933 Act. In most instances such securities are traded at
a discount from the market value of unrestricted securities of the same issuer
until the restriction is eliminated. If and when the Portfolio sells such
portfolio securities, it may be deemed an underwriter, as such term is defined
in the 1933 Act, with respect thereto, and registration of such securities under
the 1933 Act may be required. The Portfolio will not bear the expense of such
registration. The Portfolio intends to reach agreements with all such issuers
whereby they will pay all expenses of registration. In determining securities
subject to the 15% limitation, the Disciplined Mid Cap Stock Fund will include,
in addition to restricted securities, repurchase agreements maturing in more
than seven days and other securities not having readily available market
quotations.

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

Although none of the Portfolios intend 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. For 1996, the Portfolio
turnover rates were as follows: Quality Bond Portfolio, 35%; Lazard
International Stock Portfolio, 9%; MFS Emerging Growth Portfolio, 49%; Federated
High Yield Portfolio, 23%; Federated Stock Portfolio, 11%; Large Cap Portfolio,
57% (annualized); Equity Income Portfolio, 14% (annualized), and the Disciplined
Mid Cap Stock Portfolio, %.

SERIES-23
<PAGE> 43

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 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%; Equity Income
Portfolio 0.30%; and Mid Cap Disciplined Equity Fund 0.70%. 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

SERIES-24
<PAGE> 44

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 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 ASSET MANAGEMENT

Lazard 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 Asset Management is a division of Lazard & Co. LLC ("Lazard"), 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 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 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, 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 since that fund's inception in 1991.

MFS PORTFOLIO
SUBADVISER: MFS

SERIES-25
<PAGE> 45

and approximately $20.1 billion of assets invested in fixed income securities.
Approximately $4.2 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.

MANAGEMENT OF MFS PORTFOLIO

John W. Ballen, an Executive 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 Y. 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, Series of MFS Variable Insurance Trust, 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 $110 billion invested across more than 300 funds under
management and/or administration by its subsidiaries, as of December 31, 1996,
Federated Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to be led by
the management who founded the company in 1955. Federated funds are presently at
work in and through 4,500 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 along with
Robert M. Marsh. 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.

Mr. Marsh joined Federated Investors in 1994 as an Investment Analyst and has
been an Assistant Vice President of the Portfolio's Subadviser since January
1997. Mr. Marsh earned his M.S.l.A., concentrating in Finance, from Carnegie
Mellon University.

SERIES-26
<PAGE> 46

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.

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

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.

Michael P. Donnelly serves as co-manager. He joined Federated Investors in 1989
as Investment Analyst and has been a Vice President of the Portfolio's
Subadviser since 1994. He served as an Assistant Vice President of an affiliate
of the Portfolio's Subadviser from 1992 to 1994. Mr. Donnelly is a Chartered
Financial Analyst and received his M.B.A. from the University of Virginia.

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.

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

Karen Firestone is the manager of Large Cap Portfolio. Ms. Firestone also
manages earnings growth portfolios for Fidelity Management Trust Company and
serves as a portfolio assistant for Fidelity Advisor Equity Growth Fund and
Fidelity Variable Insurance Products (VIP) Fund: Growth Portfolio. Ms. Firestone
joined Fidelity in 1983. Ms. Firestone received a bachelor of arts degree in
economics,

SERIES-27
<PAGE> 47

magna cum laude, from Harvard College in 1977 and an M.B.A. from Harvard
Business School in 1983.

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.

DISCIPLINED MID CAP STOCK FUND
SUBADVISER: TRAVELERS INVESTMENT MANAGEMENT COMPANY (TIMCO)

The subadviser to the Portfolio is Travelers Investment Management Company
(TIMCO), a registered investment adviser that has provided investment advisory
services since its incorporation in 1967. Its principal offices are located at
One Tower Square, Hartford, Connecticut, and it is a wholly owned subsidiary of
Smith Barney Holdings Inc., which is a wholly owned subsidiary of Travelers
Group Inc. TIMCO also acts as investment adviser or subadviser for other
investment companies used to fund variable products, as well as for individual
and pooled pension and profit-sharing accounts, and for affiliated companies of
The Travelers Insurance Company. For its investment subadvisory services, TIMCO
receives a fee from TAMIC equal, on an annual basis, to 0.35% of the Portfolio's
average daily net assets.

MANAGEMENT OF DISCIPLINED MID CAP STOCK FUND

The investment professionals responsible for the daily operations of the Fund
are Kent A. Kelley, Sandip A. Bhagat and Jacob E. Hurwitz. Mr. Kelley is Chief
Executive Officer and a director of TIMCO. He has been with Travelers since
1976. In addition to earning a Bachelors degree from New York University and a
Masters degree from Yale University, Mr. Kelley is also a Chartered Financial
Analyst.

Mr. Bhagat is President and a director of TIMCO. He has been with Travelers
since 1987. In addition to a Bachelors of Science degree from the University of
Bombay, he also earned two Masters degrees (in Chemical Engineering and in
Finance) from the University of Connecticut. Mr. Bhagat was designated a
Chartered Financial Analyst in 1991.

Mr. Hurwitz is a senior portfolio manager for TIMCO. He has been with Travelers
since 1986. Mr. Hurwitz earned a Bachelors of Arts degree from Vanderbilt
University and two Masters degrees; one from the University of California
(History) and one from New York University (Business Administration: Finance and
International Business). Mr. Hurwitz received his Chartered Financial Analyst
designation in 1987.

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

The Series Trust, on behalf of MFS Emerging Growth Portfolio, Federated High
Yield Portfolio, Federated Stock Portfolio, Lazard International Stock
Portfolio, Travelers Quality Bond Portfolio and Disciplined Mid Cap Stock Fund
entered into an Administrative Services Agreement, whereby Travelers Insurance
will be responsible for the pricing and bookkeeping services for the 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.

SERIES-28
<PAGE> 48

The Series Trust 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, 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 dated May 1, 1993, 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 maximum percentage of each Portfolio's average net assets for
any fiscal year. For Lazard International Stock Portfolio the maximum 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

SERIES-29
<PAGE> 49

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.

NET ASSET VALUE
- --------------------------------------------------------------------------------

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.

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.

SERIES-30
<PAGE> 50

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.

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.

DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------

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.

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.

FUND PERFORMANCE

- --------------------------------------------------------------------------------

From time to time, advertisements and other sales materials may include
information concerning the historical performance of the Portfolio. Such
advertisements will also describe the performance of the relevant insurance
company separate accounts. Any such information will include the average annual
total return of a Portfolio calculated on a compounded basis for specified
periods of time. Total return information will be calculated pursuant to rules
established by the Securities and Exchange Commission. In lieu of or in addition
to total return calculations, such information may include performance rankings
and similar information from independent organizations such as Lipper Analytical
Services, Inc., Morningstar, Business Week, Forbes or other industry
publications.

The Portfolios calculate average annual total return by determining the
redemption value at the end of specified periods (assuming reinvestment of all
dividends and distributions) of a $1,000 investment in the Portfolio at the
beginning of the period, deducting the initial $1,000 investment, annualizing
the increase or decrease over the specified period and expressing the result as
a percentage.

Total return figures utilized by a Portfolio are based on historical performance
and are not intended to indicate future performance. Total return and net asset
value per share can be expected to fluctuate over time, and accordingly, upon
redemption, shares may be worth more or less than their original cost. See
"Performance Data" in the Statement of Additional Information.

SERIES-31
<PAGE> 51

Inception dates for the Portfolios depicted below are: for the Travelers
Quality Bond Portfolio, for the Lazard International Stock Portfolio,
MFS Emerging Growth Portfolio,
Federated High Yield Portfolio, Federated Stock Portfolio, Large Cap
Portfolio, Equity Income Portfolio, and Mid Cap Disciplined Equity
Fund.

The performance figures shown for the Portfolios in the chart below reflect the
actual fees and expenses paid by the Portfolios.

AVERAGE ANNUAL TOTAL RETURN

FOR THE PERIODS ENDED 12/31/97

PORTFOLIO PERFORMANCE

<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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...............................................
Mid Cap Disciplined Equity Fund.......................................
</TABLE>

PUBLIC FUND PERFORMANCE

The Portfolios commenced public sale of their shares on the following dates
. However, each of these Portfolios has the same investment
objective and follows substantially the same investment strategies as a mutual
fund ("public fund") whose shares are sold to the public and managed by the same
portfolio managers as a corresponding public fund.

Set forth below is the historical performance of the public funds. Investors
should not consider the performance data of the public funds as an indication of
the future performance of the Portfolios. The performance figures shown below
reflect the deduction of the historical fees and expenses paid by the public
funds, and not those to be paid by the Portfolios. The figures also do not
reflect the deduction of any insurance fees or charges which are imposed in
connection with the sale of variable contracts. Investors should refer to the
separate account prospectus describing the variable contracts for information
pertaining to these insurance fees and charges. The insurance separate account
fees will have a detrimental effect on the performance of the Portfolios.
Additionally, although it is anticipated that each Portfolio and its
corresponding public fund series will hold similar securities, their investment
results are expected to differ. In particular, differences in asset size and in
cash flow resulting from purchases and redemptions of Portfolio shares may
result in different security selections, differences in the relative weightings
of securities or differences in the price paid for particular portfolio
holdings. The results shown reflect the reinvestment of dividends and
distributions, and were calculated in the same manner that will be used by the
Portfolios to calculate their own performance.

The following tables show average annualized total returns for the time periods
shown for the public funds.

PORTFOLIO

<TABLE>
<CAPTION>
CORRESPONDING
PUBLIC FUND 1 YEAR 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
...........................................................................
...........................................................................
...........................................................................
...........................................................................
</TABLE>

SERIES-32
<PAGE> 52

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, Lazard
International Stock and Disciplined Mid Cap 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-1 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, for Lazard International Stock, Portfolios.

CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES

Certain of the Portfolios, including the Federated High Yield, Large Cap, Equity
Income, Disciplined Mid Cap Stock 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-33
<PAGE> 53

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 MFS, Large Cap, Equity Income and
Disciplined Mid Cap Stock, 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.

If market quotations are unavailable, lower-quality debt securities are valued
in accordance with procedures established by the Board of Trustees, including
the use of outside pricing services. Adverse publicity and changing investor
perceptions may effect the ability of outside pricing services to value
lower-quality debt securities, and the Portfolios' ability to dispose of those
securities.

FLOATING AND VARIABLE RATE INSTRUMENTS

The Lazard International Stock Portfolio, Large Cap, Equity Income, Federated
High Yield and Disciplined Mid Cap Stock Portfolios may purchase obligations
that have a floating or variable rate of

SERIES-34
<PAGE> 54

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 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.

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, Equity Income and Disciplined Mid Cap Stock
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 (e.g.,
banks or 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.

SERIES-35
<PAGE> 55

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.

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, Equity Income, and Mid Cap Disciplined Equity 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.

The Large Cap and Equity Income Portfolios will enter into reverse repurchase
agreements only with parties whose creditworthiness has been found satisfactory
to the Subadviser. Such transactions may increase fluctuations in the
Portfolio's yield or in the market value of its assets.

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.
The foregoing sentence does not apply to the Large Cap or Equity Income
Portfolios.

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.

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 may be viewed as a senior
security, and generally will be marked to market and reflected in the
Portfolio's

SERIES-36
<PAGE> 56

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 liquid assets 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.

FUTURES CONTRACTS

Certain of the Portfolios including Large Cap, Equity Income, MFS, Lazard
International Stock and Disciplined Mid Cap 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.

SERIES-37
<PAGE> 57

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 liquid
securities equal to the total market value of the futures contract, less the
amount of the initial margin.

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.

TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS: Several of the
Portfolios, including the Large Cap, Equity Income, Lazard International Stock,
MFS and Disciplined Mid Cap Stock 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.

SERIES-38
<PAGE> 58

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,
MFS and Disciplined Mid Cap Stock 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 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,
MFS and Disciplined Mid Cap Stock 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

SERIES-39
<PAGE> 59

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.

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, Lazard International
Stock and Disciplined Mid Cap 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

SERIES-40
<PAGE> 60

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, Lazard International Stock Portfolio and Disciplined Mid Cap 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, Lazard
International Stock and Disciplined Mid Cap 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 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

SERIES-41
<PAGE> 61

transactions, however, may be considered speculative and could involve
significant risk of loss, as set forth below. The Portfolios have established
procedures, which require the 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.

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

Some restricted securities may be "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,
Lazard International Stock and Disciplined Mid Cap 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.

SERIES-42
<PAGE> 62

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.

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

SERIES-43
<PAGE> 63

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 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.

SERIES-44
<PAGE> 64

LENDING PORTFOLIO SECURITIES

The Lazard International Stock, MFS, Federated High Yield, Federated Stock,
Large Cap, Equity Income and Disciplined Mid Cap Stock Portfolios are each
authorized to lend their portfolio securities to brokers, dealers and other
financial organizations. The Large Cap and Equity Income Portfolios may lend
portfolio securities to Fidelity. 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 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

SERIES-45
<PAGE> 65

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 and Disciplined Mid Cap Stock Fund 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.

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.

SERIES-46
<PAGE> 66

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.

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.

SERIES-47
<PAGE> 67

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 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.

CONVERTIBLE SECURITIES

Convertible securities include a spectrum of securities which can be exchanged
for or converted into common stock. Convertible securities may include, but are
not limited to: convertible bonds or debentures, convertible preferred stock,
units consisting of usable bonds and warrants; or securities which cap or
otherwise limit returns to the convertible security hold, such as DECS-(Dividend
Enhanced Convertible Stock, or Debt Exchangeable for Common Stock when issued as
a debt security), LYONS-(liquid Yield Option Notes, which are corporate bonds
that are purchased at prices below par with no coupons and are convertible into
stock), PERCS-(Preferred Equity Redeemable Stock (an equity issue that pays a
high cash dividend, has a cap price and mandatory conversion to

SERIES-48
<PAGE> 68

common stock at maturity), and PRIDES-(Preferred Redeemable Increased Dividend
Securities (which are essentially the same as DECS; the difference is little
more than who initially underwrites the issue).

Convertible securities are often rated below investment grade or not rated
because they fall below debt obligations and just above common equity in order
of preference or priority on the issuer's balance sheet. Hence, an issuer with
investment grade senior debt may issue convertible securities with ratings less
than investment grade or not rated. The Fund does not limit convertible
securities by rating, and there is no minimal acceptance rating for a
convertible security to be purchased or held in the Fund. Therefore, the Fund
invests in convertible securities irrespective of their ratings. This could
result in the Fund purchasing and holding, without limit, convertible securities
rated below investment grade by as NRSRO or in the Fund holding such securities
where they have acquired below investment grade after the Fund has purchased it.

SERIES-49
<PAGE> 69

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.

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.

SERIES-50
<PAGE> 70

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-51
<PAGE> 71

THE TRAVELERS SERIES TRUST

L-11788-3NC 5/98

<PAGE> 72

PART B

INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 73

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
MID CAP DISCIPLINED EQUITY FUND

MAY 1, 1998

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 May 1, 1998. A copy of the prospectus
is available from the office of the Trust at The Travelers Insurance Company,
Annuity Services, One Tower Square, Hartford, Connecticut 06183-5030 or by
calling 1-800-842-8573. This SAI should be read in conjunction with the
accompanying 1997 Annual Reports for the Portfolios.

<PAGE> 74
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. . . . . . . . . . . . . . . . . . . . . . . . 16
LARGE CAP PORTFOLIO. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . 17
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 18
EQUITY INCOME PORTFOLIO . . . . . . . . .. . . . . . . . . . . . . . . . . 19
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . 19
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 20
MID CAP DISCIPLINED EQUITY FUND. . . . . . . . . . . . . . . . . . . . . . 20
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . 20
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . 21
VALUATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 22
DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 22
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>

2
<PAGE> 75

<TABLE>
<S> <C>
DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 25
INVESTMENT ADVISORY SERVICES . . . . . . . . . . . . . . . . . . . . . . 25

INVESTMENT SUBADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . 26
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Lazard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
MFS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Federated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Fidelity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SBMFM .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Securities Transactions. . . . . . . . . . . . . . . . . . . . . . . 30
The Advisory Agreements . . . . . . . . . . . . . . . . . . . . . . 31
REDEMPTIONS IN KIND. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
FUND ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 34
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>

3
<PAGE> 76
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 multiple 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

<PAGE> 77
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> 78
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 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.

6
<PAGE> 79
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;

(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);

7
<PAGE> 80
(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.

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.

8
<PAGE> 81

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 securities.

(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:

(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

9
<PAGE> 82
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.

(10) will not purchase illiquid securities if more than 15% 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;
- - 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.

10
<PAGE> 83

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 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 15% 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 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.

11
<PAGE> 84

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 offices in Paris, London and
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 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 entry into options, forward contracts, futures
contracts, including those related to indexes shall not constitute
borrowing;

12
<PAGE> 85
- - 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 prospectus;
- - purchase securities on margin; underwrite securities; or
- - make investments for the purpose of exercising control or management.

MFS EMERGING GROWTH PORTFOLIO ("MFS PORTFOLIO")
VESTMENT 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 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;
- - 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;

13
<PAGE> 86

- - 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 investment restrictions apply,
including the following: The MFS Portfolio will not:

- - 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.

- - 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> 87

- - 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 and common stock and common stock equivalents such as
warrants, rights and options.

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.

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:

15
<PAGE> 88

- - 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.

INVESTMENT RESTRICTIONS

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

16
<PAGE> 89

- - 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 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;
- - loan participations and other direct indebtedness;
- - indexed securities;
- - short sales "against the box";
- - cash instruments;
- - 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.

17
<PAGE> 90

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 companies and industries.

The Portfolio may not buy all of these instruments or use all of these
techniques, and those described in the prospectus, 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.

Purchase of a debt security is consistent with the Portfolio's debt quality
policy if it is rated at or above the stated level by Moody's Investor
Services, Inc., in the equivalent categories by Standard & Poor's Corporation,
or is unrated but judged to be of equivalent quality by the Portfolio's
Investment Adviser. The Portfolio currently intends to limit its investments in
lower-than-Baa-quality debt securities to less than 35% of its assets.

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 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 (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.

18
<PAGE> 91

The following investment limitations, along with all other policies or
limitations not specifically identified as fundamental, are not fundamental.

- - 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 contnbracts 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."
- - The Portfolio does not currently intend to purchase the securites 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 ("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.

19
<PAGE> 92

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.

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; (vi)
lending; and (vii) various money market instruments.

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 Portfolio
- --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.)

DISCIPLINED MID CAP STOCK FUND ("DISCIPLINED MID CAP STOCK FUND")
INVESTMENT OBJECTIVES AND POLICIES

The investment objective of the Disciplined Mid Cap Stock Fund is to
seek growth of capital by investing primarily in a broadly diversified
portfolio of U.S. common stocks. In order to achieve consistent relative
performance, TIMCO manages the portfolio to mirror the overall risk, sector
weightings and style characteristics of the Standard & Poor's 400 stock index
("S&P 400 Index"). The S&P 400 Index is a value-weighted stock index consisting
of 400 mid-sized U.S. companies.

The investment policies of the Mid Cap Disciplined Equity Fund are fundamental
and may not be changed without a vote of the majority of the outstanding voting
securities of the Fund, as defined in the Investment Company Act of 1940 ("1940
Act"). These policies permit the Fund to:

- - invest up to 5% of its assets in the securities of any one issuer;
- - borrow money from banks in amounts of up to 10% of its assets, but
only as a temporary measure for emergency or extraordinary purposes;
- - pledge up to 10% of its assets to secure borrowings;

20
<PAGE> 93
- - invest up to 25% of its assets in the securities of issuers in the
same industry; and
- - invest up to 10% of its assets in repurchase agreements maturing in
more than seven days and securities for which market quotations are
not readily available.

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 Disciplined Mid Cap Stock Fund, as defined in the 1940 Act. The Portfolio
may not:

- - invest more than 5% of its total assets, computed at market value, in
the securities of any one issuer;
- - invest in more than 10% of any class of securities of any one issuer;
- - invest more than 5% of the value of its total assets in companies
which have been in operation for less than three years;
- - borrow money, except to facilitate redemptions or for emergency or
extraordinary purposes and then only from banks and in amounts of up
to 33 1/3% of its gross assets computed at cost; while outstanding, a
borrowing may not exceed one-third of the value of its net assets,
including the amount borrowed; Portfolio has no intention of
attempting to increase its net income by means of borrowing and all
borrowings will be repaid before additional investments are made;
assets pledged to secure borrowings shall be no more than the lesser
of the amount borrowed or 10% of the gross assets of the Portfolio
computed at cost;
- - 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 disposition of restricted securities the Account may be deemed
to be an underwriter, as defined in the Securities Act of 1933 (the
"1933 Act");
- - purchase real estate or interests in real estate, except through the
purchase of securities of a type commonly purchased by financial
institutions which do not include direct interest in real estate or
mortgages, or commodities or commodity contracts, except transactions
involving financial futures in order to limit transaction and
borrowing costs and for hedging purposes as described above;
- - invest for the primary purpose of control or management;
- - 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;
- - 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 Account's investment objective and policies;
- - invest more than 25% of its total assets in the securities of issuers
in any single industry;
- - purchase the securities of any other investment company, except in the
open market and at customary brokerage rates and in no event more than
3% of the voting securities of any investment company;
- - invest in interests in oil, gas or other mineral exploration or
development programs; or
- - invest more than 5% of its net assets in warrants, valued at the lower
of cost or market; warrants acquired by the Account in units or
attached to securities will be deemed to be without value with regard
to this restriction. The Portfolio is subject to restrictions in the
sale of portfolio securities to, and in its purchase or retention of
securities of, companies in which the management personnel of TIMCO
have a substantial interest.

21
<PAGE> 94

bear the expense of such registration. The Disciplined Mid Cap Stock Fund
intends to reach agreements with all such issuers whereby they will pay all
expenses of registration. In determining securities subject to the 15%
limitation, the Portfolio will include, in addition to restricted securities,
repurchase agreements maturing in more than seven days and other securities not
having readily available market quotations.

VALUATION OF SECURITIES

Current value for the Fund's portfolio securities is determined as
follows: Securities traded on national securities markets are valued at the
closing prices on such markets; securities for which no sales prices were
reported and U.S. Government and Agency obligations are valued at the mean
between the last reported bid and ask prices or on the basis of quotations
received from reputable brokers or other recognized sources; securities
maturing within 60 days are valued at cost plus accreted discount and, or minus
amortized premium, which approximates market value; and securities that have a
maturity of 60 days or more are valued at prices based on market quotations for
securities of similar type, yield and maturity.

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.

22
<PAGE> 95
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 Inc. ("Smith Barney");
Chairman and Member Chairman (1993-present), Smith Barney Strategy Advisors, Inc.;
388 Greenwich Street President (1994-present), Smith Barney Mutual Funds Management Inc.;
New York, New York Chairman and Director of forty-one investment companies associated with
Age 63 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
Company++; prior to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers Inc.

Knight Edwards Of Counsel (1988-present), Edwards & Angell, Attorneys; Member,
Member Advisory Board (1973-1994), thirty-one mutual funds sponsored by
2700 Hospital Trust Tower Keystone Group, Inc.; Member, Board of Managers, seven Variable Annuity
Providence, Rhode Island Separate Accounts of The Travelers Insurance Company+; Trustee, five
Age 73 Mutual Funds sponsored by The Travelers Insurance Company.++

Robert E. McGill, III Retired manufacturing executive. Director (1983-1995), Executive Vice
Member President (1989-1994) and Senior Vice President, Finance and
295 Hancock Street Administration (1983-1989), The Dexter Corporation (manufacturer of
Williamstown, Massachusetts specialty chemicals and materials); Director (1983-1995), Life
Age 65 Technologies, Inc. (life science/biotechnology products); Director,
(1994-present), The Connecticut Surety Corporation (insurance);
Director (1995-present), Calbiochem Novachem International (life
science/biotechnology products); Director (1995-present), Chemfab
Corporation (specialty materials manufacturer); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++

Lewis Mandell Dean, College of Business Administration (1995-present), Marquette
Member University; Professor of Finance (1980-1995) and Associate Dean (1993-
606 N. 13th Street 1995), School of Business Administration, and Director, Center for
Milwaukee, WI 53233 Research and Development in Financial Services (1980-1995), University
Age 54 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 Company, Inc.
Member (investment management); Assistant Treasurer, Pensions and Benefits.
222 Berkeley Street Management (1989-1992), United Technologies Corporation (broad- based
Boston, Massachusetts designer and manufacturer of high technology products); Member, Board
Age 49 of Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++
</TABLE>

23
<PAGE> 96

<TABLE>
<S> <C>
Ernest J. Wright Assistant Secretary (1994-present), Counsel (1987-present), The
Secretary to the Board Travelers Insurance Company; Secretary, Board of Managers, seven
One Tower Square Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 56 Travelers Insurance Company.++

Kathleen A. McGah Assistant Secretary and Counsel (1995-present), The Travelers Insurance
Assistant Secretary to the Board Company; Assistant Secretary, Board of Managers, seven Variable Annuity
One Tower Square Separate Accounts of The Travelers Insurance Company+; Assistant
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 46 Travelers Insurance Company.++ Prior to January 1995, Counsel, ITT
Hartford Life Insurance Company.

Lewis E. Daidone Managing Director of Smith Barney, Senior Vice President and Treasurer
Treasurer of 41 investment companies associated with Smith Barney since January, 1996,
388 Greenwich Street and Director and Vice President of SBMFM and TIA; Treasurer, Board of Trustees,
New York, New York five Mutual Funds sponsored by The Travelers Insurance Company.++
Age 38

Irving David Vice President of Smith Barney, Asset Management Division (March 1994-
Controller present); Controller, Board of Trustees, five Mutual Funds sponsored by
388 Greenwich Street The Travelers Insurance Company.++
New York, NY Prior to March 1994, Director of Smith Barney, Controller and Assistant
Age 35 Treasurer of 41 investment companies associated with Smith Barney.

Thomas M. Reynolds Director of Smith Barney, Asset Management Division; Controller and
Controller Assistant Secretary of 35 investment companies associated with Smith
388 Greenwich Street Barney, (September 1991-present); Controller, Board of Trustees, five
New York, NY Mutual Funds sponsored by The Travelers Insurance Company.++
Age 36
</TABLE>

+ These seven Variable Annuity Separate Accounts are: The Travelers
Growth and Income Stock Account for Variable Annuities, The Travelers
Quality Bond Account for Variable Annuities, The Travelers Money
Market Account for Variable Annuities, The Travelers Timed Growth and
Income Stock Account for Variable Annuities, The Travelers Timed
Short-Term Bond Account for Variable Annuities, The Travelers Timed
Aggressive Stock Account for Variable Annuities and The Travelers
Timed Bond Account for Variable Annuities.

++ These five Mutual Funds are: Capital Appreciation Fund, Cash Income
Trust, High Yield Bond Trust, Managed Assets Trust and The Travelers
Series Trust.

* Mr. McLendon is an "interested person" within the meaning of
the 1940 Act by virtue of his position as Managing Director of Smith Barney
Inc., an indirect wholly owned subsidiary of Travelers Group Inc. and also owns
shares and options to purchase shares of Travelers Group Inc., the indirect
parent of The Travelers Insurance Company.

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 $19,000 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. Once a Board Member retires, 50% of the retainer
amount will be paid annually. They also receive an aggregate fee of $2,500 for
each meeting of such Boards attended.

24
<PAGE> 97
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.

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,") and
Mutual Management Corp. (MMC) both referred to throughout as the "Investment
Adviser") provide investment supervision to certain Portfolios described herein
in accordance with each Portfolio's investment objectives, policies and
restrictions. The Investment Advisers' responsibilities generally include the
following:

<PAGE> 98

(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 the Investment Adviser 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 the Investment Adviser 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. 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%; Equity Income Portfolio 0.30%; and
Disciplined Mid Cap Stock Fund 0.70%. Investment advisory fees are computed
daily and are paid monthly. These fees do not reflect the Subadvisory fees
paid to the Subadvisers.

The total advisory fees paid to TAMIC for the year ended December 31, 1996 by
the Lazard International Stock Portfolio, $13,997; MFS Emerging Growth
Portfolio, $15,666; Federated High Yield Portfolio, $11,448; Federated Stock
Portfolio, $6,901and Equity Income Portfolio, $8,203. Because Mid Cap
Disciplined Equity Fund is a new fund, there were no investment advisory fees
paid for 1996. Additionally, TAMIC provides investment advisory services as
discussed below.

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

TAMIC 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,
1994, 1995 and 1996 were $82,937, $85,175, and $86,625, respectively. For the
Travelers Quality Bond Portfolio, the fee paid to TAMIC for the year ended
December 31, 1996 was $5,626. For the Zero Coupon Bond Fund Portfolios, the
fees paid for the year ended December, 31, 1996 for Series 1998, 2000 and 2005
were $1,175, $1,335 and $1,556, respectively.

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 & Research Company. ("FMR") also executes the offers, while MFS,
Lazard and Federated only place the orders for TAMIC to execute.

26
<PAGE> 99

LAZARD INTERNATIONAL STOCK PORTFOLIO
SUBADVISER: LAZARD ASSET MANAGEMENT

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

Lazard 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. For the year ended December 31, 1996, the fee
paid to TAMIC was $6,719.

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,
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 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 $52.8 billion on behalf of approximately 2.7 million investor
accounts as of October 31, 1997. As of such date, the MFS organization
managed approximately $42 billion of assets invested in equity securities
and approximately $20.1 billion of assets invested in fixed income securities.
Approximately $4.2 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").

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. For the year ended December 31, 1996, the fee paid to TAMIC was
$7,833.

27
<PAGE> 100
MANAGEMENT OF MFS PORTFOLIO

John W. Ballen, an Executive 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.

Also charged with management of the Fund is Toni Y. Shimura, who joined MFS in
1987 as a member of the Research Team. Ms. Shimura was named Investment
Officer in 1990, Assistant Vice - Investments in 1991, and Vice President -
Investments in 1992. She also manages MFS Emerging Growth Series, a Series of
MFS Variable Insurance Trust, 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,
1996, 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. For the year ended
December 31, 1996, the fee paid by TAMIC was $7,045.

MANAGEMENT OF THE FEDERATED HIGH YIELD PORTFOLIO

Mark E. Durbiano serves as the Federated High Yield Portfolio manager along
with Robert M. Marsh. 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.

Mr. Marsh joined Federated Investors in 1994 as an investment Analyst and has
been an Assistant Vice President of the Portfolio's Subadviser since January
1997. Mr. Marsh ewarned his M.S.I.A., concentrating in Finance, from Carneige
Mellon University.

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"
above for a discussion of Federated.)

28
<PAGE> 101

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.

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. For the year ended
December 31, 1996, the fee paid to TAMIC was $4,141.

MANAGEMENT OF FEDERATED STOCK PORTFOLIO

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.

Michael P. Donnelly serves as co-manager. He joined Federated Investors in 1989
as Investment Analyst and has been a Vice President of the Portfolio's
Subadviser since 1994. He served as an Assistant Vice President of an affiliate
of the Portfolio's Subadviser from 1992 to 1994, Mr. Donnelly is a Chartered
Financial Analyst and received his M.B.A. from the University of Virginia.

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.

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. For the year ended December 31,
1996, the fee paid by TAMIC was $4,927.

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

Karen Firestone is the manager of Large Cap Portfolio. Ms. Firestone also
manages earnings growth portfolios for Fidelity Management Trust Company and
serves as a portfolio assistant for Fidelity Advisor Equity Growth Fund and
Fidelity Variable Insurance Products (VIP) Fund; Growth Portfolio. Ms.
Firestone joined Fidelity in 1983. Ms. Firestone received a bachelor of arts
degree in economics, magna cum laude, from Harvard College in 1977 and an
M.B.A. from Harvard Business School in 1983.

29
<PAGE> 102

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-- Fidelity
Management & Research Company--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. For the year ended December 31, 1996,
the fee paid by TAMIC was $4,923.

MANAGEMENT OF EQUITY INCOME PORTFOLIO

Stephen Petersen is manager of Equity Income Portfolio. Since 1983, he has
also managed Fidelity Equity Income Fund a publicly traded retail 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.

MMC

Mutual Management Corp. (MMC) an indirect wholly owned subsidiary of
Travelers Group Inc., furnishes investment management and advisory services to
the Social Awareness Stock Portfolio, 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, MMC 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 year ended December 1994 and for the period January through
April 1995 were $23,474 and $ 9,877, respectively. The total advisory fee paid
to MMC for the period May 1, 1995 through December 31, 1995 was $28,613, and
was $58,250 for the year ended December 31, 1996.

MMC 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, MMC 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 MMC 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 MMC by the Utilities Portfolio for
the period ended December 1994 and for the years ended December 1995 and 1996
were $21,804, $67,791 and $113,601, respectively.

SECURITIES TRANSACTIONS

30
<PAGE> 103
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 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

31
<PAGE> 104
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,
valued for this purpose as they are valued in computing the Portfolios' NAV.
Shareholders receiving securities or other property on redemptoin may realize a
gain or loss for tax purposes, and will incur any costs of sale, as well as the
associated inconveniences. 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 MMC (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 MMC 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.

32
<PAGE> 105
Because the purchase and sale of bonds is a principal transaction there are no
brokerage commissions to report.

The total brokerage commissions paid by the Social Awareness Stock
Portfolio to TIMCO and MMC for the years ended December 31, 1994, 1995 and
1996 were $6,302, $14,657 and $5,203 respectively. (MMC, formerly known as
Smith Barney Mutual Fund Management Inc., became the investment adviser on
May 1, 1995.) For the year ended December 31, 1996, portfolio transactions in
the amount of $4,373,789 were placed with certain brokers because of research
services, of which $5,023 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 TAMIC during 1996.

The total brokerage commission paid by the Utilities Portfolio to
SBMFM for the period ended December 31, 1994 and the years ended December 31,
1995 and 1996 were $8,611, $20,686 and $26,559. For the year ended December
31, 1996, portfolio transactions in the amount of $12,025,457 were placed with
certain brokers because of research services, of which $23,039 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 1996.

The total brokerage commissions paid by the Zero Coupon Bond
Portfolios, Series 1998, 2000 and 2005 for the period ended December 31, 1995
were $2,064, $2,808 and $3,309, respectively. For the year ended December 31,
1996, no brokerage commissions were paid by the Zero Coupon Bond Portfolios,
and 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 1996.

The total brokerage commissions paid by the Travelers Quality Bond
Portfolio for the period ended December 31, 1996 was $8,148. For the year
ended December 31, 1996, 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 1996.

The total brokerage commissions paid by the Lazard International Stock
Portfolio for the period ended December 31, 1996 was $3,680. For the year
ended December 31, 1996, 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 1996.

The total brokerage commissions paid by the MFS Emerging Growth
Portfolio for the period ended December 31, 1996 was $10,326. For the year
ended December 31, 1996, 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 1996.

The total brokerage commissions paid by the Federated Stock Portfolio
for the period ended December 31, 1996 was $3,416. For the year ended December
31, 1996, 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 1996.

33
<PAGE> 106
The total brokerage commissions paid by the Large Cap Portfolio for
the period ended December 31, 1996 was $2,620. For the year ended December 31,
1996, portfolio transactions in the amount of $1,118,996 were placed with
certain brokers because of research services, of which $970 was paid in
commissions with respect to such 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 1996.

The total brokerage commissions paid by the Equity Income Portfolio
for the period ended December 31, 1996 was $1653. For the year ended December
31, 1996, portfolio transactions in the amount of $287,677 were directed to
certain brokers because of research services, of which $427 was paid in
commissions with respect to such 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
1996.

Because the Mid Cap Disciplined Equity Fund is new as of the date of
this SAI, no brokerage commissions were incurred or paid by it.

FUND ADMINISTRATION

The Series Trust, on behalf of MFS Emerging Growth, 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. Smith Barney Mutual Funds Management Inc., an
affiliate of Traveler Insurance, has been appointed to serve in this capacity.

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. For the period ended December 31, 1996, the fund
administration fee for Large Cap and Equity Income was $20,052 per portfolio,
for a total fund administration fee of $40,104.

ADDITIONAL INFORMATION

On May 1, 1997, the Travelers Insurance Company and its affiliates
owned 100% of the Series Trust's outstanding shares. 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 860-277-0111.

First Data Investor Services Group, Inc., 4400 Computer Drive,
Westboro, MA, 01581-5120 as transfer agent and dividend disbursing agent for
all of the Portfolios except Large Cap and Equity Income, for which Fidelity
Investment Institutional Operations Company ("FIIOC") acts as transfer agent
and dividend disbursing agent.

PNC Bank NA, 200 Stevens Drive, Lester, PA, 19113 and Barclay's Bank,
PLC, 75 Wall Street, New, serves as the custodians of all securities and cash
of the U.S. Government Bond, Social Awareness, Utilities, the three Zero Coupon
Bond Fund, Federated Stock, Federated High Yield, MFS Emerging Growth and
Travelers Quality Bond Portfolios. For the Large Cap and Equity Income
Portfolios, Brown Brothers Harriman and Co.

34
<PAGE> 107

serves as the custodian. For Lazard International Stock Portfolio, the
custodian is Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New
York 11245.

Through December 31, 1996, Coopers & Lybrand L.L.P., independent
accountants, 100 Pearl Street, Hartford, Connecticut 06103, were the
independent auditors for the following portfolios of the Series Trust: U.S.
Government Bond, Social Awareness, Utilities, and the three Zero Coupon Bond
Funds. The services provided by Coopers & Lybrand L.L.P., included primarily
the audit of the applicable Series Trust's financial statements and financial
highlights. The financial statements for the year ended December 31, 1996 have
been audited by Coopers & Lybrand L.L.P., as indicated in their reports
thereon, and are included in the Fund's Annual Report which is incorporated
herein by reference, in reliance upon the authority of said firm as experts in
accounting and auditing.

The applicable portfolios of the Trust terminated their audit
relationship with their former principal accountant, Coopers & Lybrand L.L.P.
on January 31, 1997. On that same day, KPMG Peat Marwick; LLP, independent
certified public accountants, 345 Park Ave., New York, NY 10154, was engaged as
principal accountant for the Trust's Portfolios (except Large Cap and Equity
Income Portfolios). KPMG Peat Marwick LLP serves as the principal accountant
for several other affiliated mutual funds.

The reports by Coopers & Lybrand L.L.P. on the financial statements
for fiscal years ended December 31, 1996 and 1995, did not contain an adverse
opinion or disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.

The decision to change principal accountants was approved by the Board
of Trustees on January 31, 1997, where it was decided to engage KPMG Peat
Marwick LLP as the principal accountant to audit the Trust's financial
statements (except Large Cap and Equity Income Portfolios) since it would
promote consistency among affiliated mutual funds.

During the past two fiscal years and any subsequent interim period
preceding such termination, there were no disagreements with Coopers & Lybrand
L.L.P. on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements if
not resolved to the satisfaction of the former accountant would have caused it
to make reference to the subject matter of disagreement in connection with its
report.

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. The financial statements for those portfolios
have been audited by KPMG Peat Marwick LLP, as indicated in their reports
thereon, and are included in the Trust's Annual Report which is incorporated
herein by reference, in reliance upon the authority of said firm as experts in
accounting and auditing.

The services provided to the Fund by Coopers & Lybrand L.L.P. included
primarily the examination of the Fund's financial statements. The financial
statements for the year ended December 31, 1996 have been audited by Coopers &
Lybrand L.L.P., as indicated in their report thereon, and are included in the
Fund's Annual Report which is incorporated herein by reference, in reliance
upon the authority of said firm as experts in accounting and auditing.

Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110,
are the auditors for Large Cap and Equity Income Portfolios. The financial
statements for those portfolios have been audited by Price Waterhouse LLP, as
indicated in their reports thereon, and are included in the Trust's Annual
Report which is incorporated herein by reference, in reliance upon the
authority of said firm as experts in accounting and auditing.

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.

35
<PAGE> 108
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.

36
<PAGE> 109
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.

37
<PAGE> 110

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

DISCIPLINED MID CAP STOCK FUND

38
<PAGE> 111
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) The financial statements of the Registrant and the Report of Independent
Accountants are contained in the Statement of Additional Information.

To be filed by amendment.

(b) Exhibits

1. Agreement and Declaration of Trust. (Incorporated herein by
reference to Exhibit 1 to Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A filed on April 3, 1996.)

2. By-Laws. (Incorporated herein by reference to Exhibit 2 to
Post-Effective Amendment No. 13 to the Registration Statement on
Form N-1A, filed April 3, 1996.)

5(a). Investment Advisory Agreement between the U.S. Government
Securities Portfolio and Travelers Asset Management
International Corporation. (Incorporated herein by reference to
Exhibit 5(a) to Post-Effective Amendment No. 13 to the
Registration Statement on Form N-1A, filed April 3, 1996.)

5(b). Investment Advisory Agreement between the Social Awareness Stock
Portfolio and Mutual Management Corp. (formerly known as Smith
Barney Mutual Fund Management Inc.). (Incorporated herein by
reference to Exhibit 5(b) to Post-Effective Amendment No. 11 to
the Registration Statement on Form N-1A filed on April 25,
1995.)

5(c). Investment Advisory Agreement between the Utilities Portfolio
and Mutual Fund Management Corp. (formerly known as Smith Barney
Mutual Fund Management Inc.). (Incorporated herein by reference
to Exhibit 5(c) to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A filed on April 25, 1995.)

5(d). Investment Advisory Agreement between the Zero Coupon Bond Fund
Portfolios of The Trust and Travelers Asset Management
International Corporation. (Incorporated herein by reference
to Exhibit 5(d) to Post-Effective Amendment No. 12 to the
Registration Statement on N-1A filed on June 2, 1995.)

5(e). Investment Advisory Agreement between MFS Emerging Growth
Portfolio of the Registrant and Travelers Asset Management
International Corporation. (Incorporated herein by reference to
Exhibit 5(e) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

5(g). Investment Advisory Agreement between Federated Stock Portfolio
of the Registrant and Travelers Asset Management International
Corporation.
(Incorporated herein by reference to Exhibit 5(g) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)
<PAGE> 112

5(h). Investment Advisory Agreement between Lazard International Stock
Portfolio of the Registrant and Travelers Asset Management
International Corporation. (Incorporated herein by reference to
Exhibit 5(h) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

5(i). Investment Advisory Agreement between Large Cap Portfolio of the
Registrant and Travelers Asset Management International
Corporation. (Incorporated herein by reference to Exhibit 5(i)
to Post-Effective Amendment No. 16 to the Registration Statement
on N-1A filed on July 31, 1996.)

5(j). Investment Advisory Agreement between Equity Income Portfolio of
the Registrant and Travelers Asset Management International
Corporation. (Incorporated herein by reference to Exhibit 5(j)
to Post-Effective Amendment No. 16 to the Registration Statement
on N-1A filed on July 31, 1996.)

5(k). Investment Advisory Agreement between Travelers Quality Bond
Portfolio of the Registrant and Travelers Asset Management
International Corporation. (Incorporated herein by reference to
Exhibit 5(k) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

5(l). Sub-Advisory Agreement between Travelers Asset Management
International Corporation and Massachusetts Financial Services
Company as Subadviser to MFS Emerging Growth Portfolio.
(Incorporated herein by reference to Exhibit 5(l) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(n). Sub-Advisory Agreement between Travelers Asset Management
International Corporation and Federated Investment Counseling as
Subadviser to Federated Stock Portfolio. (Incorporated herein
by reference to Exhibit 5(n) to Post-Effective Amendment No. 16
to the Registration Statement on N-1A filed on July 31, 1996.)

5(o). Sub-Advisory Agreement between Travelers Asset Management
International Corporation and Lazard Freres Asset Management as
Subadviser to Lazard International Stock Portfolio.
(Incorporated herein by reference to Exhibit 5(o) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(p). Sub-Advisory Agreement between Travelers Asset Management
International Corporation and Fidelity Management & Research
Company as Subadviser to Equity Income Portfolio and Large Cap
Portfolio. (Incorporated herein by reference to Exhibit 5(p) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(q). Sub-Subadvisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (U.K.) Inc.
(Incorporated herein by reference to Exhibit 5(q) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)
<PAGE> 113
5(r). Sub-Subadvisory Agreement between Fidelity Management & Research
Company and Fidelity Management & Research (Far East) Inc.
(Incorporated herein by reference to Exhibit 5(r) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(s). Investment Advisory Agreement between The Mid Cap Disciplined
Equity Fund of the Registrant and Travelers Asset Management
International Corporation. (Incorporated herein by reference to
Exhibit 5(s) to Post-Effective Amendment No. 17 to the
Registration Statement on N-1A filed on October 31, 1996.)

5(u). Investment Advisory Agreement between Travelers Asset Management
International Corporation and the MFS Mid Cap Growth Portfolio
of the Registrant. (Incorporated herein by reference to Exhibit
5(u) to Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A filed on October 27, 1997.)

5(v). Sub-Advisory Agreement between Travelers Asset Management
International Corporation and Massachusetts Financial Services
Corporation, as Subadviser for MFS Mid Cap Growth Portfolio.
(Incorporated herein by reference to Exhibit 5(v) to
Post-Effective Amendment No. 21 to the Registration Statement on
Form N-1A filed on October 27, 1997.)

5(w). Investment Advisory Agreement between Travelers Asset Management
International Corporation and the MFS Research Portfolio of the
Registrant. (Incorporated herein by reference to Exhibit 5(w) to
Post-Effective Amendment No. 21 to the Registration Statement on
Form N-1A filed on October 27, 1997.)

5(x). Sub-Advisory Agreement between Travelers Asset Management
International Corporation and Massachusetts Financial Service
Corporation, as Subadviser for MFS Research Portfolio.
(Incorporated herein by reference to Exhibit 5(x) to
Post-Effective Amendment No. 21 to the Registration Statement on
Form N-1A filed on October 27, 1997.)

5(y). Form of Investment Advisory Agreement between Travelers Asset
Management International Corporation and the NWQ Large Cap
Portfolio of the Registrant. To be filed by amendment.

5(z). Form of Sub-Advisory Agreement between Travelers Asset
Management International Corporation and NWQ Investment
Management Company, as Subadviser for the NWQ Large Cap
Portfolio. To be filed by amendment.

5(aa). Form of Investment Advisory Agreement between Travelers Asset
Management International Corporation and the Jurika & Voyles All
Cap Portfolio of the Registrant. To be filed by amendment.

5(bb). Form of Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Jurika & Voyles Fund
Group, as Subadviser for the Jurika & Voyles All Cap Portfolio.
To be filed by amendment.

5(cc). Form of Investment Advisory Agreement between Travelers Asset
Management International Corporation and the Disciplined Small
Cap Stock Portfolio of the Registrant. To be filed by amendment.
<PAGE> 114
5(dd). Form of Sub-Advisory Agreement between Travelers Asset
Management International Corporation and The Travelers
Investment Management Company, as Subadviser for the Disciplined
Small Cap Stock Portfolio. To be filed by amendment.

5(ee). Form of Investment Advisory Agreement between Travelers Asset
Management International Corporation and the Strategic Stock
Portfolio of the Registrant. To be filed by amendment.

5(ff). Form of Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Travelers Investment
Management Company, as Subadviser for the Strategic Stock
Portfolio. To be filed by amendment.

5(gg). Form of Investment Advisory Agreement between Travelers Asset
Management International Corporation and the Convertible Bond
Portfolio of the Registrant. To be filed by amendment.

8(a). Custody Agreement between the Registrant and Chase Manhattan
Bank, N.A., Brooklyn, New York. (Incorporated herein by
reference to Exhibit 8(a) to Post-Effective Amendment No. 19 to
the Registration Statement on Form N-1A filed on April 21,
1997.)

8(b). Custody Agreement between the Registrant and PNC Bank.
(Incorporated herein by reference to Exhibit 8(b) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

8(c). Custody Agreement between the Registrant and Bank of New York.
(Incorporated herein by reference to Exhibit 8(c) to
Post-Effective Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

8(d). Custody Agreement between the Registrant and Morgan Stanley
Trust Company To be filed by amendment.

8(e). Custody Agreement between the Registrant and Brown Brothers
Harriman & Co. (Incorporated herein by reference to Exhibit
8(e) to Post-Effective Amendment No. 16 to the Registration
Statement on N-1A filed on July 31, 1996.)

9(a). Transfer and Recordkeeping Agreement between the Registrant and
The Travelers Insurance Company. (Incorporated herein by
reference to Exhibit 9 to Post-Effective Amendment No. 13 to the
Registration Statement on Form N-1A, filed April 3, 1996.)

9(b). Amendment to Transfer and Recordkeeping Agreement between the
Registrant and The Travelers Insurance Company. (Incorporated
herein by reference to Exhibit 9(b) to Post-Effective Amendment
No. 16 to the Registration Statement on N-1A filed on July 31,
1996.)

9(c). Transfer Agent Agreement between Fidelity Investments
Institutional Operations Company and the Equity Income Portfolio
and Large Cap Portfolio of the Registrant. Incorporated herein
by reference to Exhibit 9(c) to Post-Effective Amendment No. 16
to the Registration Statement on N-1A filed on July 31, 1996.)

9(d). Administrative Services Agreement between the Registrant and The
Travelers Insurance Company. (Incorporated herein by reference
to Exhibit 9(d) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

Amendments No. 1, 2, 3 and 4 to the Administrative Services
Agreement between the Registrant and The Travelers Insurance
Company
<PAGE> 115
9(e). Service Agent Agreement between Fidelity Service Company and the
Equity Income Portfolio and Large Cap Portfolio of the
Registrant. (Incorporated herein by reference to Exhibit 9(e)
to Post-Effective Amendment No. 16 to the Registration Statement
on N-1A filed on July 31, 1996.)

9(f). Participation Agreement between the Registrant and The Travelers
Insurance Company. (Incorporated herein by reference to Exhibit
9(f) to Post-Effective Amendment No. 19 to the Registration
Statement on Form N-1A filed on April 21, 1997.)

10. Opinion and Consent of Counsel. To be filed by amendment.

11(a). Consent of Coopers & Lybrand L.L.P., Independent Accountants.
To be filed by amendment.

Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants. To be filed by amendment.

Consent of Price Waterhouse LLP, Independent Accountants. To be
filed by amendment.

11(b). Powers of Attorney authorizing Ernest J. Wright, Secretary or
Kathleen A. McGah, Assistant Secretary as signatory for Heath B.
McLendon, Knight Edwards, Robert E. McGill III, Lewis Mandell,
Frances M. Hawk and Ian R. Stuart. (Incorporated herein by
reference to Exhibit 11(b) to Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A, filed April 3, 1996.)

Power of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Lewis E. Daidone. (incorporated herein
by reference to Exhibit 11 to Post-Effective Amendment No. 18 to
the Registration Statement on Form N-1A filed on February 24,
1997.)

27. Financial Data Schedule. To be filed by amendment.
<PAGE> 116

Item 25. Persons Controlled By or Under Common Control With the Registrant

Not Applicable.

Item 26. Number of Holders of Securities

<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of February 1, 1998
- -------------- ------------------------
<S> <C>
Shares of beneficial interest, Eleven (11)
without par value
</TABLE>

Item 27. Indemnification

Provisions for the indemnification of the Series Trust's Trustees and officers
are contained in and are incorporated by reference to the Series Trust's
Declaration of Trust, which was filed with Post-Effective Amendment No. 13 to
this Registration Statement as Exhibit 1.

Rule 484 Undertaking

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 117
Item 28. Business and Other Connections of Investment Advisers

U.S. GOVERNMENT SECURITIES PORTFOLIO
ZERO COUPON BOND PORTFOLIOS (SERIES 1998, 2000, 2005)
LARGE CAP PORTFOLIO
EQUITY INCOME PORTFOLIO
TRAVELERS QUALITY BOND PORTFOLIO
LAZARD INTERNATIONAL STOCK PORTFOLIO
MFS EMERGING GROWTH PORTFOLIO
MFS MID CAP GROWTH PORTFOLIO
MFS RESEARCH PORTFOLIO
FEDERATED HIGH YIELD PORTFOLIO
FEDERATED STOCK PORTFOLIO
DISCIPLINED MID CAP STOCK PORTFOLIO
DISCIPLINED SMALL CAP STOCK PORTFOLIO
NWQ LARGE CAP PORTFOLIO
JURIKA & VOYLES ALL CAP PORTFOLIO
STRATEGIC STOCK PORTFOLIO
CONVERTIBLE BOND PORTFOLIO

Officers and Directors of Travelers Asset Management International Corporation
(TAMIC), the Investment Adviser for the above Portfolios of The Travelers
Series Trust, are set forth in the following table:

<TABLE>
<CAPTION>
Name Position with TAMIC Other Business
- ---- ------------------- --------------
<S> <C> <C>
Marc P. Weill Director and Chairman Senior Vice President **
Chief Investment Officer
David A. Tyson Director, President and Senior Vice President *
Chief Investment Officer
Joseph E. Rueli, Jr. Director, Senior Vice President Vice President*
and Chief Financial Officer
F. Denney Voss Director and Senior Vice Senior Vice President*
President
John R. Britt Director and Secretary Assistant Secretary *
Harvey Eisen Senior Vice President Senior Vice President*
Joseph M. Mullally Senior Vice President Vice President*
David Amaral Vice President Assistant Director*
John R. Calcagni Vice President Second Vice President*
Gene Collins Vice President Vice President*
John F. Green Vice President Second Vice President*
Thomas Hajdukiewicz Vice President Vice President*
Edward Hinchliffe III Vice President and Cashier Second Vice President and Cashier*
Richard E. John Vice President Vice President*
Kathryn D. Karlic Vice President Vice President*
David R. Miller Vice President Vice President*
Emil J. Molinaro Vice President Vice President*
Andrew Sanford Vice President Investment Officer*
Charles H. Silverstein Vice President Second Vice President*
Robert Simmons Vice President Assistant Investment Officer*
</TABLE>
<PAGE> 118
<TABLE>
<CAPTION>
Name Position with TAMIC Other Business
- ---- ------------------- --------------
<S> <C> <C>
Jordan M. Stitzer Vice President Vice President*
Joel Strauch Vice President Vice President*
William H. White Treasurer Vice President and Treasurer *
Charles B. Chamberlain Assistant Treasurer Assistant Treasurer *
George M. Quaggin, Jr. Assistant Treasurer Assistant Treasurer *
Marla A. Berman Assistant Secretary Assistant Secretary**
Andrew Feldman Assistant Secretary Senior Counsel*
Millie Kim Assistant Secretary Senior Counsel*
Patricia A. Uzzel Compliance Officer Assistant Director*
Frank J. Fazzina Controller Director *
</TABLE>

* Positions are held with The Travelers Insurance Company, One Tower
Square, Hartford, Connecticut 06183.
** Positions are held with Travelers Group Inc. , 388 Greenwich Street, New
York, N.Y. 10013.

<PAGE> 119
SOCIAL AWARENESS STOCK PORTFOLIO
UTILITIES PORTFOLIO

Officers and Directors of Smith Barney Mutual Funds Management Inc. (SBMFM),
the Investment Adviser for the Social Awareness Stock Portfolio and Utilities
Portfolio of the Series Trust, are set forth in the following table:

<TABLE>
<CAPTION>
Name Position with SBMFM* Other Business
- ---- -------------------- --------------
<S> <C> <C>

Heath B. McLendon Director, President and Managing Director of Smith
Chief Executive Officer Barney; Director of certain investment companies
sponsored by Smith Barney; Director, President and Chief
Executive Officer of Travelers Investment Adviser, Inc.
("TIA")

Lewis E. Daidone Director and Senior Managing Director of Smith
Vice President Barney, Senior Vice President and Treasurer of certain
investment companies sponsored by Smith Barney; Director
and Senior Vice President of TIA.

A. George Saks Director Managing Director and General
Counsel of Smith Barney.

Bruce D. Sargent Vice President Managing Director of Smith Barney; Vice President and
Director of certain investment companies sponsored by
Smith Barney.

Michael J. Day Treasurer Managing Director of Smith
Barney.

Christina T. Sydor General Counsel and Managing Director of Smith
Secretary Barney and Secretary of certain investment companies
sponsored by Smith Barney; General Counsel and Secretary
of TIA.

Audrey C. Pappas-Wragg Chief Compliance Officer Vice President of Smith Barney; Chief Compliance Officer
of TIA.
</TABLE>

* Address: 388 Greenwich Street, New York, N.Y. 10013
<PAGE> 120
Executive Officers and Directors of Massachusetts Financial Services Company,
the Sub-Adviser to MFS Emerging Growth Portfolio, MFS Mid Cap Growth Portfolio,
MFS Research Portfolio of the Registrant, are set forth in the following table:

<TABLE>
<CAPTION>
Position with MFS
Name Financial Services Co. Other Business
- ---- ---------------------- --------------
<S> <C> <C>
A. Keith Brodkin Director and Chairman Director
Sun Life Assurance Company
of Canada
Jeffrey L. Shames Director and President -
Arnold D. Scott Director, Senior Executive -
Vice President and Secretary
Donald A. Stewart Director President and Director
Sun Life Assurance Company
of Canada
John D. McNeil Director Chairman
Sun Life Assurance Company
of Canada
Bruce C. Avery Executive Vice President -
John W. Ballen Executive Vice President -
Thomas J. Cashman, Jr. Executive Vice President -
Joseph W. Dello Russo Executive Vice President, Chief Director of Mutual Fund
Financial Officer and Treasurer Operations, The Boston
Company
William S. Harris Executive Vice President -
Kevin R. Parke Executive Vice President -
William W. Scott, Jr. Executive Vice President -
Patricia A. Zlotin Executive Vice President -
Stephen E. Cavan Senior Vice President, General -
Counsel and Assistant Secretary -
Robert T. Burns Vice President, Associate General -
Counsel and Assistant Secretary -
Thomas B. Hastings Vice President and Assistant Treasurer -
</TABLE>
<PAGE> 121
Lazard Freres & Co. LLC, serves as the investment subadviser to the Lazard
International Stock Portfolio. Lazard Freres is a limited liability company,
an organization for which its management is provided by General Members.
Lazard Freres Asset Management is a division of Lazard Freres & Co. LLC.

<TABLE>
<CAPTION>
Position with Lazard
Name Freres & Co. LLC Other Business
- ---- -------------------- --------------
<S> <C> <C>
Michel A. David-Weill General Member -
William R. Araskog General Member -
Frederick H. Betrue General Member -
David G. Braunechvig General Member -
Patrick J. Callahan, Jr. General Member -
John V. Doyle General Member -
Charles R. Dreifus General Member -
Thomas F. Dunn General Member -
Noman Eig General Member -
Peter R. Ezersky General Member -
Jonathan F. Foster General Member -
Albert H. Garner General Member -
James S. Gold General Member -
Jeffrey A. Golman General Member -
Steven J. Golub General Member -
Herbert W. Gullquist General Member -
Thomas R. Haack General Member -
Jay R. Harris General Member -
Melvin L. Heineman General Member -
Kenneth M. Jacobs General Member -
Jonathan H. Kagan General Member -
James L. Kempner General Member -
Sandra A. Lamb General Member -
Edgar D. Lagaspi General Member -
Michael S. Lise General Member -
William R. Loomis, Jr. General Member -
Jesses R. Lovejoy General Member -
Matthew J. Lustig General Member -
Philippe L. Magistretti General Member -
Damon Mezzacappa General Member -
Christina A.Mohr General Member -
Robert P. Morgenthau General Member -
Steven J. Niemczyk General Member -
Hamish W. M. Norton General Member -
Jonathan O'Herron General Member -
James A. Paduano General Member -
Louis Perlmutter General Member -
Robert E. Pell, Jr. General Member -
Leter Pollack General Member -
Michael J. Price General Member -
Steven L. Rattner General Member -
John R. Reese General Member -
John R. Reinsberg General Member -
Louis G. Rice General Member -
Luis E. Rinaldini General Member -
Bruno M. Roger General Member -
Felix G. Rohatyn General Member -
Michael S. Rome General Member -
</TABLE>
<PAGE> 122
<TABLE>
<CAPTION>
Position with Lazard
Name Freres & Co. LLC Other Business
- ---- -------------------- --------------
<S> <C> <C>
Gerald Rosenfeld General Member -
Peter L. Smith General Member -
Arthur P. Soloman General Member -
Michael B. Solomon General Member -
Edouard M. Stern General Member -
Paul A. Street General Member -
John S. Tamagni General Member -
David L. Tashjian General Member -
Joseph M. Thomas General Member -
Donald A. Wagner General Member -
Ali E. Wambold General Member -
Michael A. Wildish General Member -
Kendrick R. Wilson, III General Member -
Alexander B. Zagoreos General Member -
</TABLE>
<PAGE> 123
Executive Officers and Directors of Federated Investment Counseling, the
Sub-Adviser to Federated Stock Portfolio and Federated High Yield Portfolio of
the Registrant, are set forth in the following table:

<TABLE>
<CAPTION>
Position with Federated
Name Investment Counseling Other Business
- ---- --------------------- --------------
<S> <C> <C>
John F. Donahue Trustee -
J. Christopher Donahue Trustee -
Henry J. Gailliot Trustee and Chairman -
Mark L. Mallon Trustee and President -
John W. McGonigle Trustee -
Mark D. Olson Trustee -
J. Alan Minteer Senior Vice President -
Robert J. Ostrowski Senior Vice President -
G. Michael P. Cullen Vice President -
Michael P. Donnelly Vice President -
Edward C. Gonzales Vice President -
Stephen A. Keen Vice President and Secretary -
Robert K. Kinsey Vice President -
Charles A. Ritter Vice President -
Christopher J. Smith Vice President -
Edward J. Tiedge Vice President -
Donna M. Fabiano Assistant Vice President -
Thomas R. Donahue Treasurer and Assistant Secretary -
Joseph M. Huber Assistant Secretary -
David M. Taylor Assistant Secretary -
Richard B. Fisher Assistant Treasurer -
</TABLE>
<PAGE> 124
Executive Officers and Directors of Fidelity Management & Research Company, the
Sub-Adviser to Equity Income Portfolio and Large Cap Portfolio of the
Registrant, are set forth in the following table:

<TABLE>
<CAPTION>
Position with Fidelity
Name Management & Research Other Business
- ---- --------------------- --------------
<S> <C> <C>
J. Gary Burkhead Director, President -
Edward C. Johnson 3d Director, Chairman of the Board -
Peter S. Lynch Director, Vice Chairman of the Board -
Fred Henning, Jr. Senior Vice President -
Richard B. Fentin Senior Vice President -
Richard Haberman Senior Vice President -
William J. Hayes Senior Vice President -
Robert A. Lawrence Senior Vice President -
Arthur S. Loring Senior Vice President, Clerk and -
General Counsel -
Robert E. Stansky Senior Vice President -
Beth F. Terrana Senior Vice President -
George A. Vanderheiden Senior Vice President -
Stephen P. Jonas Vice President and Treasurer -
</TABLE>
<PAGE> 125
DISCIPLINED MID CAP STOCK PORTFOLIO
DISCIPLINED SMALL CAP STOCK PORTFOLIO

Officers and Directors of The Travelers Investment Management Company (TIMCO),
the Sub-Adviser to the Disciplined Mid Cap Stock Portfolio and the Disciplined
Small Cap Stock Portfolio of the Registrant, are set forth in the following
table:

<TABLE>
<CAPTION>
Name Position with TIMCO Other Business
- ---- ------------------- --------------
<S> <C> <C>
Jeffrey B. Lane Director and Chairman Vice Chairman
Smith Barney Inc.*

Kent A. Kelley Director and Chief** Not Applicable
Executive Officer

Sandip A. Bhagat Director and President** Not Applicable

Heath B. McLendon Director Managing Director
Smith Barney Inc.*

Jacob E. Hurwitz Senior Vice President** Not Applicable

Emil Molinaro Vice President Vice President
Travelers Group Inc.**

Daniel Willey Vice President ** Not Applicable

Gloria G. Williams Vice President** Not Applicable

Michael F. Rosenbaum Corporate Secretary Associate General Counsel
Smith Barney Inc.*

Michael Day Treasurer Managing Director
Smith Barney Inc.*
</TABLE>

*Address: 388 Greenwich Street, New York, New York 10013
**Address: One Tower Square, Hartford, Connecticut 01683
<PAGE> 126
Officers and Directors of NWQ Investment Management Company, the Sub-Adviser to
the NQW Large Cap Portfolio of the Registrant, are set forth in the following
table:

<TABLE>
<S> <C> <C>
Position with NWQ
Name Investment Management Co. Other Business
- ---- ------------------------- --------------
</TABLE>

To be provided by amendment
<PAGE> 127
Officers and Directors of Jurika & Voyles Fund Group, the Sub-Adviser to the
Jurika & Voules All Cap Portfolio of the Registrant, are set forth in the
following table:

<TABLE>
<S> <C> <C>
Name Position with Jurika & Voyles Other Business
- ---- ----------------------------- --------------
</TABLE>

To be provided by amendment
<PAGE> 128
Officers and Directors of Travelers Investment Adviser, the Sub-Adviser to the
Strategic Stock Portfolio of the Registrant, are set forth in the following
table:

<TABLE>
<S> <C> <C>
Position with Travelers
Name Investment Adviser Other Business
- ---- ------------------ --------------
</TABLE>

To be provided by amendment
<PAGE> 129
Item 29. Principal Underwriter

Not Applicable.

Item 30. Location of Accounts and Records

(1) Mutual Management Corp.
388 Greenwich Street
New York, NY 10013

(2) Fidelity Investments Institutional Operations Company
82 Devonshire Street
Boston, MA 02109

(3) Fidelity Service Company
82 Devonshire Street
Boston, MA 02109

(4) Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY

(5) PNC Bank, N.A.
200 Stevens Drive
Lester, PA 19113

(6) Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, NY 11201

(7) Brown Brothers Harriman & Company
40 Water Street
Boston, MA 02109

(8) First Data Services
P.O. Box 5127
Westborough, MA 01581-5127

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

The undersigned Registrant hereby undertakes to provide to each person to whom
a prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE> 130
SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, The Travelers Series Trust, has duly caused this amendment to this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Hartford, State of Connecticut, on the ___ day
of February, 1998.

THE TRAVELERS SERIES TRUST
--------------------------
(Registrant)

By: *HEATH B. McLENDON
---------------------------------
Heath B. McLendon
Chairman, Board of Trustees

Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to this Registration Statement has been signed below by the following
persons in the capacities indicated on February __, 1998.

<TABLE>
<S> <C>
*HEATH B. McLENDON Chairman of the Board
- ---------------------------------------
(Heath B. McLendon)

*KNIGHT EDWARDS Trustee
- ---------------------------------------
(Knight Edwards)

*ROBERT E. McGILL, III Trustee
- ---------------------------------------
(Robert E. McGill, III)

*LEWIS MANDELL Trustee
- ---------------------------------------
(Lewis Mandell)

*FRANCES M. HAWK Trustee
- ---------------------------------------
(Frances M. Hawk)

*LEWIS E. DAIDONE Treasurer
- ---------------------------------------
(Lewis E. Daidone)

*By: Ernest J. Wright, Attorney-in-Fact
Secretary, Board of Trustees
</TABLE>
<PAGE> 131
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C>
1. Agreement and Declaration of Trust. (Incorporated
herein by reference to Exhibit 1 to Post-Effective
Amendment No. 13 to the Registration Statement on
Form N-1A, filed April 3, 1996.)

2. By-Laws. (Incorporated herein by reference to Exhibit 2
to Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A, filed April 3, 1996.)

5(a). Investment Advisory Agreement between the U.S.
Government Securities Portfolio and Travelers Asset
Management International Corporation. (Incorporated
herein by reference to Exhibit 5(a) to Post-Effective
Amendment No. 13 to the Registration Statement on
Form N-1A, filed April 3, 1996.)

5(b). Investment Advisory Agreement between the Social
Awareness Stock Portfolio and Mutual Management
Corp. (formerly known as Smith Barney Mutual Fund
Management Inc.). (Incorporated herein by reference
to Exhibit 5(b) to Post-Effective Amendment No. 11 to
the Registration Statement on Form N-1A filed on
April 25, 1995.)

5(c). Investment Advisory Agreement between the Utilities
Portfolio and Mutual Management Corp. (formerly
known as Smith Barney Mutual Fund Management Inc.).
(Incorporated herein by reference to Exhibit 5(c) to
Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A filed on April 25, 1995.)

5(d). Investment Advisory Agreement between the
Zero Coupon Bond Fund Portfolios of The Trust and
Travelers Asset Management International Corporation.
(Incorporated herein by reference to Exhibit 5(d) to Post-
Effective Amendment No. 12 to the Registration
Statement on Form N-1A filed on June 2, 1995.)

5(e). Investment Advisory Agreement between MFS
Emerging Growth Portfolio of the Registrant and
Travelers Asset Management International Corporation.
(Incorporated herein by reference to Exhibit 5(e) to
Post-Effective Amendment No. 16 to the Registration
Statement on N-1A filed on July 31, 1996.)

5(f). Investment Advisory Agreement between
Federated High Yield Portfolio of the Registrant and
Travelers Asset Management International Corporation.
(Incorporated herein by reference to Exhibit 5(f) to
Post-Effective Amendment No. 16 to the Registration
Statement on N-1A filed on July 31, 1996.)
</TABLE>
<PAGE> 132
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C>
5(g). Investment Advisory Agreement between
Federated Stock Portfolio of the Registrant and Travelers
Asset Management International Corporation.
(Incorporated herein by reference to Exhibit 5(g) to
Post-Effective Amendment No. 16 to the Registration
Statement on N-1A filed on July 31, 1996.)

5(h). Investment Advisory Agreement between
Lazard International Stock Portfolio of the Registrant and
Travelers Asset Management International Corporation.
(Incorporated herein by reference to Exhibit 5(h) to
Post-Effective Amendment No. 16 to the Registration
Statement on N-1A filed on July 31, 1996.)

5(i). Investment Advisory Agreement between Large
Cap Portfolio of the Registrant and Travelers Asset
Management International Corporation. (Incorporated
herein by reference to Exhibit 5(i) to Post-Effective
Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(j). Investment Advisory Agreement between Equity
Income Portfolio of the Registrant and Travelers Asset
Management International Corporation. (Incorporated
herein by reference to Exhibit 5(j) to Post-Effective
Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(k). Investment Advisory Agreement between Travelers
Quality Bond Portfolio of the Registrant and Travelers Asset
Management International Corporation. (Incorporated
herein by reference to Exhibit 5(k) to Post-Effective
Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(l). Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Massachusetts
Financial Services Company as Subadviser to MFS Emerging
Growth Portfolio. (Incorporated herein by reference to
Exhibit 5(l) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

5(m). Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Federated
Investment Counseling as Subadviser to Federated High
Yield Portfolio. (Incorporated herein by reference to
Exhibit 5(m) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)
</TABLE>
<PAGE> 133
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C>
5(n). Sub-Advisory Agreement between Travelers
Asset Management International Corporation and
Federated Investment Counseling as Subadviser to
Federated Stock Portfolio. (Incorporated herein by
reference to Exhibit 5(n) to Post-Effective Amendment
No. 16 to the Registration Statement on N-1A filed on
July 31, 1996.)

5(o). Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Lazard Freres
Asset Management as Subadviser to Lazard International
Stock Portfolio. (Incorporated herein by reference to
Exhibit 5(o) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

5(p). Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Fidelity
Management & Research Company as Subadviser to
Equity Income Portfolio and Large Cap Portfolio.
(Incorporated herein by reference to Exhibit 5(p) to
Post-Effective Amendment No. 16 to the Registration
Statement on N-1A filed on July 31, 1996.)

5(r). Sub-Subadvisory Agreement between Fidelity
Management & Research Company and Fidelity
Management & Research (Far East) Inc. (Incorporated
herein by reference to Exhibit 5(r) to Post-Effective
Amendment No. 16 to the Registration Statement on
N-1A filed on July 31, 1996.)

5(s). Investment Advisory Agreement between The Mid-Cap
Disciplined Equity Fund of the Registrant and
Travelers Asset Management International Corporation.
(Incorporated herein by reference to Exhibit 5(s) to Post-
Effective Amendment No. 17 to the Registration Statement
on N-1A filed on October 31, 1996.)

5(t). Sub-Advisory Agreement between Travelers
Asset Management International Corporation and
The Travelers Investment Management Company,
as Subadviser to the Mid-Cap Disciplined Equity Fund.
(Incorporated herein by reference to Exhibit 5(t) to Post-
Effective Amendment No. 17 to the Registration Statement
on N-1A filed on October 31, 1996.)
</TABLE>
<PAGE> 134
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
5(u). Investment Advisory Agreement between Travelers Asset
Management International Corporation and the MFS Mid Cap
Growth Portfolio of the Registrant. (Incorporated herein
by reference to Exhibit 5(u) to Post-Effective Amendment
No. 21 to the Registration Statement on Form N-1A filed
on October 27, 1997.)

5(v). Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Massachusetts
Financial Services Corporation, as Subadviser for MFS Mid Cap
Growth Portfolio. (Incorporated herein by reference to
Exhibit 5(v) to Post-Effective Amendment No. 21 to
the Registration Statement on Form N-1A filed on
October 27, 1997.)

5(w). Investment Advisory Agreement between Travelers Asset
Management International Corporation and the MFS
Research Portfolio of the Registrant. (Incorporated herein
by reference to Exhibit 5(w) to Post-Effective Amendment
No. 21 to the Registration Statement on Form N-1A filed
on October 27, 1997.)

5(x). Sub-Advisory Agreement between Travelers Asset
Management International Corporation and Massachusetts
Financial Service Corporation, as Subadviser for MFS
Research Portfolio. (Incorporated herein by reference to
Exhibit 5(x) to Post-Effective Amendment No. 21 to
the Registration Statement on Form N-1A filed on
October 27, 1997.)

5(y). Form of Investment Advisory Agreement between To be filed by
Travelers Asset Management International Corporation amendment
and the NWQ Large Cap Portfolio of the Registrant.

5(z). Form of Sub-Advisory Agreement between Travelers Asset To be filed by
Management International Corporation and NWQ Investment amendment
Management Company, as Subadviser for the NWQ Large
Cap Portfolio.

5(aa). Form of Investment Advisory Agreement between To be filed by
Travelers Asset Management International Corporation amendment
and the Jurika & Voyles All Cap Portfolio of the Registrant.

5(bb). Form of Sub-Advisory Agreement between Travelers Asset To be filed by
Management International Corporation and Jurika & Voyles amendment
FundGroup, as Subadviser for the Jurika & Voyles
All Cap Portfolio.

5(cc). Form of Investment Advisory Agreement between Travelers To be filed by
Asset Management International Corporation and the amendment
Disciplined Small Cap Stock Portfolio of the Registrant.
</TABLE>
<PAGE> 135
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
5(dd). Form of Sub-Advisory Agreement between Travelers Asset To be filed by
Management International Corporation and The Travelers amendment
Investment Management Company, as Subadviser for the
Disciplined Small Cap Stock Portfolio.

5(ee). Form of Investment Advisory Agreement between To be filed by
Travelers Asset Management International Corporation amendment
and the Strategic Stock Portfolio of the Registrant.

5(ff). Form of Sub-Advisory Agreement between Travelers To be filed by
Asset Management International Corporation and amendment
Travelers Investment Adviser, as Subadviser for the
Strategic Stock Portfolio.

5(gg). Form of Investment Advisory Agreement between To be filed by
Travelers Asset Management International Corporation amendment
and the Convertible Bond Portfolio of the Registrant.

8(a). Custody Agreement between the Registrant and
Chase Manhattan Bank, N.A., Brooklyn, New York.
(Incorporated herein by reference to Exhibit 8(a) to
Post-Effective Amendment No. 19 to the Registration
Statement on Form N-1A filed on April 21, 1997.)

8(b). Form of Custody Agreement between the Registrant and
PNC Bank. (Incorporated herein by reference to
Exhibit 8(b) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

8(c). Custody Agreement between the Registrant and
Bank of New York. (Incorporated herein by reference to
Exhibit 8(c) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

8(d). Form of Custody Agreement between the Registrant and To be filed by
Morgan Stanley Trust Company. amendment

8(e). Custody Agreement between the Registrant and Brown
Brothers Harriman & Co. (Incorporated herein by reference
to Exhibit 8(e) to Post-Effective Amendment No. 16 to the
Registration Statement on N-1A filed on July 31, 1996.)

9(a). Transfer and Recordkeeping Agreement between the
Registrant and The Travelers Insurance Company.
(Incorporated herein by reference to Exhibit 9 to
Post-Effective Amendment No. 13 to the Registration

Statement on Form N-1A, filed April 3, 1996.)
9(b). Amendment to Transfer and Recordkeeping Agreement
between the Registrant and The Travelers Insurance Company.
(Incorporated herein by reference to Exhibit 9(b) to Post-
Effective Amendment No. 16 to the Registration Statement
on N-1A filed on July 31, 1996.)
</TABLE>
<PAGE> 136
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
9(c). Transfer Agent Agreement between Fidelity Investments
Institutional Operations Company and the Equity Income
Portfolio and Large Cap Portfolio of the Registrant.
(Incorporated herein by reference to Exhibit 9(c) to Post-
Effective Amendment No. 16 to the Registration Statement
on N-1A filed on July 31, 1996.)

9(d). Administrative Services Agreement between the
Registrant and The Travelers Insurance Company.
(Incorporated herein by reference to Exhibit 9(d) to
Post-Effective Amendment No. 16 to the Registration
Statement on N-1A filed on July 31, 1996.)

Amendments No. 1, 2, 3 and 4 to the Administrative Electronically
Services Agreement between the Registrant and
The Travelers Insurance Company

9(e). Service Agent Agreement between Fidelity Service
Company and the Equity Income Portfolio and Large
Cap Portfolio of the Registrant. (Incorporated herein by
reference to Exhibit 9(e) to Post-Effective Amendment
No. 16 to the Registration Statement on N-1A filed on
July 31, 1996.)

9(f). Participation Agreement between the Registrant and
The Travelers Insurance Company. (Incorporated herein
by reference to Exhibit 9(f) to Post-Effective Amendment
No. 19 to the Registration Statement on Form N-1A filed
on April 21, 1997.)

10. Opinion and Consent of Counsel. To be filed by
amendment

11(a). Consent of Coopers & Lybrand L.L.P., Independent To be filed by
Accountants. amendment

Consent of KPMG Peat Marwick, LLP, Independent To be filed by
Certified Public Accountants. amendment

Consent of Price Waterhouse, LLP, Independent To be filed by
Accountants. amendment

11(b). Powers of Attorney authorizing Ernest J. Wright,
Secretary, or Kathleen A. McGah, Assistant Secretary
to be the signatory for Heath B. McLendon,
Knight Edwards, Robert E. McGill III, Lewis Mandell,
Frances M. Hawk and Ian R. Stuart. (Incorporated herein
by reference to Exhibit 11(b) to Post-Effective
Amendment No. 13 to the Registration Statement on
Form N-1A, filed April 3, 1996.)
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
Power of Attorney authorizing Ernest J. Wright or
Kathleen A. McGah as signatory for Lewis E. Daidone.
(Incorporated herein by reference to Exhibit 11(b) to Post-
Effective Amendment No. 18 to the Registration Statement
on Form N-1A filed on February 24, 1997.)

27. Financial Data Schedule. To be filed by
amendment
</TABLE>

<PAGE> 1
AMENDMENT NO. 1
TO

ADMINISTRATIVE SERVICES AGREEMENT

Amendment to the Administrative Services Agreement dated August 1,
1996 (the "Agreement") by and between The Travelers Insurance Company and the
Travelers Series Trust (the "Trust") on behalf of certain of the Trust's
portfolios agree to amend Schedule A of the Agreement to add six portfolios of
The Travelers Series Trust.

IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their respective officials thereunto duly authorized and seals to be affixed,
in the case of the Company.

THE TRAVELERS SERIES TRUST ON BEHALF
OF THEIR RESPECTIVE PORTFOLIOS LISTED
ON SCHEDULE A

By: Heath B. McLendon
--------------------------------------------------------
Name: Heath B. McLendon
------------------------------------------------------
Title: Chairman & President
-----------------------------------------------------

THE TRAVELERS INSURANCE COMPANY

By: Ernest J. Wright
--------------------------------------------------------
Name: Ernest J. Wright
------------------------------------------------------
Title: Vice President
-----------------------------------------------------
<PAGE> 2
AMENDMENT NO. 2
TO

ADMINISTRATIVE SERVICES AGREEMENT

IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their respective officials thereunto duly authorized and seals to be affixed,
in the case of the Company.

THE TRAVELERS SERIES TRUST ON BEHALF
OF THEIR RESPECTIVE PORTFOLIOS LISTED
ON SCHEDULE A

THE TRAVELERS INSURANCE COMPANY

ADMINISTRATIVE SERVICES AGREEMENT

IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their respective officials thereunto duly authorized and seals to be affixed,
in the case of the Company.

THE TRAVELERS SERIES TRUST ON BEHALF
OF THEIR RESPECTIVE PORTFOLIOS LISTED
ON SCHEDULE A

THE TRAVELERS INSURANCE COMPANY

ADMINISTRATIVE SERVICES AGREEMENT

IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their respective officials thereunto duly authorized and seals to be affixed,
in the case of the Company.

THE TRAVELERS SERIES TRUST ON BEHALF
OF THEIR RESPECTIVE PORTFOLIOS LISTED
ON SCHEDULE A

By:
--------------------------------------------------------

Name:
------------------------------------------------------

Title:
-----------------------------------------------------

THE TRAVELERS INSURANCE COMPANY

By:
--------------------------------------------------------

Name:
------------------------------------------------------

Title:
-----------------------------------------------------
<PAGE> 5
SCHEDULE A

THE TRAVELERS SERIES TRUST

<TABLE>
<CAPTION>
PORTFOLIO EFFECTIVE DATE
<S> <C>
Lazard International Stock Portfolio August 1, 1996
Federated High Yield Portfolio August 30, 1996
Federated Stock Portfolio August 30, 1996
MFS Emerging Growth Portfolio August 30, 1996
Travelers Quality Bond Portfolio August 30, 1996
U.S. Government Securities Portfolio October 28, 1996
Zero Coupon Bond Fund Portfolio - Series 1998 October 28, 1996
Zero Coupon Bond Fund Portfolio - Series 2000 October 28, 1996
Zero Coupon Bond Fund Portfolio - Series 2005 October 28, 1996
Social Awareness Stock Portfolio November 4, 1996
Utilities Portfolio November 4, 1996
Disciplined Mid Cap Stock Portfolio January 1, 1997
MFS Mid Cap Growth Portfolio December 1, 1997
MFS Research Portfolio December 1, 1997
Disciplined Small Cap Stock Portfolio May 1, 1998
NWQ Large Cap Portfolio May 1, 1998
Jurika & Voyles All Cap Portfolio May 1, 1998
Strategic Stock Portfolio May 1, 1998
Convertible Bond Portfolio May 1, 1998
</TABLE>