<PAGE> 1
Registration Statement No. (to be
filed by amendment)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
--------------------------------------------
(Exact name of Registrant)
THE TRAVELERS INSURANCE COMPANY
-------------------------------
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
----------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (860) 277-0111
--------------
ERNEST J. WRIGHT
Assistant Secretary
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
----------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
------------------
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485.
- -----
on May 1, 1997 pursuant to paragraph (b) of Rule 485.
- -----
60 days after filing pursuant to paragraph (a)(1) of Rule 485.
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on ___________ pursuant to paragraph (a)(1) 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.
PURSUANT TO RULE 24f-2 OF THE INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT
HEREBY DECLARES THAT AN INDEFINITE AMOUNT OF VARIABLE ANNUITY CONTRACT UNITS
WAS REGISTERED UNDER THE SECURITIES ACT OF 1933. A RULE 24f-2 NOTICE FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1995 WAS FILED ON FEBRUARY 29, 1996.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the registration statement shall
become effective on such date as the Commission, acting pursuant
to Section 8(a), may determine.
<PAGE> 2
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
<TABLE>
<CAPTION>
Item
No. Caption in Prospectus
- --- ---------------------
<S> <C>
1. Cover Page Prospectus
2. Definitions Glossary of Special Terms
3. Synopsis Prospectus Summary
4. General Description of Registrant, The Insurance Company; The Separate
Depositor, and Portfolio Companies Account and the Underlying Funds
5. Deductions Charges and Deductions; Distribution of
Variable Annuity Contracts
6. General Description of Variable The Contract
Annuity Contracts
7. Annuity Period The Annuity Period
8. Death Benefit Death Benefit
9. Purchases and Contract Value The Contract; Distribution of Variable Annuity
Contract
10. Redemptions Surrenders and Redemptions
11. Taxes Federal Tax Considerations
12. Legal Proceedings Legal Proceedings and Opinions
13. Table of Contents of Statement Appendix C - Contents of the Statement
of Additional Information of Additional Information
Caption in Statement of Additional
Information
------------------------------------------
14. Cover Page Cover Page
15. Table of Contents Table of Contents
16. General Information and History The Insurance Company
17. Services Principal Underwriter; Distribution and
Management Agreement
18. Purchase of Securities Being Offered Valuation of Assets
19. Underwriters Principal Underwriter
20. Calculation of Performance Data Performance Information
21. Annuity Payments Not Applicable
22. Financial Statements Financial Statements
</TABLE>
<PAGE> 3
PART A
Information Required in a Prospectus
<PAGE> 4
PROSPECTUS
This Prospectus describes both individual flexible premium variable annuity
contracts and certificates under a master group flexible premium variable
annuity contract (such individual contracts and certificates collectively
referred to as the "Contracts") offered by The Travelers Insurance Company (the
"Company"). The Contracts are currently available for use in connection with (1)
individual nonqualified purchases; (2) Individual Retirement Annuities (IRAs)
pursuant to Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code"); and (3) qualified retirement plans. Qualified contracts include
contracts qualifying under Section 401(a), 403(b) or 408(b) of the Code.
Residents of certain states, where applicable, will be issued certificates
representing participation in a master group contract owned by a trustee of an
existing trust (the "Trustee Owner"). Such certificates contain the same
provisions as the individual contracts. In instances where certificates are
issued, the terms "Contract Owner" and "you" as used in this prospectus will
refer to owners of the Certificates.
Purchase Payments made under the Contract will accumulate on a fixed and/or a
variable basis, as selected by the Contract Owner. If on a variable basis, the
value of the Contract prior to the Maturity Date will vary continuously to
reflect the investment experience of underlying funds ("Underlying Funds")
available under The Travelers Fund BD for Variable Annuities ("Fund BD"). The
Underlying Funds currently available are: Smith Barney Income and Growth
Portfolio, Alliance Growth Portfolio, American Capital Enterprise Portfolio,
Smith Barney International Equity Portfolio, Smith Barney Pacific Basin
Portfolio, TBC Managed Income Portfolio, Putnam Diversified Income Portfolio,
G.T. Global Strategic Income Portfolio, Smith Barney High Income Portfolio, MFS
Total Return Portfolio, and AIM Capital Appreciation Portfolio, and Smith Barney
Money Market Portfolio of the Smith Barney Travelers Series Fund, Inc., and
Smith Barney Total Return Portfolio of the Smith Barney Series Fund.
This Prospectus provides the information about Fund BD that you should know
before investing. Please read it and retain it for future reference. Additional
information about Fund BD is contained in a Statement of Additional Information
("SAI") dated 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 Investor Services, One Tower Square, Hartford,
Connecticut 06183-9061, or by calling 1-800-842-8573. The Table of Contents of
the SAI appears in Appendix A of this Prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS FOR THE
UNDERLYING FUNDS. BOTH THE CONTRACT PROSPECTUS AND THE UNDERLYING FUND
PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS DATED
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.............................................................. 4
PROSPECTUS SUMMARY..................................................................... 5
FEE TABLE.............................................................................. 7
THE INSURANCE COMPANY.................................................................. 9
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS.......................................... 9
THE TRAVELERS SERIES................................................................... 9
THE UNDERLYING FUNDS................................................................... 9
UNDERLYING FUND INVESTMENT MANAGERS.................................................... 11
SUBSTITUTION AND ADDITIONS............................................................. 11
PERFORMANCE INFORMATION................................................................ 11
THE CONTRACT........................................................................... 12
Purchase Payments.................................................................... 12
Right to Return...................................................................... 12
Accumulation Units................................................................... 12
CHARGES AND DEDUCTIONS................................................................. 13
Administrative Charges............................................................... 13
Mortality and Expense Risk Charge.................................................... 13
Reduction or Elimination of Contract Charges......................................... 14
Underlying Fund Charges.............................................................. 14
Premium Tax.......................................................................... 14
Changes In Taxes Based Upon Premium or Value......................................... 14
OWNERSHIP PROVISIONS................................................................... 14
Types of Ownership................................................................... 14
Beneficiary.......................................................................... 15
Annuitant............................................................................ 15
TRANSFERS.............................................................................. 15
Dollar-Cost Averaging (Automated Transfers).......................................... 15
Telephone Transfers.................................................................. 16
SURRENDERS AND REDEMPTIONS............................................................. 16
Systematic Withdrawals............................................................... 16
DEATH BENEFIT.......................................................................... 16
Death Proceeds Prior to the Maturity Date............................................ 17
Death Proceeds After the Maturity Date............................................... 17
THE ANNUITY PERIOD..................................................................... 18
Maturity Date........................................................................ 18
Allocation of Annuity................................................................ 19
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Variable Annuity..................................................................... 21
Fixed Annuity........................................................................ 22
PAYMENT OPTIONS........................................................................ 22
Election of Options.................................................................. 22
Annuity Options...................................................................... 22
Income Options....................................................................... 23
MISCELLANEOUS CONTRACT PROVISIONS...................................................... 23
Termination.......................................................................... 23
Misstatement......................................................................... 24
Required Reports..................................................................... 24
Suspension of Payments............................................................... 24
Transfers of Contract Values to Other Annuities...................................... 24
FEDERAL TAX CONSIDERATIONS............................................................. 24
General Taxation of Annuities........................................................ 24
Tax Law Diversification Requirements for Variable Annuities.......................... 24
Ownership of the Investments......................................................... 25
Penalty Tax for Premature Distributions.............................................. 25
Mandatory Distributions for Qualified Plans.......................................... 25
Nonqualified Annuity Contracts....................................................... 25
Individual Retirement Annuities...................................................... 26
Qualified Pension and Profit-Sharing Plans........................................... 26
Federal Income Tax Withholding....................................................... 27
VOTING RIGHTS.......................................................................... 28
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS............................................. 28
Conformity with State and Federal Laws............................................... 28
LEGAL PROCEEDINGS AND OPINIONS......................................................... 28
THE FIXED ACCOUNT...................................................................... 29
Transfers............................................................................ 29
APPENDIX A............................................................................. 30
APPENDIX B............................................................................. 32
APPENDIX C............................................................................. 33
</TABLE>
3
<PAGE> 7
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
The following terms are used throughout the Prospectus and have the indicated
meanings:
ACCUMULATION UNIT -- An accounting unit of measure used to calculate the value
of a Contract before Annuity Payments begin.
ACCUMULATION UNIT VALUE -- The dollar amount of an Accumulation Unit.
ANNUITANT -- The person on whose life this contract is issued and the amount of
the monthly Annuity Payments depend.
ANNUITY PAYMENTS -- A series of periodic payments for life; for life with either
a minimum number of payments or a determinable sum assured; or for the joint
lifetime of the Annuitant and another person and thereafter during the lifetime
of the survivor.
ANNUITY UNIT -- An accounting unit of measure used to calculate the amount of
Annuity Payments.
COMPANY (WE, OUR) -- The Travelers Insurance Company.
COMPANY'S HOME OFFICE -- The principal offices of The Travelers Insurance
Company located at One Tower Square, Hartford, Connecticut 06183-9061.
CONTRACT DATE -- The date on which the Contact, benefits and the contract
provisions become effective.
CONTRACT OWNER (YOU, YOUR) -- The person or entity to whom the Contract is
issued.
CONTRACT VALUE -- The current value of Accumulation Units credited to the
Contract less any administrative charges.
CONTRACT YEARS -- Twelve-month periods beginning on the Contract Date.
FIXED ACCOUNT -- An additional account into which Purchase Payments may be
allocated and which is included in the Contract Value. Purchase Payments
allocated to the Fixed Account will earn interest at a rate guaranteed by the
Company; this rate will change from time to time.
INCOME PAYMENTS -- Optional forms of payments made by the Company which are
based on an agreed-upon number of payments or payment amount.
MATURITY DATE -- The date on which the first Annuity or Income Payment is to
begin under a Contract.
PURCHASE PAYMENT -- A gross amount paid to the Company during the accumulation
period.
SEPARATE ACCOUNT -- Assets set aside by the Company, the investment experience
of which is kept separate from that of other assets of the Company (Fund BD).
SUB-ACCOUNT -- The portion of the assets of the Separate Account which is
allocated to a particular Underlying Fund.
UNDERLYING FUND(S) -- The investment option(s) available under the Separate
Account.
VALUATION DATE -- A day on which Separate Account assets are valued. A Valuation
Date is any day on which the New York Stock Exchange is open for trading. The
value of Accumulation Units and Annuity Units will be determined as of the close
of trading on the New York Stock Exchange.
VALUATION PERIOD -- The period between the close of business on successive
Valuation Dates.
VARIABLE ANNUITY -- An annuity contract which provides for accumulation and for
Annuity Payments which vary in amount in accordance with the investment
experience of a Separate Account.
4
<PAGE> 8
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
INTRODUCTION
The Contract described in this Prospectus is both an insurance policy and a
security. As an insurance policy, it is subject to the insurance laws and
regulations of each state in which it is available for distribution. As a
security, it is subject to the federal securities laws. The Contract is an
individual flexible premium variable annuity. It allows you to allocate Purchase
Payments to any or all of the Underlying Funds currently available under Fund
BD, as well as to the Fixed Account. (See "Underlying Funds.") An initial
lump-sum Purchase Payment of at least $5,000 must be made to the Contract;
additional Purchase Payments of at least $500 may be made. In some states,
subsequent Purchase Payments are not allowed. (See "Purchase Payments.")
Purchase payments over $1,000,000 may be made with the Company's prior consent.
RIGHT TO RETURN
You may return the Contract and receive a full refund of the Contract Value
(including charges) within twenty days after the Contract is delivered to you,
unless state law requires a longer period. (See "Right to Return.")
CHARGES AND EXPENSES
There are no sales or surrender charges in this contract.
Other charges include the contract administrative expense charge ($30 annually)
and a Sub-Account administrative expense charge (0.15% on an annual basis of the
average daily net assets allocated to each of the Underlying Funds). (See
"Administrative Charges.") A mortality and expense risk charge, equivalent on an
annual basis to 1.25% of the daily net assets of amounts allocated to each
Underlying Funds will also be charged. (See "Mortality and Expense Risk Charge,"
page 15.) If applicable, state premium taxes will also be deducted and paid when
due. (See "Premium Tax.")
TRANSFERS
Prior to the Maturity Date, you may reallocate the Contract Value among the
Fixed Account and any of the Underlying Funds available under Fund BD. Transfers
between the variable Sub-Accounts are unlimited. Transfers between the Fixed
Account and any of the Underlying Funds are subject to certain restrictions.
(See "Transfers" and "The Fixed Account.") Dollar-Cost Averaging, or automated
transfers, are also available. The minimum automated transfer amount is $400.
(See "Dollar Cost Averaging (Automated Transfers).")
SURRENDERS
Prior to the Maturity Date, you may surrender all or part of the Contract Value
subject to certain limitations. You will be liable for income tax on the taxable
portion of any full or partial surrender, and you may incur a 10% tax penalty if
such surrender is made prior to the age of 59 1/2. (See "Surrenders and
Redemptions" and "Penalty Tax for Premature Distributions.")
Systematic withdrawals of at least $100 on a monthly, quarterly, semiannual or
annual basis may be elected if your Contract Value is at least $15,000. Any
applicable premium taxes will be deducted. (See "Systematic Withdrawals.")
DEATH BENEFIT
A death benefit is payable to the Beneficiary upon the death of the Annuitant
prior to the Maturity Date with no Contingent Annuitant surviving. The death
benefit will vary based on the Annuitant's age at the time of death. (See "Death
Benefit.")
5
<PAGE> 9
THE ANNUITY PERIOD
On the Maturity Date, or other agreed-upon payment date, the Company will
provide Annuity or Income Payments as described in the section entitled "The
Annuity Period."
THE FIXED ACCOUNT
Although this Prospectus specifically applies only to the variable features of
the Contract, the Contract also allows you to allocate Purchase Payments to a
Fixed Account where they will earn interest at a rate guaranteed by the Company,
which interest rate will not be less than 3% per year. (See "The Fixed
Account.")
6
<PAGE> 10
FEE TABLE
- --------------------------------------------------------------------------------
FUND BD AND ITS UNDERLYING FUNDS
The purpose of the Fee Table is to assist Contract Owners in understanding the
various costs and expenses that he or she will bear, directly or indirectly,
under the Contract. The information listed reflects expenses of the Sub-Accounts
as well as of the Underlying Fund Expenses. Additional information regarding the
charges and deductions assessed under the Contract can be found on page .
Expenses shown do not include premium taxes, which may be applicable.
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Annual Contract Administrative Charge
(Waived if Contract Value is $40,000 or more) $30
</TABLE>
ANNUAL SUB-ACCOUNT CHARGES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
STANDARD ENHANCED
DEATH BENEFIT DEATH BENEFIT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortality and Expense Risk Fee
(as a percentage of daily net asset value) 1.02% 1.30%
Sub-Account Administrative Charge
(as a percentage of daily net asset value) 0.15% 0.15%
TOTAL SUB-ACCOUNT CHARGES 1.17% 1.45%
</TABLE>
UNDERLYING FUND EXPENSES
(as a percentage of average net assets of the Underlying Fund)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
MANAGEMENT OTHER TOTAL UNDERLYING
FEE EXPENSES FUND EXPENSES
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Smith Barney Income and Growth Portfolio 0.65%
Alliance Growth Portfolio 0.80%
American Capital Enterprise Portfolio 0.70%
Smith Barney International Equity Portfolio 0.90%
Smith Barney Pacific Basin Portfolio 0.90%
TBC Managed Income Portfolio 0.65%
Putnam Diversified Income Portfolio 0.75%
G.T. Global Strategic Income Portfolio 0.80%
Smith Barney High Income Portfolio 0.60%
MFS Total Return Portfolio 0.80%
Smith Barney Money Market Portfolio 0.60%
AIM Capital Appreciation Portfolio 0.80%
Smith Barney Total Return Portfolio 0.75%
</TABLE>
1 Other expenses are as of October 31, 1996, taking into account the current
expense limitations agreed to by the Managers. The Managers waived all of
their fees for the period and reimbursed the Funds for their expenses. If such
fees were not waived and expenses were not reimbursed, Total Underlying Fund
Expenses for the Travelers Series Fund Portfolios would have been: Smith
Barney Income and Growth Portfolio, %; Alliance Growth Portfolio, %;
American Capital Enterprise Portfolio, %; Smith Barney International
Equity Portfolio, %; Smith Barney Pacific Basin Portfolio, %; TBC
Managed Income Portfolio, %; Putnam Diversified Income Portfolio, %;
G.T. Global Strategic Income Portfolio, %; Smith Barney High Income
Portfolio, %; MFS Total Return Portfolio, %; Smith Barney Money Market
Portfolio, %.
2 Other expenses are as of December 31, 1996, taking into account the current
expense limitations agreed to by the Managers. The Managers waived all of
their fees for the period and reimbursed the Funds for their expenses. The
Smith Barney Series Fund Total Return Portfolio had no fees waived and no
expenses reimbursed.
* Smith Barney International Equity Portfolio and G.T. Global Strategic Income
Portfolio earned credits from the Custodian which reduced the service fees
incurred. When these credits are taken into consideration, Total Underlying
Fund Expenses are % and % respectively.
7
<PAGE> 11
EXAMPLE*
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
STANDARD DEATH BENEFIT ELECTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
A $1,000 investment would be subject to the
following expenses, assuming a 5% annual return
on assets, regardless of whether the contract
is surrendered.
- --------------------------------------------------------------------------------------------------------------------
ONE YEAR THREE YEARS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney Income and Growth Portfolio
Alliance Growth Portfolio
American Capital Enterprise Portfolio
Smith Barney International Equity Portfolio
Smith Barney Pacific Basin Portfolio
TBC Managed Income Portfolio
Putnam Diversified Income Portfolio
G.T. Global Strategic Income Portfolio
Smith Barney High Income Portfolio
MFS Total Return Portfolio
Smith Barney Money Market Portfolio
AIM Capital Appreciation Portfolio
Smith Barney Total Return Portfolio
</TABLE>
ENHANCED DEATH BENEFIT ELECTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
A $1,000 investment would be subject to the
following expenses, assuming a 5% annual return
on assets, regardless of whether the contract
is surrendered.
- --------------------------------------------------------------------------------------------------------------------
ONE YEAR THREE YEARS
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
Smith Barney Income and Growth Portfolio
Alliance Growth Portfolio
American Capital Enterprise Portfolio
Smith Barney International Equity Portfolio
Smith Barney Pacific Basin Portfolio
TBC Managed Income Portfolio
Putnam Diversified Income Portfolio
G.T. Global Strategic Income Portfolio
Smith Barney High Income Portfolio
MFS Total Return Portfolio
Smith Barney Money Market Portfolio
AIM Capital Appreciation Portfolio
Smith Barney Total Return Portfolio
</TABLE>
* The Example reflects the $30 Annual Contract Administrative Charge as an
annual charge of 0. % of assets.
8
<PAGE> 12
THE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The Travelers Insurance Company (the "Company") is a stock insurance company
chartered in 1864 in the State of Connecticut and continuously engaged in the
insurance business since that time. The Company is licensed to conduct a life
insurance business in all states of the United States, the District of Columbia,
Puerto Rico, Guam, the U.S. and British Virgin Islands, and the Bahamas. The
Company is an indirect wholly owned subsidiary of Travelers Group Inc., a
financial services holding company. The Company's Home Office is located at One
Tower Square, Hartford, Connecticut 06183.
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
- --------------------------------------------------------------------------------
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES (FUND BD)
Fund BD was established on October 22, 1993 and is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940, as amended (the
"1940 Act"). The assets of Fund BD will be invested exclusively in the shares of
the Underlying Funds.
The assets of Fund BD are held for the exclusive benefit of the owners of this
separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to Fund BD are, in
accordance with the Contracts, credited to or charged against Fund BD without
regard to other income, gains and losses of the Company. The assets held by Fund
BD are not chargeable with liabilities arising out of any other business which
the Company may conduct. Obligations under the Contract are obligations of the
Company.
All investment income and other distributions of the Underlying Funds are
payable to Fund BD. All such income and/or distributions are reinvested in
shares of the respective Underlying Fund at net asset value. Shares of the
Underlying Funds listed above are currently sold only to life insurance company
separate accounts to fund variable annuity and variable life insurance
contracts. Fund shares are not sold to the general public.
THE UNDERLYING FUNDS
Purchase Payments are allocated to the Underlying Funds in accordance with the
selection made by the Contract Owner.
More detailed information about the options and their inherent risks may be
found in the current prospectuses for the Underlying Funds. These prospectuses
are included with and must accompany this Prospectus. Since there are varying
degrees of risk inherent in each option, please read them carefully before
investing. Additional copies of the prospectuses may be obtained by contacting
your registered representative or by calling 1-800-842-8573.
Fund BD currently invests in the following Underlying Funds:
TRAVELERS SERIES FUND INC.:
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of the Income and
Growth Portfolio is current income and long-term growth of income and capital by
investing primarily, but not exclusively, in common stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth Portfolio is long-term
growth of capital by investing predominantly in equity securities of companies
with a favorable outlook for earnings and whose rate of growth is expected to
exceed that of the U.S. economy over time. Current income is only an incidental
consideration.
AMERICAN CAPITAL ENTERPRISE PORTFOLIO. The Enterprise Portfolio's objective is
capital appreciation through investment in securities believed to have
above-average potential for capital appreciation. Any income received on such
securities is incidental to the objective of capital appreciation.
9
<PAGE> 13
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective of the International
Equity Portfolio is total return on assets from growth of capital and income by
investing at least 65% of its assets in a diversified portfolio of equity
securities of established non-U.S. issuers.
SMITH BARNEY PACIFIC BASIN PORTFOLIO. The Pacific Basin Portfolio's objective
is long-term capital appreciation through investment primarily in equity
securities of companies in Asian Pacific Countries.
TBC MANAGED INCOME PORTFOLIO. The objective of the Managed Income Portfolio is
to seek high current income consistent with prudent risk of capital through
investments in corporate debt obligations, preferred stocks, and obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the Diversified Income
Portfolio is to seek high current income consistent with preservation of
capital. The Portfolio will allocate its investments among the U.S. Government
Sector, the High Yield Sector, and the International Sector of the fixed income
securities markets.
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO. The Strategic Income Portfolio's
investment objective is primarily to seek high current income and secondarily to
seek capital appreciation. The Portfolio allocates its assets among debt
securities of issuers in the United States, developed foreign countries, and
emerging markets.
SMITH BARNEY HIGH INCOME PORTFOLIO. The investment objective of the High Income
Portfolio is high current income. Capital appreciation is a secondary objective.
The Portfolio will invest at least 65% of its assets in high-yielding corporate
debt obligations and preferred stock.
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's objective is to obtain
above-average income (compared to a portfolio entirely invested in equity
securities) consistent with the prudent employment of capital. Generally, at
least 40% of the Portfolio's assets will be invested in equity securities.
SMITH BARNEY MONEY MARKET PORTFOLIO. The investment objective of the Money
Market Portfolio is maximum current income and preservation of capital by
investing in high quality, short-term money market instruments.
AIM CAPITAL APPRECIATION PORTFOLIO. The investment objective of the AIM Capital
Appreciation Portfolio is to seek capital appreciation by investing principally
in common stock, with emphasis on medium-sized and smaller emerging growth
companies.
SMITH BARNEY SERIES FUND INC:
SMITH BARNEY TOTAL RETURN PORTFOLIO. The investment objective of the Smith
Barney Total Return Portfolio is to provide total return, consisting of
long-term capital appreciation and income. The Portfolio will seek to achieve
its goal by investing primarily in a diversified portfolio of dividend-paying
common stock.
10
<PAGE> 14
UNDERLYING FUND INVESTMENT MANAGERS
The Underlying Funds receive investment management and advisory services from
the following investment professionals:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
FUND INVESTMENT MANAGER SUB-ADVISER
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney Income and Smith Barney Mutual Funds
Growth Portfolio Management Inc.("SBMFM")
- ----------------------------------------------------------------------------------------------
Alliance Growth Portfolio SBMFM Alliance Capital
Management L.P.
- ----------------------------------------------------------------------------------------------
American Capital Enterprise SBMFM American Capital Asset
Portfolio Management, Inc
- ----------------------------------------------------------------------------------------------
Smith Barney Int'l Equity SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
Smith Barney Pacific Basin SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
TBC Managed Income Portfolio SBMFM The Boston Company Asset
Management, Inc.
- ----------------------------------------------------------------------------------------------
Putnam Diversified Income SBMFM Putnam Investment Management,
Portfolio Inc.
- ----------------------------------------------------------------------------------------------
G.T. Global Strategic Income SBMFM G.T. Capital Management Inc.
Portfolio
- ----------------------------------------------------------------------------------------------
Smith Barney High Income SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
MFS Total Return Portfolio SBMFM Massachusetts Financial
Services Company
- ----------------------------------------------------------------------------------------------
Smith Barney Money Market SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
AIM Capital Appreciation SBMFM AIM Capital Management, Inc
Portfolio
- ----------------------------------------------------------------------------------------------
Smith Barney Total Return SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
</TABLE>
SUBSTITUTIONS AND ADDITIONS
If any of the Underlying Funds should become unavailable for allocating purchase
payments, or if, in the judgment of the Company further investment in an
Underlying Fund becomes inappropriate for the purposes of the Contract, we may
substitute another registered, open-end management investment company.
Substitution may be made with respect to both existing investments and the
investment of any future Purchase Payments. However, no such substitution will
be made without notice to Contract Owners, state approval if applicable, and
without prior approval of the, to the extent required by the 1940 Act, or other
applicable law. Additional Underlying Funds may also be added under the
Contract.
See Appendix A for Contracts issued in the state of New York.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Company may advertise different types of historical
performance for the Underlying Funds available through Fund BD. The Company may
advertise the "standardized average annual total returns" of each, calculated in
a manner prescribed by the SEC, as well as the "non-standardized total return,"
as described below.
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"Standardized average annual total return" will show the percentage rate of
return of a hypothetical initial investment of $1,000 for the most recent one-,
five- and ten-year periods (or fractional periods thereof). This standardized
calculation reflects the deduction of all applicable charges made to the
Contract, except for premium taxes which may be imposed by certain states.
"Non-standardized total return" will be calculated in a similar manner, except
non-standardized total returns will not reflect the deduction of the $30 annual
contract administrative charge, which would decrease the level of performance
shown if reflected in these calculations.
Performance information may be quoted numerically or may be presented in a
table, graph or other illustration. Advertisements may include data comparing
performance to well-known indices of market performance (including, but not
limited to, the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500
Index and the S&P 400 Index, the Lehman Brothers Long T-Bond Index, the Russell
1000, 2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley
Capital International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of Fund BD
and the Underlying Funds.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. A Contract Owner's Contract
Value at redemption may be more or less than original cost. The SAI contains
more detailed information about these performance calculations, including actual
examples of each type of performance advertised.
THE CONTRACT
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Purchase Payments are paid to the Company and credited to the Contract Owner's
account to accumulate until the Maturity Date. The Contract Owner assumes the
risk of gain or loss according to the performance of the selected
Sub-Account(s). There is generally no guarantee that the Contract Value at the
Maturity Date will equal or exceed the total Purchase Payments made under the
Contract, except as specified or elected under the Death Benefit provisions.
PURCHASE PAYMENTS
The minimum initial Purchase Payment must be at least $5,000. Additional
payments of at least $500 may be made under the Contract at any time. Purchase
Payments over $1,000,000 may be made with the Company's prior consent. In some
states, subsequent Purchase Payments are not allowed to this Contract. The
initial Purchase Payment is due and payable before the Contract becomes
effective.
The Company will apply the initial Purchase Payment within two business days
following its receipt at the Company's Home Office. Subsequent Purchase Payments
will be credited to the Contract on the basis of Accumulation Unit values next
determined after receipt of the Purchase Payment.
RIGHT TO RETURN
You may return the Contract for a full refund of the Contract Value (including
charges) within twenty days after you receive it (the "free-look period"). Where
state law requires a longer period, or the return of Purchase Payments, the
Company will comply. The Contract Owner bears the investment risk during the
free-look period; therefore, the Contract Value returned may be greater or less
than your Purchase Payment. If the Contract is purchased as an Individual
Retirement Annuity and is returned within the first seven days after delivery,
your Purchase Payment will be refunded in full During the remainder of the
free-look period, the Contract Value (including charges) will be refunded. All
Contract Values will be determined as of the next valuation date following the
Company's receipt of the Owner's written request for refund.
See Appendix A for Contracts issued in the state of New York.
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ACCUMULATION UNITS
The number of Accumulation Units to be credited to the Contract once a Purchase
Payment has been received by the Company will be determined by dividing the
amount allocated to each Underlying Fund by the current applicable Accumulation
Unit Value. The value of an Accumulation Unit may increase or decrease.
The initial Accumulation Unit Value applicable to each segment of the Separate
Account was established at $1.00. The value of an Accumulation Unit on any
Valuation Date is determined by multiplying the value on the immediately
preceding Valuation Date by the net investment factor for the Valuation Period
just ended. The net investment factor, calculated for each Underlying Fund,
takes into account the investment performance, expenses and the deduction of
certain expenses. The net investment factor is described more fully in the SAI.
CHARGES AND DEDUCTIONS
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ADMINISTRATIVE CHARGES
CONTRACT ADMINISTRATIVE CHARGE. An administrative charge of $30 will be
deducted annually from the Contract to compensate the Company for expenses
incurred in establishing and administering the Contract. The contract
administrative charge will be deducted from the Contract Value on the fourth
Friday of August of each year by cancelling Accumulation Units in each
Sub-Account on a pro rata basis. This charge will be prorated from the date of
purchase to the next date of assessment of charge. A prorated charge will also
be assessed upon voluntary or involuntary surrender of the Contract. The
Contract Administrative Charge will not be assessed upon distributions resulting
from the death of the Contract Owner or the Annuitant with no Contingent
Annuitant surviving, or after an annuity payout has begun, or if the Contract
Value is equal to or greater than $40,000 on the charge assessment date.
SUB-ACCOUNT ADMINISTRATIVE CHARGE. An administrative charge is deducted on each
Valuation Date from the amounts allocated to the variable Underlying Funds in
order to compensate the Company for certain administrative and operating
expenses. The charge is equivalent, on an annual basis, to 0.15% of the daily
net asset value allocated to each of the Underlying Funds.
Neither administrative charge can be increased. The charges are set at a level
which does not exceed the average expected cost of the administrative services
to be provided while the Contract is in force, and the Company does not expect
to make a profit from these charges.
MORTALITY AND EXPENSE RISK CHARGE
A mortality and expense risk charge is deducted on each Valuation Date from
amounts held in the Separate Account. This charge is intended to cover the
mortality and expense risks associated with guarantees which the Company
provides under the Contract. The mortality risk portion of the insurance charge
compensates the Company for guaranteeing to provide Annuity Payments to an
Annuitant according to the terms of the Contract regardless of how long the
Annuitant lives and no matter what the actual mortality experience of other
Annuitants under the Contract might be, and for guaranteeing to provide the
standard or the enhanced death benefit if an Annuitant dies prior to the
Maturity Date. The expense risk charge compensates the Company for the risk that
the charges under the Contract, which cannot be increased during the duration of
the Contract, will be insufficient to cover actual costs.
For those Contract Owners who have elected a standard death benefit provision,
the insurance charge is equivalent, on an annual basis, to 1.02% of the daily
net asset value of amounts held in the Separate Account.
For those Contract Owners who have elected an enhanced death benefit provision,
the insurance charge is equivalent, on an annual basis, to 1.30% of the daily
net asset value of amounts held in
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<PAGE> 17
the Separate Account. The Company reserves the right to lower the mortality and
expense risk charge at any time.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess will be a profit
to the Company. The Company expects to make a profit from the mortality and
expense risk charge.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The administrative charges and the mortality and expense risk charge under the
Contract may be reduced or eliminated when certain sales of the Contract result
in savings or reduction of sales expenses. The entitlement to any such reduction
will be based on the following: (1) the size and type of group to which sales
are to be made; (2) the total amount of Purchase Payments to be received; and
(3) any prior or existing relationship with the Company. There may be other
circumstances, of which the Company is not presently aware, which could result
in fewer sales expenses. In no event will reduction or elimination of the
administrative charge be permitted where such reduction or elimination will be
unfairly discriminatory to any person.
UNDERLYING FUND CHARGES
Fund BD purchases shares of the Underlying Funds at net asset value. The net
asset value of each Underlying Fund reflects investment management fees and
other expenses already deducted from the assets of the Underlying Funds. For a
complete description of these investment advisory fees and other expenses, refer
to the prospectus for the Underlying Funds.
PREMIUM TAX
Certain state and local governments impose premium taxes. These taxes currently
range from 0% to 5.0%, depending upon jurisdiction. The Company, in its sole
discretion and in compliance with any applicable state law, will determine the
method used to recover premium tax expenses incurred. Where required, the
Company will deduct any applicable premium taxes from the Contract Value either
upon death, surrender, annuitization, or at the time Purchase Payments are made
to the Contract, but no earlier than when the Company has a tax liability under
state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
the premiums of the contract, gains in the contract or value of the contract, we
reserve the right to charge you proportionately for this tax.
OWNERSHIP PROVISIONS
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TYPES OF OWNERSHIP
OWNER. The Contract belongs to the Owner designated on the Contract
Specifications page, or to any other person subsequently named pursuant to a
valid assignment. An assignment of ownership or a collateral assignment may be
made only for nonqualified contracts. The Owner has sole power during the
Annuitant's lifetime to exercise any rights and to receive all benefits given in
the contract provided the Owner has not named an irrevocable beneficiary and
provided the Contract is not assigned.
The Owner is the recipient of all payments while the Annuitant is alive unless
the Owner directs them to an alternate recipient. An alternate recipient under a
payment direction does not become the Owner.
JOINT OWNER. For nonqualified contracts only, Joint Owners may be named in a
written request prior to the Contract Date. Joint Owners may independently
exercise transfers between the Sub-
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<PAGE> 18
Accounts or between the Fixed Account and the Sub-Accounts. All other rights of
ownership must be exercised by joint action.
Joint owners own equal shares of any benefits accruing or payments made to them.
All rights of a Joint Owner end at death if another Joint Owner survives. The
entire interest of the deceased Joint Owner in the Contract will pass to the
surviving Joint Owner.
SUCCEEDING OWNER. For nonqualified contracts only, if Joint Owners are not
named, the Contract Owner may name a Succeeding Owner in a written request. The
Succeeding Owner becomes the Owner if living when the Owner dies. The Succeeding
Owner has no interest in the Contract before then. The Owner may change or
delete a Succeeding Owner by written request.
BENEFICIARY
The Beneficiary is the party named by the Owner in a written request. The
Beneficiary has the right to receive any remaining contractual benefits upon the
death of the Annuitant or the Owner. If there is more than one Beneficiary
surviving the Annuitant, the Beneficiaries will share equally in benefits unless
different shares are recorded with the Company by written request prior to the
death of the Annuitant or Owner.
With nonqualified contracts, the Beneficiary may differ from the designated
beneficiary as defined by the distribution provisions of the Contract. The
designated beneficiary may take the contract benefits in lieu of the Beneficiary
upon the death of the Contract Owner.
Unless an irrevocable Beneficiary has been named, the Owner has the right to
change any Beneficiary by written request during the lifetime of the Annuitant
and while the Contract continues.
ANNUITANT
The Annuitant is designated on the Contract Specifications page, and is the
individual on whose life the Maturity Date and the amount of the monthly annuity
payments depend. The Annuitant may not be changed after the Contract Date.
For nonqualified contracts only, the Contract Owner may also name one individual
as a Contingent Annuitant by written request prior to the Contract Date. A
Contingent Annuitant may not be changed, deleted or added to the Contract after
the Contract Date.
See Appendix A for Contracts issued in the state of New York.
If an Annuitant who is not also an owner or a joint owner dies prior to the
Maturity Date while this Contract is in effect and while the Contingent
Annuitant is living:
1) the Contract Value will not be payable upon the Annuitant's death;
2) the Contingent Annuitant becomes the Annuitant; and
3) all other rights and benefits provided by this Contract will continue in
effect.
When a Contingent Annuitant becomes the Annuitant, the Maturity Date remains the
same as previously in effect, unless otherwise provided.
TRANSFERS
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Prior to the Maturity Date, the Contract Owner may transfer all or part of the
Contract Value between SubAccounts. There are no charges or restrictions on the
amount or frequency of transfers currently; however, the Company reserves the
right to charge a fee for any transfer request, and to limit the number of
transfers to one in any six month period. Since different Underlying Funds have
different expenses, a transfer of Contract Values from one Sub-Account to
another could result in a Contract Owner's investment becoming subject to higher
or lower expenses.
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<PAGE> 19
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS)
Dollar-cost averaging permits the Contract Owner to transfer a fixed dollar
amount to other Sub-Accounts on a monthly or quarterly basis so that more
Accumulation Units are purchased in a Sub-Account if the value per unit is low
and less Accumulation Units are purchased if the value per unit is high.
Therefore, a lower-than-average value per unit may be achieved over the long
run.
You may elect automated transfers through written request or other method
acceptable to the Company. (See Appendix A for Contracts issued in the state of
New York.) You must have a minimum total Contract Value of $5,000 to enroll in
the Dollar-Cost Averaging program. The minimum total automated transfer amount
is $400.
Certain restrictions apply for automated transfers from the Fixed Account that
do not apply to automated transfers from any of the Sub-Accounts. You may
establish automated transfers of Contract Values from the Fixed Account at any
time. Automated transfers from the Fixed Account may not deplete your Fixed
Account Value in a period of less than twelve months from your enrollment in the
Dollar-Cost Averaging program.
You may start or stop participation in the Dollar-Cost Averaging program at any
time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. Automated transfers
are subject to all of the other provisions and terms of the Contract, including
provisions relating to the transfer of money between Sub-Accounts. The Company
reserves the right to suspend or modify transfer privileges at any time and to
assess a processing fee for this service.
Before transferring any part of the Contract Value, Contract Owners should
consider the risks involved in switching between investments available under
this Contract. Dollar-cost averaging requires regular investments regardless of
fluctuating price levels, and does not guarantee profits or prevent losses in a
declining market. A potential investor should consider his or her financial
ability to continue purchases through periods of low price levels.
TELEPHONE TRANSFERS
A Contract Owner may place a transfer request via telephone. The telephone
transfer privilege is available automatically; no special election is necessary
for a Contract Owner to have this privilege available. In certain cases, the
company may allow you to authorize your agent to make telephone transfers. All
transfers must be in accordance with the terms of the Contract. Transfer
instructions are currently accepted on each Valuation Date between 9:00 a.m. and
4:00 p.m., Eastern time, at 1-800-842-8573. Once instructions have been
accepted, they may not be rescinded; however, new telephone instructions may be
given the following day. If the transfer instructions are not in good order, the
Company will not execute the transfer and will promptly notify the caller.
The Company will make a reasonable effort to record each telephone transfer
conversation, but in the event that no recording is effective or available, the
Contract Owner will remain liable for each telephone transfer effected.
Additionally, the Company is not liable for acting upon instructions believed to
be genuine and in accordance with the procedures described above. As a result of
this policy, the Contract Owner may bear the risk of loss in the event that the
Company follows instructions that prove to be fraudulent.
SURRENDERS AND REDEMPTIONS
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A Contract Owner may redeem all or any portion of the Contract Value of the
Contract at any time prior to the Maturity Date. The Contract Owner must submit
a written request (in the proper form) specifying the investment option from
which the surrender is to be made. The Contract Value will be determined as of
the next valuation following receipt of the Owner's surrender request at the
Company's Home Office. The Contract Value may be more or less than the Purchase
Payments made.
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<PAGE> 20
The Company may defer payment of any Contract Value for a period of not more
than seven days after the request is received in the mail, but it is the
Company's intent to pay as soon as possible. Requests for surrender that are not
in good order will not be processed until the deficiencies are corrected. The
Company will contact the Contract Owner to advise of the reason for the delay
and what is needed to act upon the surrender request.
SYSTEMATIC WITHDRAWALS
Prior to the Maturity Date of the Contract, a Contract Owner may elect in
writing on a form provided by the Company to take systematic withdrawals from
the Contract by surrendering a specified dollar amount (at least $100) on a
monthly, quarterly, semiannual or annual basis. The election must be made on the
form provided by the Company. Any applicable premium taxes will be deducted. The
minimum Contract Value required to begin systematic withdrawals is $15,000. The
Company will process the withdrawals as directed by surrendering on a pro-rata
basis Accumulation Units from all investment options in which the Contract Owner
has an interest, unless otherwise directed. The Contract Owner may begin or
discontinue systematic withdrawals at any time by notifying the Company in
writing, but at least 30 days' notice must be given to change any systematic
withdrawal instructions that are currently in place.
The Company reserves the right to discontinue offering systematic withdrawals or
to assess a processing fee for this service upon 30 days' written notice to
Contract Owners. See Appendix A for Contracts issued in the state of New York.
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the Contract Owner is under age 59 1/2. Contract Owners should
consult with their tax adviser regarding the tax consequences of systematic
withdrawals.
DEATH BENEFIT
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Prior to the Maturity Date, a Death Benefit is payable to the Beneficiary upon
the death of the Annuitant, Contract Owner or the first of Joint Owners,
provided there is no Contingent Annuitant. Two different types of death benefits
are available under the Contract: a Standard Death Benefit and an Enhanced Death
Benefit (the Enhanced Death Benefit may not be available in all jurisdictions).
Death Benefits are payable upon the Company's receipt at its Home Office of due
proof of death. A Beneficiary may request that a death benefit payable under the
Contract be applied to one of the settlement options available under the
Contract, subject to the contract provisions. (See also "Nonqualified Annuity
Contracts.") See Appendices A and B, respectively, for Contracts issued in the
states of New York and Florida.
For nonqualified contracts, if the Contract Owner (including the first of joint
owners) dies before the Maturity Date, a distribution may be required under the
minimum distribution requirements of the federal tax law. If so required, the
Company will recalculate the value of the Contract under the provisions of
"Death Proceeds Prior to the Maturity Date," below. The value of the Contract,
as recalculated, will be credited to the party taking distributions upon the
death of the Contract Owner with the Annuitant or Contingent Annuitant
surviving. This will generally be the surviving joint owner or succeeding owner,
or otherwise the Beneficiary in accordance with all the circumstances and the
terms of the Contract. This party may differ from the Beneficiary who was named
by the Owner in a written request and who would receive any remaining
contractual benefits upon the death of the Annuitant. This party may be paid in
a single lump sum, or by other options, but should take distributions as
required by minimum distribution rules of the federal tax law.
If the Contract Owner's spouse is the surviving joint owner, the spouse may
elect to continue the Contract as owner in lieu of taking a distribution under
the Contract. (See generally, "Nonqualified Annuity Contracts.") In this case,
all references to age in the "Death Proceeds Prior to the Maturity Date" section
will be based on the Contract Owner's age rather than the Annuitant's age.
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DEATH PROCEEDS PRIOR TO THE MATURITY DATE
STANDARD DEATH BENEFIT. Under the standard death benefit, if the Annuitant dies
BEFORE AGE 75 and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit in an amount equal to the greatest of (1), (2) or
(3) below, each reduced by any applicable premium tax or prior surrenders not
previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
immediately preceding the date on which the Company receives due proof
of death.
If the Annuitant dies ON OR AFTER AGE 75, BUT BEFORE AGE 85 and before the
Maturity Date, the Company will pay to the Beneficiary a death benefit in an
amount equal to the greatest of (1), (2) or (3) below, each reduced by any
applicable premium tax or prior surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or the Contract
Value on the latest fifth contract year anniversary occurring on or
before the Annuitant's 75th birthday.
If the Annuitant dies ON OR AFTER AGE 85 and before the Maturity Date, the
Company will pay to the Beneficiary a death benefit in an amount equal to the
Contract Value, less any applicable premium tax.
See Appendix B for Contracts issued in the state of Florida.
ENHANCED DEATH BENEFIT. Under the enhanced death benefit, if the Annuitant dies
BEFORE AGE 75 and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit equal to the greater of (1) the guaranteed death
benefit, or (2) the Contract Value less any applicable premium tax.
The guaranteed death benefit is equal to the Purchase Payments made to the
Contract (minus surrenders and applicable premium tax) increased by 5% on each
contract date anniversary, but not beyond the contract date anniversary
following the Annuitant's 75th birthday, with a maximum guaranteed death benefit
of 200% of the total of Purchase Payments minus surrenders and minus applicable
premium tax.
If the Annuitant dies ON OR AFTER AGE 75, BUT BEFORE AGE 85 and before the
Maturity Date, the Company will pay to the Beneficiary a death benefit in an
amount equal to the greater of (1) the guaranteed death benefit as of the
Annuitant's 75th birthday, plus additional purchase payments, minus surrenders
and applicable premium tax; or (2) the Contract Value less any applicable
premium tax.
If the Annuitant dies ON OR AFTER AGE 85 but before the Maturity Date, the
Company will pay to the Beneficiary a death benefit equal to the Contract Value
less any applicable premium tax.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the Annuitant dies on or after the Maturity Date, the Company will pay the
Beneficiary a death benefit consisting of any benefit remaining under the
Annuity or Income Option then in effect.
THE ANNUITY PERIOD
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MATURITY DATE
Annuity Payments will ordinarily begin on the Maturity Date stated in the
Contract. If no Maturity Date is elected, the Maturity Date will be the
Annuitant's 70th birthday for qualified contracts and the Annuitant's 75th
birthday, or ten years after the Contract Date, if later, for nonqualified
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<PAGE> 22
contracts. The Maturity Date is the date on which the Company will begin paying
the first of a series of Annuity or Income Payments in accordance with the
Settlement Option selected by the Contract Owner. Annuity or Income Payments
will begin on the Maturity Date unless the Contract has been fully surrendered
or the proceeds have been paid to the Beneficiary prior to that date. The
Company may require proof that the Annuitant is alive before Annuity Payments
are made.
See Appendices A and B, respectively, for Contracts issued in the states of New
York and Florida.
For nonqualified Contracts, at least 30 days before the original Maturity Date,
a Contract Owner may elect to extend the Maturity Date to any time prior to the
Annuitant's 85th birthday or, for qualified Contracts, to a later date with the
Company's consent. Certain annuity options taken at the Maturity Date may be
used to meet the minimum required distribution requirements of federal tax law,
or a program of partial surrenders may be used instead. These mandatory
distribution requirements take effect generally upon the death of the Contract
Owner, or with qualified contracts upon either the Contract Owner's attainment
of age 70 1/2 or the death of the Contract Owner. Independent tax advice should
be sought regarding the election of minimum required distributions.
See Appendix B for Contracts issued in the state of Florida.
ALLOCATION OF ANNUITY
When an Annuity Option is elected, it may be elected as a Variable Annuity, a
Fixed Annuity, or a combination of both. If, at the time Annuity Payments begin,
no election has been made to the contrary, the Contract Value shall be applied
to provide an annuity funded by the same investment options. At least 15 days
prior to the Maturity Date, you may reallocate the basis on which Annuity
Payments will be determined. (See "Transfers.")
VARIABLE ANNUITY
ANNUITY UNIT VALUE. The initial value of an Annuity Unit applicable to each
Funding Option was established at $1. The Annuity Unit Value as of any Valuation
Date is equal to (a) the value of the Annuity Unit on the immediately preceding
Valuation Date, multiplied by (b) the corresponding net investment factor for
the Valuation Period just ended, divided by (c) the assumed net investment
factor for the Valuation Period. (For example, the assumed net investment factor
based on an annual assumed net investment rate of 3.0% for a Valuation Period of
one day is 1.000081 and, for a period of two days, is 1.000081 x 1.000081.) The
value of an Annuity Unit as of any date other than a Valuation Date is equal to
its value on the next succeeding Valuation Date.
The number of Annuity Units credited to the Contract is determined by dividing
the first monthly Annuity Payment attributable to each Sub-Account by the
corresponding Annuity Unit Value as of 14 days prior to the date Annuity
Payments commence. The number of Annuity Units remains fixed during the annuity
period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly Annuity Payment. The amount applied to effect an
Annuity will be the Contract Value as of 14 days before the date Annuity
Payments commence less any applicable premium taxes not previously deducted.
The amount of the first monthly payment depends on the Annuity Option elected. A
formula for determining the adjusted age is contained in the Contract. The total
first monthly Annuity Payment is determined by multiplying the benefit per
$1,000 of value shown in the tables of the Contract by the number of thousands
of dollars of value of the Contract applied to that Annuity Option. The Company
reserves the right to require satisfactory proof of age of any person on whose
life Annuity Payments are based before making the first payment under any of the
Settlement Options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
the second and subsequent Annuity Payments is not predetermined and may change
from month to month based on the investment experience of the applicable
Underlying Fund. The total amount of each
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Annuity Payment will be equal to the sum of the basic payments in each
Underlying Fund. The actual amounts of these payments are determined by
multiplying the number of Annuity Units credited to each Underlying Fund by the
corresponding Annuity Unit Value as of the date 14 days prior to the date before
payment is due.
See Appendix B for Contracts issued in the state of Florida.
FIXED ANNUITY
A Fixed Annuity provides for payments that do not vary during the Annuity
Period. The dollar amount of the first Fixed Annuity Payment will be calculated
as described under "Variable Annuity" above. All subsequent payments will be
made in the same amount. If it would produce a larger payment, the Company
agrees that the first Fixed Annuity Payment will be determined using the Life
Annuity Tables in effect on the Maturity Date.
PAYMENT OPTIONS
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ELECTION OF OPTIONS
On the Maturity Date, or other agreed-upon date, the Company will pay an amount
payable under the Contract in one lump sum, or in accordance with the payment
option selected by the Contract Owner. Election of an option must be made in
writing in a form satisfactory to the Company. Any election made during the
lifetime of the Annuitant must be made by the Contract Owner. While the
Annuitant is alive, the Contract Owner may change a Settlement Option election
by written request at any time prior to the Maturity Date. Once Annuity or
Income Payments have begun, no further election changes are allowed. During the
Annuitant's lifetime, if no election has been made prior to the Maturity Date,
the Company will pay to the Contract Owner the first of a series of monthly
Annuity Payments based on the life of the Annuitant, in accordance with Annuity
Option 2 (Life Annuity with 120 monthly payments assured). For certain qualified
contracts, Annuity Option 4 (Joint and Last Survivor Joint Life
Annuity -- Annuity Reduced on Death of Primary Payee) will be the automatic
option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100, the Company reserves the right to make
payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
See Appendix B for Contracts issued in the state of Florida.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the Contract Value may be paid under one or more of the following
Annuity Options. Payments under the Annuity Options may be elected on a monthly,
quarterly, semiannual or annual basis.
OPTION 1 -- LIFE ANNUITY -- NO REFUND. The Company will make Annuity Payments
during the lifetime of the Annuitant, terminating with the last payment
preceding death. This option offers the maximum periodic payment, since THERE IS
NO ASSURANCE OF A MINIMUM NUMBER OF PAYMENTS OR PROVISION FOR A DEATH BENEFIT
FOR BENEFICIARIES.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED. The
Company will make monthly Annuity Payments during the lifetime of the Annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months, as elected, payments will be continued
during the remainder of the period to the Beneficiary.
OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND. The Company will
make Annuity Payments during the joint lifetime of the two persons on whose
lives payments are based, and
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during the lifetime of the survivor. No further payments will be made following
the death of the survivor.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE. The Company will make Annuity Payments during the lifetime of the
two persons on whose lives payments are based. One of the two persons will be
designated as the primary payee, the other will be designated as the secondary
payee. On the death of the secondary payee, if survived by the primary payee,
the Company will continue to make Annuity Payments to the primary payee in the
same amount that would have been payable during the joint lifetime of the two
persons. On the death of the primary payee, if survived by the secondary payee,
the Company will continue to make Annuity Payments to the secondary payee in an
amount equal to 50% of the payments which would have been made during the
lifetime of the primary payee. No further payments will be made following the
death of the survivor.
OPTION 5 -- OTHER ANNUITY OPTIONS. The Company will make any other arrangements
for Annuity Payments as may be mutually agreed upon.
INCOME OPTIONS
Instead of one of the Annuity Options described above, and subject to the
conditions described under "Election of Options," all or part of the Contract
Value may be paid under one or more of the following Income Options, provided
that they are consistent with federal tax law qualification requirements.
Payments under the Income Options may be elected on a monthly, quarterly,
semiannual or annual basis:
OPTION 1 -- PAYMENTS OF A FIXED AMOUNT. The Company will make equal payments of
the amount elected until the Contract Value applied under this option has been
exhausted. The first payment and all later payments will be paid from each
Sub-Account or the Fixed Account in proportion to the Contract Value
attributable to that Account. The final payment will include any amount
insufficient to make another full payment.
OPTION 2 -- PAYMENTS FOR A FIXED PERIOD. The Company will make payments for the
period selected. The amount of each payment will be equal to the remaining
Contract Value applied under this option divided by the number of remaining
payments.
OPTION 3 -- OTHER INCOME OPTIONS. The Company will make any other arrangements
for Income Payments as may be mutually agreed upon.
The amount applied to effect an Income Option will be the Contract Value as of
14 days before the date Income Payments commence, less any applicable premium
taxes not previously deducted. The Contract Value used to determine the amount
of any Income Payment will be determined on the same basis as the Contract Value
during the Accumulation Period, including the deduction for mortality and
expense risks and the Sub-Account Administrative Charge. Income Options differ
from Annuity Options in that the amount of the payments made under Income
Options are unrelated to the length of life of any person. Although the Company
continues to deduct the charge for mortality and expense risks, it assumes no
mortality risks for amounts applied under any Income Option. Moreover, payments
are unrelated to the actual life span of any person. Thus, the Annuitant may
outlive the payment period.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
TERMINATION
No Purchase Payments after the first are required to keep the Contract in
effect. However, the Company reserves the right to terminate the Contract on any
Valuation Date if the Contract Value as of that date is less than $1,000 and no
Purchase Payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the Contract Owner at his or her
last known address
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and to any assignee of record. If the Contract is terminated, the Company will
pay to the Contract Owner the Contract Value, less any applicable administrative
charge or premium tax.
See Appendix A for Contracts issued in the state of New York.
MISSTATEMENT
If the Annuitant's or Contract Owner's sex or date of birth was misstated, all
benefits under the Contract are what the Purchase Payment paid would have
purchased at the correct sex and age. Proof of the Annuitant's or Contract
Owner's age may be filed at any time at the Company's Home Office.
REQUIRED REPORTS
As often as required by law, but at least once in each Contract Year before the
due date of the first Annuity Payment, the Company will furnish a report showing
the number of Accumulation Units credited to the Contract and the corresponding
Accumulation Unit Value as of the date of the report for each Underlying Fund to
which the Contract Owner has allocated amounts during the applicable period. The
Company will keep all records required under federal or state laws.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment of
any benefit or values for any Valuation Period (1) when the New York Stock
Exchange ("Exchange") is closed; (2) when trading on the Exchange is restricted;
(3) an emergency exists as determined by the SEC so that disposal of the
securities held in the Sub-Accounts is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's net
assets; or (4) during any other period when the SEC, by order, so permits for
the protection of securityholders.
TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES
The Company may permit Contract Owners to transfer their Contract Values into
other annuities offered by the Company or its affiliated insurance Companies
under rules then in effect.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following description of the federal income tax consequences under this
Contract is not exhaustive and is not intended to cover all situations. Because
of the complexity of the law and the fact that the tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of an annuity contract and by a
Contract Owner or Beneficiary who may make elections under a contract. For
further information, a qualified tax adviser should be consulted.
GENERAL TAXATION OF ANNUITIES
Amounts credited to the Contract are not generally taxable until they are
received by the Contract Owner or the Beneficiary, either in the form of Annuity
Payments or other distributions. Distributions from annuities that include
previously taxed amounts may be taxed on either an income-first basis or an
income-last basis, or on a pro-rata basis according to the type of plan or due
to other circumstances.
TAX LAW DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
segregated asset account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how segregated assets accounts must be diversified. The
Company monitors the diversification of investments constantly and believes that
its accounts are adequately diversified. The consequence of any failure is
essentially the loss to the contract owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
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<PAGE> 26
OWNERSHIP OF THE INVESTMENTS
Assets in the segregated asset accounts must be owned by the Company and not by
the Contract Owner for federal income tax purposes. Otherwise, the deferral of
taxes is lost and income and gains from the accounts would be includable
annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent contract owners from
being considered the owner of the assets of the accounts.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the Contract Owner has attained the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions for life or life expectancy, or
unless the distribution follows the death or disability of the Contract Owner.
Other exceptions may be available in certain tax-qualified plans.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which a participant under a
qualified plan, a Section 403(b) annuity, or an IRA attains age 70 1/2.
Distributions must also begin or be continued according to required patterns
following the death of the Owner or the Annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax law funding limits.
The Purchase Payments receive no tax benefit, deduction or deferral, but
increases in the value of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however (e.g., by a corporation), the increases in value attributable to
Purchase Payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in the income of a Contract Owner when the
Contract Owner transfers the contract without adequate consideration.
If two or more annuity contracts are purchased from the same insurer within the
same calendar year, distributions from any of them will be taxed based upon the
amount of income in all of the same calendar year series of annuities. This will
generally have the effect of causing taxes to be paid sooner on the deferred
gain in the contracts.
Those receiving partial distributions made before the Maturity Date will
generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have
23
<PAGE> 27
been placed in the contract by means of a tax-deferred exchange under Section
1035 of the Code may be withdrawn first without income tax liability. This
information on deposits must be provided to the Company by the other insurance
company at the time of the exchange. There is income in the contract generally
to the extent the Cash Value exceeds the investment in the contract. The
investment in the contract is equal to the amount of premiums paid less any
amount received previously which was excludable from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.
The federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the Contract Owner,
including the first of joint owners. Failure to meet these requirements will
cause the surviving joint owner, the succeeding Contract Owner, or the
Beneficiary to lose the tax benefits associated with annuity contracts, i.e.,
primarily the tax deferral prior to distribution. The distribution required
depends, among other things, upon whether an Annuity Option is elected or
whether the new Contract Owner is the surviving spouse. Contracts will be
administered by the Company in accordance with these rules and the Company will
make a notification when payments should be commenced.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase Payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $4,000.
The Code provides for the purchase of a Simplified Employee Pension (SEP) plan.
A SEP is funded through an IRA with an annual employer contribution limit of 15%
of compensation up to $30,000 for each participant.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, Purchase Payments made by an
employer are not currently taxable to the participant and increases in the value
of a contract are not subject to taxation until received by a participant or
Beneficiary.
Distributions are taxable to the participant or Beneficiary as ordinary income
in the year of receipt. Any distribution that is considered the participant's
"investment in the contract" is treated as a return of capital and is not
taxable. Certain lump-sum distributions may be eligible for special forward
averaging tax treatment for certain classes of individuals.
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<PAGE> 28
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA or to another retirement plan but that
are not directly rolled over. A distribution made directly to a
participant or Beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise
required by law.
A distribution including a rollover that is not a direct rollover will
be subject to the 20% withholding, and a 10% additional tax penalty may
apply to any amount not added back in the rollover. The 20% withholding
may be recovered when the participant or Beneficiary files a personal
income tax return for the year if a rollover was completed within 60
days of receipt of the funds, except to the extent that the participant
or spousal Beneficiary is otherwise underwithheld or short on estimated
taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding, if the aggregate
distributions exceed $200 for the year, unless the recipient elects not
to have taxes withheld. If no such election is made, 10% of the taxable
distribution will be withheld as federal income tax. Election forms will
be provided at the time distributions are requested. This form of
withholding applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing a completed
election form. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.
As of January 1, 1997, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total
$ or less per year, will generally be exempt from periodic
withholding.
Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient to cover tax
liabilities.
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
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VOTING RIGHTS
- --------------------------------------------------------------------------------
The Contract Owner has certain voting rights in Fund BD and the Underlying
Funds. The number of votes which a Contract Owner may cast in the accumulation
period is equal to the number of Accumulation Units credited to the account
under the Contract. During the annuity period, the Contract Owner may cast the
number of votes equal to (i) the reserve related to the Contract divided by (ii)
the value of an Accumulation Unit, and a Contract Owner's voting rights will
decline as the reserve for the Contract declines.
Each person having a voting interest in Fund BD will receive periodic reports
relating to the Underlying Fund(s) in which he or she has an interest, as well
as any proxy materials, including a form on which to give voting instructions
with respect to the proportion of the Underlying Fund shares held by Fund BD
which correspond to his or her interest in the Sub-Account.
Upon the death of the Contract Owner, all voting rights will vest in the
Beneficiary of the Contract, except in the case of Contracts where the surviving
spouse becomes the Contract Owner.
The Company will vote shares of Underlying Funds held by Fund BD at regular and
special meetings of the Underlying Fund shareholders in accordance with
instructions received from persons having a voting interest in Fund BD. The
Company will vote shares for which it has not received instructions in the same
proportion as it votes shares for which it has received instructions. However,
if the 1940 Act or any regulation thereunder should be amended, or if the
present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote shares of the Underlying Funds in its
own right, it may elect to do so.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. The Contracts will
be sold by life insurance sales agents who represent the Company, and who are
licensed registered representatives of the Company or certain other registered
broker-dealers. The compensation paid to sales representatives will not exceed
6.25% of the payments made under the Contracts.
From time to time the Company may pay or permit other promotional incentives, in
cash, credit or other compensation.
Any sales representative or employee will have been qualified to sell Variable
Annuities under applicable federal and state laws. Each broker-dealer is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and all are members of the National Association of
Securities Dealers, Inc. Tower Square Securities, Inc., an affiliate of the
Company, is the principal underwriter for the Contracts.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered. Any
paid-up Annuity, Cash Surrender Value or death benefits that are available under
the Contract are not less than the minimum benefits required by the statutes of
the state in which the Contract is delivered. The Company may at any time make
any changes, including retroactive changes, in the Contract to the extent that
the change is required to meet the requirements of any law or regulation issued
by any governmental agency to which the company, the Contract or the Contract
Owner is subject.
LEGAL PROCEEDINGS AND OPINIONS
- --------------------------------------------------------------------------------
There are no pending material legal proceedings affecting Fund BD. Legal matters
in connection with the federal laws and regulations affecting the issue and sale
of the Contract described in this Prospectus, as well as the organization of the
Company, its authority to issue variable annuity contracts under Connecticut law
and the validity of the forms of the variable annuity contracts
26
<PAGE> 30
under Connecticut law, have been reviewed by the General Counsel of the Life and
Annuities Division of the Company.
THE FIXED ACCOUNT
- --------------------------------------------------------------------------------
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of Fund BD or any of the
Sub-Accounts does not affect the Fixed Account portion of the Contract Owner's
Contract Value, or the dollar amount of fixed annuity payments made under any
payout option.
The Company guarantees that, at any time, the Fixed Account Contract Value will
not be less than the amount of the Purchase Payments allocated to the Fixed
Account, plus interest credited as described above, less any applicable premium
taxes or prior surrenders.
Purchase Payments allocated to the Fixed Account portion of the Contract and any
transfers made to the Fixed Account become part of the general account of the
Company which supports insurance and annuity obligations. Neither the general
account nor any interest therein is registered under, nor subject to the
provisions of the 1933 or 1940 Acts. The Company will invest the assets of the
Fixed Account at its discretion. Investment income from such Fixed Account
assets will be allocated by the Company between itself and the Contracts
participating in the Fixed Account.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The amount of such investment income allocated to
the Contracts will vary from year to year in the sole discretion of the Company
at such rate or rates as the Company prospectively declares from time to time.
The initial rate for any deposit into the Fixed Account is guaranteed for one
year from the date of such deposit. Subsequent renewal rates will be guaranteed
for the calendar quarter. The Company also guarantees that for the life of the
Contract it will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in the sole discretion of the company. The contract owner assumes
the risk that interest credit to the Fixed Account may not exceed the minimum
guarantee of 3% for any given year.
TRANSFERS
Transfers from the Fixed Account to any other available investment option(s)
will be permitted twice a year during the 30 days following the semiannual
Contract Date anniversary in an amount of up to 15% of the Fixed Account Value
on the semiannual Contract Date anniversary. (This restriction does not apply to
transfers from the Dollar-Cost Averaging Program.) Amounts previously
transferred from the Fixed Account to the Sub-Accounts may not be transferred
back to the Fixed Account for a period of at least 6 months from the date of
transfer. The Company reserves the right to waive either of these restrictions
in its discretion.
Automated transfers from the Fixed Account to any of the Sub-Accounts may begin
at any time. Automated transfers from the Fixed Account may not deplete your
Fixed Account value in a period of less than twelve months from your enrollment
in the Dollar-Cost Averaging program.
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<PAGE> 31
APPENDIX A
FOR CONTRACTS ISSUED IN THE STATE OF NEW YORK
- --------------------------------------------------------------------------------
SUBSTITUTION
No substitution of shares of any of the Underlying Funds for shares of another
open-end management investment company will be made without prior approval of
the New York Insurance Commissioner.
RIGHT TO RETURN
The Contract may be returned for a full refund of the Contract Value (including
charges) within twenty days after delivery of the Contract to the Contract Owner
(the "free-look period"). For purposes of determining the refund amount, all
Contract Values will be determined as of the Return Date, which is the next
valuation after the date you mail or deliver the Written Request to the
Company's Home Office or to your Agent. If the Contract is returned within the
first 7 days of the free-look period, we will calculate the Contract Value by
using the investment experience of the Smith Barney Money Market Portfolio
Sub-Account as of the Return Date. If the Contract is returned during the last 8
to 20 days of the free-look period, we will calculate the Contract Value Date by
using the investment experience of the Sub-Accounts(s) selected on your
application, or as you have instructed us more recently. If Purchase Payments
are allocated to the Fixed Account during the free-look period, then the full
Contract Value will be returned. After the Contract is returned, it will be
considered as if never in effect.
ANNUITANT
If the Owner of a Contract is also the Annuitant, a Contingent Annuitant may not
be named.
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS)
You may establish automated transfers of Contract Values on a monthly or
quarterly basis from the Fixed Account and certain of the Sub-Accounts to other
Sub-Accounts only through written request.
SYSTEMATIC WITHDRAWALS
The Company waives the right to discontinue offering systematic withdrawals or
to assess a processing fee for this service.
DEATH BENEFIT
The Enhanced Death Benefit is not available in New York.
MATURITY DATE
The Maturity Date may not be any date beyond the Annuitant's 85th birthday.
TERMINATION
No Purchase Payments after the first are required to keep the Contract in
effect. However, the Company reserves the right to terminate the Contract on any
Valuation Date if the Contract Value as of that date is less than $1,000 and no
Purchase Payments have been made for at least three years, unless otherwise
specified by state law. However, the Company reserves the right to terminate the
Contract on any Valuation Date if the Contract Value as of that date is less
than $1,000 and no Purchase Payments have been made for at least THREE years.
Termination will not occur until 31 days after the Company has mailed notice of
termination to the Contract Owner at his or her last known address and to any
assignee of record. If the Contract is terminated, the Company will pay to the
Contract Owner the Contract Value, if any, less any applicable administrative
charge or premium tax.
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APPENDIX B
FOR CONTRACTS ISSUED IN THE STATE OF FLORIDA
- --------------------------------------------------------------------------------
DEATH BENEFIT
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
The Enhanced Death Benefit is not available in Florida.
STANDARD DEATH BENEFIT. Under the standard death benefit, if the Annuitant dies
BEFORE AGE 75 and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit in an amount equal to the greatest of (1), (2) or
(3) below, less any applicable premium tax or prior surrenders not previously
deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
immediately preceding the date on which the Company receives due proof
of death.
IF THE ANNUITANT DIES ON OR AFTER AGE 75, BUT BEFORE AGE 90 and before the
Maturity Date, the Company will pay to the Beneficiary a death benefit in an
amount equal to the greatest of (1), (2) or (3) below, less any applicable
premium tax or prior surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
occurring on or before the Annuitant's 75th birthday.
THE ANNUITY PERIOD
MATURITY DATE
The maturity date may not be any date beyond the Annuitant's 90th birthday.
THE VARIABLE ANNUITY
Variable payouts are not permitted in Florida. Contract Owners may only have
their Contract Values applied to provide a Fixed Annuity.
Disregard the "Variable Annuity" section described on page 21.
ELECTION OF OPTIONS
ON THE MATURITY DATE, OR OTHER AGREED-UPON DATE, THE COMPANY WILL PAY AN AMOUNT
PAYABLE UNDER THE CONTRACT IN ACCORDANCE WITH THE PAYMENT OPTION SELECTED BY THE
CONTRACT OWNER. Election of an option must be made in writing in a form
satisfactory to the Company. Any election made during the lifetime of the
Annuitant must be made by the Contract Owner. While the Annuitant is alive, the
Contract Owner may change a Settlement Option election by Written Request at any
time prior to the Maturity Date. Once Annuity or Income Payments have begun, no
further election changes are allowed. During the Annuitant's lifetime, if no
election has been made prior to the Maturity Date, the Company will pay to the
Contract Owner the first of a series of monthly Annuity Payments based on the
life of the Annuitant, in accordance with Annuity Option 2 (Life Annuity with
120 monthly payments assured). For certain tax-qualified contracts, Annuity
Option 4 (Joint and Last Survivor Joint Life Annuity -- Annuity Reduced on Death
of Primary Payee) will be the automatic option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100, the Company reserves the right to make
payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
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APPENDIX C
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information and
financial statements relating to the Separate Account and The Travelers
Insurance Company. A list of the contents of the Statement of Additional
Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Management Agreement
Valuation of Assets
Performance Data
Independent Accountants
Financial Statements
- --------------------------------------------------------------------------------
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1997 (FORM NO.
) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE CLIP THIS
COUPON ON THE DOTTED LINE, ENTER YOUR NAME AND ADDRESS IN THE SPACES PROVIDED
BELOW, AND MAIL TO: THE TRAVELERS INSURANCE COMPANY, ANNUITY INVESTOR SERVICES,
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183-9061.
Name:
- --------------------------------------------------------------------------------
Address:
================================================================================
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PART B
Information Required in a Statement of Additional Information
<PAGE> 35
VINTAGE
STATEMENT OF ADDITIONAL INFORMATION
dated
__________, 1997
for
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
This Statement of Additional Information is not a prospectus but relates to,
and should be read in conjunction with, the Individual Variable Annuity
Contract Prospectus dated _________, 1997. A copy of the Prospectus may be
obtained by writing to The Travelers Insurance Company, Annuity Services, One
Tower Square, Hartford, Connecticut 06183-9061, or by calling 1-800-842-8573.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE INSURANCE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PRINCIPAL UNDERWRITER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DISTRIBUTION AND MANAGEMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VALUATION OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
1
<PAGE> 36
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company"), is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. The Company is licensed to conduct a life
insurance business in all states of the United States, the District of
Columbia, Puerto Rico, Guam, the U.S. and British Virgin Islands, and the
Bahamas. The Company's Home Office is located at One Tower Square, Hartford,
Connecticut 06183, and its telephone number is (860) 277-0111.
The Company 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 engaged, through its
subsidiaries, principally in four business segments: (i) Investment Services;
(ii) Consumer Finance Services; (iii) Life Insurance Services; and (iv)
Property and Casualty Insurance Services.
PRINCIPAL UNDERWRITER
Tower Square Securities, Inc. ("Tower Square "), an affiliate of the
Company, serves as principal underwriter for Fund BD and the Contracts. The
offering is continuous. Tower Square is an indirect wholly owned subsidiary of
Travelers Group Inc. and its principal executive offices are located at One
Tower Square, Hartford, Connecticut.
DISTRIBUTION AND MANAGEMENT AGREEMENT
Under the terms of the Distribution and Management Agreement among
Fund BD, the Company and Tower Square, the Company provides all administrative
services and mortality and expense risk guarantees related to variable annuity
contracts sold by the Company in connection with the Fund BD. Tower Square
performs the sales functions related to the Contracts. The Company reimburses
Tower Square for commissions paid, other sales expenses and certain overhead
expenses connected with sales functions. The Company also pays all costs
(including costs associated with the preparation of sales literature); all
costs of qualifying the Fund BD and the variable annuity contract with
regulatory authorities; the costs of proxy solicitation; and all custodian,
accountant's and legal fees. The Company also provides without cost to the
Fund BD all necessary office space, facilities, and personnel to manage its
affairs.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of historical
performance for Sub-Accounts of Fund BD. The Company may advertise the
"standardized average annual total returns" of the Underlying Funds available
through the Separate Account, calculated in a manner
2
<PAGE> 37
prescribed by the Securities and Exchange Commission, as well as the
"non-standardized total return," as described below:
STANDARDIZED METHOD. Quotations of average annual total return are
computed according to a formula in which a hypothetical initial investment of
$1,000 is allocated to an Underlying Fund, and then related to ending
redeemable values over one-, five- and ten-year periods, or inception, if an
Underlying Fund has not in existence for one of the prescribed periods. These
quotations reflect the deduction of all recurring charges during each period
(on a pro rata basis in the case of fractional periods). The deduction for the
semiannual administrative charge ($15) is converted to a percentage of assets
based on the actual fee collected, divided by the average net assets per
contract sold under the Prospectus to which this Statement of Additional
Information relates. Each quotation assumes a total redemption at the end of
each period with the assessment of any applicable Contingent Deferred Sales
Charge at that time.
NON-STANDARDIZED METHOD. Non-standardized "total return" will be
calculated in a manner similar to "standardized" as describe above. However,
non-standardized total return will not reflect the deduction of the $15
semiannual contract administrative charge, which, if reflected, would decrease
the level of performance shown. The Contingent Deferred Sales Charge is not
reflected because the Contract is designed for long-term investment.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may
be quoted numerically or may be presented in a table, graph or other
illustration. Advertisements may include data comparing performance to
well-known indices of market performance (including, but not limited to, the
Dow Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P
400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and
3000 Indices, the Value Line Index, and the Morgan Stanley Capital
International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of Fund BD
and the Underlying Funds.
For Underlying Funds that were in existence prior to the date they
became available under Fund BD, the standardized average total return and
non-standardized total return quotations will show the investment performance
that such Underlying Funds would have achieved (reduced by the applicable
charges) had they been held available under the Contract for the period quoted.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. An Owner's Contract Value at
redemption may be more or less than original cost.
Average annual total returns for each of the Underlying Funds
available under Fund BD computed according to the standardized and
non-standardized methods for the period ending December 31, 1996 are set forth
in the following table.
3
<PAGE> 38
STANDARDIZED TOTAL RETURN CALCULATIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Regular Since Enhanced Since Inception
1 Year Inception 1 Year Inception Date
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Smith Barney Income
and Growth 6/20/94
Alliance Growth Portfolio 6/20/94
American Capital Enterprise
Portfolio 6/21/94
Smith Barney International
Equity Portfolio 6/20/94
Smith Barney Pacific Basin
Portfolio 6/21/94
TBC Managed Income
Portfolio 6/28/94
Putnam Diversified
Income Portfolio 6/20/94
G.T. Global Strategic
Income Portfolio 6/21/94
Smith Barney High
Income Portfolio 6/22/94
MFS Total Return
Portfolio 6/20/94
Smith Barney Money
Market Portfolio 6/20/94
AIM Capital Appreciation
Portfolio 10/10/95
Smith Barney Total
Return Portfolio 12/3//93
</TABLE>
4
<PAGE> 39
NONSTANDARDIZED TOTAL RETURN CALCULATIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Regular Since Enhanced Since Inception
1 Year Inception 1 Year Inception Date
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Smith Barney Income
and Growth Portfolio 6/20/94
Alliance Growth Portfolio 6/20/94
American Capital Enterprise
Portfolio 6/21/94
Smith Barney International
Equity Portfolio 6/21/94
Smith Barney Pacific Basin
Portfolio 6/21/94
TBC Managed Income
Portfolio 6/28/94
Putnam Diversified
Income Portfolio 6/20/94
G.T. Global Strategic
Income Portfolio 6/21/94
Smith Barney High
Income Portfolio 6/22/94
MFS Total Return
Portfolio 6/20/94
Smith Barney Money
Market Portfolio 6/20/94
AIM Capital Appreciation
Portfolio 10/10/95
Smith Barney Total
Return Portfolio 12/3/93
</TABLE>
5
<PAGE> 40
VALUATION OF ASSETS
The value of the assets of each Underlying Fund is determined on each
Valuation Date as of the close of the New York Stock Exchange. Each security
traded on a national securities exchange is valued at the last reported sale
price on the Valuation Date. If there has been no sale on that day, then the
value of the security is taken to be the mean between the reported bid and
asked prices on the Valuation Date or on the basis of quotations received from
a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available
is valued at the mean between the quoted bid and asked prices on the Valuation
Date or on the basis of quotations received from a reputable broker or any
other recognized source.
Securities traded on the over-the-counter-market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by computing a
market value based upon quotations from dealers or issuers for securities of a
similar type, quality and maturity. This computation takes into account
unrealized appreciation or depreciation due to changes in interest rates or
other factors which would influence the current fair values of such securities.
Short-term investments maturing in sixty days or less for which there is no
reliable quoted market price are valued at amortized cost which approximates
market.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The net
investment factor for a Sub-Account for any Valuation Period is equal to the
sum of 1.000000 plus the net investment rate (the gross investment rate less
any applicable Sub-Account deductions during the Valuation Period relating to
the Insurance Charge and the Sub-Account Administrative Charge). The gross
investment rate of a Sub-Account is equal to (a) minus (b) divided by (c)
where:
(a) = investment income plus capital gains and losses (whether
realized or unrealized);
(b) = any deduction for applicable taxes (presently zero); and
(c) = the value of the assets of the Underlying Fund at the beginning
of the Valuation Period.
6
<PAGE> 41
The gross investment rate may be either positive or negative. A
Sub-Account's assets are based on the net asset value of the Underlying Fund,
and investment income includes any distribution whose ex-dividend date occurs
during the Valuation Period.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., certified public accountants, 100 Pearl Street,
Hartford, Connecticut, are the independent auditors for Fund BD. The services
provided to Fund BD include primarily the examination of the Fund's financial
statements. The Financial Statements of Fund BD have been audited by Coopers
& Lybrand L.L.P., as indicated in their report thereon, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
The consolidated balance sheet of The Travelers Insurance Company and
Subsidiaries (the "Company") as of December 31, 1996, 1995 and 1994 and the
consolidated statements of operations and retained earnings and cash flows for
the years then ended, have been included herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP covering the December 31, 1995 consolidatd financial
statements of the Company refers to a change in the accounting for investments
in accordance with provisions of Statement of Financial Accounting Standards
No.115, "Accounting for Certain Investments in Debt and Equity Securities," in
1994.
7
<PAGE> 42
VINTAGE
STATEMENT OF ADDITIONAL INFORMATION
Individual Variable Annuity Contracts
issued by
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
May, 1997
8
<PAGE> 43
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of Independent
Accountants thereto are incorporated into the Statement of Additional
Information by reference to the Fund BD Annual Report. The financial statements
of the Registrant and the Depositor will be filed by amendment.
(b) Exhibits
1. Resolution of The Travelers Insurance Company Board of Directors
authorizing the establishment of the Registrant. (Incorporated
herein by reference to Exhibit 1 to Post-Effective Amendment
No. 3 to the Registration Statement on Form N-4 (file nos.
33-73466; 811-8422) filed on April 23, 1996.)
2. Not Applicable.
3. Form of Distribution and Management Agreement among the
Registrant, The Travelers Insurance Company and Travelers
Equities Sales, Inc. (now known as Tower Square Securities,
Inc.) (Incorporated herein by reference to Exhibit 3. to
Post-Effective Amendment No. 2 to the Registration Statement on
Form N-4, (file nos. 33-73466; 811-8422) filed on April 27,
1995.)
3(b). Form of Selling Agreement. (Incorporated herein by reference to
Exhibit 3(b) to Post-Effective Amendment No. 3 to the
Registration Statement on Form N-4 (file nos. 33-73466;
811-8422) filed on April 23, 1996.)
4. Variable Annuity Contract. (Incorporated herein by reference to
Exhibit 4 to Post-Effective Amendment No. 3 to the Registration
Statement on Form N-4 (file nos. 33-73466; 811-8422) filed on
April 23, 1996.)
5. Application. (Incorporated herein by reference to
Exhibit 5 to Post-Effective Amendment No. 3 to the
Registration Statement on Form N-4 (file nos. 33-73466;
811-8422) filed on April 23, 1996.)
6(a). Charter of The Travelers Insurance Company, as amended on
October 19, 1994. (Incorporated herein by reference to Exhibit
3(a)(i) to Registration Statement on Form S-2, File No.
33-58677, filed via Edgar on April 18, 1995.)
<PAGE> 44
6(b). By-Laws of The Travelers Insurance Company, as amended on
October 20, 1994. (Incorporated herein by reference to Exhibit
3(b)(i) to the Registration Statement on Form S-2, File No.
33-58677, filed via Edgar on April 18, 1995.)
9. Opinion of Counsel as to the legality of securities being
registered. (Incorporated by reference to the Registrant's most
recent 24f-2 Notice (file nos. 33-73466; 811-8422) filed on
February 28, 1997.)
10(a). Consent of Coopers & Lybrand L.L.P., Independent Accountants. (To
be filed by amendment.)
10(b). Consent of KPMG Peat Marwick LLP, Independent Auditors. (To be
filed by amendment.)
13. Schedule for Computation of Total Return Calculations -
Standardized and Non-Standardized. (To be filed by amendment.)
15(a). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Jay S. Fishman and Ian R. Stuart.
(Incorporated herein by reference to Exhibit 15(a) to
Post-Effective Amendment No. 3 to the Registration
Statement on Form N-4 (file nos. 33-73466; 811-8422)
filed April 23, 1996.
15(b). Powers of Attorney authorizing Jay S. Fishman or Ernest J.
Wright as signatory for Robert I. Lipp, Charles O. Prince, III,
Marc P. Weill, Irwin R. Ettinger and Donald T. DeCarlo.
(Incorporated herein by reference to Exhibit 15(b) to
Post-Effective Amendment No. 2 to the Registration Statement on
Form N-4, (file nos. 33-73466; 811-8422) filed on April 27,
1995.)
15(c). Power of Attorney authorizing Jay S. Fishman or Ernest J. Wright
as signatory for Michael A. Carpenter. (Incorporated by reference
to Exhibit 15(c) to Post Effective Amendment No. 3 to
Registration Statement on Form N-4, (file nos. 33-73466;
811-8422) filed April 23, 1996.)
<PAGE> 45
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- -------------------------
<S> <C>
Michael A. Carpenter* Director, President and Chief Executive Officer
Jay S. Benet* Senior Vice President
George C. Kokulis* Senior Vice President
Robert I. Lipp* Director and Chairman
Ian R. Stuart* Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
Katherine M. Sullivan Director, Senior Vice President and General Counsel
Marc P. Weill** Director and Senior Vice President
Stuart Baritz** Senior Vice President
Jay S. Fishman* Director
Elizabeth C. Georgakopoulos Senior Vice President
Barry Jacobsen Senior Vice President
Russell Johnson Senior Vice President
Warren H. May* Senior Vice President
Christine M. Modie Senior Vice President
David A. Tyson Senior Vice President
F. Denney Voss Senior Vice President
Paula Burton Vice President
Elizabeth Charron* Vice President
Charles N. Vest* Vice President and Actuary
Donald R. Munson Jr. Second Vice President
Ernest J. Wright* Assistant Secretary
Kathleen A. McGah Assistant Secretary
Principal Business Address:
* The Travelers Insurance Company ** Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, Connecticut 06183 New York , New York 10013
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
(To be filed by Amendment)
<PAGE> 46
Item 27. Number of Contract Owners
As of March 17, 1997, 0 contract owners held qualified and non-qualified
contracts offered by the Registrant.
Item 28. Indemnification
Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding
indemnification of directors and officers of Connecticut corporations provides
in general that Connecticut corporations shall indemnify their officers,
directors and certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
in connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply unless (1)
the individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by persons specified in the
statute) that the individual acted in good faith and in the best interests of
the corporation; or (3) the court, upon application by the individual,
determines in view of all of the circumstances that such person is fairly and
reasonably entitled to be indemnified, and then for such amount as the court
shall determine. With respect to proceedings brought by or in the right of the
corporation, the statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals, against reasonable
expenses actually incurred by them in connection with such proceedings, subject
to certain limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Depositor. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the Federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 47
Item 29. Principal Underwriter
(a) Tower Square Securities, Inc.
One Tower Square
Hartford, Connecticut 06183
Tower Square Securities, Inc. also serves as principal underwriter for the
following :
The Travelers Growth and Income Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund VA for Variable Annuities
The Travelers Fund BD II for Variable Annuities
The Travelers Fund ABD for Variable Annuities
The Travelers Fund ABD II for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund UL II for Variable Annuities
The Travelers Variable Life Insurance Separate Account One
The Travelers Variable Life Insurance Separate Account Three
The Travelers Separate Account QP for Variable Annuities
The Travelers Separate Account QP II for Variable Annuities
<TABLE>
<CAPTION>
(b)Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ---------------- -------------------
<S> <C> <C>
Russell H. Johnson Chairman of the Board,
Chief Executive Officer,
President and Chief Operating Officer -----
William F. Scully, III Member, Board of Directors, -----
Senior Vice President, Treasurer
and Chief Financial Officer
Cynthia P. Macdonald Vice President, Chief Compliance -----
Officer, Assistant Secretary
Joanne K. Russo Member, Board of Directors -----
Senior Vice President
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Jay S. Benet Member, Board of Directors -----
George C. Kokulis Member, Board of Directors -----
Warren H. May Member, Board of Directors -----
Donald R. Munson, Jr. Senior Vice President -----
Stuart L. Baritz Vice President -----
Michael P. Kiley Vice President -----
Tracey Kiff-Judson Second Vice President -----
Robin A. Jones Second Vice President -----
Whitney F. Burr Second Vice President -----
Marlene M. Ibsen Second Vice President -----
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
(cont'd)
(b)Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
- ------------------ ---------------- -------------------
<S> <C> <C>
John J. Williams, Jr. Director and Assistant Compliance -----
Officer
Susan M. Curcio Director and Operations Manager -----
Dennis D. D'Angelo Director -----
Thomas P. Tooley Director -----
Nancy S. Waldrop Assistant Treasurer -----
</TABLE>
* Principal business address: One Tower Square, Hartford, Connecticut 06183
(c)Tower Square Securities, Inc. serves as the principal underwriter. The
compensation listed below is for the year ending December 31, 1996.
<TABLE>
<CAPTION>
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Tower Square $ 0 $ 0 $ 0 $ 0
Securities, Inc.
</TABLE>
Item 30. Location of Accounts and Records
(1)The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a)To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements in
the registration statement are never more than sixteen months old for so long
as payments under the variable annuity contracts may be accepted;
(b)To include either (1) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that the applicant can
remove to send for a Statement of Additional Information; and
(c)To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request.
(d)To represent to the Securities and Exchange Commission that the aggregate
charges under the contracts of the Registrant described herein are reasonable in
relation to the services rendered, the expenses to be incurred, and the risks
assumed by the company.
<PAGE> 49
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant Act this Registration Statement to be signed on its behalf
in the City of Hartford, State of Connecticut, on March 17, 1997.
THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS INSURANCE COMPANY
(Depositor)
By: *IAN R. STUART
------------------------------
Ian R. Stuart
Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities indicated on
March 17, 1997.
<TABLE>
<S> <C>
*MICHAEL A. CARPENTER Chairman of the Board, President and Chief Executive Officer
- --------------------------------------
(Michael A. Carpenter)
*JAY S. BENET Director
- --------------------------------------
(Jay S. Benet)
*GEORGE C. KOKULIS Director
- --------------------------------------
(George C. Kokulis)
*ROBERT I. LIPP Director
- --------------------------------------
(Robert I. Lipp)
*KATHERINE M. SULLIVAN Director, Senior Vice President and
- -------------------------------------- General Counsel
(Katherine M. Sullivan)
*IAN R. STUART Director, Senior Vice President, Chief Financial Officer,
- -------------------------------------- Chief Accounting Officer and Controller
(Ian R. Stuart)
*MARC P. WEILL Director
- --------------------------------------
(Marc P. Weill)
*By: /s/Ernest J. Wright
----------------------------------------------
Ernest J. Wright, Attorney-in-Fact
</TABLE>
<PAGE> 50
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------------ ----------- ----------------
<S> <C>
1 Resolution of The Travelers Insurance Company
Board of Directors authorizing the establishment
of the Registrant. (Incorporated by reference to Exhibit 1 to
Post-Effective Amendment No. 3 to the Registration
Statement on Form N-4, file nos. 33-73466; 811-8242,
filed on April 23, 1996.
3 Form of Distribution and Management Agreement among
the Registrant, The Travelers Insurance Company and
Travelers Equities Sales, Inc. (now known as Tower Square
Securities, Inc.) (Incorporated herein by reference to Exhibit
3 to Post-Effective Amendment No. 2 to the Registration
Statement on Form N-4, file nos. 33-73466; 811-8242,
filed April 27, 1995.)
3(b). Form of Selling Agreement. (Incorporated herein by
reference to Exhibit 3(b) to Post-Effective Amendment
No. 3 to the Registration Statement on Form N-4,
file nos. 33-73466; 811-8242, filed April 23, 1996.)
4 Variable Annuity Contract. (Incorporated herein by
reference to Exhibit 4 to Post-Effective Amendment
No. 3 to the Registration Statement on Form N-4,
file nos. 33-73466; 811-8242, filed April 23, 1996.)
5. Application. (Incorporated herein by reference to
Exhibit 5 to Post-Effective Amendment No. 3 to the
Registration Statement on Form N-4, file nos. 33-73466;
811-8242, filed April 23, 1996.)
6(a) Charter of The Travelers Insurance Company, as
amended on October 19, 1994. (Incorporated herein
by reference to Exhibit 3(a)(i) to the Registration
Statement on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
6(b) By-Laws of The Travelers Insurance Company, as
amended on October 20, 1994. (Incorporated herein
by reference to Exhibit 3(b)(i) to the Registration
Statement on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
9 Opinion of Counsel as to the legality of securities being
registered by Registrant. (Incorporated herein by
reference to the Registrant's most recent 24f-2 Notice, (file
nos. 33-73466; 811-8242) filed on February 28, 1997.)
10(a) Consent of Coopers & Lybrand L.L.P., Independent (To be filed by Amendment)
Accountants.
</TABLE>
<PAGE> 51
<TABLE>
<S> <C>
10(b) Consent of KPMG Peat Marwick LLP, Independent (To be filed by Amendment)
Auditors.
13 Schedule for Computation of Total Return (To be filed by Amendment)
Calculations - Standardized and Non-Standardized.
15(a) Powers of Attorney authorizing Ernest J. Wright or
Kathleen A. McGah as signatory for Jay S. Fishman
and Ian R. Stuart. (Incorporated herein by reference to
Exhibit 15(a) to Post-Effective Amendment No. 3 to the
Registration Statement on Form N-4, file nos. 33-73466;
811-8242, filed April 23, 1996.)
15(b) Powers of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Robert I. Lipp,
Charles O. Prince, III, Marc P. Weill, Irwin R. Ettinger
and Donald T. DeCarlo. (Incorporated herein by
reference to Exhibit 15(b) to Post-Effective Amendment
No. 15(b) to the Registration Statement on Form N-4,
file nos. 33-73466; 811-8242, filed April 27, 1995.)
15(c). Power of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Michael A. Carpenter.
(Incorporated herein by reference to Exhibit 15(c)
to Post-Effective Amendment No. 3 to the Registration
Statement on Form N-4, file nos. 33-73466; 811-8242,
filed April 23, 1996.)
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