<PAGE> 1
VINTAGE ANNUITY
ANNUAL REPORT
DECEMBER 31, 1996
THE TRAVELERS FUND BD
FOR VARIABLE ANNUITIES
[TRAVELERSLIFE LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
THE TRAVELERS FUND BD
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
Travelers Series Fund Inc.:
Alliance Growth Portfolio, 15,971,658 shares (cost $212,538,355)........................ $ 268,004,422
Van Kampen American Capital Enterprise Portfolio, 5,840,606 shares (cost $76,780,466)... 92,339,974
TBC Managed Income Portfolio, 1,942,452 shares (cost $20,764,747)....................... 20,784,235
G.T. Global Strategic Income Portfolio, 1,579,431 shares (cost $17,111,542)............. 18,763,644
Smith Barney High Income Portfolio, 4,450,230 shares (cost $49,858,605)................. 52,690,729
Smith Barney International Equity Portfolio, 9,145,616 shares (cost $98,628,311)........ 114,868,937
Smith Barney Income and Growth Portfolio, 7,007,128 shares (cost $88,570,798)........... 105,527,348
Smith Barney Money Market Portfolio, 65,851,856 shares (cost $65,851,856)............... 65,851,856
Putnam Diversified Income Portfolio, 6,015,886 shares (cost $67,132,707)................ 69,603,797
Smith Barney Pacific Basin Portfolio, 1,372,222 shares (cost $13,046,211)............... 13,777,106
MFS Total Return Portfolio, 8,639,298 shares (cost $100,388,021)........................ 113,779,555
AIM Capital Appreciation Portfolio, 8,254,953 shares (cost $84,436,672)................. 91,052,129
The Travelers Series Trust:
MFS Emerging Growth Portfolio, 505,023 shares (cost $5,493,405)......................... 5,327,996
Smith Barney Series Fund:
Total Return Portfolio, 6,726,431 shares (cost $87,870,312)............................. 105,806,760
-------------
Total Investments (cost $988,472,008).................................................. $ 1,138,178,488
Receivables:
Dividends..................................................................................... 129,190
Purchase payments and transfers from other Travelers accounts................................. 2,898,308
Other assets....................................................................................... 17,187
---------------
Total Assets............................................................................ 1,141,223,173
---------------
LIABILITIES:
Payable for contract surrenders and transfers to other Travelers accounts.......................... 1,224,588
Accrued liabilities................................................................................ 265,067
---------------
Total Liabilities................................................................... 1,489,655
---------------
NET ASSETS: $ 1,139,733,518
===============
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 3
THE TRAVELERS FUND BD
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............................................................. $ 30,140,850
EXPENSES:
Insurance charges...................................................... $ 9,274,982
Administrative fees.................................................... 1,298,993
-------------
Total expenses........................................................ 10,573,975
-------------
Net investment income................................................ 19,566,875
-------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENTS:
Realized gain from investment transactions:
Proceeds from investments sold........................................ 44,883,919
Cost of investments sold.............................................. 42,369,055
-------------
Net realized gain.................................................... 2,514,864
Change in unrealized gain on investments:
Unrealized gain at December 31, 1995.................................. 33,086,025
Unrealized gain at December 31, 1996.................................. 149,706,480
-------------
Net change in unrealized gain for the year........................... 116,620,455
-------------
Net realized gain and change in unrealized gain..................... 119,135,319
-------------
Net increase in net assets resulting from operations................... $ 138,702,194
=============
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 4
THE TRAVELERS FUND BD
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income.............................................................. $ 19,566,875 $ 10,885,538
Net realized gain from investment transactions..................................... 2,514,864 204,102
Net change in unrealized gain (loss) on investments................................ 116,620,455 35,109,162
-------------- --------------
Net increase in net assets resulting from operations.............................. 138,702,194 46,198,802
-------------- --------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 309,302,224 and 354,498,881 units, respectively)................... 383,170,981 402,861,925
Participant transfers from other Travelers accounts
(applicable to 144,063,150 and 71,152,191 units, respectively).................... 180,135,696 80,569,733
Administrative charges
(applicable to 151,433 and 47,422 units, respectively)............................ (194,398) (55,076)
Contract surrenders
(applicable to 16,185,043 and 8,346,617 units, respectively)...................... (20,667,720) (7,774,891)
Participant transfers to other Travelers accounts
(applicable to 97,380,805 and 42,873,181 units, respectively)..................... (112,209,151) (47,707,531)
Other payments to participants
(applicable to 6,579,537 and 1,036,056 units, respectively)....................... (8,630,013) (1,169,880)
-------------- --------------
Net increase in net assets resulting from unit transactions...................... 421,605,395 426,724,280
-------------- --------------
Net increase in net assets...................................................... 560,307,589 472,923,082
NET ASSETS:
Beginning of year................................................................. 579,425,929 106,502,847
-------------- --------------
End of year....................................................................... $1,139,733,518 $ 579,425,929
============== ==============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Fund BD for Variable Annuities ("Fund BD") is a separate
account of The Travelers Insurance Company ("The Travelers"), an indirect
wholly owned subsidiary of Travelers Group Inc., and is available for
funding certain variable annuity contracts issued by The Travelers. Fund BD
is registered under the Investment Company Act of 1940, as amended, as a
unit investment trust.
Participant purchase payments applied to Fund BD are invested in one or more
eligible funds in accordance with the selection made by the contract owner.
As of December 31, 1996, the eligible funds available under Fund BD are:
Alliance Growth Portfolio, Van Kampen American Capital Enterprise Portfolio
(formerly American Capital Enterprise Portfolio), TBC Managed Income
Portfolio, G.T. Global Strategic Income Portfolio, Smith Barney High Income
Portfolio, Smith Barney International Equity Portfolio, Smith Barney Income
and Growth Portfolio, Smith Barney Money Market Portfolio, Putnam
Diversified Income Portfolio, Smith Barney Pacific Basin Portfolio, MFS
Total Return Portfolio, and AIM Capital Appreciation Portfolio of Travelers
Series Fund Inc. (formerly Smith Barney/Travelers Series Fund Inc.); MFS
Emerging Growth Portfolio of The Travelers Series Trust; and Total Return
Portfolio of Smith Barney Series Fund. Travelers Series Fund Inc. is
incorporated under Maryland law. The Travelers Series Trust and Smith
Barney Series Fund are registered as Massachusetts business trusts. All
eligible funds are managed by affiliates of The Travelers.
The following is a summary of significant accounting policies consistently
followed by Fund BD in the preparation of its financial statements.
SECURITY VALUATION. Investments are valued daily at the net asset values
per share of the underlying funds.
FEDERAL INCOME TAXES. The operations of Fund BD form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended (the "Code"). Under existing federal income tax law, no taxes
are payable on the investment income of Fund BD. Fund BD is not taxed as a
"regulated investment company" under Subchapter M of the Code.
OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Security transactions are accounted for on the trade date. Dividend income
is recorded on the ex-dividend date.
2. INVESTMENTS
Purchases and sales of investments aggregated $501,446,579 and $44,883,919,
respectively, for the year ended December 31, 1996. Realized gains and
losses from investment transactions are reported on an identified cost
basis. The cost of investments in eligible funds was $988,472,008 at
December 31, 1996. Gross unrealized appreciation for all investments at
December 31, 1996 was $149,871,889. Gross unrealized depreciation for all
investments at December 31, 1996 was $165,409.
-4-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS - CONTINUED
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. For contracts with a standard death benefit provision, these
charges are equivalent to 1.02% of the average net assets of Fund BD on an
annual basis. For contracts with an enhanced death benefit provision, these
charges are equivalent to 1.30% of the average net assets of Fund BD on an
annual basis.
Administrative fees are paid for administrative expenses incurred by The
Travelers. This charge is equivalent to 0.15% of the average net assets of
Fund BD on an annual basis.
For contracts in the accumulation phase with a contract value less than
$40,000, an annual charge of $30 (prorated for partial periods) is deducted
from participant account balances and paid to The Travelers to cover
contract administrative charges.
No sales charge is deducted from participant purchase payments when they are
received. However, The Travelers generally assesses a contingent deferred
sales charge of up to 6% if a participant's purchase payment is surrendered
within six years of its payment date. Contract surrender payments include
$407,279 and $159,900 of contingent deferred sales charges for the years
ended December 31, 1996 and 1995, respectively.
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------------------------------------
ACCUMULATION ANNUITY UNIT NET
UNITS UNITS VALUE ASSETS
----- ----- ----- ------
<S> <C> <C> <C> <C>
Travelers Series Fund Inc.
Alliance Growth Portfolio
Standard.................................................. 123,279,471 14,430 $ 1.785 $ 220,062,214
Enhanced.................................................. 27,251,039 - 1.772 48,295,268
Van Kampen American Capital Enterprise Portfolio
Standard.................................................. 45,338,023 - 1.655 75,021,219
Enhanced.................................................. 10,651,957 - 1.643 17,501,300
TBC Managed Income Portfolio
Standard.................................................. 15,376,353 - 1.163 17,875,229
Enhanced.................................................. 2,501,925 - 1.154 2,888,148
G.T. Global Strategic Income Portfolio
Standard.................................................. 11,497,954 7,544 1.316 15,138,743
Enhanced.................................................. 2,795,018 - 1.306 3,651,689
Smith Barney High Income Portfolio
Standard.................................................. 33,737,041 - 1.300 43,850,052
Enhanced.................................................. 6,918,760 13,015 1.291 8,945,892
Smith Barney International Equity Portfolio
Standard.................................................. 77,527,235 26,827 1.222 94,762,761
Enhanced.................................................. 16,661,870 - 1.213 20,214,879
Smith Barney Income and Growth Portfolio
Standard.................................................. 57,479,118 - 1.528 87,835,657
Enhanced.................................................. 12,169,907 - 1.517 18,465,517
Smith Barney Money Market Portfolio
Standard.................................................. 49,671,946 - 1.098 54,523,417
Enhanced.................................................. 10,166,432 10,010 1.090 11,091,357
Putnam Diversified Income Portfolio
Standard.................................................. 43,879,497 18,569 1.252 54,945,229
Enhanced.................................................. 11,776,554 11,965 1.243 14,650,677
Smith Barney Pacific Basin Portfolio
Standard.................................................. 10,502,076 11,393 0.983 10,339,822
Enhanced.................................................. 3,487,131 - 0.977 3,405,342
MFS Total Return Portfolio
Standard.................................................. 68,216,853 18,948 1.376 93,891,229
Enhanced.................................................. 14,689,857 - 1.366 20,070,193
AIM Capital Appreciation Portfolio
Standard.................................................. 71,085,132 - 1.088 77,333,394
Enhanced.................................................. 12,861,969 - 1.084 13,944,449
The Travelers Series Trust
MFS Emerging Growth Portfolio
Standard.................................................. 4,789,844 - 1.005 4,815,199
Enhanced.................................................. 780,369 - 1.005 784,137
Smith Barney Series Fund
Total Return Portfolio
Standard.................................................. 58,898,210 - 1.550 91,301,246
Enhanced.................................................. 9,168,615 - 1.541 14,129,259
---------------
Net Contract Owners' Equity........................................................................... $ 1,139,733,518
===============
</TABLE>
-6-
<PAGE> 8
This page intentionally left blank.
-7-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. SCHEDULE OF FUND BD OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
VAN KAMPEN
AMERICAN CAPITAL
ALLIANCE GROWTH PORTFOLIO ENTERPRISE PORTFOLIO
-------------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends......................................................... $ 9,816,609 $ 4,161,477 $ 289,639 $ 1,467,553
------------- ------------- ------------ ------------
EXPENSES:
Insurance charges................................................. 2,169,443 756,535 751,363 196,954
Administrative fees............................................... 303,331 104,779 104,909 27,184
------------- ------------- ------------ ------------
Net investment income (loss)................................ 7,343,835 3,300,163 (566,633) 1,243,415
------------- ------------- ------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold................................ 3,105,789 420,100 627,969 137,452
Cost of investments sold...................................... 2,042,913 325,568 435,377 108,756
------------- ------------- ------------ ------------
Net realized gain (loss).................................... 1,062,876 94,532 192,592 28,696
------------- ------------- ------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year...................... 13,022,560 141,949 2,189,023 32,282
Unrealized gain (loss) end of year............................ 55,466,067 13,022,560 15,559,508 2,189,023
------------- ------------- ------------ ------------
Net change in unrealized gain (loss) for the year........... 42,443,507 12,880,611 13,370,485 2,156,741
------------- ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations................................... 50,850,218 16,275,306 12,996,444 3,428,852
------------- ------------- ------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments..................................... 61,004,662 86,330,764 26,547,791 32,824,166
Participant transfers from other Travelers accounts............... 35,105,480 18,954,600 13,168,168 6,023,872
Administrative charges............................................ (50,141) (15,912) (15,153) (3,138)
Contract surrenders............................................... (4,437,655) (1,885,730) (1,434,621) (349,775)
Participant transfers to other Travelers accounts................. (11,489,385) (5,093,545) (3,275,514) (1,671,606)
Other payments to participants.................................... (1,941,149) (224,238) (425,382) (23,650)
------------- ------------- ------------ ------------
Net increase in net assets resulting
from unit transactions...................................... 78,191,812 98,065,939 34,565,289 36,799,869
------------- ------------- ------------ ------------
Net increase in net assets.................................. 129,042,030 114,341,245 47,561,733 40,228,721
NET ASSETS:
Beginning of year............................................. 139,315,452 24,974,207 44,960,786 4,732,065
------------- ------------- ------------ ------------
End of year................................................... $ 268,357,482 $ 139,315,452 $ 92,522,519 $ 44,960,786
============= ============= ============ ============
<CAPTION>
TBC Managed
Income Portfolio
------------------------------
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................... $ 902,359 $ 735,632
------------ ------------
EXPENSES:
Insurance charges................................................. 199,423 86,861
Administrative fees............................................... 28,191 12,219
------------ ------------
Net investment income (loss)................................ 674,745 636,552
------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold................................ 1,963,926 175,140
Cost of investments sold...................................... 1,832,633 170,011
------------ ------------
Net realized gain (loss).................................... 131,293 5,129
------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year...................... 392,297 (51,965)
Unrealized gain (loss) end of year............................ 19,488 392,297
------------ ------------
Net change in unrealized gain (loss) for the year........... (372,809) 444,262
------------ ------------
Net increase (decrease) in net assets
resulting from operations................................... 433,229 1,085,943
------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments..................................... 5,994,394 9,503,149
Participant transfers from other Travelers accounts............... 2,753,639 1,402,447
Administrative charges............................................ (2,971) (1,145)
Contract surrenders............................................... (511,153) (258,982)
Participant transfers to other Travelers accounts................. (2,333,056) (581,784)
Other payments to participants.................................... (492,301) (42,780)
------------ ------------
Net increase in net assets resulting
from unit transactions...................................... 5,408,552 10,020,905
------------ ------------
Net increase in net assets.................................. 5,841,781 11,106,848
NET ASSETS:
Beginning of year............................................. 14,921,596 3,814,748
------------ ------------
End of year................................................... $ 20,763,377 $ 14,921,596
============ ============
</TABLE>
-8-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
G.T. GLOBAL STRATEGIC SMITH BARNEY SMITH BARNEY SMITH BARNEY INCOME
INCOME PORTFOLIO HIGH INCOME PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO AND GROWTH PORTFOLIO
- -------------------------- -------------------------- ------------------------------ -------------------------
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,482,115 $ 374,859 $ 2,988,430 $ 1,166,940 $ 116,506 $ 71,145 $ 2,370,046 $ 823,312
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
152,906 66,231 438,067 128,351 985,087 388,285 829,045 249,794
21,322 9,065 61,547 18,031 137,895 53,700 116,092 34,696
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
1,307,887 299,563 2,488,816 1,020,558 (1,006,476) (370,840) 1,424,909 538,822
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
401,825 338,190 1,164,676 596,151 747,728 266,046 588,953 161,301
352,981 330,843 1,038,182 584,832 623,511 284,870 402,651 139,017
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
48,844 7,347 126,494 11,319 124,217 (18,824) 186,302 22,284
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
607,235 (179,821) 684,556 (113,195) 2,744,085 (1,182,006) 5,357,875 (196,959)
1,652,102 607,235 2,832,124 684,556 16,240,626 2,744,085 16,956,550 5,357,875
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
1,044,867 787,056 2,147,568 797,751 13,496,541 3,926,091 11,598,675 5,554,834
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
2,401,598 1,093,966 4,762,878 1,829,628 12,614,282 3,536,427 13,209,886 6,115,940
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
5,288,275 5,402,931 19,997,369 20,687,029 28,969,297 33,434,139 35,890,271 30,974,631
2,019,060 952,268 5,668,106 3,098,805 17,689,935 9,317,337 12,396,460 4,408,848
(3,076) (1,400) (6,641) (1,805) (24,379) (10,690) (15,158) (4,438)
(351,124) (114,398) (1,305,418) (428,763) (1,875,077) (703,459) (1,607,648) (401,636)
(559,024) (459,906) (3,650,986) (1,450,391) (4,085,495) (2,189,208) (2,526,626) (898,610)
(102,212) (46,771) (438,913) (177,874) (747,726) (75,039) (679,755) (46,045)
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
6,291,899 5,732,724 20,263,517 21,727,001 39,926,555 39,773,080 43,457,544 34,032,750
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
8,693,497 6,826,690 25,026,395 23,556,629 52,540,837 43,309,507 56,667,430 40,148,690
10,096,935 3,270,245 27,769,549 4,212,920 62,436,803 19,127,296 49,633,744 9,485,054
- ------------ ------------ ------------ ------------ ------------- ------------ ------------- ------------
$ 18,790,432 $ 10,096,935 $ 52,795,944 $ 27,769,549 $ 114,977,640 $ 62,436,803 $ 106,301,174 $ 49,633,744
============ ============ ============ ============ ============= ============ ============= ============
</TABLE>
-9-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. SCHEDULE OF FUND BD OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY PUTNAM
MONEY MARKET PORTFOLIO DIVERSIFIED INCOME PORTFOLIO
--------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................................. $ 2,820,044 $ 1,162,345 $ 3,684,313 $ 1,761,448
------------- ------------ ------------ ------------
EXPENSES:
Insurance charges.......................................... 626,011 243,101 604,394 229,754
Administrative fees........................................ 87,663 33,566 83,790 31,336
------------- ------------ ------------ ------------
Net investment income (loss)......................... 2,106,370 885,678 2,996,129 1,500,358
------------- ------------ ------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold......................... 30,479,851 11,782,693 1,057,117 262,948
Cost of investments sold............................... 30,479,851 11,782,693 930,448 254,352
------------- ------------ ------------ ------------
Net realized gain (loss)............................. - - 126,669 8,596
------------- ------------ ------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year............... - - 1,447,661 (62,230)
Unrealized gain (loss) end of year..................... - - 2,471,090 1,447,661
------------- ------------ ------------ ------------
Net change in unrealized gain (loss) for the year.... - - 1,023,429 1,509,891
------------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations............................ 2,106,370 885,678 4,146,227 3,018,845
------------- ------------ ------------ ------------
UNIT TRANSACTIONS:
Participant purchase payments.............................. 61,862,581 60,911,919 21,052,427 24,989,920
Participant transfers from other Travelers accounts........ 22,480,733 8,062,764 9,058,694 4,735,354
Administrative charges..................................... (8,289) (2,266) (10,681) (4,087)
Contract surrenders........................................ (2,619,667) (1,963,486) (1,515,474) (545,688)
Participant transfers to other Travelers accounts.......... (66,134,151) (30,581,456) (3,040,509) (1,069,291)
Other payments to participants............................. (387,857) (82,649) (683,955) (97,206)
------------- ------------ ------------ ------------
Net increase in net assets resulting
from unit transactions............................... 15,193,350 36,344,826 24,860,502 28,009,002
------------- ------------ ------------ ------------
Net increase in net assets........................... 17,299,720 37,230,504 29,006,729 31,027,847
NET ASSETS:
Beginning of year...................................... 48,315,054 11,084,550 40,589,177 9,561,330
------------- ------------ ------------ ------------
End of year............................................ $ 65,614,774 $ 48,315,054 $ 69,595,906 $ 40,589,177
============= ============ ============ ============
<CAPTION>
SMITH BARNEY
PACIFIC BASIN PORTFOLIO
-------------------------
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................. $ 85,088 $ 22,050
------------ -----------
EXPENSES:
Insurance charges.......................................... 130,320 48,102
Administrative fees........................................ 17,916 6,534
------------ -----------
Net investment income (loss)......................... (63,148) (32,586)
------------ -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold......................... 1,510,099 73,530
Cost of investments sold............................... 1,555,495 83,120
------------ -----------
Net realized gain (loss)............................. (45,396) (9,590)
------------ -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year............... (94,030) (219,183)
Unrealized gain (loss) end of year..................... 730,895 (94,030)
------------ -----------
Net change in unrealized gain (loss) for the year.... 824,925 125,153
------------ -----------
Net increase (decrease) in net assets
resulting from operations............................ 716,381 82,977
------------ -----------
UNIT TRANSACTIONS:
Participant purchase payments.............................. 4,266,062 4,212,825
Participant transfers from other Travelers accounts........ 3,494,877 992,308
Administrative charges..................................... (2,485) (933)
Contract surrenders........................................ (317,932) (79,023)
Participant transfers to other Travelers accounts.......... (1,991,724) (118,912)
Other payments to participants............................. (33,381) (11,072)
------------ -----------
Net increase in net assets resulting
from unit transactions............................... 5,415,417 4,995,193
------------ -----------
Net increase in net assets........................... 6,131,798 5,078,170
NET ASSETS:
Beginning of year...................................... 7,613,366 2,535,196
------------ -----------
End of year............................................ $ 13,745,164 $ 7,613,366
============ ===========
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
AIM CAPITAL MFS EMERGING
MFS TOTAL RETURN PORTFOLIO APPRECIATION PORTFOLIO GROWTH PORTFOLIO TOTAL RETURN PORTFOLIO
- --------------------------- -------------------------- ------------------------ ----------------------------
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 3,828,423 $ 1,727,749 $ 89,374 $ 24,151 $ 25,251 $ - $ 1,642,653 $ 737,581
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
942,815 328,157 646,707 30,738 4,468 - 794,933 189,833
132,120 45,649 90,846 4,267 636 - 112,735 26,982
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
2,753,488 1,353,943 (648,179) (10,854) 20,147 - 734,985 520,766
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
1,262,839 469,662 1,197,200 3,087 - - 775,947 40,353
979,860 419,739 1,126,918 3,199 - - 568,235 35,551
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
282,979 49,923 70,282 (112) - - 207,712 4,802
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
5,006,835 (205,882) (570,345) - - - 2,298,273 13,873
13,391,534 5,006,835 6,615,457 (570,345) (165,409) - 17,936,448 2,298,273
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
8,384,699 5,212,717 7,185,802 (570,345) (165,409) - 15,638,175 2,284,400
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
11,421,166 6,616,583 6,607,905 (581,311) (145,262) - 16,580,872 2,809,968
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
32,478,099 37,218,089 43,928,872 19,736,982 4,210,333 - 31,680,548 36,635,381
15,491,308 9,146,918 23,045,936 6,338,146 1,548,789 - 16,214,511 7,136,066
(19,879) (6,585) (17,703) - - - (17,842) (2,677)
(2,264,908) (762,981) (1,131,730) (26,938) (3,561) - (1,291,752) (254,032)
(4,224,343) (2,036,463) (5,252,724) (796,313) (10,963) - (3,634,651) (760,046)
(1,226,965) (173,925) (573,279) - - - (897,138) (168,631)
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
40,233,312 43,385,053 59,999,372 25,251,877 5,744,598 - 42,053,676 42,586,061
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
51,654,478 50,001,636 66,607,277 24,670,566 5,599,336 - 58,634,548 45,396,029
62,306,944 12,305,308 24,670,566 - - - 46,795,957 1,399,928
- ------------- ------------ ------------ ------------ ----------- ----------- ------------- ------------
$ 113,961,422 $ 62,306,944 $ 91,277,843 $ 24,670,566 $ 5,599,336 $ - $ 105,430,505 $ 46,795,957
============= ============ ============ ============ =========== =========== ============= ============
</TABLE>
-11-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. SCHEDULE OF FUND BD OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
COMBINED
-----------------------------
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends..................................................................... $ 30,140,850 $ 14,236,242
-------------- -------------
EXPENSES:
Insurance charges............................................................. 9,274,982 2,942,696
Administrative fees........................................................... 1,298,993 408,008
-------------- -------------
Net investment income (loss)............................................ 19,566,875 10,885,538
-------------- -------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold............................................ 44,883,919 14,726,653
Cost of investments sold.................................................. 42,369,055 14,522,551
-------------- -------------
Net realized gain (loss)................................................ 2,514,864 204,102
-------------- -------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year.................................. 33,086,025 (2,023,137)
Unrealized gain (loss) end of year........................................ 149,706,480 33,086,025
-------------- -------------
Net change in unrealized gain (loss) for the year....................... 116,620,455 35,109,162
-------------- -------------
Net increase (decrease) in net assets
resulting from operations............................................... 138,702,194 46,198,802
-------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments................................................. 383,170,981 402,861,925
Participant transfers from other Travelers accounts........................... 180,135,696 80,569,733
Administrative charges........................................................ (194,398) (55,076)
Contract surrenders........................................................... (20,667,720) (7,774,891)
Participant transfers to other Travelers accounts............................. (112,209,151) (47,707,531)
Other payments to participants................................................ (8,630,013) (1,169,880)
-------------- -------------
Net increase in net assets resulting
from unit transactions.................................................. 421,605,395 426,724,280
-------------- -------------
Net increase in net assets.............................................. 560,307,589 472,923,082
NET ASSETS:
Beginning of year......................................................... 579,425,929 106,502,847
-------------- -------------
End of year............................................................... $1,139,733,518 $ 579,425,929
============== =============
</TABLE>
-12-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND BD
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
VAN KAMPEN
AMERICAN CAPITAL
ALLIANCE GROWTH PORTFOLIO ENTERPRISE PORTFOLIO
------------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year..................................... 99,904,339 23,860,599 33,041,812 4,558,743
Accumulation units purchased and
transferred from other Travelers accounts............. 62,183,855 81,629,940 26,338,152 30,054,909
Accumulation units redeemed and
transferred to other Travelers accounts............... (11,542,721) (5,583,996) (3,389,984) (1,571,840)
Annuity units............................................ (533) (2,204) - -
----------- ----------- ---------- ----------
Accumulation and annuity units
end of year........................................... 150,544,940 99,904,339 55,989,980 33,041,812
=========== =========== ========== ==========
<CAPTION>
TBC MANAGED
INCOME PORTFOLIO
-------------------------
1996 1995
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year..................................... 13,076,945 3,829,067
Accumulation units purchased and
transferred from other Travelers accounts............. 7,771,745 10,065,751
Accumulation units redeemed and
transferred to other Travelers accounts............... (2,970,412) (817,873)
Annuity units............................................ - -
---------- ----------
Accumulation and annuity units
end of year........................................... 17,878,278 13,076,945
========== ==========
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL STRATEGIC SMITH BARNEY
INCOME PORTFOLIO HIGH INCOME PORTFOLIO
----------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year..................................... 9,019,702 3,462,455 23,908,189 4,267,721
Accumulation units purchased and
transferred from other Travelers accounts............. 6,140,644 6,161,791 21,206,906 21,533,742
Accumulation units redeemed and
transferred to other Travelers accounts............... (859,551) (603,392) (4,445,210) (1,892,168)
Annuity units............................................ (279) (1,152) (1,069) (1,106)
---------- --------- ---------- ----------
Accumulation and annuity units
end of year........................................... 14,300,516 9,019,702 40,668,816 23,908,189
========== ========= ========== ==========
<CAPTION>
SMITH BARNEY INTERNATIONAL
EQUITY PORTFOLIO
--------------------------
1996 1995
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year..................................... 59,503,877 20,039,144
Accumulation units purchased and
transferred from other Travelers accounts............. 40,470,047 42,509,931
Accumulation units redeemed and
transferred to other Travelers accounts............... (5,757,002) (3,041,102)
Annuity units............................................ (990) (4,096)
---------- ----------
Accumulation and annuity units
end of year........................................... 94,215,932 59,503,877
========== ==========
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY INCOME SMITH BARNEY
AND GROWTH PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------ --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year..................................... 38,482,886 9,668,753 45,699,686 10,919,262
Accumulation units purchased and
transferred from other Travelers accounts............. 34,571,705 29,977,228 78,328,712 66,074,922
Accumulation units redeemed and
transferred to other Travelers accounts............... (3,405,566) (1,163,095) (64,179,188) (31,293,647)
Annuity units............................................ - - (822) (851)
---------- ---------- ---------- ----------
Accumulation and annuity units
end of year........................................... 69,649,025 38,482,886 59,848,388 45,699,686
========== ========== ========== ==========
<CAPTION>
PUTNAM DIVERSIFIED
INCOME PORTFOLIO
-------------------------
1996 1995
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year..................................... 34,727,849 9,486,475
Accumulation units purchased and
transferred from other Travelers accounts............. 25,380,256 26,813,384
Accumulation units redeemed and
transferred to other Travelers accounts............... (4,419,852) (1,568,158)
Annuity units............................................ (1,668) (3,852)
---------- ----------
Accumulation and annuity units
end of year........................................... 55,686,585 34,727,849
========== ==========
</TABLE>
-13-
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND BD
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY MFS
PACIFIC BASIN PORTFOLIO TOTAL RETURN PORTFOLIO
------------------------------ --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year..................................... 8,375,185 2,820,564 51,286,236 12,577,846
Accumulation units purchased and
transferred from other Travelers accounts............. 8,058,171 5,792,679 37,667,058 41,380,324
Accumulation units redeemed and
transferred to other Travelers accounts............... (2,432,335) (236,319) (6,026,937) (2,669,053)
Annuity units............................................ (421) (1,739) (699) (2,881)
---------- ---------- ---------- ----------
Accumulation and annuity units
end of year........................................... 14,000,600 8,375,185 82,925,658 51,286,236
========== ========== ========== ==========
<CAPTION>
AIM CAPITAL
APPRECIATION PORTFOLIO
-------------------------
1996 1995
---- ----
<S> <C> <C>
Accumulation and annuity units
beginning of year..................................... 25,760,350 -
Accumulation units purchased and
transferred from other Travelers accounts............. 64,913,879 26,610,743
Accumulation units redeemed and
transferred to other Travelers accounts............... (6,727,128) (850,393)
Annuity units............................................ - -
---------- ----------
Accumulation and annuity units
end of year........................................... 83,947,101 25,760,350
========== ==========
</TABLE>
<TABLE>
<CAPTION>
MFS EMERGING TOTAL RETURN
GROWTH PORTFOLIO PORTFOLIO
---------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation and annuity units
beginning of year..................................... - - 37,437,245 1,385,876
Accumulation units purchased and
transferred from other Travelers accounts............. 5,584,170 - 34,750,074 37,045,728
Accumulation units redeemed and
transferred to other Travelers accounts............... (13,957) - (4,120,494) (994,359)
Annuity units............................................ - - - -
--------- -------- ---------- ----------
Accumulation and annuity units
end of year........................................... 5,570,213 - 68,066,825 37,437,245
========= ======== ========== ==========
</TABLE>
-14-
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Owners of Variable Annuity Contracts of
The Travelers Fund BD for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Fund BD for Variable Annuities as of December 31, 1996, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended.
These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of shares owned as of December 31, 1996, by
correspondence with the underlying funds. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Travelers Fund BD for
Variable Annuities as of December 31, 1996, the results of its operations for
the year then ended, and the changes in its net assets for each of the two
years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 7, 1997
-15-
<PAGE> 17
This page intentionally left blank.
<PAGE> 18
Independent Accountants
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Fund BD for Variable Annuities or Fund
BD's underlying funds. It should not be used in connection with any offer
except in conjunction with the Prospectuses for the Variable Annuity products
offered by The Travelers Insurance Company and the Prospectuses of the
underlying funds, which collectively contain all pertinent information,
including the applicable sales commissions.
VG-FNDBD (Annual) (12-96) Printed in U.S.A.
