<PAGE> 1
ANNUAL REPORT
DECEMBER 31, 1997
THE TRAVELERS VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT ONE
[TRAVELERS LIFE & ANNUITY LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
TRAVELERS VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT ONE
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
The Travelers Series Trust, 174,170 shares (cost $1,825,638) ........... $ 1,858,486
Travelers Series Fund Inc., 5,330,072 shares (cost $26,215,188) ........ 30,060,997
Greenwich Street Series Fund, 258,893 shares (cost $3,971,991) ......... 4,561,699
Smith Barney Concert Allocation Series Inc., 4,172 shares (cost $47,357) 46,685
-----------
Total Investments (cost $32,060,174) ................... $36,527,867
Receivables:
Dividends .............................................................. 6,768
Premium payments and transfers from other Travelers accounts ........... 30,800
-----------
Total Assets ................................................... 36,565,435
-----------
LIABILITIES:
Payable for contract surrenders and transfers to other Travelers accounts ...... 30,798
Accrued liabilities ............................................................ 2,401
-----------
Total Liabilities .............................................. 33,199
-----------
NET ASSETS: $36,532,236
===========
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 3
THE TRAVELERS VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT ONE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................................... $ 465,479
EXPENSES:
Insurance charges .............................................................. $ 233,340
Administrative fees ............................................................ 113,217
-----------
Total expenses ......................................................... 346,557
-----------
Net investment income .......................................... 118,922
-----------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENTS:
Realized gain from investment transactions:
Proceeds from investments sold ......................................... 12,722,440
Cost of investments sold ............................................... 12,383,302
-----------
Net realized gain .............................................. 339,138
Change in unrealized gain on investments:
Unrealized gain at December 31, 1996 ................................... 1,262,660
Unrealized gain at December 31, 1997 ................................... 4,467,693
-----------
Net change in unrealized gain for the year ..................... 3,205,033
-----------
Net realized gain and change in unrealized gain ........ 3,544,171
-----------
Net increase in net assets resulting from operations ........................... $ 3,663,093
===========
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 4
THE TRAVELERS VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT ONE
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income ..................................................... $ 118,922 $ 414,810
Net realized gain from investment transactions ............................ 339,138 104,715
Net change in unrealized gain on investments .............................. 3,205,033 1,261,716
------------ ------------
Net increase in net assets resulting from operations .............. 3,663,093 1,781,241
------------ ------------
UNIT TRANSACTIONS:
Participant premium payments
(applicable to 11,877,130 and 20,300,668 units, respectively) ..... 12,668,925 20,747,433
Participant transfers from other Travelers accounts
(applicable to 9,594,528 and 16,483,710 units, respectively) ...... 12,632,833 17,805,104
Growth rate intra-fund transfer in
(applicable to 14,024,894 units) .................................. 17,848,901 -
Contract surrenders
(applicable to 603,379 and 289,255 units, respectively) ........... (713,491) (314,374)
Participant transfers to other Travelers accounts
(applicable to 12,446,521 and 19,639,934 units, respectively) ..... (13,416,453) (20,145,618)
Growth rate intra-fund transfer out
(applicable to 14,055,338 units) .................................. (17,848,901) -
------------ ------------
Net increase in net assets resulting from unit transactions 11,171,814 18,092,545
------------ ------------
Net increase in net assets ........................ 14,834,907 19,873,786
NET ASSETS:
Beginning of year ......................................................... 21,697,329 1,823,543
------------ ------------
End of year ............................................................... $ 36,532,236 $ 21,697,329
============ ============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Variable Life Insurance Separate Account One ("Separate
Account One") is a separate account of The Travelers Life and Annuity
Company ("Travelers Life"), which is a wholly owned subsidiary of The
Travelers Insurance Company ("The Travelers"), an indirect wholly owned
subsidiary of Travelers Group Inc., and is available for funding certain
variable life insurance contracts issued by Travelers Life. Separate
Account One is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust.
Participant premium payments applied to Separate Account One are invested
in one or more eligible funds in accordance with the selection made by the
contract owner. As of December 31, 1997, the eligible funds available under
Separate Account One are: Zero Coupon Bond Fund Portfolio Series 1998, Zero
Coupon Bond Fund Portfolio Series 2000, Zero Coupon Bond Fund Portfolio
Series 2005 and MFS Emerging Growth Portfolio of The Travelers Series
Trust; Alliance Growth Portfolio, Van Kampen American Capital Enterprise
Portfolio, TBC Managed 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, MFS Total Return Portfolio and AIM Capital
Appreciation Portfolio of Travelers Series Fund Inc.; Total Return
Portfolio of Greenwich Street Series Fund (formerly Smith Barney Series
Fund); and Select High Growth Portfolio, Select Growth Portfolio, Select
Balanced Portfolio, Select Conservative Portfolio and Select Income
Portfolio of Smith Barney Concert Allocation Series Inc. The Travelers
Series Trust and Greenwich Street Series Fund are registered as
Massachusetts business trusts. Travelers Series Fund Inc. and Smith Barney
Concert Allocation Series Inc. are incorporated under Maryland law. All
eligible funds are managed by affiliates of The Travelers. Not all funds
may be available in all states or to all contract owners.
The following is a summary of significant accounting policies consistently
followed by Separate Account One in the preparation of its financial
statements.
SECURITY VALUATION. Investments are valued daily at the net asset values
per share of the underlying funds.
SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Dividend income is recorded on the ex-dividend date.
FEDERAL INCOME TAXES. The operations of Separate Account One form a part of
the total operations of Travelers Life and are not taxed separately.
Travelers Life 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 Separate
Account One. Separate Account One 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.
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
were $24,056,259 and $12,722,440, respectively, for the year ended December
31, 1997. Realized gains and losses from investment transactions are
reported on an identified cost basis. The cost of investments in eligible
funds was $32,060,174 at December 31, 1997. Gross unrealized appreciation
for all investments at December 31, 1997 was $4,471,046. Gross unrealized
depreciation for all investments at December 31, 1997 was $3,353.
-4-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS - CONTINUED
3. CONTRACT CHARGES
Insurance charges are paid for the mortality and expense risks assumed by
Travelers Life. These charges are equivalent to 0.90% of the average net
assets of Separate Account One on an annual basis. (Contracts in this
category are identified as Price 1 in Note 4.) For any contract year that
follows a contract year in which the participant's average net fund growth
rate (as described in the prospectus) is 6.5% or greater, these charges
will be reduced to 0.75%. (Contracts in this category are identified as
Price 2 in Note 4.)
Administrative fees are paid for administrative expenses incurred by
Travelers Life. This charge is equivalent to 0.40% of the average net
assets of Separate Account One on an annual basis.
Travelers Life receives contingent surrender charges on full or partial
contract surrenders. Such charges are computed by applying various
percentages to premiums and/or stated contract amounts (as described in the
prospectus). Travelers Life received $15,103 in satisfaction of such
contingent surrender charges for the year ended December 31, 1997. No
contingent surrender charges were received for the year ended December 31,
1996.
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
THE TRAVELERS SERIES TRUST
Zero Coupon Bond Fund Portfolio Series 1998
Price 1 ................................ 36,036 $ 1.074 $ 38,703
Price 2 ................................ 208,054 1.077 224,122
Zero Coupon Bond Fund Portfolio Series 2000
Price 1 ................................ 99,366 1.072 106,562
Price 2 ................................ 390,450 1.076 419,974
Zero Coupon Bond Fund Portfolio Series 2005
Price 1 ................................ 240,393 1.095 263,348
Price 2 ................................ 392,335 1.099 431,077
MFS Emerging Growth Portfolio
Price 1 ................................ 257,609 1.143 294,429
Price 2 ................................ 70,065 1.144 80,149
TRAVELERS SERIES FUND INC. .............................
Alliance Growth Portfolio
Price 1 ................................ 1,142,834 1.679 1,918,642
Price 2 ................................ 2,061,808 1.684 3,472,769
Van Kampen American Capital Enterprise Portfolio
Price 1 ................................ 846,483 1.560 1,320,712
Price 2 ................................ 1,318,054 1.565 2,062,810
TBC Managed Income Portfolio
Price 1 ................................ 330,049 1.094 361,054
Price 2 ................................ 126,473 1.097 138,745
Smith Barney High Income Portfolio
Price 1 ................................ 393,697 1.290 507,728
Price 2 ................................ 1,428,850 1.294 1,848,701
Smith Barney International Equity Portfolio
Price 1 ................................ 628,414 1.212 761,394
Price 2 ................................ 1,547,095 1.215 1,880,184
Smith Barney Income and Growth Portfolio
Price 1 ................................ 1,075,064 1.473 1,583,574
Price 2 ................................ 1,222,518 1.478 1,806,374
Smith Barney Money Market Portfolio
Price 1 ................................ 3,043,238 1.084 3,298,171
Price 2 ................................ 326,323 1.087 354,842
Putnam Diversified Income Portfolio
Price 1 ................................ 501,013 1.134 567,915
Price 2 ................................ 564,387 1.137 641,661
MFS Total Return Portfolio
Price 1 ................................ 983,798 1.362 1,339,772
Price 2 ................................ 1,735,713 1.366 2,371,103
AIM Capital Appreciation Portfolio
Price 1 ................................ 932,896 1.282 1,195,576
Price 2 ................................ 2,049,033 1.286 2,634,059
GREENWICH STREET SERIES FUND
Total Return Portfolio
Price 1 ................................ 860,659 1.491 1,283,412
Price 2 ................................ 2,191,092 1.496 3,277,992
SMITH BARNEY CONCERT ALLOCATION SERIES INC. ............
Select Growth Portfolio
Price 1 ................................ 46,248 1.009 46,682
-----------
Net Contract Owners' Equity ............................ $36,532,236
===========
</TABLE>
-6-
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
INVESTMENT OPTIONS NO. OF MARKET
SHARES VALUE
------------- ------------
<S> <C> <C>
THE TRAVELERS SERIES TRUST (5.1%)
Zero Coupon Bond Fund Portfolio Series 1998 (Cost $265,523) 26,206 $ 262,842
Zero Coupon Bond Fund Portfolio Series 2000 (Cost $524,824) 52,187 526,570
Zero Coupon Bond Fund Portfolio Series 2005 (Cost $662,316) 65,952 694,471
MFS Emerging Growth Portfolio (Cost $372,975) 29,825 374,603
------------- ------------
Total (Cost $1,825,638) 174,170 1,858,486
------------- ------------
TRAVELERS SERIES FUND INC. (82.3%)
Alliance Growth Portfolio (Cost $4,189,954) 248,800 5,386,524
Van Kampen American Capital Enterprise Portfolio (Cost $2,745,990) 166,183 3,378,505
TBC Managed Income Portfolio (Cost $460,715) 42,575 499,833
Smith Barney High Income Portfolio (Cost $2,058,655) 174,821 2,356,581
Smith Barney International Equity Portfolio (Cost $2,502,509) 204,381 2,636,514
Smith Barney Income and Growth Portfolio (Cost $2,845,949) 177,517 3,385,246
Smith Barney Money Market Portfolio (Cost $3,677,302) 3,677,302 3,677,302
Putnam Diversified Income Portfolio (Cost $1,142,999) 97,083 1,209,657
MFS Total Return Portfolio (Cost $3,168,501) 232,198 3,705,882
AIM Capital Appreciation Portfolio (Cost $3,422,614) 309,212 3,824,953
------------- ------------
Total (Cost $26,215,188) 5,330,072 30,060,997
------------- ------------
GREENWICH STREET SERIES FUND (12.5%)
Total Return Portfolio
Total (Cost $3,971,991) 258,893 4,561,699
------------- ------------
SMITH BARNEY CONCERT ALLOCATION SERIES INC. (0.1%)
Select Growth Portfolio
Total (Cost $47,357) 4,172 46,685
------------- ------------
TOTAL INVESTMENT OPTIONS (100%)
(COST $32,060,174) $36,527,867
============
</TABLE>
-7-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF SEPARATE ACCOUNT ONE OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ZERO COUPON BOND ZERO COUPON BOND ZERO COUPON BOND
FUND PORTFOLIO FUND PORTFOLIO FUND PORTFOLIO
SERIES 1998 SERIES 2000 SERIES 2005
----------------------- ----------------------- -----------------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .......................................... $ 14,195 $ 11,484 $ 28,920 $ 22,438 $ 37,278 $ 21,875
--------- --------- --------- --------- --------- ---------
EXPENSES:
Insurance charges .................................. 2,018 1,122 4,022 2,555 4,796 2,369
Administrative fees ................................ 996 501 1,996 1,138 2,282 1,058
--------- --------- --------- --------- --------- ---------
Net investment income (loss) ................. 11,181 9,861 22,902 18,745 30,200 18,448
--------- --------- --------- --------- --------- ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ................. 9,939 3,588 16,664 11,330 21,083 6,922
Cost of investments sold ....................... 10,018 3,569 16,920 11,396 21,384 7,212
--------- --------- --------- --------- --------- ---------
Net realized gain (loss) ..................... (79) 19 (256) (66) (301) (290)
--------- --------- --------- --------- --------- ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year ....... (3,447) - (4,648) - 2,224 -
Unrealized gain (loss) end of year ............. (2,681) (3,447) 1,746 (4,648) 32,155 2,224
--------- --------- --------- --------- --------- ---------
Net change in unrealized gain (loss)
for the year ............................... 766 (3,447) 6,394 (4,648) 29,931 2,224
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations .................... 11,868 6,433 29,040 14,031 59,830 20,382
--------- --------- --------- --------- --------- ---------
UNIT TRANSACTIONS:
Participant premium payments ....................... - - - - - -
Participant transfers from other Travelers accounts 38,179 212,787 52,711 447,366 179,106 457,424
Growth rate intra-fund transfer in ................. 188,170 - 367,996 - 332,692 -
Contract surrenders ................................ (3,857) (2,239) (8,101) (5,340) (10,289) (4,975)
Participant transfers to other Travelers accounts .. (346) - (328) (2,843) (7,053) -
Growth rate intra-fund transfer out ................ (188,170) - (367,996) - (332,692) -
--------- --------- --------- --------- --------- ---------
Net increase in net assets resulting
from unit transactions ....................... 33,976 210,548 44,282 439,183 161,764 452,449
--------- --------- --------- --------- --------- ---------
Net increase in net assets ................... 45,844 216,981 73,322 453,214 221,594 472,831
NET ASSETS:
Beginning of year .............................. 216,981 - 453,214 - 472,831 -
--------- --------- --------- --------- --------- ---------
End of year .................................... $ 262,825 $ 216,981 $ 526,536 $ 453,214 $ 694,425 $ 472,831
========= ========= ========= ========= ========= =========
</TABLE>
-8-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
VAN KAMPEN
MFS EMERGING AMERICAN CAPITAL TBC MANAGED
GROWTH PORTFOLIO ALLIANCE GROWTH PORTFOLIO ENTERPRISE PORTFOLIO INCOME PORTFOLIO
- ------------------------ -------------------------- -------------------------- --------------------------
1997 1996 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C> <C> <C>
$ 6,449 $ - $ - $ 99,350 $ - $ 5,283 $ - $ 13,493
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
836 - 30,645 13,339 18,789 8,988 3,443 1,970
386 - 15,027 5,958 9,285 4,013 1,591 876
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
5,227 - (45,672) 80,053 (28,074) (7,718) (5,034) 10,647
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
2,306 - 267,070 229,640 216,188 159,079 21,661 6,423
2,000 - 212,972 202,194 163,555 145,576 20,987 6,511
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
306 - 54,098 27,446 52,633 13,503 674 (88)
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
- - 288,913 (249) 168,800 (546) 1,378 -
1,628 - 1,196,570 288,913 632,515 168,800 39,118 1,378
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
1,628 - 907,657 289,162 463,715 169,346 37,740 1,378
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
7,161 - 916,083 396,661 488,274 175,131 33,380 11,937
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
- - - - - - - -
368,833 - 1,949,577 2,374,269 1,320,465 1,548,355 175,937 300,251
82,592 - 2,547,398 - 1,587,396 - 133,010 -
(1,416) - (62,390) (32,508) (30,702) (20,467) (7,090) (4,465)
- - (132,624) (118,101) (73,860) (77,047) (10,151) -
(82,592) - (2,547,398) - (1,587,396) - (133,010) -
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
367,417 - 1,754,563 2,223,660 1,215,903 1,450,841 158,696 295,786
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
374,578 - 2,670,646 2,620,321 1,704,177 1,625,972 192,076 307,723
- - 2,720,765 100,444 1,679,345 53,373 307,723 -
- ----------- --------- ----------- ----------- ----------- ----------- ----------- -----------
$ 374,578 $ - $ 5,391,411 $ 2,720,765 $ 3,383,522 $ 1,679,345 $ 499,799 $ 307,723
=========== ========= =========== =========== =========== =========== =========== ===========
</TABLE>
-9-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF SEPARATE ACCOUNT ONE OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY SMITH BARNEY
HIGH INCOME PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO
--------------------------- ------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................. $ - $ 93,822 $ - $ 1,831
----------- ----------- ----------- -----------
EXPENSES:
Insurance charges ..................................... 15,991 9,312 18,268 9,881
Administrative fees ................................... 8,008 4,148 9,036 4,398
----------- ----------- ----------- -----------
Net investment income (loss) .................... (23,999) 80,362 (27,304) (12,448)
----------- ----------- ----------- -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 85,083 28,023 75,395 139,666
Cost of investments sold .......................... 75,982 26,546 62,664 129,802
----------- ----------- ----------- -----------
Net realized gain (loss) ........................ 9,101 1,477 12,731 9,864
----------- ----------- ----------- -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 45,893 (75) 121,359 1,118
Unrealized gain (loss) end of year ................ 297,926 45,893 134,005 121,359
----------- ----------- ----------- -----------
Net change in unrealized gain (loss) for the year 252,033 45,968 12,646 120,241
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ....................... 237,135 127,807 (1,927) 117,657
----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Participant premium payments .......................... - - - -
Participant transfers from other Travelers accounts ... 554,614 1,533,606 931,630 1,745,858
Growth rate intra-fund transfer in .................... 1,473,688 - 1,797,156 -
Contract surrenders ................................... (30,494) (19,601) (33,954) (19,973)
Participant transfers to other Travelers accounts ..... (51,754) - (56,447) (90,720)
Growth rate intra-fund transfer out ................... (1,473,688) - (1,797,156) -
----------- ----------- ----------- -----------
Net increase in net assets resulting
from unit transactions .......................... 472,366 1,514,005 841,229 1,635,165
----------- ----------- ----------- -----------
Net increase in net assets ...................... 709,501 1,641,812 839,302 1,752,822
NET ASSETS:
Beginning of year ................................. 1,646,928 5,116 1,802,276 49,454
----------- ----------- ----------- -----------
End of year ....................................... $ 2,356,429 $ 1,646,928 $ 2,641,578 $ 1,802,276
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY INCOME
AND GROWTH PORTFOLIO
---------------------------
1997 1996
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................. $ - $ 28,917
----------- -----------
EXPENSES:
Insurance charges ..................................... 19,021 7,315
Administrative fees ................................... 9,145 3,268
----------- -----------
Net investment income (loss) .................... (28,166) 18,334
----------- -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 201,383 271,548
Cost of investments sold .......................... 152,442 250,615
----------- -----------
Net realized gain (loss) ........................ 48,941 20,933
----------- -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 94,212 (353)
Unrealized gain (loss) end of year ................ 539,297 94,212
----------- -----------
Net change in unrealized gain (loss) for the year 445,085 94,565
----------- -----------
Net increase (decrease) in net assets
resulting from operations ....................... 465,860 133,832
----------- -----------
UNIT TRANSACTIONS:
Participant premium payments .......................... - -
Participant transfers from other Travelers accounts ... 1,814,055 1,264,075
Growth rate intra-fund transfer in .................... 1,453,728 -
Contract surrenders ................................... (41,259) (18,817)
Participant transfers to other Travelers accounts ..... (133,125) (132,073)
Growth rate intra-fund transfer out ................... (1,453,728) -
----------- -----------
Net increase in net assets resulting
from unit transactions .......................... 1,639,671 1,113,185
----------- -----------
Net increase in net assets ...................... 2,105,531 1,247,017
NET ASSETS:
Beginning of year ................................. 1,284,417 37,400
----------- -----------
End of year ....................................... $ 3,389,948 $ 1,284,417
=========== ===========
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
SMITH BARNEY PUTNAM AIM CAPITAL
MONEY MARKET PORTFOLIO DIVERSIFIED INCOME PORTFOLIO MFS TOTAL RETURN PORTFOLIO APPRECIATION PORTFOLIO
- ----------------------------- -------------------------- -------------------------- --------------------------
1997 1996 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 195,839 $ 152,658 $ - $ 35,287 $ - $ 63,619 $ - $ 2,310
------------ ------------ --------- ------------ --------- ------------ --------- ------------
34,989 28,570 6,944 3,873 21,280 8,753 24,568 13,032
15,758 12,700 3,397 1,732 10,377 3,918 12,178 5,806
------------ ------------ --------- ------------ --------- ------------ --------- ------------
145,092 111,388 (10,341) 29,682 (31,657) 50,948 (36,746) (16,528)
------------ ------------ --------- ------------ --------- ------------ --------- ------------
10,946,949 12,928,844 122,842 9,962 234,586 39,655 267,687 147,463
10,946,949 12,928,844 115,772 9,686 195,175 37,947 209,800 130,930
------------ ------------ --------- ------------ --------- ------------ --------- ------------
- - 7,070 276 39,411 1,708 57,887 16,533
------------ ------------ --------- ------------ --------- ------------ --------- ------------
- - 6,406 - 96,283 (466) 146,685 1,010
- - 66,658 6,406 537,381 96,283 402,339 146,685
------------ ------------ --------- ------------ --------- ------------ --------- ------------
- - 60,252 6,406 441,098 96,749 255,654 145,675
------------ ------------ --------- ------------ --------- ------------ --------- ------------
145,092 111,388 56,981 36,364 448,852 149,405 276,795 145,680
------------ ------------ --------- ------------ --------- ------------ --------- ------------
12,668,925 20,747,433 - - - - - -
341,272 674,596 549,032 634,085 1,382,323 1,858,163 1,341,655 2,286,291
584,140 - 537,311 - 2,020,832 - 2,070,380 -
(330,372) (98,271) (14,350) (7,519) (39,693) (22,040) (41,915) (27,167)
(12,649,679) (19,426,566) (45,017) - (34,999) (61,027) (86,881) (121,065)
(584,140) - (537,311) - (2,020,832) - (2,070,380) -
------------ ------------ --------- ------------ --------- ------------ --------- ------------
30,146 1,897,192 489,665 626,566 1,307,631 1,775,096 1,212,859 2,138,059
------------ ------------ --------- ------------ --------- ------------ --------- ------------
175,238 2,008,580 546,646 662,930 1,756,483 1,924,501 1,489,654 2,283,739
3,477,775 1,469,195 662,930 - 1,954,392 29,891 2,339,981 56,242
------------ ------------ --------- ------------ --------- ------------ --------- ------------
$ 3,653,013 $ 3,477,775 $ 1,209,576 $ 662,930 $ 3,710,875 $ 1,954,392 $ 3,829,635 $ 2,339,981
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
-11-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF SEPARATE ACCOUNT ONE OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (CONTINUED)
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO SELECT GROWTH PORTFOLIO
----------------------------- --------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................. $ 182,798 $ 41,671 $ - $ -
------------ ------------ ------------ ---------
EXPENSES:
Insurance charges ..................................... 27,615 12,883 115 -
Administrative fees ................................... 13,704 5,752 51 -
------------ ------------ ------------ ---------
Net investment income (loss) .................... 141,479 23,036 (166) -
------------ ------------ ------------ ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 233,208 154,905 396 -
Cost of investments sold .......................... 176,287 141,505 395 -
------------ ------------ ------------ ---------
Net realized gain (loss) ........................ 56,921 13,400 1 -
------------ ------------ ------------ ---------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 298,602 505 - -
Unrealized gain (loss) end of year ................ 589,708 298,602 (672) -
------------ ------------ ------------ ---------
Net change in unrealized gain (loss) for the year 291,106 298,097 (672) -
------------ ------------ ------------ ---------
Net increase (decrease) in net assets
resulting from operations ....................... 489,506 334,533 (837) -
------------ ------------ ------------ ---------
UNIT TRANSACTIONS:
Participant premium payments .......................... - - - -
Participant transfers from other Travelers accounts ... 1,585,614 2,467,978 47,830 -
Growth rate intra-fund transfer in .................... 2,672,412 - - -
Contract surrenders ................................... (57,298) (30,992) (311) -
Participant transfers to other Travelers accounts ..... (134,189) (116,176) - -
Growth rate intra-fund transfer out ................... (2,672,412) - - -
------------ ------------ ------------ ---------
Net increase in net assets resulting
from unit transactions .......................... 1,394,127 2,320,810 47,519 -
------------ ------------ ------------ ---------
Net increase in net assets ...................... 1,883,633 2,655,343 46,682 -
NET ASSETS:
Beginning of year ................................. 2,677,771 22,428 - -
------------ ------------ ------------ ---------
End of year ....................................... $ 4,561,404 $ 2,677,771 $ 46,682 $ -
============ ============ ============ =========
</TABLE>
<TABLE>
<CAPTION>
COMBINED
-----------------------------
1997 1996
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................. $ 465,479 $ 594,038
------------ ------------
EXPENSES:
Insurance charges ..................................... 233,340 123,962
Administrative fees ................................... 113,217 55,266
------------ ------------
Net investment income (loss) .................... 118,922 414,810
------------ ------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 12,722,440 14,137,048
Cost of investments sold .......................... 12,383,302 14,032,333
------------ ------------
Net realized gain (loss) ........................ 339,138 104,715
------------ ------------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 1,262,660 944
Unrealized gain (loss) end of year ................ 4,467,693 1,262,660
------------ ------------
Net change in unrealized gain (loss) for the year 3,205,033 1,261,716
------------ ------------
Net increase (decrease) in net assets
resulting from operations ....................... 3,663,093 1,781,241
------------ ------------
UNIT TRANSACTIONS:
Participant premium payments .......................... 12,668,925 20,747,433
Participant transfers from other Travelers accounts ... 12,632,833 17,805,104
Growth rate intra-fund transfer in .................... 17,848,901 -
Contract surrenders ................................... (713,491) (314,374)
Participant transfers to other Travelers accounts ..... (13,416,453) (20,145,618)
Growth rate intra-fund transfer out ................... (17,848,901) -
------------ ------------
Net increase in net assets resulting
from unit transactions .......................... 11,171,814 18,092,545
------------ ------------
Net increase in net assets ...................... 14,834,907 19,873,786
NET ASSETS:
Beginning of year ................................. 21,697,329 1,823,543
------------ ------------
End of year ....................................... $ 36,532,236 $ 21,697,329
============ ============
</TABLE>
-12-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF UNITS FOR SEPARATE ACCOUNT ONE
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ZERO COUPON ZERO COUPON ZERO COUPON
BOND FUND BOND FUND BOND FUND MFS EMERGING ALLIANCE
PORTFOLIO PORTFOLIO PORTFOLIO GROWTH GROWTH
SERIES 1998 SERIES 2000 SERIES 2005 PORTFOLIO PORTFOLIO
----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Units beginning of year ............ 211,610 447,140 475,491 - 2,063,437
Units purchased and transferred from
other Travelers accounts ........ 217,747 417,090 498,663 399,280 3,038,124
Units redeemed and transferred to
other Travelers accounts ........ (185,267) (374,414) (341,426) (71,606) (1,896,919)
----------- ---------- ---------- ---------- ------------
Units end of year .................. 244,090 489,816 632,728 327,674 3,204,642
=========== ========== ========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
VAN KAMPEN
AMERICAN TBC SMITH BARNEY SMITH BARNEY
CAPITAL MANAGED SMITH BARNEY INTERNATIONAL INCOME AND
ENTERPRISE INCOME HIGH INCOME EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Units beginning of year ............ 1,366,133 304,658 1,434,816 1,507,875 1,089,556
Units purchased and transferred from
other Travelers accounts ........ 2,022,172 296,438 1,695,480 2,183,812 2,427,490
Units redeemed and transferred to
other Travelers accounts ........ (1,223,768) (144,574) (1,307,749) (1,516,178) (1,219,464)
---------- ---------- ---------- ---------- ------------
Units end of year .................. 2,164,537 456,522 1,822,547 2,175,509 2,297,582
========== ========== ========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
PUTNAM
SMITH BARNEY DIVERSIFIED MFS AIM CAPITAL
MONEY MARKET INCOME TOTAL RETURN APPRECIATION TOTAL RETURN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Units beginning of year ............ 3,328,723 621,538 1,716,546 2,020,691 2,070,519
Units purchased and transferred from
other Travelers accounts ........ 12,749,969 996,513 2,690,528 2,727,356 3,089,331
Units redeemed and transferred to
other Travelers accounts ........ (12,709,131) (552,651) (1,687,563) (1,766,118) (2,108,099)
------------ ----------- ----------- ----------- -----------
Units end of year .................. 3,369,561 1,065,400 2,719,511 2,981,929 3,051,751
============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SELECT
GROWTH
PORTFOLIO COMBINED
----------- ------------
<S> <C> <C>
Units beginning of year ............ - 18,658,733
Units purchased and transferred from
other Travelers accounts ........ 46,559 35,496,552
Units redeemed and transferred to
other Travelers accounts ........ (311) (27,105,238)
------------ -------------
Units end of year .................. 46,248 27,050,047
============ =============
</TABLE>
-13-
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Owners of Variable Life Insurance Contracts of The Travelers Variable
Life Insurance Separate Account One:
We have audited the accompanying statement of assets and liabilities of The
Travelers Variable Life Insurance Separate Account One as of December 31, 1997,
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 audits 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, 1997, by correspondence with
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 Variable Life
Insurance Separate Account One as of December 31, 1997, 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 19, 1998
-14-
<PAGE> 16
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 Variable Life Insurance Separate Account
One or Separate Account One's underlying funds. It should not be used in
connection with any offer except in conjunction with the Prospectuses for the
Variable Universal Life Insurance products offered by The Travelers Life and
Annuity Company and the Prospectuses for the underlying funds, which
collectively contain all pertinent information, including the applicable sales
commissions.
VG-SEP1 (Annual) (12-97) Printed in U.S.A.
